It seems fair to say that Cristina Fernández de Kirchner, the 55th President of Argentina, is on an agenda to alienate her country wherever she can. In short, Spain now stands alongside Britain in anger over the behaviour of the Argentine government. Why? Perhaps due to her ignominious failure to achieve any of her goals at the recent 2012 Summit of the Americas, Kirchner’s government seized – up from a mere 0.02% stake – 51% of shares in the oil company YPF; thus obliterating the majority position of Spain’s Repsol. Even Spain’s centre-left newspaper El País had no choice but to speak out against what the Financial Times called a “shabby act of economic piracy”.
As the Spanish title, La Razón, reported on 17 April, President Mariano Rajoy of Spain reiterated how his government will not only fight for the interests of Spanish companies abroad, but also for “a model of international relations based on mutual respect between nations and legal security, which are basic and fundamental principles for development and the common good”. Certainly, the Spanish have every reason to be outraged. YPF yielded $2.1 billion in profits in FY 2011, and produces another estimated 2.1 billion barrels of crude oil every year. Though some might prefer such terms as “redistributed” or “reclaimed”, the reality is that this vast economic potential was unashamedly stolen from its rightful owners.
…the sound of a tremendous explosion rocked the hall…
By this point, you may well be wondering, why should I care? Why is this an issue? Firstly, it merits attention for its implications in international affairs and Argentina’s own capacity to influence them. The Falklands dispute, for instance, could make for an instructive case. Kirchner has already been struggling to drum up international support for her agitation over the matter; so unilateral and populist a decision as to nationalise outright a major, foreign-owned business will likely not help her appeal. Moreover, if a nation’s international clout truly rests on its internal economic strength, then Argentine influence will surely diminish in the aftermath of Kirchner’s action. Why? Rumour has it that a Chinese company was about to buy up YPF; now, one scarcely imagines foreign capital will flow to Buenos Aires with Repsol’s fate on display.
Secondly, at least for me, my interest was piqued because the story makes for a case of life imitating art. That is, the Argentine government’s extortion uncannily echoes part of one of my favourite novels – Atlas Shrugged. Those who know me personally will doubtless roll their eyes on reading this, but it bears a moment’s thought. Specifically, towards the end of the novel, one of the story’s heroes catches wind of a plot by the Chilean government to seize his company. However, at the exact moment the motion is passed to steal his life’s work, “almost as if the gavel’s blow had set it off – the sound of a tremendous explosion rocked the hall, shattering the glass of its windows… when the legislators rushed to the windows, they saw a long column of flame where once had risen the familiar shape of the ore docks of d’Anconia Copper”. The hero, Francisco d’Anconia, had sent his employees home with their pay-checks before denying his would-be thieves their victory.
…we are not simply looking at an issue of law…
Of course, in the real world, there was no such romantic hero at YPF to deny Kirchner’s political avarice, but the comparison is telling. Put simply, it helps highlight the nature of what the Argentine government is engaged in. On one level, it is simple bullying: unlike Britain’s deterrence around the Falklands, Repsol was defenceless against the supposed guarantor of its rights. But we are not simply looking at an issue of law, or even politics – you could hate Atlas but the issue remains. Ultimately, whether a proud Argentine patriot or someone who happened across this article by accident, we are dealing with a question of basic morals. Precisely: could such extortion could ever be justified, irrespective of the context? The right answer ought to be immediately clear.
Image courtesy of InfoLibre