“This is a hostile step by Argentina,” Said Spain’s Prime Minister
“Who cares!” would probably be the most common reaction of readers discovering the topic of this article. At first sight, few will worry about the Argentinean government expropriation of Spanish Repsol shares in YPF, Argentina’s national oil company. Yet, due to the delicate situation of the euro, the central role Spain is playing in the ongoing European financial crisis, and the sheer size of the companies involved, anyone in Europe and the USA should care. The fact is that another illegitimate theft by a South American state took place yesterday, April 16, 2012, and it may be the announcement of similar such steps in the near future. Argentina is endangering the euro, and indirectly, the American dollar.
activities until the ownership transfer is completed. Spain was fast to declare the move was illegitimate and that it will react harshly in the near future. “This is a hostile step by Argentina,” said Mariano Rajoy, the recently elected Spanish prime minister.
Populist Peronism Hits Again
The current Argentinean president belongs to the Peronist Party. So did her husband, who was the previous president. So were Isabel Peron and Juan Domingo Peron, another presidential couple of the 20thCentury. Nepotism is an intrinsic characteristic of Peronism. Juan Domingo Peron gave his name to this populist party, which eventually preceded—and some would say caused—the brutal military dictatorships that ruled Argentina off and on during the second half of the previous century.
Peronism is widely recognized as an authoritarian ideology; Peron has been often compared to fascist dictators and accused of demagoguery. His friendship with Italian Mussolini and Spanish Franco (he lived in Spain as an exile following a military revolt against him) contributed to this. Proclaiming himself the embodiment of nationality, he silenced dissent by accusing opponents of being unpatriotic; as such his government was only a civilian phase leading to Argentinean military dictatorships. Confiscation of property and nationalization of companies is not new to the Peronist Party. Following his rise to power in 1946, Peron subverted freedoms by nationalizing the broadcasting system, centralizing the workers’ unions under his control, and monopolizing the supply of newspaper print. Since then, Peronist candidates have won eight of the ten presidential elections that they have not been banned from participating in. Nationalizations are unpredictable; the most famous one took place in 2008, when air carrier Aerolineas Argentinas was nationalized, although through a legal purchase of shares by the state.
In this context, the actions of the actual president were expected. Argentina is facing—for years now—an energy crisis. This is an absurd, since the country has large reserves of oil and gas. It has the world’s third largest gas reserves, though it lacks the technology needed for its extraction (a few years from now, they will probably ask Repsol to return and extract it). Yet, Argentina has been unable to provide its own energy needs. The populist answer was clear: blame the foreigners and expropriate (let’s call this by its rightful name: “steal”) their company.
As claimed at the beginning, few would guess the importance of the companies involved. Even after reading this very schematic summary of the Argentinean reality, few would be brave enough to invest in the Argentinean economy. Thus, one cannot help but define Spaniards as the bravest people on earth, since they are the largest foreign investor in Argentina. Over the years, major Spanish corporations had invested major sums in their former colony. Spanish Telefonica— the third largest phone provider in the world—is active in Argentina (see Spain as Western China). Santander Group is a Spanish banking group and the 6th largest company in the world, operates banks in Argentina. The same goes for BBVA, the 7thlargest financial institution in the Western world. Overall, more than 400 Spanish companies have substantial investments in what turned out to be nothing more than a robbers den. Two large Spanish companies are involved in the Argentinean energy market: Gas Natural and Repsol. The first is still untouched, the other-which is the 15th largest petroleum refining company-was robbed yesterday by the Argentinean government.
Repsol Out! Graffiti in Buenos Aires, April 16, 2012 | In The Cross of Bethlehem II (see bottom) I expand on the use of graffiti by South American intelligence services in order to accomplish their masters’ political goals.
Argentine Hits the Euro
Spain itself is an unlikely giant, being the twelfth largest economy in the world. Yet, it is an economy in trouble, like much of Europe nowadays. In February 2012, Chinese Premier Wen Jiabao visited Europe and offered co-operation to help stabilize debt-ridden EU nations, but made no specific promise to invest in the proposed European bailout fund (see Spain as Western China). The visit was urgent, since credit-rating agency Moody’s had again downgraded Spain, Italy and Portugal. It also downgraded the credit outlook for France, the UK and Austria. Greece passed then a new package of severe cuts, and that resulted in ongoing riots in Athens. The USA is in deep financial problems itself, and thus in no position to help the EU. Last year, the European Union was the largest trading partner of China, with a trade worth 560bn euros. Hence, China became the best chance for the EU to get financial help; especially since China enjoys a surplus economy. Without the new fund, the weakest European economies would fail to inspire enough credibility to be able to sell their bonds; meaning that some of them could collapse. However, the EU delegation failed to get the solid commitment they wanted from China. Probably the European leaders were the only ones surprised by that. After all, in the last 500 years Europe has behaved like an elephant in a china shop. In 2012, Spain is one of the dark stars in the ongoing crisis.
Since February, Spain was off the news. Its new government has repeatedly announced it will not need a European bailout and is working hard at that. Spain is important in the current crisis because it is not like Greece, Portugal, Ireland or even Italy. Spain played by the EU rules, and yet it is collapsing. When it joined the euro in 1999, Spain broke the EU debt rule, with a debt/GDP ratio of 62.3%. However, since then, the Spanish government ran a balanced budget on average—meaning its borrowing was zero—every year until the 2008 financial crisis. If Spain fails, it may mean the euro is not viable, and that Germany and France may also collapse. Argentina’s strike of yesterday has already caused the Spanish government’s 10-year bond yield to jump over the 6% mark; indicating the markets do not trust the Spanish government capability to solve the situation without a bailout. If the Argentinean government continues fighting its incompetence by robbing foreign companies, Spain will be the main victim; and with it, Europe. No wonder Spain’s Prime Minister said: “This is a hostile step by Argentina.”
Addendum: On West’s End
In February 2012, I published Spain as Western China; this rather bland article bothered a few of my readers due to one of its sections, which was titledWest’s End. The name of the section referred to a poem titled “My Heart is in the East” by Yehuda Halevi. The first lin
e reads: “Libi Bamizrach Va’ani Besof Ma’arav,” which means “My heart is in the east and I’m in west’s end.” He was in Spain at the time and was writing about Jerusalem. Given my situation as a political prisoner inBolivia, my name choice for the section of the article dealing with Spain was obvious. I couldn’t expect everybody to recognize words written in Hebrew many centuries ago; my apologies for the misunderstanding.