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Argentinian president, Cristina Fernández de Kirchner, rejects criticism over YPF nationalisation

Category : Business

Nationalisation of oil company YPF has been criticised as ‘unjustifiable’ but the takeover has support in Argentina

He launches finger-wagging attacks on the “free-market fundamentalists” whom he accuses of conspiring against Argentina’s economic independence. Opposition journalists he dismisses as “parrots” in the pay of corporations that want to destroy the self-defined “national and popular” government of which he is a proud member.

Axel Kicillof, the country’s baby-faced deputy economy minister, is the mastermind behind the controversial seizure last week by Cristina Fernández de Kirchner, Argentina’s president, of the oil giant YPF, the largest company in Argentina, without paying prior compensation to its Spanish owner, Repsol.

Reaction was strong around the world. For Spain, in the middle of an economic crisis, the loss of Repsol’s lucrative Argentinian arm was a blow. In the US, the Wall Street Journal described the surprise move as “theft”.

Hillary Clinton, the US secretary of state, Mariano Rajoy, Spain’s prime minister, and Felipe Calderón, Mexico’s president, labelled the seizure as “unjustifiable” and “a mistake”. But Kirchner – reportedly “hypnotised” by 41-year-old Kicillof’s interventionist economic ideas – is not about to lose sleep over international opinion.

Florencio Randazzo, the interior minister, said: “The government makes its decisions with Argentinians in mind, not based on what the US or Spain might think.”

The takeover has support across the political spectrum and among the population at large. Opposition legislators have said they will vote in favour of the bill Kirchner has sent to Congress, where it is expected to sail through in the next few days. Pollsters add that the move has bolstered the president’s image, recently sagging because of inflation and revelations of corruption in her government.

Recovering YPF for the state is even defended by some of the president’s most ardent critics, such as Pino Solanas the leftwing filmmaker who dropped out of last year’s presidential elections.

“Energy policy for the last 20 years has been run by private individuals as a financial venture,” Solanas said, proclaiming the privatisation of the company 20 years ago was “a disaster”. Until the 1990s, Argentina’s economy was to a large extent closed to the outside world and all public utilities were state-owned, inefficient and overstaffed.

Obtaining a phone line from the state company ENTel could take 20 years. A privatisation programme by the Peronist president Carlos Menem during his 10-year rule in the 1990s brought Argentina violently into the globalised world. Phone lines were available overnight after French and Spanish operators took over. But there was a dark side to the boom years of Menem’s rightwing open-market administration. Hundreds of thousands of employees at state companies such as YPF lost their jobs and much of the middle class quickly slid into poverty.

By the start of this century, Argentina had descended to the level of a barter economy, bank deposits were seized and the country eventually defaulted on its massive foreign debt, ushering in an era of social and economic chaos.

That began to change when leftwing Peronist Néstor Kirchner was elected president in 2003. Argentina entered a new boom phase, this time brought on by leftist consumption-boosting policies that resulted in the longest continuous period of growth the country had seen.

The boom continued after Cristina Fernández de Kirchner succeeded her husband in 2007. After his death from a heart attack in 2010, she was left without her main economic adviser. Some observers feel that her husband’s role in that capacity has now been filled by Kicillof. “He’s young, ambitious, intelligent, good-looking, leftist and authoritarian,” says Laura DiMarco, the author of La Cámpora, a bestselling book about the neo-Peronist youth group of the same name to which Kicillof belongs.

Articulate and energetic, this doctor in economics has reputedly “hypnotised” Fernández with his strong push for greater state intervention.

The YPF seizure marks the coming of age of La Cámpora, headed by technocrats in their 30s and early 40s who view the world through the lens of 1970s revolutionary movements, although they have been portrayed as living in luxury apartments in prime Buenos Aires neighbourhoods, bankrolled with top jobs at the companies renationalised by President Fernández. Kicillof denies this portrait painted of La Cámpora in the independent press. “They want to make La Cámpora look like monsters,” he said recently. La Cámpora is proclaiming the seizure of YPF in heroic terms as a triumph against voracious corporations and first-world dominance. Posters appeared overnight last week on streets natiwonwide bearing only six letters, YPF and CFK (Cristina Fernández de Kirchner) over the motto “They are Argentine”.

The takeover is seen as a “recovery of sovereignty” in a country in which energy had traditionally been in the hands of the state. Although oil production soared during the first 10 years of the newly privatised YPF in the Menem years, falling production and perceived mismanagement in the Kirchner-Fernández de Kirchner years made last week’s move easily acceptable, despite some anger among economists at the seizure without prior compensation.

Kicillof’s dismissal of this criticism as coming from “parrots” and “idiots” in the press is more than rhetorical. Kirchner claims that among the secret YPF papers that Kicillof has uncovered are contracts showing that some journalists received salaries from YPF. “So just go somewhere else with all those stories, those tales and all those parrots,” she said on Friday.

Although Kirchner and her husband both promoted the privatisation of YPF in the 1990s, Kicillof says: “Times have changed.” And he seems to be right.

Even former president and current senator Menem, who privatised YPF in the 1990s, has said that he will vote in favour of a state-owned YPF. Kirchner claims that her husband secretly wished to see YPF renationalised although he made no effort to do so during his government. In his native oil-rich province of Santa Cruz, where she will be laying flowers at his mausoleum this weekend, Kirchner said she is consecrating the new law to his memory.

“I’m going to take him the bill, tied with a ribbon in the Argentine colours,” she said on Friday. “Although one part of him rests there, I know another is not resting and is probably out around doing things. I’m convinced of this, and that’s what’s keeping me alive.”

guardian.co.uk

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