The government of Cristina Fernández de Kirchner has decided to declare 51 percent of the capital of YPF — a company whose majority shareholder is the Spanish oil firm Repsol — “of public interest and subject to expropriation.” This amounts to an economic declaration of hostility, which ought to be repudiated by international institutions, and challenged in the courts. The fact of the expropriation, threatened for months with the intention of undermining Repsol’s resistance and cheapening YPF’s shares, goes beyond a mere breakdown of the legal security one expects in a democratic country; it is an intentional betrayal of the agreement on reciprocal protection of investments signed by Spain and Argentina in November 1991, and initiates a period of grave uncertainty for Spanish companies in Argentina, and for all foreign investors there.
The particular arbitrariness of the decision stems not from a country’s right to obtain maximum profitability from its raw materials for the benefit of its citizens, but from the tortuous procedure with which the Fernández de Kirchner government has impelled Repsol YPF into a situation without any rational alternatives. YPF has scrupulously complied with all the financial, economic and labor-related terms established in its contract. There are no genuine reasons to justify the expropriation, and not even the drip-drip withdrawal of operating licenses that YPF has been suffering. If the Argentinean authorities are convinced that a different management of the country’s energy resources would be of greater utility for the citizens, the proper way to go about it is straightforward, transparent negotiation with the concessionary firm.
To declare 51 percent of YPF’s capital “subject to expropriation” goes beyond a legitimate claim on the country’s energy resources. The Argentinean government is appropriating — without setting a price or capital structure deal in place — the human and financial capital of a company, without explanations and by decree. This is the action, equivalent to plunder, which the international community must repudiate and sanction with measures proportionate to the harm done by the government in Buenos Aires. Recourse to the courts is the proper option for Repsol, but it must be coordinated with negotiation to conserve a substantial shareholding that would minimize the effects of the expropriation.
The Argentinean public must be aware that the expropriation of YPF has less to do with the preservation of the country’s petroleum resources, than with the effects of a misguided policy that has led to a negative energy balance for the country. It is not hard to predict that a YPF in the hands of the party clique governing Argentina will lose any possibility of making a profit, and become another sterile instrument of subsidies that will squander the country’s resources. The expropriation of YPF is a headlong rush into a dark place, which places Argentina beyond the pale of the international economic community.