Has the fightback begun? In France the socialist candidate Francois Hollande is the short priced favourite to become the country’s president and abandon the prevailing conservative European views on economic austerity. And perhaps more importantly, in Argentina President Cristina Fernández de Kirchner has seized control of the oil giant YPF, the largest company in her country, without paying prior compensation to its Spanish owner, Repsol.
As a couple of articles in London’s Sunday The Observer (here and here) point out, the takeover – made to stop a controlling interest being sold to a Chinese government owned company – 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.
That anger has been expressed more widely by other governments and pundits. As The Observer records, 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”. The Economist thundered that President Fernández’s antics must not go unpunished; nationalisation is a sin beyond redemption.
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The columnist Will Hutton put the controversy into perspective thus: