YPF: To privatize or to nationalize… That is the Question!
19 Apr, 2012 16:02
While Argentineans went into “nationalistic flag-waving mode” on news the YPF oil company will be nationalized, and its former owner Repsol, Spain and the West went furious, there’re many hidden currents that led to the outcome.
What’s this really all about?Firstly, we should not be led astray by President Kirchner’s “nationalist” gestures, because in order to expropriate and nationalize YPF today, it first had to be privatized. That happened in 1992 under Carlos Menem’s Presidency – orchestrated by Finance Minister Domingo Cavallo – within the scope of Argentina’s capitulation to the Global Power Masters.At that time, in order to sell YPF to Spain’s Repsol Mr Menem had to bring on board Argentina’s eight oil-producing provinces, one of which is Santa Cruz Province down south in Patagonia whose Governor at the time was Néstor Kirchner and his wife (and present president) Cristina was Congressional Deputy for Santa Cruz. The Kirchners agreed to approve the predatory privatization of YPF if the Menem government paid Santa Cruz Province $654 million in back-logged YPF oil royalties. Part of Argentine public opinion has been pressing for a full-scale investigation into what the Kirchner’s did with those hundreds of millions dollars in YPF monies but – alas! – to no avail: the Argentine courts, local NGO’s, the local Ombudsman, Anti-Corruption Agency and mainstream media won’t go near the subject!The privatization of YPF coincided with the Kirchner’s super-meteoric-political careers, and their sudden, enormous personal wealth. Suspected partial whitewashing/recycling of those ill-gotten funds may have come at the end of 2007 when the Kirchner’s – in sync with Repsol who after years of exploiting YPF wanted to step back a bit because of the huge investment shale oil exploitation would require – arranged for 14.9% of YPF stock to be sold to local banker, financier and Kirchner associate Eduardo Eskenazi. In February 2008, a further 10.1% was acquired by Mr Eskenazi bringing his total holdings in YPF to 25%: a great deal for him (and his partners) as he’s been paying for his “investment” with on-going YPF profits. Britain ’s Spanish “amigos…”Many observers in Argentina and elsewhere link Repsol to the UK; more specifically with BP for which it may have acted as a front company in order to elegantly engineer its privatization in 1992. Clearly, it would have looked awful for Argentina’s crown flagship oil company YPF – a symbol inspiring nationalist fervor – to be sold off to “those British pirates usurping our Falkland/Malvinas Islands”! So, how convenient indeed for Britain’s Spanish amigos to step in; Spain is, after all, Argentina’s “mother country”, right? Clearly, Spain played a key geopolitical role in Argentina’s “privatization process”, no doubt reflecting traditional close links between the Spanish Bourbons and English Mountbattens. At the time, the “leading case” for privatizations was Spain’s flag-carrier airline Iberia “buying-up” Aerolineas Argentinas; a truly weird “privatization” considering Iberia was a state-owned company! Anyway, Iberia promptly destroyed Aerolineas Argentina by emptying it out of spares, turbine engines, aircraft and state-of-the-art flight simulators. A bad omen for YPF…Who really owns YPF?With Cristina Kirchner’s expropriation, YPF ownership will be: 26% (Argentina’s Federal Government); 25% (Argentina’s eight oil-producing provinces); 24.5% (local Eskenazi Financial Group closely linked to Kirchner’s entourage), 6.0% (Lazard Bank); 5.0% (Eton Park: Goldman Sachs, Minsich, Rosemberg); 2.0% (Werthein Group) and 6.5% (Repsol). Interestingly, that still leaves 44% in the hands of entities linked to international finance and aligned to their geopolitical appetites over Argentina,YPF: Repsol’s “Cash Cow”Kirchner’s official reason for expropriating YPF is Repsol’s stripping the company of its financial assets, lack of investment and insufficient production and exploration, thus forcing Argentina to import oil. The presidential decree refers to “Repsol’s predator strategy in its control of YPF which has had serious consequences for Argentina’s national economy, which tends to worsen if the Government does not take measures to control the Company”.That is true: Repsol did impose on YPF a “strategy of reducing production” generating for the first time in seventeen years an oil and gas trade deficit in 2011 of over $3 billion. In 1997, YPF accounted for 42% of Argentina’s oil and 35% gas supply; in 2011, that had fallen to 34% oil and 23% gas.As a Reuters dispatch dated 16th April further explains, Repsol made the “disastrousdecision” of merging with YPF in 1999 because in 2001/2 Argentina fell into full-scale financial collapse. That “ turned YPF from Repsol's crown jewel into an albatross, though it still provided substantial cash flows for reinvestment elsewhere in the world. Repsol's use of YPF as a cash cow has rankled the government and a partial sell-off of the company has not helped matters.” Thus, “Repsol preferred to milk the company for dividends rather than invest”.Nationalization: Why Now?As with all complex issues, this is not a clear-cut matter. However, weighing all the factors one can say that Ms Kirchner’s decision to nationalize and expropriate YPF is the right decision (because Argentina does need to exert sovereign control over its oil reserves and revenues), taken by the wrong people (because the Kirchner administration are specifically accountable for aiding the catastrophic and fraudulent privatization of YPF to Repsol twenty years ago, for which they received very handsome sums of money), and for the wrong reasons (Kirchner needs to access YPF cash and collateral so that Argentina can continue servicing its increasingly unpayable sovereign debt, which continues to balloon thus placing Argentina under growing Global Money Power control). Bowing to mega-banker demands, rather than making a full investigation into Argentina’s sovereign debt – rooted in the illegal military-civilian regime that usurped power from 1976 to 1983 a large chunk of which can be declared “Odious Debt” under international law – the Kirchners prefer to pay and pay. As funds dried up, they first nationalized Pension Funds in 2008 and since then increasingly use Central Bank Reserves; again, two sovereign measures that are right, taken by the wrong people and for the wrong reasons.Playing with Fire?What Cristina Kirchner and her supporters seem to forget is that if you mess around with the UK, US, and Europe over oil that can get you into a whole lot of trouble. Lately, she’s raised her shrill voice over illegal UK exploitation of Falkland/Malvinas Island oil; now she’s nationalized YPF. All, at a time when the Western Powers have made very clear their decision to fully militarize their oil control and access strategies worldwide (ask Iraq, Libya, Afghanistan or Iran…). At the same time, however, Ms Kirchner sends the UK and the Global Power Masters loud and strong signals that Argentina is fully unarmed and would never even dream of having a strong dissuasive military: music to British, American and European ears!! So… either she’s extremely naïve or… might she be playing a much more subtle role within a grander Global Power Elite strategy, that always looks for “excuses” to militarily intervene wherever there are oil resources? Adrian Salbuchi for RTAdrian Salbuchi is a political analyst, author, speaker and radio/TV commentator in Argentina. www.asalbuchi.com.arDisclaimer: The views and opinions expressed in the story are solely those of the author and do not necessarily represent those of RT.