Published: April 26, 2012
BUENOS AIRES — President Cristina Fernández de Kirchner ofArgentina has incurred the wrath of the European Union by expropriating a controlling stake in YPF S.A., the oil and gas company owned by the Spanish energy giant Repsol, prompting retaliatory salvos in a budding trans-Atlantic trade war.
But for many Argentines, the nationalization does not go far enough.
“They should expropriate 100 percent, not just a part of it,” said Fernando Solanas, a congressman and filmmaker who belongs to an opposition party. “Oil is a public interest.”
In seizing control of YPF, Mrs. Kirchner has adroitly shifted attention away from her country’s soaring inflation, capital flight and her own falling approval ratings, focusing instead on a longstanding subject of resentment here: the market-oriented policies of the 1990s, which preceded a severe economic crisis at the start of the last decade.
The nationalization has been so warmly received here that Argentina’s Senate voted 63 to 3 early Thursday to take control of YPF, the country’s leading energy company, during a lengthy special session in which most senators used their allotted time to laud Mrs. Kirchner’s initiative. Some members of the political opposition from oil and gas-producing provinces came close to tears expressing gratitude for the measure. The expropriation bill will be taken up on May 3 by Argentina’s lower house of Congress, where it is also expected to pass by a large margin.
Even Carlos Menem, the former president who oversaw the start of YPF’s privatization in 1992, now supports the takeover. “The scenario has changed,” said Mr. Menem, now a senator.
To critics here and abroad, the nationalization — and the readiness of many Argentines to invite a clash with Spain, one of their nation’s largest trading partners — is the kind of step that has made Argentina seem like a “truant of economic management,” in the words of Walter Molano, an American financial expert.
Indeed, some here contend that Argentina has gone to the dogs, literally. So many nervous citizens have taken their money out of the country that Argentina’s tax agency now uses Labrador retrievers trained to detect the ink used to print dollar bills in an effort to stanch capital flight at the airports, ferry terminal and bus terminal in Buenos Aires.
“It’s a marvel to watch them,” Ariel Viola, a tax agent at the Buquebus terminal, where ferries travel to Uruguay, said of the dogs. “They’re incredibly effective. They’ve smelled out millions of dollars travelers were attempting to smuggle.”
Capital flight accelerated to $22 billion in 2011 as fears spread over soaring inflation. Unofficial measures suggest that annual inflation is between 20 percent and 25 percent. But the authorities have fined researchers for disseminating such figures, and the official estimate stands at 9.8 percent.
Dollar-sniffing dogs and fines for publishing statistics might point to an economy in crisis. But Argentina’s is growing robustly, albeit at a slower pace than in recent years. A decade-long recovery has given Mrs. Kirchner broad support to pursue nationalist policies that sometimes perplex — and enrage — foreign banks, companies and governments, not to mention some Argentines who view her moves as a return to the protectionism that long hobbled the economy.
Riding an export boom for commodities like soybeans, Argentina’s economy grew at an average rate of 7.7 percent from 2004 to 2010, almost twice the average annual growth of 4.3 percent in Chile, a country often cited as a model for economic policies, over the same period.
Some controversy also swirls over the way Argentina officially measures economic growth, which the government said reached 9.2 percent in 2011. But even the I.M.F. sees Argentina growing 4.2 percent this year, a rate outstripping the 3 percent growth foreseen for Brazil, the region’s economic powerhouse.
Argentina’s postcollapse boom underscores the shifting fortunes on both sides of the Atlantic. Thousands of young Spanish emigrants have recently made their way to Buenos Aires; in the hipster restaurants of the city’s Palermo district, Spanish accents are heard among the wait staff and bartenders.
After Mrs. Kirchner was elected in 2007, succeeding her husband, Néstor Kirchner, as president, she increased social spending on programs like the “universal allocation per child,” which provides poor families with monthly cash stipends.
These programs, along with other antipoverty initiatives, reduced inequality, helping Mrs. Kirchner cruise to re-election in 2011. At the same time, the buying power of Argentines soared as incomes climbed and the government maintained controls on energy prices.
Meanwhile, YPF and other oil companies, wary of investing in a country where low energy prices curb profitability, limited spending that could have lifted energy production. The result: Argentina went from being an energy exporter to importing fuel from countries as far away as Qatar.
This reliance on foreign energy sources grew acute in the past year. The authorities now struggle with a $3 billion energy deficit to meet domestic demand for oil and natural gas, according to Esteban Fernández Medrano, an independent economist.
In addition to giving the government more control over Argentina’s energy industry, seizing YPF from Repsol also allows Mrs. Kirchner to tap into lingering bitterness over the policies that allowed many state companies to be sold more than a decade ago to private investors.
This sentiment, described as “anti-noventista” (roughly “anti-1990s”), is symbolized by the rise of La Cámpora, a nationalist youth organization led by Mrs. Kirchner’s 34-year-old son, Máximo. Members of La Cámpora now hold supervisory or senior management positions in nationalized companies like YPF and the state airline.
But the nation is also sharply divided politically, as symbolized by Mrs. Kirchner’s clashes with two leading newspapers, Clarín and La Nación, and her strengthening of an array of pro-government media organizations. Some here question whether the nationalizations, which have already encompassed seven companies in the two Kirchner administrations, will stop at YPF.
One company in Mrs. Kirchner’s cross hairs is Papel Prensa, Argentina’s only newsprint manufacturer. A new law calling newsprint a “commodity of public interest” allows the government to increase its stake in Papel Prensa, potentially taking control of the company away from Clarín and La Nación.
“We’re extremely concerned by the government’s maneuvering on this issue,” said Eduardo Lomanto, La Nación’s director. “It fits within a systematic plan for the domination of the media.”
Broadly popular social policies, like keeping energy prices low, have pleased Mrs. Kirchner’s constituents. But they come with costs, as reflected in Argentina’s yawning energy imports and the nationalization of YPF.
Galloping inflation is yet another cost, and price increases are absorbed largely by people without the means to try slipping packages of dollars past the dogs at the ferry terminal.
Ramona González, 43, a maid who lives in Florencio Varela, a city on the southern outskirts of Buenos Aires, said she was well aware of the state takeover of YPF. “What is Argentine should be Argentine.”
But she has other concerns. “Inflation is what is worrying me the most, not YPF,” she said.