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This is Not Journalism Belongs in the OP-ED Section: In Brazil and Elsewhere, Dismay at Argentina’s Nationalization Move (NYT 19/4/12)

Posted in Uncategorized by ce399 on 20/04/2012

In a fiery speech justifying her decision to nationalize the oil company YPF, Argentina’s president, Cristina Fernández de Kirchner, cited her admiration for Petrobras, Brazil’s state-controlled oil giant, and other state oil companies in Latin America.

But here in Brazil, Latin America’s rising oil power, and elsewhere in the region, financial experts greeted Mrs. Kirchner’s abrupt decision with dismay, saying the nationalization and other economic policies were making Argentina more of a hemispheric outlier than a leader in a bold new economic era.

“Argentina’s capacity to err seems unlimited,” said Míriam Leitão, one of Brazil’s most influential columnists on economic issues, in an essay comparing the YPF expropriation to Juan Domingo Perón’s nationalizations in the 1940s and ’50s, which left Argentina hobbled with anemic state enterprises.

While Brazil’s government has maintained control of Petrobras, it has also exposed the company to market forces, starting in the ’90s when its monopoly was broken, energy experts here point out. Since then, Petrobras has grown into Latin America’s largest company.

Argentina, on the other hand, repeatedly clashed with YPF’s Spanish owner, Repsol, before expropriating its controlling stake, creating a diplomatic dispute with Spain and tension with the European Union. “Crazy queen” was how one prominent Brazilian humor columnist described Mrs. Kirchner this week.

In a different tone, Chile’s economy minister, Pablo Longueira, said the nationalization could be harmful for Latin America as a whole, turning it into a “less trustworthy region” compared with Asia. “Capital flows exit to those places where there is more investor confidence,” he told Reuters.

Even in Mexico, where Lázaro Cardenas carried out in the 1930s what was arguably Latin America’s most symbolically important oil nationalization of the 20th century, creating Pemex, political leaders disparaged Mrs. Kirchner’s move.

Speaking to business executives this week, Mexico’s president, Felipe Calderón, said the YPF nationalization “did no one any good.” Two of Mexico’s presidential candidates, Enrique Peña Nieto and Josefina Vázquez Mota, also criticized the move.

At another end of the political spectrum, Mrs. Kirchner’s nationalization plan drew support from Venezuela, where President Hugo Chávez has asserted state control over dozens of companies, including huge oil projects, in recent years.

And in Uruguay, President José Mujica, a former member of the Tupamaros, a guerrilla group, expressed solidarity with Mrs. Kirchner’s decision, calling it a response to “rich Europe” and a correction to the “error” that Argentina made in privatizing YPF in the ’90s.

Yet in Brazil, where Petrobras’s achievement of energy independence and huge offshore oil discoveries have made it a model for oil companies in other developing nations, the YPF expropriation served as an opportunity to draw important contrasts with the situation in Argentina.

As recently as 2000, Brazil still relied on oil imports from Argentina to meet energy needs, buying about 74,000 barrels of a day from its neighbor.

Now the tables are turned. Petrobras, through its acquisition of Perez Companc, an independent Argentine oil company, has aggressively expanded in Argentina to the point where concerns have emerged here as to Petrobras’s exposure if Mrs. Kirchner opts to expand her nationalizations.

In the run-up to the announcement of YPF’s nationalization, the province of Neuquén in Argentina abruptly pulled an exploration concession held by Petrobras. Maria das Graças Foster, the chief executive of Petrobras, is set to meet on Friday with Julio De Vido, a top aide of Mrs. Kirchner whom she has appointed as YPF’s supervisor.

In the meantime, Brazil’s energy minister, Edson Lobão, has tried to assuage concerns over the expropriation, saying this week in the capital, Brasília, that every country is “sovereign” in their capacity to decide on matters “as they see fit.”

The nationalization, which follows state takeovers of an airline and of pension funds, has its critics in Buenos Aires. Nevertheless, the nationalizations resonate in a country where strong resentments persist about the privatizations carried out under the liberal economic policies of the ’90s, which preceded a chaotic economic crisis at the start of the last decade.

The authorities are “taking back what belongs to us,” said Manuel Rivera, 27, who peddles flags and souvenirs at the Plaza de Mayo, in front of Mrs. Kirchner’s palace in Buenos Aires.

New posters blanketed the city’s avenues on Wednesday, exhorting Congress to pass the nationalization law. “Not a peso more Repsol,” read the posters, in which the letters YPF were illustrated with the blue and white stripes of Argentina’s flag.

A crucial question in Argentina is whether the nationalizations will stop with YPF. A prominent union leader, Óscar Lescano, had his own answer on Wednesday, saying in comments broadcast on radio that state takeovers could spread to the electrical sector.

A rising group of young officials with nationalist leanings in Mrs. Kirchner’s government will have sway in molding Argentina’s economic landscape after the YPF nationalization. Prominent among them is Axel Kicillof, a 40-year-old economist she named to help lead YPF.

Mr. Kicillof, sporting sideburns that might have made Elvis Presley smile, vehemently defended the policy when he appeared this week before Argentina’s Congress, accusing Repsol of “hoarding” fuel to try to force the government to raise domestic energy prices to international levels.

He belongs to La Cámpora, a militant youth movement founded by Mrs. Kirchner’s son, Máximo. Reflecting the return of resource nationalism in a country that has recently made big discoveries of shale oil, the group’s members enthusiastically chanted before Argentina’s president when she announced plans to nationalize YPF.

Like fans at a soccer stadium, they shouted their refrains. “The wealth will stay in Argentina,” they yelled, hands slicing through the air. “I’m a soldier for Cristina.”

But the critics, including Daniel Altman, an expert on Argentina’s economy at the Stern School of Business at New York University, were not impressed. “Brazil’s leaders have a more global view of their future,” he said, “while Argentina has a government that is ultimately self-destructive.”



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