Argentina takes oil stake with nod to socialism

BUENOS AIRES — The government’s takeover of the affiliate of a Spanish oil company places Argentina firmly in the Hugo Chavez camp of populist-socialist Latin American countries, observers say.

President Cristina Fernandez’s administration last month seized control of YPF, which extracts, refines and distributes oil and natural gas across Argentina.
On a lopsided 207-32 vote, the Argentine Congress overwhelmingly agreed Thursday night to formalize the nationalization of a controlling stake in the company, held by the Spanish firm Repsol.

Combined with increased currency controls and trade restrictions, the takeover of the oil company places Argentina “within Chavez’s bloc,” said Joaquin Morales Sola, a political commentator for the daily La Nacion.

“Already within the Chavez bloc, Argentina is converting itself into an unpredictable country,” Mr. Morales Sola said.

For many years, Argentina had not taken sides between what is viewed as a free-market, U.S.-friendly group of countries in Latin America – notably Colombia, Mexico and Chile – and the continent’s leftist bloc of Bolivia, Ecuador and Mr. Chavez’s Venezuela, said Juan Carlos Hidalgo, a policy analyst at the libertarian Cato Institute in Washington.

“Now, with the nationalization of YPF, you can certainly put Argentina in the populist camp,” Mr. Hidalgo said.

Given the country’s difficult fiscal situation, Ms. Fernandez might not stop with YPF, but “go for the banks” and consider more nationalizations, he said.

The takeover of the $10.5 billion oil firm has caused outrage in Spain, where Prime Minister Manuel Rajoy’s government threatened Argentina with trade sanctions and vowed to “defend the legitimate interests” of Spanish companies.

Washington also criticized the move Thursday. “These actions against foreign investors really dampen the investment climate in Bolivia, in Argentina, in wherever. So that’s our concern,” State Department spokesman Mark Toner said.

What surprised some observers here was the biting criticism from fellow Latin American leaders. such as Presidents Juan Manuel Santos of Colombia and Felipe Calderon of Mexico.

“Here [in Colombia], we do not expropriate,” Mr. Santos quipped in an off-the-cuff comment last month, hosting Mr. Rajoy in Bogota.

Mr. Calderon decried YPF’s nationalization as “not very responsible [and] not very rational.”

Mr. Chavez, meanwhile, called Ms. Fernandez to congratulate her on the decision. The Venezuelan leader has nationalized hundreds of companies during his 13 years in office.

The critical comments hit close to home for the Argentine president, who has styled herself as a champion of Latin American integration and who earlier this year seemed to have successfully framed Argentina’s claim to the British Falkland Islands as a cause of the entire continent.

Just days before the YPF takeover, cracks in the desired regional unity were visible at the Summit of the Americas in Cartagena, Colombia.

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