Nationalization of oil companies will earn points on the home front, but at what cost?
In a shocking move, Argentine President Cristina Fernández de Kirchner announced the government would seize control of the country’s leading oil and gas producer, YPF. Its parent firm, Repsol, is based in Spain; the country expressed outrage at the takeover and offered its full support to the conglomerate. Kirchner, who announced the nationalization on live TV, will grant Argentina a 51 per cent controlling share in the company; she also dumped CEO Sebastián Eskenazi, installing two of her top aides, Julio de Vido and Axel Kicillof, in his place. The populist move is sure to win Kirchner points on the homefront, where there is a widespread sense that oil profits are being shipped elsewhere, but it comes at a steep cost internationally.
Repsol’s president, Antonio Brufau, claims the takeover was an excuse to cover up Argentina’s “social and economic crisis.” Spain’s industry minister is warning of “diplomatic, commercial and energy” consequences. Even Argentina’s two main newspapers were sharply critical: Clarin, the country’s largest daily, claimed Argentina risks scaring off investors. “The price,” it wrote, “is not just the court cases but the risk of ending up a little further away from the rest of the world.”