Despite its president’s fiery rhetoric, Argentina’s decision to renationalise YPF was not part of any overarching strategy. Cronyism, rifts between rival oligarchs, political expediency, populism and the wish to please a public resentful of the privatisations of the 1990s all played into the decision – which came in the context of a rapidly deteriorating economic and political situation.
Argentina suffers from high inflation, slowing economic growth, ballooning subsidies, price controls, capital flight, decaying infrastructure and a less than welcoming environment for foreign investors. Sooner or later the situation will become unsustainable. If Ms Fernández keeps postponing reform, her last years in office will be a nightmare – and YPF will be the least of her problems.