Falkland Islands

[bickster]

And bring all the convicts back from Australia...

[PauloBarnesi]

I think most Australians live in west London already?

[Risso]

I don't think many of the original inhabitants of Argentina spoke Spanish, did they?

[bickster]

I don't think many of the original inhabitants of Argentina spoke Spanish, did they?

Nor for that matter did they speak Italian (around 1,500,000 Italian speakers), German (500,000), Yiddish (200,000) or even Welsh (35,000 though there are thought to be 50,000 people of Welsh descent).

[villaajax]

And bring all the convicts back from Australia...

Is there a bar staff shortage?

[TrentVilla]

And bring all the convicts back from Australia...

Surely Murdoch is enough?

[theunderstudy]

I think he needs to be sent on a rickety boat all the way to Australia in chains myself

[thetrees]

I think he needs to be sent on a rickety boat all the way to Australia in chains myself

As a US citizen, we're probably better to leave him in New York.

[PauloBarnesi]

Guess the Spanish won’t be supporting them anymore...

It's sounds like a story from the past: A Latin American leader announces plans to nationalize a large foreign company, touching off a high-stakes battle that involves money, politics and diplomacy.

Yet it's happening right now. Argentina's President Cristina Fernandez said this week that her country plans to take over a giant Spanish oil company at a time when the economies in both countries are facing challenges.

Spanish officials are threatening to retaliate against Argentina for seizing a majority of shares in the biggest oil company in Argentina, YPF.

The move also raised concerns about foreign investments in the region and whether Argentina's move points to the possibility of additional expropriations of foreign companies.

The Argentine plan calls for the state to take 51 percent of the company, all of it coming out of the 57 percent that is now owned by Repsol of Spain. Other shareholders in the company would be untouched.

Fernandez said it is necessary to nationalize YPF, because Repsol had taken most of the company's profits back to Spain, leaving Argentina without the resources to develop new energy sources.

Argentina Becomes An Energy Importer

She said it was a matter of Argentina's national security, because the country has had to start importing fuel.

It's a turnabout for an oil-producing nation. Argentina began importing fuel in 2010, and could face a bill for imported energy of as much as $14 billion this year.

Fernandez knew that she would face condemnation from Spain and other countries. When she made the announcement, she declared, "I am a head of state, and not a hoodlum."

Argentina says it will compensate Repsol for the shares, but the amount will be determined by an Argentine panel.

EnlargeDiego Giudice/Bloomberg via Getty Images

A pump extracts crude oil in western Argentina, at the foot of the Andes mountain range near the border with Chile, in 2007. The refinery is owned by the Spanish company Repsol, but Argentina's government plans to take over the company, which is complaining about the move.

Repsol officials say their stake in the company is worth at least $10.5 billion. The company's shares have tumbled this week after Fernandez announced her plan. Argentina's Senate plans to vote on the move next week, and there appears to be overwhelming support for nationalization.

YPF announced a major shale oil discovery in November, in a part of southwest Argentina with the unpromising name of Vaca Muerta, or "dead cow." Developing the reserves in that region will be expensive, analysts say.

A Political Move?

So why would Fernandez take this step now?

"In one word, politics," says Moises Naim, a political columnist for Spain's El Pais and other papers. Naim says that Fernandez's left-leaning government has mismanaged the economy and is in need of money.

"Latin America is divided between countries that are doing well, and some that are lagging behind," Naim says.

He cites Colombia, where he recently attended the Summit of the Americas, as an example of "what was once an untouchable, radioactive country that is now doing quite well," both in promoting development and reducing income inequality.

Naim says Argentina is one of the region's laggards "because of policies that have made it impossible for investors to invest." He cited the government's failure to maintain infrastructure and its earlier nationalizations of two utilities and an airline.

Comparisons To Eva Peron

But Fernandez is a popular figure in Argentina, having won re-election last year with more than 54 percent of the vote and a wide margin over her nearest rival.

She's often compared with the fiery Eva Peron, and she chose to make the announcement nationalizing YPF in front of an image of Peron, Argentina's former first lady and the inspiration for the musical Evita.

Economist Mark Weisbrot isn't buying the claim that Argentina's economy is on the ropes.

Weisbrot, the co-director of the Center for Economic and Policy Research in Washington, points to International Monetary Fund projections that show the Argentine economy has grown by more than 90 percent in the decade since the country's economy collapsed and it defaulted on its debt in 2001.

The IMF is projecting that Argentina's gross domestic product will gallop like a gaucho this year, growing by nearly 5 percent. That's more than twice as fast as the United States.

Weisbrot says Argentina's real problem is that it needs a steady flow of foreign exchange, in part because international lenders are still wary after the country defaulted on its debt.

That means the country needed to get more out of its oil resources than the Spanish company was providing.

Weisbrot says it was a mistake for Argentina to nationalize its oil industry in the early 1990s, though he thinks it makes sense for the government to take YPF back now.

The big mistake is to say, 'Here comes another wave of nationalizations.' As the world was spinning out of control, the region that navigated [the global economic crisis] the best was Latin America. Because Latin America is the world champion of these crises, and society has learned what not to do.

- Moises Naim, newspaper columnist

He points out that most of the world's biggest oil-producing nations, such as Saudi Arabia and Russia, capture their profits through state-run oil companies.

A History Of Nationalizations

Nationalizing foreign companies has long been a temptation for cash-strapped developing countries in Latin America and elsewhere. It's been much less common in recent years, though there are still examples.

President Hugo Chavez has steadily nationalized key industries in Venezuela, including oil, cement, steel and just two years ago, two glass-making plants owned by the U.S. company Owens-Illinois.

In Bolivia, President Evo Morales has nationalized oil and gas, telecommunications and electricity, and silver mining.

Ecuador nationalized its oil and gas industry, and President Rafael Correa threatens to nationalize banana-exporting companies whenever producers feel squeezed.

But other countries with left-of-center governments have moved toward policies that are generally welcoming toward foreign investment, including Brazil, Peru and Uruguay.

"Labels of left and right don't mean that much," says Naim. "There are likely to be more nationalizations in the countries that are not doing well, but this is not an ideological issue."

Will There Be A Backlash?

Analysts agree that the Argentine nationalization is likely to hurt the country's ability to attract foreign investment. But they disagree on how serious the consequences may be.

"Investors don't like this, but does that matter?" asks Weisbrot. "South Korea relied very little on foreign direct investment [during its major expansion], so it's not an essential ingredient of economic growth."

On the other hand, there's the question of whether Argentina can come up with the money needed to develop YPF's oil holdings.

"I don't think any country with [Argentina's] size of reserves can develop the company without the aid of international investors," says economist Eduardo Levy-Yeyati. "In Argentina, where the financing costs are already so high, this is doubly true."

Levy-Yeyati, a senior fellow at the Brookings Institution, is a former chief economist at the Central Bank of Argentina.

He says much will depend on whether Argentina pays what is perceived as a fair price for Repsol's stake in the oil company.

Despite the threats of retaliation from Spain, Levy-Yeyati says the cash-strapped Spaniards don't have much leverage against Argentina.

Argentina exports a lot of biodiesel to the European Union, and particularly to Spain, he says. But it's unlikely that other EU members could be persuaded to take part in a boycott of Argentine products.

Because of its financial problems, Levy-Yeyati says, "Spain is in no position to ask for more solidarity from the rest of Europe."

Still, he adds, even if Argentina goes unpunished, "this doesn't look like the first chapter in a long-running saga."

Moises Naim agrees. "The big mistake is to say, 'Here comes another wave of nationalizations.' As the world was spinning out of control, the region that navigated [the global economic crisis] the best was Latin America. Because Latin America is the world champion of these crises, and society has learned what not to do."

[Awol]

Guess the Spanish won’t be supporting them anymore...

The interesting point here (beyond the inevitable leftward slide of Kirchner's Government into State seizures of private property) is the call from the EU Parliament for sanctions against Argentina, yet when the Argies threaten UK oil firms operating in the Falklands the EU don't make a peep of protest.

Why? Well, even the most ardent Europhile should be able to figure that one out.

[blandy]

Even the most rabid Eurosceptic should be able to figure out that State seizures of private property is a more serious act than "threatening Oil firms", and perhaps from that they might deduce that "calling for sanctions" might be appropriate for one act, but not the other?

[Awol]

Even the most rabid Eurosceptic should be able to figure out that State seizures of private property is a more serious act than "threatening Oil firms", and perhaps from that they might deduce that "calling for sanctions" might be appropriate for one act, but not the other?

Touche..

Actually given the range of measures Argentina has taken to try and isolate the population of the Islands (disrupting the air link, trying to prevent Falkland flagged vessels docking in South America, threatening and attempting to disrupt legal commercial activity, etc) I think EU sanctions would be a justified response. In reality they have not said a word to support the UK or the Islanders, despite the current sovereignty situation being endorsed by the Lisbon Treaty..

That's not to say the EU Parliament's response in support of Spanish interests is wrong - it's not - but the double standards applied by our neighbours/allies (lolz) whenever the UK is involved gets on my tits.

Unless the EU wants more money (and Osborne has coughed up another 10 billion to support their fantasy currency this morning), or getting us signed up to some stupid regulations to benefit France & Germany, the attitude towards our interests is at best characterised as mild neglect, if not outright hostility.

Just saying :winkold:

[blandy]

I get that sentiment, Awol, and to an extent agree, even. I don't think, personally, that sanctions are right in response to the sabre waving gestures and the inconvenience being caused by Argentina's gov't over the Falklands, I think that would be disproportionate.

I read a really good article, written by an Argentine writer, in the Independent a few weeks ago

The opportunity to offload a valueless colony turned into an obligation to hold on to it at any price

I was one of the guilty men of 1982. The previous year, in conversations at my college in Oxford, where my colleagues and I dismissed the Falklands dispute as trivial, visiting Argentinian top brass got the impression that Britain would not fight for so pointless a prize. Indeed, few British people cared about "a far-off country" of which they knew little. The inference, however, that they would not fight over a matter of principle was false.

Britain had virtually nothing of any material value at stake in the islands at the time of the invasion on 2 April 1982. But to allow the Junta to invade the Falklands with impunity was almost as unthinkable as allowing Hitler to seize Poland. Recourse to violence imperilled the peace of the world, because the differences between the sides could have been sorted out with modest compromises. Today, 30 years after the war, two developments have put the continuing controversy beyond hope of a reasonable outcome: first, the effects of the war; then a revolution in the islands' economic prospects.

The war exacerbated feelings and made a negotiated outcome hard to imagine. Both sides worked themselves up into silly self-righteousness and unreasonable mutual condemnation. On the day the invasion started, an Argentinian friend of mine got into a taxi in Park Lane without knowing that hostilities had broken out. "I am from Argentina," she announced cheerfully in reply to the cabbie's idle question about her provenance. "Out of the cab!" he ordered. "I'm not having no bleedin' Argies."

A few months later, when the war was over, my wife was surprised by a rather more courteous gesture from an Argentinian pilgrim on the steps of the cathedral of Compostela. He solemnly shook her hand, explaining that he exempted her from responsibility for the malevolence, piracy, war crimes, atrocities and evil aggression committed by her government. The pilgrim was nicer than the cabbie – but both showed the insuperable ignorance that divided the sides.

In some ways, the war did both countries good. The British enjoyed a rare opportunity for self-congratulation on a victory whose heroics they exaggerated and whose brutalities they largely overlooked. Argentinians, meanwhile, could replace dictatorship with democracy and console themselves with thought that Albion had only triumphed, as usual, by perfidy – shooting the Belgrano in the back and reimposing colonialism at bayonet-point.

Partly in consequence of these comforting delusions, neither side could recall the war with realism, or assess its folly with objectivity. To understand Argentina, one must appreciate that the average citizen conceives his country's past as a history of failure and frustration. God, Argentinians think, made theirs to be a great land, but at every opportunity they have wrecked His handiwork, allowing dictators to repress their virtues and foreigners to steal their resources.

The conscripts' inertia in the face of British forces was understandable – indeed, sensible, as it would have compounded folly to give one's life for valueless islands or gratify the revolting vanity of General Galtieri and his cronies. But so abject a defeat was a source of shame and a cause for evasion in a country whose national anthem ends with the cry, "Let us swear to die with glory!"

The British, in turn, were victims of the gypsy's curse: "May you have wars – and win them!" Victory involved terrible costs for a penurious economy and imposed further waste of resources on defence and investment. Somehow, the costs had to be justified and, if possible, recouped – making a future settlement with Argentina harder than ever. The opportunity to offload a futile, valueless colony had turned into an obligation to hold on to it at any price. Then economic changes began to set in, problematising ever more hopelessly the prospects for lasting peace. First, in the 1990s, the offshore fisheries became highly productive, and fleets from all over the world wanted licences. Then – decisively – in the following decade, the chances of profitable oil exploitation multiplied.

Once rumours of oil seep out, they poison negotiations as surely as slicks blacken the sea. The parties in the dispute go on uttering unconvincing rhetoric. Monotonous cant about the islanders' rights of self-determination dominates language on the British side, as if the handful of people concerned could not be easily satisfied – indeed, bought off – with so many resources to hand. Argentina continues to belly-ache about the injustice of Britain's original seizure of the islands in 1833, as if any of that mattered now. Continued British rule rests on the bottom line. When the islands were unimportant, their fate would have been easy to settle. The magnitude of the problem has grown with the magnitude of the stakes.

There was a moment in the past decade when Britain and Argentina might have agreed to share the bonanza. But, just as the Junta blew the chance of a rational solution by an act of folly in 1982, so President Nestor Kirchner wrecked hope of a settlement in 2007 by repudiating unilaterally existing resource-sharing protocols. He thought he was commemorating the 25th anniversary of the war, distracting his electorate, striking a heroic pose, and making a calculated effort for a better deal.

He was wrong on all counts. He counted Argentina out of a stake in the mounting promise of profits and made it impossible for British governments to give back what he had forfeited. His widow, who now occupies the presidency, has been left with no option but to try to justify or conceal his error retrospectively. Her bluster cannot change the situation. It can, perhaps, obscure the truth. In either event, the problem remains insoluble: Argentina cannot renounce her claims. Britain cannot accommodate them.

Today the islands are grossly under-defended and, if Argentina were to invade, there would probably be little international support for Britain this time round. Big oil would shift allegiance to the victors. It won't happen – but only because Argentina is now indelibly democratic and her citizens will no more vote for war than hens will for Easter. Instead, we can look to a long stalemate, while the islanders get rich and relations between Britain and Argentina stagnate.

When the next opportunity for a settlement comes – probably sometime in the next 20 years, with renegotiation of international agreements on Antarctic exploitation – it may be possible to transfer sovereignty quietly, while divvying up amicably such resources as then remain. Maybe then we shall be able to admit the truth: it doesn't matter who rules the Falklands – or whether we call them the Malvinas.

http://goo.gl/3ksZT

[villaajax]

So basically it's a 'pointless', 'valueless' 'colony' but it would be good if Argentina could have the islands and the oil?

Another thing I don't get is people who say we should share the oil or the profits with Argentina, why? Why don't we share it with Spain, the Islands belonged to them at one point. How about France, they held control of the Falklands once? The islands were discovered by Dutch explorers, maybe the Netherlands has a claim?

[A.J.Rimmer]

To save space I won't copy the long piece in Blandy's above post, BUT:

I read every word of the above and whilst there are a number of minor and not so minor points with which one may disagree in this article, most significantly it dramatically underlines the salient point, and the reason we should never ever contemplate handing the islands over to a nation full of ignorant cnuts like Argentina.

THE ISLANDS DO NOT BELONG TO US. THEY DO NOT BELONG TO ARGENTINA. THEY BELONG TO THE FALKLAND ISLANDERS.... WHO NEVER GET A SINGLE FECKING MENTION IN THIS MORON'S PATHETIC ATTEMPT AT SELF JUSTIFICATION.

[theunderstudy]

This being the islanders who want to be British, yeah?

[The_Rev]

Of course.

[Ads]

The islands are not under defended at all. The last war was an air war. Given the distance, the Argie would have around two minutes over the island before his fuel ran out (they only have two air to air re-fuelling aircraft). Not that he'd get there mind before a Typhoon introduced him to the ocean.

I'd love to know just how the Argies would invade.

[villadude]

This being the islanders who want to be British, yeah?

Yes, obviously..

[Awol]

THE ISLANDS DO NOT BELONG TO US. THEY DO NOT BELONG TO ARGENTINA. THEY BELONG TO THE FALKLAND ISLANDERS.... WHO NEVER GET A SINGLE FECKING MENTION IN THIS MORON'S PATHETIC ATTEMPT AT SELF JUSTIFICATION.

I'll hang my hat on this neat summary. That article sums up what is wrong with the perspective of all Argies (even the author who seemingly considers himself to be above petty nationalism - while demonstrating the opposite throughout the piece) when it describes British "bluster" regarding self determination.

We can discuss sovereignty of the Islands with the legitimate owners of South America, just as soon as the Spanish colonisers who stole their land and slaughtered their people have returned to Iberia.