The next Venezuela? Argentina to nationalize oil company

When Argentine President Cristina Fernández de Kirchner abruptly left the Summit of the Americas, it was reported that she did so over the lack of support for her country's claim to the British-controlled Falkland Islands.

Yesterday, President Kirchner revealed another reason she returned to Buenos Aires: to announce the nationalization of the Argentine oil company, YPF, whose majority stakeholder is the Spanish energy firm, Repsol.  The move has infuriated Repsol and Spanish officials, and raised concerns that this may be the first of many expropriations of privately run companies in Argentina, putting the government on the path toward a Hugo Chávez-type model of state control over key resources.

“Once you start expropriating you don’t know where it will stop,” says Boris Segura, an analyst at the New York investment bank Nomura.  “Mrs. Kirchner is now running close to Mr. Chávez’s model,” Segura says.

During a passionate speech at the presidential palace yesterday afternoon, Kirchner announced that her government will seize 51 percent of Repsol’s shares in YPF. Spanish industry minister José Manuel Soria immediately declared the move “hostile,” and said measures would be taken in the next few days against Argentina.

Spanish newspapers report the European Union could boycott Argentine soy and meat, two of the country’s biggest exports. Hilary Clinton, the US secretary of State, has also criticized the measure.

YPF, which stands for Fiscal Petroleum Fields in English, was privatized in 1993 by former president Carlos Menem, and purchased by Repsol in 1999.  Kirchner said she sent a bill to Congress – almost certain to pass in both houses – that will permit her government to expropriate YPF.

“We are the only country in [the Americas], and nearly the world, that doesn’t control its own natural resources,” Kirchner said in front of a mural of Eva Perón, the second wife of former president Juan Perón, who oversaw the mass nationalization of Argentine industry and public services in the late 1940s. “This is the recuperation of the sovereignty of Argentina’s natural resources,” she said.

'Chavez model’

Kirchner’s nationalistic rhetoric was explicit in her address yesterday, and it has played an integral part in the Argentine dispute with the UK over the Falkland Islands the past few months. Her call for the nationalization of resources sparked celebrations by pro-Kirchner groups in the Plaza de Mayo, the main square in Buenos Aires.

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