Argentine Congress approves nationalization of 51% of YPF oil company

The Argentine Chambers of Deputies (lower house) on Thursday followed the Senate in approving the compensated nationalization of 51% of the shares of YPF (Yacimientos Petrolíferos Fiscales), the formerly state-owned Argentine oil company, from the Spanish multinational Repsol, which owned 57% of the shares. (Hoy se aprueba la expropiación de YPF Página 12 03.05.2012) President Cristina Fernández' government justified the measure as necessary to protect Argentina's sovereignty by regaining control of its own energy supplies and production.

Other investors will still own 49% of the company, including Repsol's remaining 6% holding if they choose to retain it. This is being rightly called a nationalization. But that doesn't mean that YPF will be completely state-owned again. This will be a public-private partnership (PPP). The PPP concept was popular in previous decades among the advocates of neoliberal economics and the privatization of state-owned companies that was a central principle of it. PPP's were an intermediate state to full privatization in their eyes.

The PPP arrangement for YPF is moving back in the other direction. Ironically, one foreign firm that objected to the move by Argentina was Pemex, the state-owned Mexican oil company, which holds shares in YPF. Only shares held by Repsol are being taken in this action.

Paul Krugman in Down Argentina Way 05/03/2012 grumbles about how sloppy the business press is in its coverage of Argentina:

Matt Yglesias, who just spent time in Argentina, writes about the lessons of that country’s recovery following its exit from the one-peso-one-dollar “convertibility law”. As he says, it’s a remarkable success story, one that arguably holds lessons for the euro zone.

I’d just add something else: press coverage of Argentina is another one of those examples of how conventional wisdom can apparently make it impossible to get basic facts right. We keep getting stories about Ireland’s recovery when there is, in fact, no recovery — but there should be, darn it, because they’ve done the “right” thing, so that’s what we’ll report.

And conversely, articles about Argentina are almost always very negative in tone — they’re irresponsible, they’re renationalizing some industries, they talk populist, so they must be going very badly.

He also includes a chart showing that Argentina's growth since it extracted itself from a euro-type currency and financial crisis in 2001-2 compares very favorably with that of Brazil, which is recognized worldwide as one of the BRIC countries (Brazil, Russia, India, China) of surging growth and notably increasing world clout.

This is a Spanish-language video of the President talking about the YPF takeover on Thursday, Visión Siete: Cristina: "Estamos muy contentos por la recuperación de YPF" 05/03/2012, in the context of Argentina's growth and her ambitions for the country:



Tags: argentina, cristina fernández, paul krugman, ypf