¡Exprópiese! Let's follow the kleptocracy's takeover of YPF

[Cutlass]

Related blog post:

What’s the Matter with Argentina? http://whynationsfail.com/blog/2012/4/20/whats-the-matter-with-argentina.html

One hundred years ago Argentina was one of the richest countries in the world. For fifty years it rode a wave of favorable market opportunities and experienced one of the most successful periods of extractive growth in world history (sharing these honors with the Soviet Union and contemporary China or Sinagpore).

But extractive growth can’t last and in Argentina it didn’t. When you have a combination of extractive political institutions but somewhat inclusive economic institutions as Argentina did (and China does now) there are two ways to go, but only one leads to sustained economic growth. You can open the political system and try to move towards an inclusive society, or you can go in reverse and clamp down on the inclusivity in economic institutions giving up prosperity for power.

Argentina did the latter. Around the time of the First World War the traditional elites in Argentina made hesitant steps towards opening the political system, but they quickly decided they did not want to run the risk of losing power. In 1930 came the first military coup. Opening the political system was off the table. Then came a series of coups, and the one in 1943 brought a military officer named Juan Domingo Perón to power as Minister of Labor. Perón used this position to build an extraordinary political machine which has dominated Argentina politics more or less ever since. There is only one effective political party today in Argentina, the Peronists (official name: Partido Justicialista). The Peronists were not the traditional elites. Quite the contrary. But they seized control of the society and its economic institutions, and have been every bit as extractive as the traditional elites.

...

Insecure property rights are actually a well known phenomenon in Argentina. Grabbing the oil company is actually small potatoes compared to “El Corralito” in 2001 when the government effectively expropriated 75% of people’s savings in banks (as we discuss in Chapter 13 of Why Nations Fail).

The failure to make the transition towards inclusive economic institutions condemned Argentina to a century of economic stagnation.

 

[Takhisis]

Unsurprisingly, the infamous 1989-99 President Menem has announced he'll be voting for the renationalisation of the company on the grounds that 'times have changed' and that Repsol have taken too much money out of Argentina.
The fact that they've done this unchecked since 1999, 9 years into the Kirchner administration by now, is largely obviated by the same officials (including the Presidentess) who've suddenly forgotten how they themselves were praising the YPF management as national heros until late last year.

And, strangely enough, this has only come as Vice-President Amado Boudou (another turncoat extraordinaire like Menem and the Kirchners) has come under investigation for his performance as Economy Minister when he stepped in on a printing house's bankruptcy process and acquired the company through nominees, and then said company was awarded contracts without following proper procedure (tender/procurement laws are rather strict here) for nothing less than printing millions of 100-peso bills!

How is 'inhabitant of the Nation' defined, and does YPF qualify?

Any person recognised as such. According to the Civil Code, a 'person' is either a human being (ANY human being) or any society (commercial or otherwise) properly registered. So, if the company is registered in Argentina (which it is) all Argentine laws apply. just by the company itself 'inhabiting', so to speak, the national territory.

This seems to suggest that the government can expropriate property for public utility, but only under some particular conditions. What would be required to make this move 'qualified by law'?

First of all, there has to be a law. Sanctioned by Congress, promulgated by the Executive, and then published in the official Bulletin. Which wouldn't take place until at least May but all the Repsol executives are being kicked out of their offices by the government's 'interventor'. Then, you have to agree on a price with the owner.

• If a price is agreed, then it goes on to the sales, transfers, etc. of all being set up and then operated on.
• If a price is not agreed on by both parties, it is submitted to arbitration, appointing judges, etc. etc., a lengthy process.

It's after paying, then and only then can the state assume control of the company and/or property expropriated.

However, by naming an interventor to 'temporarily' displace the shareholder-appointed directors with state-appointed ones, most of the above has in effect been voided. The government is already in control of the company without paying a single peso, against the resistance of its owners and against its own laws.
Also, the payment must be done in cash unless the owners accept taking any other form of payment. Who knows what they'll be paid with?
And Minister De Vido is already hinting that there's better future partners out there.

Out of curiosity, how corrupt is Argentina compared to, say, Uruguay or Chile? How about Brazil, as well?

I'm under the impression that Chile and Uruguay are among the least corrupt countries in Latin America, roughly on par with Europe or the US, while Argentina has a far higher level of corruption. Given that all three countries have similar standards of living and they all emerged from military dictatorships at similar times, why did Argentina come out so differently? And what's up with all the personality politics there?

Argentina is much more corrupt than the surrounding countries except Bolivia and Paraguay.

A weaker Spain is good for us independentists. Well done argentinian kleptocrats.

But you're garnering international support! From the Yanks and stuff. Maybe we could do a trade-off: Spain gets Repsol back but gives away Catalunya and the Catalans teach the AFA how to make Messi perform.

There's a leap of logic here which I'm not at all sure is self-evident.

I don't think anyone can understand it unless they've lived under such a system.

Related blog post:

What’s the Matter with Argentina? http://whynationsfail.com/blog/2012/4/20/whats-the-matter-with-argentina.html

Viveza brought down the nation.

 

[innonimatu]

First things first: You have been presented with evidence that the people in charge of Argentina today are still the same "neoliberals" who you demonize. You have been shown that the Kirchner couple supported the privatizations, and that the President who conduced the privatizations, Menem, is an ally of Christina. As for corruption charges, it's almost unbelievable you ask them. It's pretty much public knowledge, even among their supporters, that the K couple is hopelessly corrupt. Their official income statement declares an 8-fold increase in their fortune since 2003, when Néstor became president, despite the fact that their salary as presidents is just 3.9 thousand dollars per month. And of course the 8-fold increase is what they declare; Néstor never accounted for the "pittance" of 1 billion dollars that "disappeared" during his term as governor of Santa Cruz.

But Luiz, I never made any argument that they were not corrupt. I actually said that I can believe they are. I only claimed that the economic policies of argentinian governments under them have been objectively different from those of the 80s and 90s. Merely saying, or even proving,that they have enriched themselves illegally would only be relevant as a reply if you could demonstrate that they were enriching themselves by taking bribes in exchange for giving away state assets.
It is a sad observation this I going to make, but if they merely got themselves a few tens of millions over a decade they've been positively tame even by western (European/US) standards. What I would like to know is how this wealth was obtained. Their governments have not sold off state assets, that I know of. They have not been recently involved in any infamous big construction projects with hundreds of millions in kickbacks. Money being unaccountable in state budgets is, unfortunately, all too common - need we mention the pallets of billions of dollars that US government sent to Iraq to go missing? The unaudited huge "black budgets" of the US government? The many cases of mismanagement and corruption in all western european countries going into the hundreds of billions? If we are going to have any productive discussion about corruption in Argentina we need to discuss the specific cases of corruption and amounts involved, known or suspected. Unfortunately judging the "good" and the "bad" has become a comparative exercise where people must seek the lesser evil....

Unless you are willing to discus relevant specific cases of corruption I must interpret any further insistence on the "they are corrupt" argument as an attempted diversion from the substance of this debate, which is about economic policies undertaken by governments, in particular Argentina's move to nationalize a controlling share on its largest (and originally state-owned) oil and gas company.

Now lets talk economics. You seem to be fascinated by Argentina's robust growth since their collapse. I see nothing fascinating. Their economy contracted 0.8% in 2000, 4,5% in 2001 and a horrifying 11% in 2002, with a total composed effect of a 17% drop in GDP in just 3 years. This means that the economy would have to grow very fast for several years just to get back on trend. And that's what usually happens following an economic collapse. The utilization of Argentine industry in 2002 was around 50%. Getting back to 60% would already mean a growth in industrial output of 20%.

I am indeed fascinated, because by 2000/1 almost everyone was predicting that the sky would fall on Argentina if they dared end their peg and default on debt. The opposite happened: they quickly recovered from a crisis which had kept their economy depressed for a number of years before. The definition of stupidity, I've once heard, is doing the same thing over and over again expecting a different outcome. Well, the argentinians had by then been stupid for a number of years, Then they changed their policies, almost everyone yelled at them that they'd be ruined... and they instead got their economy back in the tracks.

Economic systems are not deterministic elastic solids that bounce up and down at fixed intervals of time and with fixed dislocations. They're dynamic unpredictable systems that can keep sinking for decades, keep rising for decades, keep bouncing up and down, fall down and keep falling for many years, fall down and stagnate, or recover immediately... the key idea here is that the outcome will depend on the situation and policy choices made during each crisis in response to that specific situation. And in this case if Argentina had not told its creditors to shove it it would not have recovered. Every prediction by the international institutions then busy advising them said so, predicting at best a modest and protracted recovery. They overturned the table, changed the rules and and beat them all.

Products that Argentina export, such as oil, soy and beef, all gained a lot of value vis-a-vis the manufactures they import, which fueled their boom. Now lets see if the Argentine case was exceptional or particularly strong[...]

Luiz, have you researched before posting? Argentina imports oil. I've said so, and you can check it. And its oil production has been falling because YPF has been sending its operating profits out of the country as dividends, instead of reinvesting to increase production.
Angola and any other nations largely dependent on oil exports are not at all comparable to Argentina. Check the numbers for commodity exports and for industrial and services exports, conveniently available in the same source I linked to above. You'll find that describing Argentina as an "resource exporting country" is a mischaracterization.

 

[luiz]

I'll address the rest of your post later.

As for oil:
No, Argetina's net balance of oil was positive throughout the last decade, that is, they exported more oil products (in US dollars) than they imported. Imports have risen sharply in the last years, which is one of the reasons for the takeover of YPF. They are concerned that there will be a net deficit, But throughout the 00's Argentina accumulated billions of dollars in surpluses from oil exports.
Check:
http://www.indexmundi.com/argentina/oil_exports.html
http://www.indexmundi.com/argentina/oil_imports.html

I have many flaws, but I am not a sloppy researcher on this sort of thing!

And of course, oil was only one of the commodities whose price soared and they made billions with. Soybeans, beef, wheat and many other raw materials had skyrocketing prices and Argentina just surfed the wave. Not unlike Peru, to give an examplo of a non-oil exporting nation. But Peru has much better macroeconomic policies.

 

[innonimatu]

I'll address the rest of your post later.

As for oil:
No, Argetina's net balance of oil was positive throughout the last decade, that is, they exported more oil products (in US dollars) than they imported. Imports have risen sharply in the last years, which is one of the reasons for the takeover of YPF. They are concerned that there will be a net deficit, But throughout the 00's Argentina accumulated billions of dollars in surpluses from oil exports.
Check:
http://www.indexmundi.com/argentina/oil_exports.html
http://www.indexmundi.com/argentina/oil_imports.html

I have many flaws, but I am not a sloppy researcher on this sort of thing!

And of course, oil was only one of the commodities whose price soared and they made billions with. Soybeans, beef, wheat and many other raw materials had skyrocketing prices and Argentina just surfed the wave. Not unlike Peru, to give an examplo of a non-oil exporting nation. But Peru has much better macroeconomic policies.

You are correct about the oil balance of trade. That's what I get for not taking note of the values and repeating what I recalled from the previous day! I was recalling the fuel exports and imports which I had seen as as a percentage of total exports and imports, and thinking them to be absolute numbers in US$ billion. Because Argentina exports more than it imports the absolute values had not yet crossed over into negative territory in 2011.

And you are, I must add, correct about Argentina having consistently been a large commodities exporter and having benefited from recent high prices. Its commercial balance in goods has been largely positive except for a few years in the 90s. It's not comparable to big oil-exporting countries which have run huge surpluses on a single commodity and benefited disproportionately from recent high oil prices, but high demand for other commodities has helped Argentina recover over the past decade.

But the thing is: even that recent big positive goods trade balance has been being drained by the necessity to serve the remaining external debt (they did only a partial default) and by the profits from FDI being taken out of the country. If they don't do something fast they'll cross over to a negative balance of payments again.

Putting together the problems with scaling up the oil production, the looming balance of payments trouble (given the consequences of running deficits in the 90s they should be even more paranoid than the germans!), and the fact that YPF was by far the largest drain on capital through profit remittances, what were they supposed to do. Retaking control over the oil company (as every other country exporting country has done anyway) is the obvious immediate counter to those problems. Far better that trying to limit spending abroad on, for example, book imports! Thus, I maintain that this is sound economic policy, the alternatives being to:
- clamp down on imports through tariffs and regulations;
- further defaults on debt held by foreigners - making a habit of that may not be the best option.
- stricter capital flows regulations;
- engineer an internal depression so as to cut people's income and force them to import less (what the EU is prescribing to some of its constituents) - makes little sense because they already have a goods surplus, their main problem is with capital flows, not trade on goods.

 

[Takhisis]

Well, just as hooligan firms associated with the cocaine trade are being paid by the government to display flags at stadia against 'traitorous' newspapers, I guess everyone is a traitor now when they don't think like the government does. The government is degrading into Fascism even ore quickly than I've expected.

You ask what the government should do. The answer is simple: stop stealing. Stop diverting billions in 'subsidies' that diverted in bridges to nowhere, stop allowing officials to sell public lands to themselves or their relatives and then resell them for ten times the original price, stop buying votes by placing entire populations on the dole, stop bankrolling hoolingan gangs to carry out 'demonstrations' in the government's 'favour', etc. etc.
Then you propose to

- clamp down on imports through tariffs and regulations;​

Already being done, not just the books. All types of electronics, vehicles, medicinal drugs are already clamped down on. Hospitals are running out of meds.

- further defaults on debt held by foreigners - making a habit of that may not be the best option.​

It isn't the best option. Of course, it can always be whipped up in a stir of fervent patriotism.

- stricter capital flows regulations;​

Such as, for example, outright banning Argentine citizens from withdrawing money from ATMs unless they do it from offshore bank accounts in foreign currency. Already enacted.
Ah, and also handpicking which companies are allowed to pay dividends, dictating where, when and how much. Strangely enough, all the YPF owners (not just Repsol) were allowed to do this until recently, and their balance sheets were always approved without comment.
And banning people from buying foreign currency. Also already enacted.

- engineer an internal depression so as to cut people's income and force them to import less (what the EU is prescribing to some of its constituents)​

Does 20-30% (according to the sector) annual inflation combined with sustained devaluation do the trick for reducing imports?

Argentina is heavily -if not near-completely- dependent on its wheat, beef and soy exports, any bad harvest, hail, flood, drought, whatever brings new chaos to the country. Strangely enough, nothing's been done by this government except up taxes and retentions and continually use propaganda claiming tht all the farmers have to do is throw a few seeds and let the plants grow (the Presidentess herself has claimed soy is 'scientifically a weed') or sit down and watch their cows fatten up. Meanwhile, the country's milch herds are being slaughtered. Something's not been done right.

 

[innonimatu]

You ask what the government should do. The answer is simple: stop stealing. Stop diverting billions in 'subsidies' that diverted in bridges to nowhere, stop allowing officials to sell public lands to themselves or their relatives and then resell them for ten times the original price, stop buying votes by placing entire populations on the dole, stop bankrolling hoolingan gangs to carry out 'demonstrations' in the government's 'favour', etc. etc.

And the impact of any such things that may be happening on the country's balance of payments is?
The only things I can see having an impact are corrupt officials sending their ill-gotten profits abroad (catching that is one more reason for imposing strict capital controls) and cutting that "dole" for the poor, supposing the poor spend it in imported products - but somehow I doubt that is so. Populations on the dole tend to spend that money locally on essential products. But I guess you could in alternative draft a "modest proposal" to dispose of them in a more profitable fashion.

- clamp down on imports through tariffs and regulations;​

Already being done, not just the books. All types of electronics, vehicles, medicinal drugs are already clamped down on. Hospitals are running out of meds.

- further defaults on debt held by foreigners - making a habit of that may not be the best option.​

It isn't the best option. Of course, it can always be whipped up in a stir of fervent patriotism.

- stricter capital flows regulations;​

Such as, for example, outright banning Argentine citizens from withdrawing money from ATMs unless they do it from offshore bank accounts in foreign currency. Already enacted.
Ah, and also handpicking which companies are allowed to pay dividends, dictating where, when and how much. Strangely enough, all the YPF owners (not just Repsol) were allowed to do this until recently, and their balance sheets were always approved without comment.
And banning people from buying foreign currency. Also already enacted.

- engineer an internal depression so as to cut people's income and force them to import less (what the EU is prescribing to some of its constituents)​

Does 20-30% (according to the sector) annual inflation combined with sustained devaluation do the trick for reducing imports?

Argentina is heavily -if not near-completely- dependent on its wheat, beef and soy exports, any bad harvest, hail, flood, drought, whatever brings new chaos to the country.

Well then, pick your poison. AS I said, you'd have to pick one or a combination of those policies in order to sort out the country's finances. I know none are pleasant, but unless you can show that Argentina could easily have a sustainable positive balance of payments without any of those you can't evade making a choice.
Or, actually, you can. Just sit in denial and let things get worse and worse.

Strangely enough, nothing's been done by this government except up taxes and retentions and continually use propaganda claiming tht all the farmers have to do is throw a few seeds and let the plants grow (the Presidentess herself has claimed soy is 'scientifically a weed') or sit down and watch their cows fatten up. Meanwhile, the country's milch herds are being slaughtered. Something's not been done right.

That complaint seems to me rather unfair. The government is doing something: right now, for example, it's taking over control of the country's oil company with the stated goal of reinvesting 90% of its operating profits in further exploration and production, instead of the 10% or so that its private owners were allotting to that purpose. And... you complained about that too! So, what gives? The government is bad if it allows agricultural commodities to remain the sole export; and it is bad if it tries to tax those current exports in order to get funding for investments in different areas? And it is bad if it tries to reinforce investment in energy production?

 

[Takhisis]

And the impact of any such things that may be happening on the country's balance of payments is?
The only things I can see having an impact are corrupt officials sending their ill-gotten profits abroad (catching that is one more reason for imposing strict capital controls) and cutting that "dole" for the poor, supposing the poor spend it in imported products - but somehow I doubt that is so. Populations on the dole tend to spend that money locally on essential products. But I guess you could in alternative draft a "modest proposal" to dispose of them in a more profitable fashion.

The impact of such things is literally 75 billion pesos per annum and rising in transport subsidies, just to start. Plus over a billion in three years for football, etc. etc.… keep counting.

The 'essential products', as you can find out by visiting any shantytown, are usually a DirecTV sat dish and the swankiest clothes you can find.

Those corrupt officials you yourself mention are the Presidentess, her ministers and Secretaries, and of course her Vice-President who's been caught red-handed fixing a deal to take charge of the firm printing official currency through nominees? The same people who've had control of Aerolíneas Argentinas and have doubled the subsidy expenditure while at the same time service is as crappy as ever?

Well then, pick your poison. AS I said, you'd have to pick one or a combination of those policies in order to sort out the country's finances. I know none are pleasant, but unless you can show that Argentina could easily have a sustainable positive balance of payments without any of those you can't evade making a choice.
Or, actually, you can. Just sit in denial and let things get worse and worse.

Which is what the government does. For example, by hand-drawing statistics that show inflation to be half or even a third of what it really is, applying the same procedure to infection and disease rates, and turning a blind eye on the current crime wave, while threatening everyone with a new terrorism law that proclaims that anyone who publishes news that might 'scare the people' is prosecutable for terrorism.

That complaint seems to me rather unfair. The government is doing something: right now, for example, it's taking over control of the country's oil company with the stated goal of reinvesting 90% of its operating profits in further exploration and production, instead of the 10% or so that its private owners were allotting to that purpose. And... you complained about that too! So, what gives? The government is bad if it allows agricultural commodities to remain the sole export; and it is bad if it tries to tax those current exports in order to get funding for investments in different areas? And it is bad if it tries to reinforce investment in energy production?

Stated goal… Argentine stated goals aren't worth a fig. We were promised, when football was 'nationalised' in mid-2009, that it was a way to generate revenue for the state because there would be a gigantic windfall of advertising money coming that way, and that anything left over from this would be assigned to Olympic sports. This never came true and football matches are now on state TV and commentary is interspersed with assertions on the greatness of Néstor, the happiness of the people and the greatness of the nation, and announcements of when the next official speech will override all media and stop all normal programmes.
We've also been promised 20 billion dollars in Chinese investments (2004) and a 'bullet train' from Buenos Aires to Córdoba (2006/2008), both of which failed to materialise. How many more broken promises do you need to realise this government lies through their teeth and accomplishes nothing?

 

[Josu]

Fortunately the actual government (right-winged) and the EU are responding firmly
Not as the preceding government (left-winged) who would have made nothing in this case

Dramatization of what happened:
Mariano Rajoy: Cristina, you are a bad girl, very bad girl!! Don't do it again.

They passed about 5 days until EU reacted
Even USA,alma mater of capitalism, has just refered to the act just as "negative event"
I think that we both have different idea of what a firm response is.

Spain has been caught with its pants down (Se ha quedado con el culo al aire) and USA's an EU's support has been limited and late.

On the other hand, I do not see the point on defending a company that has a reduced spanish capital and that declares to the treasury the about the 25% of what is supposed to because they have they money in tax havens

 

[Takhisis]

On the other hand, I do not see the point on defending a company that has a reduced spanish capital and that declares to the treasury the about the 25% of what is supposed to because they have they money in tax havens

Because a short-term way to look tough is to defend national interests abroad, just like Cameron idiotically upping a non-existing ante regarding the Falklands. That, just like this will, eventually cooled off.

 

[Josu]

Because a short-term way to look tough is to defend national interests abroad, just like Cameron idiotically upping a non-existing ante regarding the Falklands. That, just like this will, eventually cooled off.

Yes, deffending national interests is cool, I wonder why spanish government is not doing the same with several companies that are having a calvary in Morocco (URL in Spanish)

 

[gangleri2001]

Becase we're seeing a Green-March-like strategy being used against Spain: everyone knows that Spain is in deep *excrement*, so everyone uses this circumstance in their own favor. Good example of this is us, independentists, who are making huge political profit out of it.

 

[Takhisis]

Recommended reading for anyone with even a basic grasp of Spanish.

Also, a few of the concessions revoked in the last couple months have already been re-awarded to the intervened YPF.

 

[Takhisis]

Interview with Estela de Carlotto, officia/unofficial spokeswoman and part of the 'National Project' (Proyecto Nacional).

Ya en el postre, surge la expropiación de YPF: “Vendrán más. Ahora, las minerías. Pero eso no tiene nada que ver con las relaciones entre argentinos y españoles, que seguirán siendo buenas”.

(right at the end, the expropriation of YPF comes up: 'More is coming. Now, mining [companies]. But that has nothing to do with Argentine-Spanish relations, which will continue to be good'

Source.

This is great, the current administartion can't even begin to understand the differenc between ruling a place and owning it.

 

[innonimatu]

Also, a few of the concessions revoked in the last couple months have already been re-awarded to the intervened YPF.

No surprise there: if the state was going to award concessions it may as well do it to the company it now controls.

Interview with Estela de Carlotto, officia/unofficial spokeswoman and part of the 'National Project' (Proyecto Nacional).
Source.

This is great, the current administartion can't even begin to understand the differenc between ruling a place and owning it.

So the privatization back in 1999 was outright theft aided by corrupt politicians, those same politians remain in power (and that is the real danger), and the deal around that Eskenazi family stinks? No news also.

What may be interesting is analyzing in detail how the hole oil sector was managed since 1999. The quoted op mentions a dwindling share of YPF in total production and production problems by other firms. But it lacks detail. Do you have some lengthier account of the situation, and if possible of the process over these last few years? I'm genuinely curious about that.

And if Argentina is going after the mines, does that mean it'll step on Vale's toes? You know, that company which came out of that other big ruinous privatizations/theft/whatever (depends on who's commenting) in South America that happened at around the same time in Brazil? (except that the brazilians were smart enough to privatize their own industrial/resource behemoths in a way that at least kept control mostly within Brazil)

And, speaking of Brazil, you can easily find among brazilian economists/politicians (and this one with a history of helping "open up" Brazil's economy, I believe not even Luiz would find fault with him) support for Argentina's move to nationalize YPF. As he put it, and as I mentioned here before also, countries with positive trade balances do not need foreign investment, they already have too much capital and actually need to export capital, otherwise their currency will become overvalued and (internal debt inducing) consumer booms (and eventual busts) will result. The only kind of interesting FDI in those circumstances is that which brings in new technology not available locally.

Argentina's problem with capital is that between remittances and debt payments it still has a shaky capital accounts balance. But getting FDI to paper over problems with that balance was what sunk Argentina further during the late 90s (after the initial mismanagement of its currency, national budget and state assets). It was what "justified" the firesale of YPF and other assets.

 

[Takhisis]

No surprise there: if the state was going to award concessions it may as well do it to the company it now controls.

But it's not new concessions, it's the same ones, to the same company. It's what's known here as an 'apriete', i.e. a shakedown. Just to intimidate YPF and score cheap political points.

So the privatization back in 1999 was outright theft aided by corrupt politicians, those same politians remain in power (and that is the real danger), and the deal around that Eskenazi family stinks? No news also.

The Eskenazis were raised by the current misgovernment until at least september, the offensive only started in the summer when the government had to face a corruption scandal that put the vice-President on the line for taking control of Ciccone Calcográfica (a printing company) and then illegally (i.e. without public tender) awarding it the contract for the printing of all Argentien currency; there was also a train crash massacre with 51 dead and over 700 wounded which was just like YPF: a long time under private administration/concession,

It's always onwards to the next crusade, like the old kings of Sweden.

What may be interesting is analyzing in detail how the hole oil sector was managed since 1999. The quoted op mentions a dwindling share of YPF in total production and production problems by other firms. But it lacks detail. Do you have some lengthier account of the situation, and if possible of the process over these last few years? I'm genuinely curious about that.

In a nutshell: no. This government and the previous ones approved of any decisions by the company directors (they even had a state-appointed one) and approved and rubber-stamped all the balance sheets. Misteriously, they're suddenly evil. This (posted before) is a good starting point:

Culpar a la gestión de Repsol en YPF por la mayor crisis petrolera de toda nuestra historia es una simplificación tramposa: YPF representa sólo el 30% de la producción de gas y petróleo del país; y además, de las 14 empresas que lideran la producción del país, nueve (entre ellas, Petrobras, Total, Chevron, Enap, Tecpetrol) tuvieron pérdidas superiores o comparables a las de YPF.
To blame the Repsol management at YPF for the greatest oil crisis of all our history is a misleading simplifcation: YPF represents only 30% of the country's oil and gas production, and moreover, of the 14 companies heading the country's production, nine (between them, Petrobras, Total, Chevron, Enap, Tecpetrol) had losses that were larger than or comparable to those of YPF
(…)
¿por qué expropia al grupo Repsol y exime a los Eskenazi, siendo que el retiro de utilidades extraordinario -255%, en 2008, y 140%, en 2009- se produjo para que la familia Eskenazi pudiera pagar la compra del 25% de las acciones con las ganancias de la propia compañía? Además, es Sebastián Eskenazi quien manejó la compañía en estos años. El acuerdo societario firmado entre Repsol y Eskenazi en febrero de 2008 y los balances de la compañía que dan cuenta del vaciamiento fueron aprobados y llevan la firma del director del Estado en YPF, Santiago Carnero, actual miembro del directorio del Banco Central (¡qué peligro!), y de la síndica del Estado en YPF, Silvana Rosa Lagrosa, actual miembro de la Sigen (¡otro peligro!)
Why do you expropriate Repsol and exempt the Eskenazi, with the extraordinary withdrawal of utilities {dividends} -255% in 2008 and 140% in 2009- was done so that the Eskenazi family could pay for the purchase of 25% of the shares with the company's own earnings? Besides, it's been Sebastián Eskenazi who ran the company these years. The partnership agreement signed between Repsol and Eskenazi in February 2008 and the company balance sheets detailing the emptying of the company were approbed by and have the signature of the state's YPF director, Santiago Carnero, currently a member of the Central Bank Board (how dangerous!) and of the state's syndic in YPF, Silvana Rosa Lagrosa, currently a Sigen (general syndicature) member (another danger!)

So, the government approved of the Eskenazis buying in with future profits, said profits are shipped offshore to pay for the acquisition, and Repsol (not the Eskenazis) get their shares expropriated.

And if Argentina is going after the mines, does that mean it'll step on Vale's toes? You know, that company which came out of that other big ruinous privatizations/theft/whatever (depends on who's commenting) in South America that happened at around the same time in Brazil? (except that the brazilians were smart enough to privatize their own industrial/resource behemoths in a way that at least kept control mostly within Brazil)

Here we have Barrick Gold, not sure about Vale's involvement.

And, speaking of Brazil, you can easily find among brazilian economists/politicians (and this one with a history of helping "open up" Brazil's economy, I believe not even Luiz would find fault with him) support for Argentina's move to nationalize YPF. As he put it, and as I mentioned here before also, countries with positive trade balances do not need foreign investment, they already have too much capital and actually need to export capital, otherwise their currency will become overvalued and (internal debt inducing) consumer booms (and eventual busts) will result. The only kind of interesting FDI in those circumstances is that which brings in new technology not available locally.

We do not have a positive trade balance, or else we wouldn't be having to curtail imports from every single country and attempting such ridiculous things as a scheme to sell stuff to Angola.

Argentina's problem with capital is that between remittances and debt payments it still has a shaky capital accounts balance. But getting FDI to paper over problems with that balance was what sunk Argentina further during the late 90s (after the initial mismanagement of its currency, national budget and state assets). It was what "justified" the firesale of YPF and other assets.

That was pure wordplay. What justified the sale of YPF in the '90s was the bribes paid up front by 'investors', including the ones taken by a then-Governor known as Néstor Kirchner who sold off the ~4% stake the province of Santa Cruz had and placed the money in an offshore bank acount 'for the future'. The money's not been returned to the province yet.

 

[Josu]

Bolivia has expropriated Red Electrica Española
They have past more than 24 hours and Mr Rajoy is still missing and haven't said a word.
I suppose that still we can find people who thinks that his actuation is brilliant.
Or maybe it is Zapatero's fault

 

[luiz]

And if Argentina is going after the mines, does that mean it'll step on Vale's toes?

It wouldn't surprise me at all if they did. This government's policy has been to remain quiet while other South American countries did whatever the hell they pleased with Brazilian assets.

When Bolivia nationalized some refineries owned by Petrobras, a Brazilian state-owned company, the government here didn't do anything. They sent the army in, expelled Brazilian personnel on gunpoint, and the government didn't even protest or try to take the case to international arbitration.

Argentina has thrown the Mercosul's free-trade clauses down the sewer and imposed all sorts of restrictions on Brazilian goods. Did the government retaliate? Nope. Tried to take the case to the WTO? Nope. Made at least a formal protest? Nope.

What about Paraguay, that pariah state that supplies all Brazilian gangs with guns and drugs? We paid for Itaipu dam all by ourselves and they still get 50% of the electricity generation, which we buy under a pre-established price. When their president decided the price was too little, this government shockingly agreed and accepted a gigantic increase that directly affected the Brazilian consumer.

I could also add to the list Ecuador taking over construction sites operated by Brazilian companies, detaining Brazilian citizens and failing to honor contracts even with the Brazilian Development Bank, which is state-owned.

Basically the Brazilian government has quietly accepted all sorts of insults by our neighbors, which have costed the Brazilian taxpayer tens of billions of dollars. Supposedly it is all done to cement our "leadership position", in reality we became South America's b*tch.

You know, that company which came out of that other big ruinous privatizations/theft/whatever (depends on who's commenting) in South America that happened at around the same time in Brazil? (except that the brazilians were smart enough to privatize their own industrial/resource behemoths in a way that at least kept control mostly within Brazil)

Vale's privatization was so successful that now they pay in taxes more than they had in profits back in the state-owned days. Brazilian state-owned companies were very poorly run; they were essentially an infinite job source for second-level politicians. Look at Petrobras, every Workers' Party thug in the country has a job there.

And, speaking of Brazil, you can easily find among brazilian economists/politicians (and this one with a history of helping "open up" Brazil's economy, I believe not even Luiz would find fault with him) support for Argentina's move to nationalize YPF. As he put it, and as I mentioned here before also, countries with positive trade balances do not need foreign investment, they already have too much capital and actually need to export capital, otherwise their currency will become overvalued and (internal debt inducing) consumer booms (and eventual busts) will result. The only kind of interesting FDI in those circumstances is that which brings in new technology not available locally.

I find a lot of problems with Bresser. He was a minister of Sarney, for starters. And he is now deep into that "developmentalism" nonsense.

The overwhelming consensus on the Brazilian economic community is that Argentina shot its own foot, once again.

 

[innonimatu]

What about Paraguay, that pariah state that supplies all Brazilian gangs with guns and drugs? We paid for Itaipu dam all by ourselves and they still get 50% of the electricity generation, which we buy under a pre-established price. When their president decided the price was too little, this government shockingly agreed and accepted a gigantic increase that directly affected the Brazilian consumer.

Serves you right for not wiping them out back in the 1800s.

Basically the Brazilian government has quietly accepted all sorts of insults by our neighbors, which have costed the Brazilian taxpayer tens of billions of dollars. Supposedly it is all done to cement our "leadership position", in reality we became South America's b*tch.

Now, really, would protesting have done any good? That's part of the usual ebb and flow of risking investment in other countries: they're sovereign and can take it all if they want to. To prevent it... well, you have to get even more involved with their affairs, often not in a good way. Entangled. Should Brazil try to play the US's role, invading other countries or bribing its military and politicians to topple governments? And wouldn't that risk bringing the US down on it? They don't like competition.
It's better diplomacy to lose, where it is inevitable, with good grace that make enemies. And to cultivate good relations with your neighbors and yes, even give them stuff away, because that can be called later. Paraguay is getting a good deal? True, but that's also something they can't easily afford losing, brazilian influence to be called when and if it is really necessary...

For example: the US has been very active preparing Paraguay as a military base in South America... even though it never explained what enemies is had there. Turns out that Paraguay kicked them out, after its neighbors (obviously the only possible targeted enemies) pressured them to do it.

Vale's privatization was so successful that now they pay in taxes more than they had in profits back in the state-owned days. Brazilian state-owned companies were very poorly run; they were essentially an infinite job source for second-level politicians. Look at Petrobras, every Workers' Party thug in the country has a job there.

The commodity boom that succeeded the depletion of the cold-war era re-purposed infrastructure and stocks probably had something to do with that.

I find a lot of problems with Bresser. He was a minister of Sarney, for starters. And he is now deep into that "developmentalism" nonsense.

Why nonsense?

 

[luiz]

Serves you right for not wiping them out back in the 1800s.

I sadly agree; both Brazil and Paraguay would be far better off if Paraguay had simply been absorbed as a province of the Empire. We killed everybody and destroyed everything, so we might as well have taken responsibility for the whole damn thing. I suppose the Emperor was not keen on absorbing such wasteland, but if he knew how much that place would screw his country over in the next century, he would have done it.

Now, really, would protesting have done any good? That's part of the usual ebb and flow of risking investment in other countries: they're sovereign and can take it all if they want to. To prevent it... well, you have to get even more involved with their affairs, often not in a good way. Entangled. Should Brazil try to play the US's role, invading other countries or bribing its military and politicians to topple governments? And wouldn't that risk bringing the US down on it? They don't like competition.
It's better diplomacy to lose, where it is inevitable, with good grace that make enemies. And to cultivate good relations with your neighbors and yes, even give them stuff away, because that can be called later. Paraguay is getting a good deal? True, but that's also something they can't easily afford losing, brazilian influence to be called when and if it is really necessary...

For example: the US has been very active preparing Paraguay as a military base in South America... even though it never explained what enemies is had there. Turns out that Paraguay kicked them out, after its neighbors (obviously the only possible targeted enemies) pressured them to do it.

I think the very least they should have done is formally protest and, most importantly, shut down their access to cheap credit from the Brazilian Development Bank. For countries like Ecuador and Bolivia, that's a big deal. With Argentina, we can just retaliate by imposing similar barriers on their products.

I don't want an intervention of any sort (except in Paraguay, but that's another matter). What bugs me is that the government does nothing, in part out of ideological camaraderie with the fellows taking Brazilian assets and in part under the illusion that this sort of benevolence cements our "leadership position", which doesn't even exist.

The commodity boom that succeeded the depletion of the cold-war era re-purposed infrastructure and stocks probably had something to do with that.

That's very true, but if we compare the development of Vale and Petrobras, we see that Vale clearly outperformed their state-owned counterpart. The same is also true for CSN, Usiminas and other privatized companies.

State-owned companies here are really poorly run. In Petrobras virtually all their directors (maybe literally all) are politicians with zero experience in the oil business. Many mid-level managers are politicians as well. Hell, the former president was a Workers' Party politician from Bahia who had never seen a barrel of oil in his life. Of course results won't be great, or even good.

Why nonsense?

We tried that route and the results were less than formidable...