April 20, 2012 · 0 Comments
By Dean Baker:
It seems that the NYT disapproves of the decision by Argentine president Cristina Kirchner to nationalize YPF, the country’s major oil company. At least that would be the impression of an article on reactions to this decision.
The article begins by telling us about a “fiery” speech in which Ms. Kirchner justified her decision to nationalize the company, which is currently owned by Repsol, a Spanish oil company. The piece concludes with a critical comment from Daniel Altman, who is identified as “an expert on Argentina’s economy at the Stern School of Business at New York University.” Altman is probably better known as a former New York Times business reporter, who did not specialize in coverage of Latin America.
In between the article gives us the views of many people who do not approve of the decision, although the article does point out that the company was just privatized back in the 90s and also that most other Latin American countries with substantial energy resources have a state owned oil company.
The article includes a bizarre paragraph telling readers:
“Yet in Brazil, where Petrobras’s achievement of energy independence and huge offshore oil discoveries have made it a model for oil companies in other developing nations, the YPF expropriation served as an opportunity to draw important contrasts with the situation in Argentina.
As recently as 2000, Brazil still relied on oil imports from Argentina to meet energy needs, buying about 74,000 barrels of a day from its neighbor.
Now the tables are turned. Petrobras, through its acquisition of Perez Companc, an independent Argentine oil company, has aggressively expanded in Argentina to the point where concerns have emerged here as to Petrobras’s exposure if Mrs. Kirchner opts to expand her nationalizations.”
It is not clear what “important contrasts” readers are expected to draw from this comparison. The piece seems to be describing the operations of a highly successful state-owned oil company which appears to be gaining ground at the expense of the privately-owned company in Argentina. This would be exactly the sort of argument that someone would make to justify the nationalization of YPF, although it is not clear if this is the conclusion the reader is expected to reach.
The reality is that there are examples of successful state-run companies, as this article shows. There are also many examples of poorly run government enterprises, just as there are many examples of poorly run private companies.
Whether or not Argentina will be able to improve the operation of YPF if it carries through the nationalization of the company remains to be seen. While there is evidence that might shed insight on this question, the article does not present any.