Op-ed: International support for Repsol

The Spanish government has rolled out its big diplomacy guns in order to win international support for addressing the legal questions and threats to free market regulations resulting from the Argentine government's attempt to control the Repsol subsidiary YPF. Spain consulted the following groups and got their diplomatic support: the EU, the American Summit (via Colombia and Mexico), the G-20 Summit, and the United States Treasury.

President Kirchner fully understood the international reaction resulting from her action, but internal circumstances related to Argentine politics and economics continue to push her along on this mistaken path: the Argentine government is attempting to suffocate YPF, an Argentine subsidiary of Repsol, in order to take it over. The results of the last election have bestowed Kirchner with a sense of legitimacy that she thinks she can use however she wants.

Further, Argentina's economy has seen better days. A notable decline in growth is expected for 2012, real inflation will hit 20% even though official figures will say 10%, there are significant problems with the country's capital markets, and the government is considering cutting subsidies in a country that is dependent on them. In order to distract the public from internal issues, the Argentine government is advocating for nationalism (with the Malvinas and Repsol as the flag) without recognizing that its poor energy policy is slowing corporate growth.

Argentina used to export energy, but in 2012 it could incur a deficit of more than 4 billion dollars for energy purchases. Even if Kirchner thinks she can deceive Argentine citizens, she won't, because the international door will slam in her face should she continue to carry on with the same attitude.