Tuesday, 1 May 2012

Cry for me, Argentina

Its time to change Andrew Lloyd Webber's famous song in Evita. There's no option, but to cry for Argentina. How else can you react to the awful move by Cristina Fernandez, Argentina's President, to nationalise YPF, two weeks ago ?

YPF, Argentina's largest oil and gas company is 57% owned by Repsol, the Spanish oil giant. Ms Fernandez's grouse against Repsol is that it is not investing in increasing production in YPF. This is partly true, but the real reason why YPF is not expanding production is that her government has artificially kept petroleum product prices low . No company is going to invest for very little profit. So the good lady has decided to nationalise the company. No doubt, a pittance would be paid to Repsol, well below the market value of its shares in YPF. This is daylight robbery, of the kind Ramamritham (of Vodafone fame) would feel proud.

Is this any way to treat your largest foreign investor ? Spain and the EU are up in arms and threatening a fight. Spanish companies have significant investments in Argentina, united by a common language, of course. Argentina can kiss good bye to any foreign investor from now on. Already it is an international economic pariah having defaulted on its sovereign debt in 2001. However much you hate international finance, you need investors for any economic activity.

Does any serious country nationalise anything these days ? Is there any more proof needed that nationalisation and state control of industry does not work ?

An interesting by line is the parallel with Indian politics. Cristina Fernandez is a Rabri Devi. Her husband Nestor Kirchner was the strongman of Argentina. When the constitution limited him for a consecutive presidential term in 2007, he installed his wife as President and , well ...... The plan was that he would return back in 2011 as President. Unfortunately, God willed otherwise and he died. So, the lady continues.

The worrying thing is that what this lady is doing might be read, and emulated, by another lady who's running another Eastern state in India. Thankfully, the latter lady apparently does not read any newspapers other than those that only write about her greatness. She certainly doesn't read this blog and there is little risk that the Argentinian precedent will be known to her. But still ,.........

The real worry is that Ramamritham has learnt about this move in the opposite corner of the world. You see, the problem with Ramamritham is that he reads widely, maybe even this blog !! The real worry is that he will take a leaf out of Ms Fernandez's book.

Andrew Lloyd Webber will have to produce another musical then. "Sonia" the musical, will feature the hit song, Cry for me, India !


Appu said...

This is again one LOL ROTL inspite of the seriousness of it! Unfortunately, he died!!
Her greatness!!
BTW there is already one Sonia song in Tamil ;))

Shachi said...

wow - love your case studies and analogies :). Let's have N Modi in charge and we won't have any crying musicals for our country!

Deepa said...

The thought already made me cry because I realized this could indeed happen as anything is possible in India. I do want to bank on a more informed generation and a vocal media though. But I can also not forget what path we were on for 40-45 odd years in spite of having probably one of the most renowned economists on our team.

Ramesh said...

@Zeno - Even by her standards, the nationalisation is an outrageous move.

@Shachi - Oh - that's a difficult one Shachi. I'm afraid his goose is cooked, whatever be his record in Gujarat (which is outstanding); But the one blemish will dog him all the way).

@Deepa - Right now, the drift in governance is as bad. Its a sad fact that political leadership does not attract talent - its virtually dominated by criminal elements all the way through. One exception appears to be the new Goa CM Manohar Parrikar . An IIT alumnus, his actions after taking power have been nothing short of sensational.

sriram khe said...

A week or so ago, a colleague (who is also from India) and I were talking about Calcutta, the city where he grew up--he wanted to know if I swung by there during my sabbatical travels. We ended up talking about Bengal's politics and Mamata. His words were "remember Reagan was a joke? Mamata makes Reagan look like awesome!"

I nodded my head, and didn't want to remind him about Tamil Nadu's Reagan--MGR :)

Quite a few years ago, a lawyer friend in California explained the emergence of incompetence to the highest levels of politics and governance with a simple statement: shit floats!

Pristine said...

One more reason for Ramamritham to spread his wings..

Exkalibur666 said...

There seems to be no dearth of Rabri devi's across the globe..

Reflections said...

I'm so glad I read ur blog Ramesh....
Silly question, where else will I get to read abt relevant stuff going on in the world. I had no clue Rabri Devi was ruling Argentina;-o.

The only news I hrd that matched closest to Argentina was that Maradona threatened to quit Al Wasl if he didn't get more money for his players. But the real story is that Al Wasl is tired of losing games under his coachmanship[;-P] and are considering letting him go.

Reflections said...

Just kidding.....


abt RD;-D

I got it the 1st time itself u know;-D

Yeah.....u guessed right, I read each post atleast thrice to make sure I don't goof up while writing comments;-(

Seriously...the things I do to hang around in ur company:-D.

Ramesh said...

@Prashanth - Thanks for your comment. Alas so, but we can somewhat discount the antics of hard core leftists like Hugo Chavez and Evo Morales.

@Excalibur - Earlier they were restricted to East and South Asia. Now there are examples popping up in other places like Argentina.

@Reflections - Awww. Much honoured that you read my blog three times :) and "hang around in my company" !! But the word goof and you cannot be uttered in the same sentence ever.

On Maradona. He'll forever remain a clown. Of all the clubs in the world he lands with Al Wasl !!!! Maybe he needs the money that desperately.

Ramesh said...

@sriram - What a superb analogy from your friend. Shit does indeed float. Unfortunately too much of it in India.

Ravi Rajagopalan said...

By declaring that seeking to avoid tax is equivalent to tax evasion, and by working on the flawed presumption that sale of shares in a company is equal to the sale of its assets, the FM is trying to do the same thing. The word is thanks to GAAR a general pull out has begun. Not sure how true that is. Do you have a view?

Sandhya Sriram said...

I would possibly sing another beautiful song, in repartee to this


Well that is what is life - so many things so overwhelming, but yet, its such a maze that we learn to live with them along with them, we know how we feel and yet dont know how we feel.

i think, it is this maze that keeps it going - what say Ramesh

Ramesh said...

@Ravi - Indeed. The whole GAAR is another monster. Its simply Ramamritham speak for Guilty until you prove yourself innocent.

@Sandhya - Hey - never knew your musical talent extends there. But alas. the link doesn't work. Can't wait to figure out what song you had in mind.

Vishal said...

Interesting link between the ladies! When one strongman succumbed to another good and wise strongman electorally here in India, the wife also subsided and lost in vacuum now. Can the same be the case in Argentina also in future (little do I know of Argentina except of Maradona and Messi)?

Ramesh said...

@Vishal - She'll likely lose in the next election and then possibly fade away. Argentina is a lovely country - go there sometime if you can.

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