After a weekend of cavorting in Colombia, the White House was caught flat-footed by Argentina’s takeover of a big oil company whose loss will hike gas prices, harm Spain and slam U.S. investors. Lucky us.
Never was a response to a global outrage more mealy-mouthed than the one from the U.S. after Argentina’s President Cristina Fernandez de Kirchner, standing under a portrait of Evita Peron, announced a brazen grab for YPF, the Argentine oil company that’s 57% owned by Spain’s Repsol.
Markets fell, world leaders denounced the violation of contracts and economically battered Spain rallied European Union support.
But the U.S.? “We are following developments on this issue. We are not currently aware of any WTO complaints related to this issue,” the State Department said.
Then, leading from behind after Spain vowed a “forceful” response, Secretary of State Hillary Clinton tried to toughen up: “Having an open market is a preferable model. Models that include competition and market access have been the most successful around the world.”
Which must have provoked a horse laugh from Buenos Aires. After all, Fernandez heard President Obama the first time when he declared that he free market “doesn’t work. It’s never worked.”The move — the largest expropriation since Russia expropriated Yukos in 2003 — not only hit Spain’s biggest company, already hit by a 38% loss of share value this year, it also moves Argentina sharply closer to another big default on its sovereign debt, trading in the debt swaps market shows.
But the U.S. is in for trouble, too, and that’s why the mush from the State Department, along with the weekend’s photos of dancing and drinking at the Summit of the Americas in Cartagena, Colombia, that conveyed no sense of the trouble ahead gives the sense that the Obama administration is asleep at the wheel.