Argentina: government plans to re-nationalize oil company
Argentine president Cristina Fernández de Kirchner announced on April 16 that her government planned to take control of 51% of the shares in YPF SA, the country's largest oil company. The Spanish company Repsol has had majority ownership of the Argentine company, formerly known as Yacimientos Petrolíferos Fiscales, since 1999. Later in the week the government took control of YPF Gas, which is also owned mostly by Repsol. A tribunal is to determine how much Argentina will pay in compensation to the companies' private shareholders.
A telephone survey conducted by Argentina's Poliarquia polling institute and published on April 22 by the daily La Nación found 26% of respondents strongly in favor of the move, with another 36% supporting it less strongly. (New York Times, April 17; AFP, April 22, via France24)
The plan to expropriate the company came in the midst of continuing economic instability in Europe, and the Spanish government reacted angrily to Argentina's move. After an interview with US secretary of state Hillary Clinton in Brussels on April 19, Spanish foreign affairs minister José Manuel García-Margallo told a press conference that Spain and the US "are going to analyze the way in which it might be possible to collaborate together to restore international legality." He said the two countries might work together in the World Bank, "in the International Monetary Fund [IMF], in the G-20 [Group of 20 major economies], in the Paris Club, in any other institution in which one could carry out an action to try to have the government of Argentina correct itself." (La Jornada, Mexico, April 20, from DPA)
The privatization of the state-owned Yacimientos Petrolíferos Fiscales was the most important element in the massive sell-off of government enterprises carried out by the government of former president Carlos Saúl Menem (1989-1999) during an era of extreme neoliberal policies that ended with economic collapse in late 2001 and early 2002. The Menem government started by laying off 50,000 employees in four years. On Sept. 24, 1992, the Chamber of Deputies approved a law privatizing the firm, now named YPF SA, with majority control going to provincial governments. The private sector gradually bought more and more shares in the YPF until 1999, when Repsol obtained complete control. Later the Petersen Group, headed by Argentine entrepreneur Enrique Eskenazi, acquired about 25%.
The decision to re-nationalize the company has a number of ironies. President Fernández's general secretary of the presidency, Oscar Parrilli, was a promoter of the privatization in 1992, when he was a deputy from Neuquén province. "We are here in this session," he said in a pro-privatization speech in Congress that year, "with the firm conviction that we are taking the steps that Argentine society and the world are demanding of us in order to achieve the transformation of our country." Cristina Fernández, then a provincial legislator in Santa Cruz, also supported the privatization. (La Capital, Rosario, April 17)
The main force behind selling off YPF was Carlos Menem, who is now a senator for La Rioja province. In an April 20 interview in the daily Crónica he said he planned to vote in favor of the re-nationalization. "The scenario has changed, the situation isn't the same as when I privatized it," he explained. "I know they're going to beat me up, but it won't be the first time." (Clarín, Buenos Aires, April 21)
Until last year Menem was in a faction of the Justicialist Party (PJ, Peronist) that strongly opposes the PJ faction that Fernández heads. Menem became a Fernández ally around the time he was starting to face trials on various criminal charges.
From Weekly News Update on the Americas, April 22.