MEXICAN HIGH-TECH WORKERS DEMAND JUSTICE

by Kent Paterson, Frontera NorteSur

The two high-tech workers laughed when asked if they could afford the smartphones made by their colleagues on Mexican production lines. “No, no, no,” chuckled Maria and Alma, two Guadalajara workers who have labored for years in Mexico’s Silicon Valley. A cheap $20 cell phone has to make do for Maria, while Alma uses a similarly low-priced contraption she won on a five-dollar raffle ticket. “It’s not a luxury, it’s a necessity, especially when you have kids,” Alma said.

The two women, who asked that their real names not be used because of possible employer retaliation, recently sat down with Frontera NorteSur to discuss their jobs and lives as factory workers in Mexico’s second largest city and one of the world’s most important centers in the electronics industry supply chain.

An assembly-line worker, Maria makes about $10 for an eight hour shift six days a week. Although Maria said she gets all the benefits afforded by Mexican law, she must renew her work contract every two months. A quality control specialist, Alma has more responsibilities than Maria but gets the same amount of pay. A third woman who joined the conversation worked in the local high-tech industry until she was fired two years ago. Unlike Maria and Alma, the friend completed higher education training for a technician’s career but still maxed out her earnings at approximately $500 monthly after a dozen years in the industry.

All the women interviewed have multiple children to support, and two of them are single mothers. Living in Guadalajara these days is expensive, they said. The lowest rent hovers around $100 a month, a cylinder of gas costs a couple of days’ pay and the price of staple corn tortillas is now well above a dollar. Tomatoes, eggs and the hot chile de arbol essential for so many Mexican sauces have all gone up in price recently. A family budget for four or more people can get quickly dented just by forking out the bus fare necessary for moving around a sprawling city.

To make ends meet, the women play what might be called the Mexican Shuffle. They take out pay-day loans from a bank, dip into small savings accounts, accept packages of basic commodities from churches and contemplate the ever-expanding doors of pawn shops. Like other low-income Mexicans, they participate in tandas, a form of economic solidarity in which members of a group contribute ten bucks or so and then pay out the sum total to a member on a rotating basis. Guadalajara’s women workers get by on a “miracle,” Maria laughed again. “God is great!”

Maria and her friends said they endure an employment system in which a job is on an increasingly temporary basis, unpaid furloughs pop up, promised bonuses do not materialize, overtime is not properly compensated and “labor representation” is performed by “unions” the workers often do not even know exist. Complaints are waved away by the constant fluttering of an economic wand.

“If you don’t like the work, there are five other people outside willing to do it,” Maria said. “You have no option.” While Maria and her friends say they are too afraid to speak out publicly, many workers like themselves channel their grievances through the non-governmental organization Cereal (Centre for Reflection and Action on Labour Rights).

“These are very generalized, across-the board situations, especially in the electronics industry,” said Felipe Burgueno, Cereal’s outreach coordinator. “Many of the [high-tech] businesses are sustained by women, and many of them are housewives. They are frequently paid less than the men and get treated worse.”

Celebrating its 15th anniversary this month, Cereal documents the complaints of workers, negotiates with employers, helps fired workers get severance pay and advocates for the right of workers to collective bargaining and union representation of their choice. Cereal has focused its efforts on electronics industry workers but is beginning to hear more from other sectors of the workforce, according to Burgueno.

Some workers are taking collective action. On Feb. 21, a small group of former Jabil Circuit employees, some of them wearing masks and holding signs, staged a demonstration outside the gate of the company’s Guadalajara plant. The protesters demanded the reinstatement of dismissed workers, freedom of association, steady work and labor justice. In a press statement, the demonstrators contended that pay inequity among “workers performing the same activities” violated Article 4 of the Mexican Constitution that guarantees equal pay for equal work.

The Guadalajara action was also endorsed by the National Coalition of Workers and Ex-Workers of the Electronics Industry. A phone call to Jabil’s headquarters in Florida was not immediately returned.

Last fall, Cereal released a report that highlighted the low pay of electronics industry workers in Mexico. According to the Jesuit-affiliated group, the $8.70 average rate of daily pay in the electronics industry is sufficient to cover only 60% of the cost of a basket of food and other routinely-consumed goods. In a production cost analysis, Cereal asserted that workers only receive 0.1%, or 64 cents, of the sales price of a smartphone that retails for more than $600 abroad.

Covering a variety of issues, the report included case studies of worker experiences with Nokia, Lenovo, Philips, Blackberry, Dell, Foxconn, and Celestica. Since the Mexican high-tech sector is so reliant on sub-contracted workers hired through temporary agencies, the report also discussed the Manpower and Azanza temporary employment firms.

“Frequently, workers who sign seven-day contracts stay in the company months and even years, signing contracts every week,” Cereal said in a statement announcing the release of the report.

Jorge Barajas, Cereal coordinator for Guadalajara, said industry reactions to the report varied. While Hewlett-Packard, IBM and Sanmina were most responsive, some finger-pointing went on with Blackberry, for example, telling Cereal to speak with its supplier Jabil about labor problems, Barajas said. On the other hand, Sanmina rehired 10 workers and made severance and social security payments to 20 others, according to the longtime labor activist. “These are verified, concrete changes,” he said.

For years Cereal and other non-governmental organizations have dialogued with the heavy hitters in the high-tech world assembled in the Electronic Industry Citizenship Coalition (EICC), an initiative which was launched eight years ago to promote business, labor and environmental best practices.

According to the EICC’s mission statement, the organization envisions “a global electronics industry supply chain that consistently operates with social, environmental and economic responsibility.” Available in 16 languages, the EICC has a code of conduct its 67 member companies must commit to implement in their employment and production policies.

The EICC Code of Conduct upholds adherence to all local laws regarding wages and benefits, and explicitly recognizes the right of workers to freedom of association.

“Workers shall be able to communicate openly with management regarding working conditions without fear of reprisal, intimidation or harassment,” the EICC Code of Conduct states.

Barajas said the results of the management-labor dialogue have been mixed at best, with progress noted in different individual grievances but little headway made in changing structural conditions like the growing use of temporary workers, the lack of genuine union representation and revolving lay-offs.

Since the beginning of the year, Cereal has estimated that about 3,000 high-tech workers have been laid off from Guadalajara plants.

“There was a lot of expectation in the beginning but (EICC) has lost a lot of credibility in the last two years among unions and NGOs because of its inability to affect changes in the industry,” Barajas said. “There is a lot of debate about the utility of the EICC, even in the industry.”

The lot of high-tech industry workers in Guadalajara and elsewhere will be on the agenda of an international gathering scheduled for Amsterdam this upcoming May. The meeting is expected to draw representatives from the EICC and its European counterpart as well as unions and groups like Cereal. According to Barajas, labor activists are increasingly looking to the United Nations as the possible forum for resolving worker grievances in an emblematic industry that spans the globe.

For Guadalajara high-tech worker Maria, the right of workers to organize and enjoy a decent career is a fundamental one that’s currently missing
from their lives. “I want my job, but I want it with dignity,” she said. “This is something we deserve.”

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This article was first published March 3 on Frontera NorteSur.

From our Daily Report:

Mexico: unions hold “last May Day of the PAN era”
World War 4 Report, May 8, 2012

Strikes spread across China
World War 4 Report, Dec. 3, 2011

See also:

iDIDN’T MOURN STEVE JOBS
by Michael I. Niman, ArtVoice, Buffalo, NY
World War 4 Report, December 2011

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Reprinted by World War 4 Report, June. 20, 2012
Reprinting permissible with attribution

Continue ReadingMEXICAN HIGH-TECH WORKERS DEMAND JUSTICE 

MESOAMERICA PROJECT

Obama's Message to the Latin American Governments

by Emma Volante, Upside Down World

On Dec. 5, 2011, representatives from Mexico, Colombia and the countries of Central American attended the 13th Summit of the Tuxtla Mechanism for Dialogue and Coordination in Merida, Mexico. The summit's main purpose was to discuss the progress of different initiatives included in the Mesoamerica Project's framework, which is the new version of the Plan Puebla-Panama (PPP).

Launched by the Mexican government in 2001, the PPP envisioned the creation of infrastructures that would connect Central America from Puebla, south of Mexico City, down to Panama, all promoted in the name of development and welfare for the people of the region. The idea was to facilitate investments by transnational corporations through the creation of incentives for maquiladoras and mining companies. Furthermore, to ensure the full development of neoliberalism, they planned to open numerous hydroelectric power plants that would provide these factories with energy, as well as new means of communication within the region, to better enable trade. The PPP was primarily financed by loans from the World Bank and the Inter-American Development Bank, which citizens themselves have since had to pay back. It was not long after that that Central Americans rose up in protest and lifted the veil on the Plan’s true objectives, obscured by government promises of "development," which were essentially to create the conditions to strip these nations of their natural resources and to uproot entire communities, and exploiting the people in maquiladoras as underpaid and exploited workforces with no rights. The popular resistance has been strong and as a result PPP has disappeared from official discourse.

However, governments and international organizations continued to carry out certain projects until June 2008, when the Villahermosa Declaration was signed, replacing the PPP with the "new" Mesoamerica Integration and Development Project, or the Mesoamerica Project (MP). The new project eliminates some 95% of the original projects (which were based on strategic principles of physical and economic infrastructure and cooperating for social development), but the remaining projects have expanded to include the Dominican Republic and Colombia. And if we take into account that a similar project named the Initiative for Integration of Regional Infrastructure in South America (IRSSA) also emphasizes infrastructure development and integration through ecologically damaging mega-projects, it is apparent how this attempt to integrate the continent would imply greater circulation and extraction of resources by transnational corporations, which in turn would then arrive at US, European and Chinese ports.

The final document from the Tuxtla Summit further focuses on existing security problems in the region, and naively urges the US and other countries that produce and sell weapons to create regulations necessary to stem their weapons flow and to take measures that will considerably reduce their citizens' demand for drugs. The statement also reiterates how important the participating governments' involvement is in fighting organized crime. The MP is not, in fact, merely economic, as it openly addresses problems surrounding regional security and the "war on drugs."

The CIEPAC (Centro de Investigaciones Económicas y Políticas de Acción Comunitaria) report “Integration for Plunder: The Mesoamerica Project, or Ratcheting up the Land Grab”, written by Mariana Zunino, gives details of the future projects of the MP while offering a perspective that goes beyond official statements. Zunino observes that "with this new ingredient of security, the MP has more clearly become a US geo-strategic plan to force countries from Mexico to Colombia to conform to its national security interests.… According to the Mexico City-based Permanent Seminar on Chicano and Border Studies, the way out of the deep economic crisis involves boosting the military-industrial complex through two ways. First, though coercion, which includes new military bases in Colombia, Peru and Panama; supporting the coup in Honduras; or the reactivation, after 50 years, of the US Navy’s Fourth Fleet in the Caribbean. Then, diplomacy, through Free Trade Agreements (FTAs)."

Zunino points out that the first aspect was also highlighted in the Declaration of Guanacaste in Costa Rica at the 11th Summit of the Tuxtla Mechanism for Dialogue and Coordination, which dedicates 10 points to the fight against drug-trafficking and organized crime. There they agreed to "welcome the Merida Initiative, as an important instrument of international cooperation in the fight against transnational organized crime, particularly drug trafficking."

The Merida Initiative (or "Plan Mexico") provides large US investments for the militarization of the drug war in Mexico and Central America by providing military equipment and training. A strikingly similar project, Plan Colombia, has been in effect in the Andean nation since 2000. The underlying logic behind both projects is to use "territorial rearrangement," which involves displacing indigenous and other rural communities that live in strategic commercial areas, in order to make space for multinational corporations to develop transnational investment, in areas such as oil.

Argentine journalist Stella Calloni discussed US policy on the continent in an interview with Fernando Arellano Ortiz, the Director of online news portal ‘Observatorio Sociopolítico Latinoamericano’. Calloni stated that "Plan Colombia's territorial politics, which aim to re-colonize the continent, have been transferred over to Mexico under the Merida Initiative. The project is a copy of Plan Colombia and it’s evident that violence in Mexico has reached unbearable levels in the last six years. During this time, Mexico’s death toll reached that of Colombia while the country suffered destruction of its rural areas and the loss of deep-rooted local cultures, all due to its involvement in the North American Free Trade Agreement (NAFTA)."

However, at the Merida Summit, Mexican President Felipe Calderón insisted, stating that "the North American Free Trade Agreement is a great asset for the country." He also signed a new treaty—along with other Central American governments – to reinforce existing bilateral agreements and create space for free trade in the region. These governments, who are almost all right-wing, are evidently following US imperial interests in implementing free trade policies.

Not only has the US signed FTAs with Central America and the Dominican Republic, but also with Chile, Peru and most recently with Colombia. Therefore, thanks to the implementation of these corporate, economic and military agreements in Colombia, Mexico and Central America, Washington is one step closer to reaching its goals for establishing militarized neoliberalism throughout the continent.

On December 6, Panama, Colombia and the US signed an agreement for a new military academy in Panama. Andrés Mora Rodriguez, from AUNA Costa Rica, points out that plans for the new academy and the consolidation of the Mesoamerican FTA were announced only a few days after the end of the summit of the Community of Latin American and Caribbean States (CELAC) Summit in Caracas, Venezuela, where heads of state from around Latin America made a major step toward regional integration and independence outside the interests of Washington. The US message to the Latin American governments is a clear one: we are not letting go of our hold on the continent.

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This article was first published Jan. 4 on Upside Down World. It was translated from the Spanish by Victoria Robinson.

From our Daily Report:

Oaxaca meets the new boss —or does it?
World War 4 Report, Jan. 28, 2011

See also:

THE RETURN OF PLAN PUEBLA-PANAMA
The New Struggle for Central America
by Bill Weinberg, World War 4 Report
World War 4 Report, May 2007

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Reprinted by World War 4 Report, June. 20, 2012
Reprinting permissible with attribution

Continue ReadingMESOAMERICA PROJECT 

OCCUPY GUATEMALA

Shantytown Dwellers Occupy Congress—And Win

by Frauke Decoodt, World War 4 Report

As crisis and poverty escalate in the Western world, activists in Europe and North America occupied city squares everywhere. In Guatemala City, however, an independent movement existed, as activists occupied the street in front of Congress from Aug. 22, 2011 until Jan. 12, 2012. Here, warm houses were not sacrificed for tents—rather, miserable hovels have been exchanged for tents. Activists from the slums pledged not to leave until the “Housing Law” was approved—demanding a solution for the housing crisis in Guatemala. A lack of affordable accommodation forces uncountable Guatemalans into shantytowns where precarious living conditions often have lethal consequences.

The slums of Guatemala
Everywhere you look there are banners in the tent-camp. The khaki-colored tents were distributed in the shantytowns following natural disasters. Electricity is provided by a school down the street, and plastic toilets were donated by supportive social movements. In the camp, a coal fire is smoldering. The welcoming activists, mostly chatting women and their children, largely ignore the television. “The conditions here are better than where we live,” they assure me.

The protesters are some of the estimated 1.5 million inhabitants of the slums of Guatemala. Shantytowns are everywhere, in cities and in the countryside. Recent accurate figures are not available. Within the camp Roly Escobar, the sympathetic representative of the organization CONAPAMG (National Coordinator of Marginal Areas and Inhabitants of Guatemala), is having a meeting with his some fellow activists. We look for a quiet place to talk. Escobar has a thorough understanding of the situation, having fought for years for the rights of poor neighborhoods. Escobar claims that in Guatemala more than 800,000 families live in shacks in the country’s some 1,000 slums. Nearly half of these are situated in and around Guatemala City. According to experts, a fifth to one third of the 2.5 million inhabitants of the metropolitan area reside in “precarious” locations—that is, essentially squatting, with no official title.

The residents call their shantytowns “settlements.” They feel this is a more dignified and accurate description, as the settlements can vary in size from a house to a whole neighborhood. “Only poor people live in the settlements, they are forced to settle on land which they do not own,” says Escobar. “Often this is wasteland where nobody wants to live, on the edge of ravines, on steep slopes and adjacent to or in garbage dumps.”

After leaving the streets to live in the slums, Luis Lacán quickly became aware of the needs of the settlement dwellers and the problems they face. He joined UNASGUA—an organization that offers legal support to those who fight to improve conditions in the slums. As we sit in his humble office, Lacán explains, “living conditions are precarious because invariably the occupied land has nothing, no water, no electricity, no drainage, no paved streets, nothing.”

Lacán worries about his fellow slum dwellers. He explains that one cannot connect water and electricity without being able to prove a legal right to occupancy. The settlements are not included in official plans for regional and urban development and so are not considered for infrastructure investment. This sometimes has disastrous consequences for the safety and health of residents.

Over time residents often start to organize themselves, some areas acquire electricity and water, some shacks become more like houses, while others still resemble cardboard boxes. However, in spite of the age of a settlement, without legalization, the fear of eviction is ever-present.

Surviving in the slums
“Most families in our neighborhoods live in houses made of rusty corrugated iron, cardboard and plastic. Some families do not even have that,” says Brenda, one of the campaigners camped outside Congress. A young mother named Julia adds, “Without sewage systems all the waste water from the surrounding neighborhoods passes by our shacks, shacks which have earth floors. It’s a breeding ground for diseases and infections. Our children get sick, sometimes they die, just because they lack a decent home. My daughter was eighteen months old when she became ill and died.”

Brenda nods affirmatively. “During the rainy season, many people live in mud,” he says. “Water flows through their shacks. Children and the elderly are particularly susceptible to pneumonia and bronchitis and deaths are not uncommon. Recently, an elderly woman died in my neighborhood from bronchitis. Because of hurricane Agatha in 2010 she lived in a house built from cardboard and plastic. My neighborhood suffered much then.”

Malnutrition has a huge impact on the health and development of the residents, especially children. According to figures from the United Nations half of Guatemalans live below the poverty line, and half the children are malnourished. These figures are the daily reality of slum dwellers. “We do not have enough money to buy food for our children. With the privatizations everything became more expensive; food, water, gas, electricity,” explains Brenda indignantly. Escobar emphasizes that it is not only young children but that most settlement dwellers are malnourished. “How is this possible in such a rich country? Without work and income people will die of hunger here. This is already happening. Recently three fifteen year old teenagers died of malnutrition.”

Another common cause of death in these neighborhoods is violence. The slums are often associated with notoriously brutal gangs. Escobar, whose son was murdered, wants to put this violence in its context. “If there is no work, no schools, nothing to do, and you have the level of poverty where parents cannot afford to feed their children or send them to school then you are going to get criminality. Young people become easy prey to powerful organized criminals. These problems are not born here and do not only occur here. The whole of Guatemala is plagued by narcos and violence.”

Many inhabitants feel hopeless. Doña Rosa, an elderly woman who joins in as Brenda and Julia talk cannot restrain her tears. “What will happen if I die? Maybe I will never see this legalization.”

A lame housing policy and a growing housing problem
“Why do we go and live in a slum on the edge of an abyss or on a steep mountain slope? Not because we want to live like this, but because we hope to survive. People live here because they have no choice, there is no viable, affordable housing. Far too many people have nowhere to live,” says Brenda, whilst her five year old daughter jumps around catching her attention.

The reasons why there are so many overcrowded slums are diverse. The recent armed conflict, natural disasters, population growth and a lack of land or work in the countryside have forced many Guatemalans to migrate to the city and live in the slums.

Official figures estimate that by the end of 2011 there will be a housing shortage for 1.6 million households, of which 15% will be in Guatemala City. “The increasing demand exceeds the capacity of the State to resolve the incurred housing shortage,” concludes the state Peace Secretariat (SEGEPAZ). Those knowledgeable about the housing crisis and settlement residents agree that the government has never really tried to find a solution to the housing problem. ASIES, a research institution, found that since 1956 government action on housing has consisted of sporadic initiatives undertaken by inefficient institutions and of insufficient policy interventions, resulting in the accumulation of an enormous housing shortage.

To remedy this situation the first “Law for Housing” was finally approved in 1996. Overseen by the Ministry of Communications, Infrastructure and Housing, the new housing initiative received a ridiculously low budget. The corrupt siphoning of funds by government officials, building companies, and representatives of neighborhood organizations has left little to provide for those with housing needs. Applying for a grant under the scheme is not only a very long and bureaucratic process, it also requires the applicant to add a considerable sum of money, something many do not have. “Given the size of the housing problem, it was clear that this law was not a solution,” concludes Lacán.

The housing policy of the last few decades was mainly characterized by cosmetic solutions claims Helmer Velásquez of the newspaper El Periodico. “Residents must first occupy what is basically an uninhabitable piece of land in order to gain the attention of the authorities. After a while they are provided with ‘important’ infrastructure such as stairs and paved allies. Especially during the elections there is thought about the conditions in the slums and about legalization.” Lacán affirms that “only during elections politicians find the way to the slums. Then they come with presents such as corrugated iron and concrete, with promises such as employment, education and health.”

From bills to hunger stikes
As a result of these myriad problems, shantytown residents and related social movements began working on a bill themselves, drawing on their own experiences, the Constitution, national laws and the international treaties of the United Nations which guarantee the right to housing. The University of San Carlos and relevant state institutions further refined the proposal. Lacán continues, “In 2008 the bill was presented to Congress. There too, the proposal was revised and eventually consented by Congressional committees. Since then it is stuck. The bill should only be reread and approved, in principle, a formality.”

On Aug. 23, 2011, when the bill was again not approved for the umpteenth time, some activists decided to set up a “Shantytown Congress,” camping in front of the doors until they are heard. “So many governments have come and gone and no one has ever taken us into account. Now we are here and we stay until they approve the bill,” declares the elderly Doña Rosa combatively.

“We struggle for a law that will benefit the entire Guatemalan population,” emphasizes Brenda. “We demand that shacks are changed into livable homes, that our land and our homes are legalized so we can finally connect basic services, we demand that housing is provided to families who really need it.”

Escobar wants socially responsible institutions and housing policy directed from a dedicated housing ministry. A good housing policy needs to have good law as its foundations.

Academics however point out that a law and legalization are not enough. Attention should also be paid to education, employment, living conditions, in short to a different socio-economic model which breaks the vicious circle of poverty. Otherwise, the slums will continue to grow.

But after nearly four months in front of Congress the slum dwellers begin to lose their patience. After the bill was rejected again on Nov. 22 three residents, including the young mother Julia, decided to start a hunger strike.

Update: A happy end?
The three slum dwellers stopped their hungerstrike after 19 days. The activists from the slums lifted their occupation in front of Congress after five months. The changing political context of the country was on their side. Otto Pérez Molina would soon become the new president and wanted the streets clean for his inauguration. On Jan. 12, two days before the ceremony, he visited the protesters with the head of Congress. Both promised to pass the bill by the end of March. They carried a letter signed by 40 members of Congress backing this position. The slum dwellers vowed to return if the politicians broke their promises.

On Feb. 10, the bill finally became law. What remains to be seen now is if the measures within the law are fulfilled. Guatemala has many great laws and agreements, the problem is they are often not enacted. Another question is where will the money come from to provide decent housing for 1.5 million people within the next four years.

For a president that vowed to rule with an iron fist, and who is haunted by a past stained with accusations of grave human right violations, Pérez Molina’s support for the housing law and slum dwellers seems rather unexpected. This is arguably a strategic move to prove his opponents wrong and gain support of a sizable part of the population. Many presidents have promised decent housing at the beginning of their term, but the slum residents now have a law that might force authorities to turn words into action, or in this case, houses.

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This article was first published in Dutch on Dec. 2, 2011 on the author’s website, and later translated in English, Spanish and German. It was updated on May 9.

Resources:

Movimiento Guatemalteco de Pobladores
www.movimientoguatemaltecodepobladores.blogspot.com

International Alliance of Inhabitants
www.habitants.org

See also:

“THIS LAND IS OURS!”
Land Theft as Legacy of Genocide in Guatemala
by Frauke Decoodt, World War 4 Report
World War 4 Report, December 2010

OCCUPY JUAREZ DEFIES REPRESSION
by Dawn Paley, Upside Down World
World War 4 Report, December 2011

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Special to World War 4 Report, June 20, 2012
Reprinting permissible with attribution

Continue ReadingOCCUPY GUATEMALA 

REPSOL SUES ARGENTINA OVER YPF NATIONALIZATION

by Carmelo Ruiz-Marrero, CorpWatch

Repsol, a multinational based in Spain, has brought a class action lawsuit in New York courts against the Argentine government for the re-nationalization of YPF, the former Argentine state oil company. The company has also lodged a complaint with the World Bank’s International Center for Settlement of Investment Disputes (ICSID).

President Cristina Fernández de Kirchner of Argentina signed a bill on May 4 seizing 51% of the company’s shares after over 80% of legislators in both the lower and upper houses of parliament voted in favor. Respol, which owned 57% of YPF, wants $10.5 billion in compensation, although it may find it hard to collect since Buenos Aires has ignored previous ICSID fines.

“When corporate interests are not aligned with national interests, when companies are concerned only with profits, that’s when economies fail, which is what happened globally in 2008 and what happened to Argentina in 2001,” Fernández said in a speech on May 3 to explain her motives in pushing for the takeover alleging that Repsol under-invested in the company and paid out excessive dividends, essentially stripping out the value.

Fernández’s move has rattled international financial markets but drawn extensive praise from some popular movements.

The Battle Against Privatization in South America

In the 1970s, most oil companies in South America were state-owned, just like most utilities. Following the debt crisis of the 1980s, governments in the region were persuaded by the World Bank and the International Monetary Fund to privatize many of these state assets. A number of European multinationals – like Repsol of Spain and Suez of France – jumped at the opportunity to capture lucrative new sources of production and revenues. Financial institutions hailed this wave as an opportunity for the region to attract capital for modernization and to get rid of unnecessary bureaucracy.

Carlos Menem, who was elected the president of Argentina at this time, became the darling of global financial markets for his aggressive privatization strategy that brought in foreign direct investment, cut inflation and boosted productivity, although his policies also caused major unemployment. At the same time Menem also increased borrowing from the International Monetary Fund and failed to control the flight of capital out of the country by the country’s elite. In 2001, the Argentine economy collapsed again.

In 2003 President Néstor Kirchner was elected. He chose to turn his back on the international financial institutions and renegotiate the national debt at favorable terms and engineer an economic recovery. In 2006 he canceled Argentina’s contract for water supply to Buenos Aires with the French company Suez.

He was succeeded in 2007 by his wife, Cristina Fernández, who maintained his policies of keeping the international institutions and multinationals at bay.

The partial nationalization of YPF (49% of the company will remain in the hands of local and foreign private investors) repudiates the advice of international economists but is wildly popular in Argentina. It could bring an influx of cash to the Argentine economy but could also backfire, if it does not.

Then there is the threat of Western interests who do not take kindly to being kicked out. Notably, the government of Spain has not taken the news well. Spanish president Mariano Rajoy has threatened economic sanctions against Argentina, and vice president Soraya Saenz de Santamaria has stated that Spain and its allies “will protect the juridical safety of European investments worldwide”. The European Union is considering bringing a case against Argentina to the World Trade Organization.

Fernandez says she has a very pragmatic reason for pushing for nationalization: Argentina’s bills for energy imports hit $9.4 billion last year affecting the country’s trade surplus.

Environmental Impact Questionable

She has the backing of some community activists.

“Repsol is still in debt to the people of Argentina and to nature,” proclaimed the National Peasant and Indigenous Movement (MNCI) on their website. “The REPSOL corporation must assume responsibility for the environmental harms it has caused and damages to natural resources, economically compensating the country and the peasant and indigenous communities that have been affected.”

But not all movements are convinced that a state owned YPF will be that different. “As an ecologist collective, and being plainly conscious that the Argentina government was not thinking of environmental issues when it made its decision, we will remain vigilant of [YPF’s] future actions,” said Noelia Sánchez of the Spanish group Ecologistas en Acción.

Indeed Repsol-YPF has been tried three times by the Permanent Peoples Tribunal for environmental and human rights violations and found guilty. For example in 2010 YPF was accused of trampling on the rights of the Lonko Purran community of Mapuche people in the Cerro Bandera oil field.

Others note that YPF plans to exploit the country’s “unconventional” oil and gas finds, such as the Vaca Muerta oil deposit in the province of Neuquen, using hydraulic fracturing (fracking) will mean business as usual, no matter who owns the company: “The future scenario could be one of profound environmental and social risk for much of the country, as experience abroad (of the environmental impact of fracking) has demonstrated,” warns Diego Di Risio, a spokesman for Petroleum Observatory South (Opsur)

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This story first appeared May 18 on CorpWatch.

Resources:

Oil Giant Repsol Sues Argentina
Courthouse News Service, May 18, 2012

From our Daily Report:

Fracking and “energy independence”: full-on propaganda push
World War 4 Report, May 6, 2012

Argentina: government plans to re-nationalize oil company
World War 4 Report, April 24, 2012

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Reprinted by World War 4 Report, June 20, 2012
Reprinting permissible with attribution
 

Continue ReadingREPSOL SUES ARGENTINA OVER YPF NATIONALIZATION