Day By Day

Tuesday, May 08, 2012

Don't cry for me

The EU decides to flex its muscle.

European Union trade chief Karel De Gucht said Monday the bloc will shortly take action against Argentina's government, after its decision to seize control of oil giant Repsol's YPF subsidiary.

"We will soon be moving forward with a response to Argentina's action in the Repsol case, in particular," De Gucht said in a speech during which he complained of a "growing tendency towards protectionism across Latin America."

Argentine President Cristina Kirchner on Friday signed a bill expropriating 51 percent of YPF's stock from Repsol, its majority shareholder, sealing a measure that has roiled the country's trade ties with Europe.

"Argentina has also continued other trade restrictive policies, like its import-licensing regime," De Gucht added.

"And just last week we saw Bolivia take another step towards nationalising utility companies at the expense of a Spanish firm.

"These types of moves are of course a problem for Argentina and Bolivia -- which will find it harder to secure the international investment they need," he underlined.

EU officials have already complained about the "overly broad use" of red tape, notably in the "pre-registration and pre-approval of all imports into Argentina."

Individual states may also suspend WTO-compliant preferential trade status accorded to Buenos Aires.
Spain's Prime Minister Mariano Rajoy said Monday that the seizure will trigger a "tremendous" loss in investor confidence in the country, while other international organisations have also criticised the measure.
Argentina is a delightful country; the OC has visited there several times and loves to feast on Argentine steaks and Malbec wine.  But the people and politicians are some of the most self-destructive in the world.  The nationalist populism of Juan Peron has never left the Argentine psyche, much to its detriment.

It starts with class envy populism, moves on to increasing governmental control and international antagonism.  It then spirals into a cycle of government actions, market responses and further governmental interventions. When it fails, and given its nature it always will, the fault will be blamed on others.  Yankees.  The Spanish.  Whomever.

Eva got out while the going was still good.

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