Argentina Tries To Nationalize Oil Company
MELISSA BLOCK, HOST:
And now, Spain has a problem across the pond, as well. On Monday, Argentina's President Cristina Fernandez de Kirchner announced plans to nationalize the country's largest oil company, YPF. It's currently owned by a Spanish company, Repsol, which calls the move an illegal and unjustifiable act. And if the nationalization goes forward, Repsol says it will seek more than $10 billion in compensation.
Simon Romero has been following this for The New York Times and he joins me now.
Thanks so much for being with us.
SIMON ROMERO: Thank you, Melissa. It's my pleasure.
BLOCK: And, Simon, how this nationalization would. How does Argentina assume control of a company that's a Spanish-run company?
ROMERO: Well, Argentina's President Cristina Fernandez de Kirchner is attempting to do this, you know, through Argentina's legal system. She's issued a bill and sent it to Congress. Congress is widely expected to approve that bill without any problems. And she's already dispatched two of her top aides to the oil company's headquarters in Buenos Aires, where they have already replaced the executives who were previously in charge.
This is a company that has operated in Argentina, of course, for many decades. It was founded back in the 1920s. It's employees are largely Argentine, so this is a nationalization that should be carried out without many problems on the physical front.
When it comes to the legal battle, of course, that's a different question because Repsol, of course, is requesting more than $10 billion in payment for its stake in YPF. And Argentina is saying that it won't pay that amount. So this is something that's likely to be settled in international arbitration.
BLOCK: President Kirchner has called this a recovery of sovereignty and control. Argentina, of course, a former Spanish colony. How is that playing out in the street? Is that the popular view among Argentineans?
ROMERO: It actually is quite popular on the street level in Argentina. Cristina Kirchner has already nationalized other parts of the economy. She's taken over the national airline and billions of dollars in pension funds, as well. And these moves are largely welcome. It's very interesting.
Argentina, of course, clashed with international investors back in the early part of the last decade when they defaulted on their foreign debt. Some analysts have said that it would bring about chaos. Denied, actually, and Argentina recovered quite well. It had one of the fastest-growing economies in Latin America over the past decade.
And Mrs. Kirchner was, in fact, re-elected by a wide margin last year. So, she has the political capital to go through with a move like this.
BLOCK: And as for the Spanish oil company, Repsol, what recourse do they have to try to keep this from going forward?
ROMERO: Well, they're attempting to put some political pressure on Argentina. Leaders in Spain's government have spoken out quite assertively against the nationalization, as have leaders in the European Union. But it's not clear what more they can do. It seems like a fait accompli at this point already. Of course, there's always the courts and there are international arbitration panels which Repsol can go to. And it's likely that lawyers will be working on this dispute for some years to come.
BLOCK: From the Spanish side of this equation, given the recession going on there, what are the repercussions of this, if the Argentinean nationalization does take place?
ROMERO: Well, it really is an illustration of how much fortunes have changed on both sides of the Atlantic since the 1990s. Back then, Spain was coming into the region, its companies were flush with cash, and they were buying assets in privatization auctions up and down the Americas. This is called La Reconsquista, The Reconquest, sort of a return of Spain to the region and a display of its newfound economic clout back then.
Now, of course, Spain is in crisis and this is illustration of that. And it's not clear how this is going to play out, but the Spanish government, the Spanish leaders, appear to be quite worried about it.
BLOCK: Simon Romero, things are much for talking with us.
ROMERO: Thank you, Melissa.
BLOCK: Simon Romero is The New York Times bureau chief in Rio de Janeiro. We were talking about Argentina's plan to nationalize that country's largest oil company.
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