Piracy as good policy | by Serge Halimi

by May 29, 2012All Articles

piracy-as-good-policyThe head of state, confident after electoral victory, tells the governor of the central bank what to do, introduces forex controls and announces that a key sector of the economy, sold off to private investors 13 years ago, is to be nationalised. Two members of the government are appointed to head this enterprise, now in public hands again, and its private owners are told to go. The European Commission, The Wall Street Journal and the Financial Times are furious about this “shabby act of economic piracy”. The Economist suggests that the “pirate state” should be excluded from the G20, and that its citizens (who voted in the head of state) must get visas to travel abroad.
This is not Europe. It is Argentina. As President Cristina Kirchner explained on 16 April when most of the assets of the Spanish multinational Repsol, majority shareholder in the Argentinian oil company YPF, were about to be nationalised: “We are the only country in Latin America, and I would say in the world, that doesn’t control its natural resources.” Public ownership is not as prevalent as she suggests — Total, BP, ExxonMobil and others are private companies — but she is thinking of earlier battles to recover common sources of wealth: Mossadeq’s nationalisation of British Petroleum in Iran in 1951, Nasser’s seizure of the Suez Canal for Egypt in 1956, Boumedienne’s acquisition of Elf and Total assets for Algeria in 1971, Putin’s seizure of the Yukos company in Russia in 2003 and Hugo Chávez’s takeover of PDVSA (Petroleum of Venezuela).
Argentina’s government claims the former owners of YPF distributed 90% of its profits to shareholders. With no investment in the industry, national oil production has declined by 20% since 2004; energy imports have increased 20-fold. Argentina has learned by painful experience not to rely on foreign loans (and even less on the IMF) to balance its books.
Though well received at home, Kirchner’s daring move has brought extravagant demands for compensation, threats of a commercial boycott and warnings of storms ahead. But Buenos Aires is familiar with prophets of doom. In 2001, when Argentina stopped repaying its debt and devalued its currency, it was told to expect balance of payments crises and economic ruin. Since then, its foreign accounts have been in credit, production has increased by 90%, and unemployment and poverty have been dramatically reduced (1). Europe would do well not to side with the Spanish multinational’s shareholders but to follow Argentina’s bold political lead.
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