Earlier this week, Argentina made headlines the world over after President Cristina Kirchner nationalized the oil company YPF, an Argentine company controlled by the Spanish company Repsol. The move caused significant ripples throughout the international business world. The European Union lambasted Argentina for the move, which could damage the traditional “special ties” between Spain and Argentina. Spain has already begun to mobilize international support in opposition to Argentina’s move even while Spanish companies reconsider investment in Argentina as a means to spur growth and help the Spanish economy stabilize. Even Mexico and Brazil, who nationalized their oil industries in the 1930s and the 1950s, respectively, have become critical of the move (although Venezuela was quick to condemn British and Spanish criticisms of the move, even while Bolivia remained circumspect and Colombia tried to use the situation to its own advantage). Mexican President Felipe Calderon criticized Argentina’s efforts, while some media figures in Brazil are critical of the move even while government officials spoke about respecting Argentina’s sovereignty. (And as I mentioned here, Míriam Leitão is far from an impartial or reasonable analyst on the issue of nationalized vs. privatized companies, given her frequent role as a standard-bearer for neoliberal policies.)
However, not all are critical of the move, and Mark Weisbrot provides some reason in an echo chamber of indignity in the international community.
The Argentinian government’s decision to renationalise the oil and gas company YPF has been greeted with howls of outrage, threats, forecasts of rage and ruin, and a rude bit of name-calling in the international press. We have heard all this before.
When the government defaulted on its debt at the end of 2001 and then devalued its currency a few weeks later, it was all doom-mongering in the media. The devaluation would cause inflation to spin out of control, the country would face balance of payments crises from not being able to borrow, the economy would spiral downward into deeper recession. Then, between 2002 and 2011, Argentina’s real GDP grew by about 90%, the fastest in the hemisphere. Employment is now at record levels, and both poverty and extreme poverty have been reduced by two-thirds. Social spending, adjusted for inflation, has nearly tripled. All this is probably why Cristina Kirchner was re-elected last October in a landslide victory.
Of course this success story is rarely told, mostly because it involved reversing many of the failed neoliberal policies – that were backed by Washington and its International Monetary Fund – that brought the country to ruin in its worst recession of 1998-2002. Now the government is reversing another failed neoliberal policy of the 1990s: the privatisation of its oil and gas industry, which should never have happened in the first place.
Weisbrot goes on to point out that YPF’s failure to provide supply to meet the demand of the growing country is a very real problem both for daily lived experiences of Argentines and for broader macroeconomic issues facing Argentina. In many ways, then, the nationalization was the right thing for Argentina’s domestic economy, providing a more equal balance of trade.
And it’s not like Kirchner nationalized a company that had a rich history of private investment. YPF had been a national industry in Argentina until the 1990s, when ex-president Carlos Menem (like his Brazilian counterpart, Fernando Henrique Cardoso) went on a privatization binge, selling state properties, utilities, and resources left and right with a neoliberal zeal that characterized much of Latin America in the 1990s. While leaders like Menem, Cardoso, Peru’s Alberto Fujimori, and others thought neoliberalism would be the economic savior of the region, it had become clear by the end of the decade that the policies not only failed to improve Latin American economies or the region’s standing in the global community; they also exacerbated very real social problems and inequalities in the countries that implemented them. In this context, a series of center-left leaders like Lula, Nestor Kirchner (Cristina’s late husband), Evo Morales, and others ended up winning election in the 2000s based on public discontent with the neoliberal policies of the right in Latin America. So in many ways, Argentina’s nationalization of YPF is simply returning to conditions that worked far more favorably for the Argentine economy up until the 1990s, abandoning what Weisbrot rightfully calls the “failed neoliberal policies” of the late-20th century.
Weisbrot wraps up by pointing out that
Argentina is catching up with its neighbours and the world, and reversing past mistakes in this area. As for their detractors, they are in a weak position to be throwing stones. The ratings agencies threatening to downgrade Argentina – should anyone take them seriously after they gave AAA ratings to worthless mortgage-backed junk during the housing bubble, and then pretended that the US government could actually default? And as for the threats from the European Union and the rightwing government of Spain – what have they done right lately, with Europe caught in its second recession in three years, nearly halfway through a lost decade, and with 24% unemployment in Spain?
I think this is exactly right. While European leaders can lash out against the growing importance and autonomy of Latin American nations with regards to resources, and while neoliberals can continue to decry the injustices of nationalizing industries, they do so as increasingly impotent and diminished authorities on the global economy in the 21st century. And it’s not like threats not to invest in Argentina are really powerful tools of coercion; many multinationals and European countries have avoided investment in Argentina in the decade since the 2001 economic collapse (brought about, of course, by aggressive neoliberal policies). And yet Argentina’s economy has done remarkably well. It’s not in Kirchner’s interest to kowtow to foreign private companies; it’s her job to make sure she implements policies that ensure her country’s economy has the best chance at long-term success. Nationalizing YPF is part of those policies, and those who speak out against it do so from an increasingly anachronistic and out-of-touch understanding of the global economy in the 21st century.