Argentina's defiance on YPF strikes chord at home

Tue Apr 17, 2012 3:07pm EDT

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* Move to seize control of YPF stirs nationalist sentiment

* Crisis-weary Argentines wary of big business, finance

* Move could strengthen President Fernandez politically

By Helen Popper and Hilary Burke

BUENOS AIRES, April 17 (Reuters) - Argentina's drive to seize control of leading energy company YPF from Spain's Repsol may have outraged European trade partners and foreign investors, but many ordinary citizens hailed it as virtually heroic.

The move by combative President Cristina Fernandez appealed to Argentines who are critical about the vagaries of global finance and the controversial privatizations of the 1990s - a decade remembered for rampant corruption and factory closures in Latin America's No. 3 economy.

Fernandez loyalists pasted "Thank You Cristina" posters on government buildings in the capital Buenos Aires and supporters of the expropriation drive praised the president's boldness.

"It's about recovering what's ours," said Julio Olaz, a passerby in downtown Buenos Aires. "We need to get together and make sure Argentina belongs to Argentina and not to foreigners."

The takeover move could help Fernandez regain the political initiative after a series of unpopular policy moves and a corruption probe involving her vice president that have eroded her approval ratings since her landslide re-election in October last year.

Fernandez, faced with a widening energy shortfall as Argentina's fuel import bill surges, says her only concern is protecting the national interest by guaranteeing future energy supplies and righting the wrongs of the free-market policies widely blamed for precipitating a sharp economic crisis and debt default in 2001/02.

"Companies that operate in Argentina, even when their shareholders are foreign, are Argentine companies. Don't anyone forget that," the fiery Fernandez said on Monday, standing beside an image depicting famous first lady Evita Peron, to whom fellow Peronist Fernandez is sometimes compared.

Argentina's move on YPF , which was fully state-owned for 70 years before its privatization, is thought to be one of the biggest takeovers in the natural resources field since the seizure of Russia's Yukos oil giant a decade ago.

But it follows a steady trend toward resource nationalism in commodities-rich Latin American countries governed by leftists such as President Hugo Chavez of Venezuela and Bolivian President Evo Morales, both close allies of Fernandez.

Chavez applauded her move and rejected European "threats and efforts at intimidation."

Fernandez, who started her political career in an oil-rich Patagonian province, has gradually tightened state control over the economy since she was elected to succeed her late husband, Nestor Kirchner, in 2007.

At the height of the global financial crisis, she shook markets with a nationalization of some $30 billion in private pension funds. At around the same time, she renationalized airline Aerolineas Argentinas, which had also been privatized in the 1990s.

Both measures were popular and won broad support from Argentina's mainly left-leaning opposition in Congress, which Fernandez controls, pointing to easy passage for the YPF expropriation bill despite criticism of Fernandez's approach from some rightist and centrist leaders.

"(Her) objectives are shared, but the expropriation will bring consequences that must be considered," said Oscar Aguad, a lawmaker from the opposition Radical party.

REGAIN INITIATIVE

But even as the move on YPF draws condemnation from some quarters, it may strengthen Fernandez's political capital at home.

The country's most-powerful trade union leader, Hugo Moyano, who has been at odds with the government over surging inflation and efforts to cap wage rises, praised Fernandez's plans.

"Despite the pain over the plundering of our resources during 20 years of occupation, we welcome the start of a new era," Moyano's CGT labor federation said in a statement.

Fernandez's Peronist party, which has dominated Argentine politics for seven decades, relies heavily on support from the country's mighty trade unions, explaining Fernandez's emphasis on protecting jobs and local industry whatever the cost to the country's reputation abroad.

Even before the condemnation over YPF, international patience with Argentina was wearing thin, partly due to waning sympathy over the 2001/02 crisis that plunged millions into poverty but also because of Fernandez's rule-breaking policies.

The International Monetary Fund has given the government an ultimatum to overhaul its widely discredited inflation data, and Washington recently suspended trade benefits because of the Argentina's failure to pay two compensation awards.

The U.S. State Department said it was tracking developments related to YPF.

But with YPF's seizure winning broad support at home, Fernandez is unlikely to take a softer line.

"It's the best news we've had of late," Alicia Muzio, a Fernandez supporter, told Reuters Television. "Together with the nationalization of the pension funds, water and post services and Aerolineas, this is excellent news."

Political analyst Graciela Romer said while some leftist supporters back the oil firm's renationalization on ideological grounds, most voters approve because they think the free-market reforms of the 1990s failed so spectacularly.

"They left societies much poorer, with greater inequality. And that's why people turned to the state again, it's less ideological than it is pragmatic," Romer said. "They see this as a possible way to improve people's quality of life."

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Comments (2)
Kyung wrote:
The USA should do the same. Why should US citizens and the nation not benefit from the largest liquid natural gas supply in the world.
If companies want to manufacture using natural resources of the United States, then the manufacturing should also be done in the United States using the explosively growing supply of young asian and latino US workers.

Apr 17, 2012 3:50pm EDT  --  Report as abuse
Bobonobobo wrote:
Kyung
I agree with you.
The greed of the Oil industry and the rich have no boundaries, It’s time to put an end to it.
The oil and gas under our feet should benefit the people not the Vampire class.
I have no interest in supporting a system that makes life hell for the masses so a few can live like kings. FK em!

Apr 17, 2012 8:49pm EDT  --  Report as abuse
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