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  • Argentina, and Obama, Make Us Want to Cry

    Standing before a mural of Eva Peron Duarte (wife of Argentina’s legendary strongman Juan Domingo Peron and the “first lady of populism”) Argentina’s recently re-elected President Cristina Fernandez de Kirchner unveiled a plan to seize majority ownership in Argentina’s chief energy company YPF and return it to state control.

    “We are the only country in [the Americas], and nearly the world, that doesn’t control its own natural resources,” she said. “This is the recuperation of the sovereignty of Argentina’s natural resources.”

    The country would take over majority control of YPF, which currently has as its majority owner REPSOL, a Spanish energy firm. The chief complaint lodged against REPSOL is that it has made insufficient investments in energy development. Like her friend and patron Hugo Chavez—and like Evita—President Fernandez believes a nation’s resources, savings, and property exist to serve partisan ends.

    Senior European officials warned that the nationalization would have a chilling effect on foreign investment in Argentina. For example, Catherine Ashton, the EU’s high representative for foreign affairs, was “alarmed to note that the president referred in her speech to investments in other sectors such as telecoms and banking.” Mexico’s President Felipe Calderon was even blunter: “No one in their right mind is going to invest in a country that expropriates investments.” Spanish conservative Prime Minister Mariano Rajoy, battling major domestic economic challenges, promised justifiable retaliation as Madrid struggles to preserve financial calm.

    The move against REPSOL comes at a time when Argentina has pursued a similarly nationalistic and predatory strategy, applying diplomatic and economic pressures in an attempt to force Great Britain to abandon the Falkland Islands. In addition to long-standing Argentine nationalism, one of the underlying factors motivating the current aggressiveness has been oil exploration around the Falklands.

    The impact of the move remains uncertain. Some commentators recognize the capacity of energy-possessing nations to nationalize, break contracts, or punitively tax with relative impunity given heavy demand and vast amounts of global capital seeking a home. The Economist observed that President Fernandez “had already ruined Argentina’s reputation as a safe place to do business long before the nationalization of YPF.” The Wall Street Journal termed the action “thuggish” and called for Argentina’s expulsion from the G-20.

    Like its neutrality stance on the Falklands, (Malvinas or Maldives—oh, whatever!) the Obama Administration’s first inclination is to deny that a problem exists. Intoned the State Department’s press spokesperson on April 17: “The importance that we subscribe to—or ascribe to diversity of energy resources. We believe that’s the best route to go.”

    While the Administration tangos with another thorny Argentine issue, of one thing there is relative certainty: When it comes to running economies, both Fernandez de Kirchner and Obama share a belief in their ability to defy economic laws of gravity.

    Posted in Featured [slideshow_deploy]

    6 Responses to Argentina, and Obama, Make Us Want to Cry

    1. O_Henry says:

      Some people prefer corrupt governemnt (i.e. no or low accountability personally, no internal checks and balances, etc.) certainly so when it is the individuals running the government.

    2. Lloyd Scallan says:

      Does no one get it yet? Does anyone not understand that under Obama's plans, he will "nationalize" (control) every industry in this nation, including all energy, just like any two bit thug dictator in any third world country.

    3. allen says:

      There should be no doubt that the USA President would nationalize the Oil in the US if he had more time and he had not proceeded with Obamacare. This Little Man is Thug and every day it Shines through, If people can not see it then that is their Problem, Some of the Population want this type of man as they pickup the Hand Outs, and I do not mean Social Security, All of us paid for that check. Just give me my Money back and I would be HAPPY. But the bottom feeders will throw a hissy and re-elect this Liar.

    4. Dan Camp says:

      Why would Obama care about this… he owns banks and car companies and the healthcare industry and green energy industry…etc.

    5. Bill Hodges says:

      And, our boy can't wait to lead the US down the same path!

    6. Jim Ross says:

      The Blind lead the blind, and they have a illegal fast talker to doing the job
      the White house.

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