Richard Drayton is Rhodes Professor of Imperial History at King\’s College London
Hmm, so what\’s he got to say about Argentina then?
YPF, under Repsol, paid extraordinarily high dividends to its foreign owners – some 9% in 2011 – which it paid for by borrowing. So while YPF debts soared and Argentina\’s oil went undrilled, Repsol both banked profits and \”invested\” Argentinian capital elsewhere in its corporate structure. As the rating agency Standard & Poor\’s commented on 19 April: \”Repsol does not guarantee any of the debt at YPF.\” Madrid got the juice, but the liabilities all fell on Buenos Aires.
High dividends allowed Repsol also to cash out of 25% of its YPF holding by selling it on to the Eshkenazi family, with the capital coming from Credit Suisse, Goldman Sachs, BNP Paribas, Standard Chartered and Citibank, with banks then making money buying and selling derivative contracts on Repsol and YPF debt.
Err, no. Wrong way around. Repsol was given, erm, a little bit of political encouragement to sell that 25% stake. As the Eshkenazi family didn\’t have the income to service the loans they had taken out to purchase the stake then YPF was encouraged to pay out 90% of income in dividends so that they could.
YPF in the 1990s drilled three times as many exploratory wells in Argentina as it did in the 2000s under Repsol. Argentina\’s oil and gas output was falling, and new reserves were not being found to replace exploited deposits.
In nationalising, Argentina showed that a democratic government can stop predatory financiers. And it has not scared away new investors: already Talisman, ConocoPhillips, Chevron, and Chinese companies are seeking access to Argentina\’s shale oil reserves, the third largest in the world.
It was Repsol, through YPF, that found those shale reserves.
I do think that those wishing to study history might want to give King\’s a wide berth.