The fallout from the YPF seizure

The players are taking sides as Argentina consolidates the ground it has taken

The fallout from Argentina's seizure of 51 per cent of its former state oil company YPF continues today, both in diplomatic and financial sectors.

The most immediate impact is that a deal to sell the company has fallen through. The Financial Times reports that Repsol, the Spanish company that held 57 per cent of YPF, was negotiating a deal to sell the company to the Chinese firm Sinopec. Now that Repsol owns 6, rather than 57, per cent of the company, that deal is obviously unlikely to go through.

The sale was being negotiated in secret, according to the FT's sources, because the firms hoped to present it to the Argentine government in its finalised state. The government holds a golden share in YPF, which means that any sales have to be approved by it.

To what extent Argentina will feel concerned about this is debatable. On the one hand, they nationalised the company without knowing all the details, but on the other, even if the takeover had gone ahead, it seems unlikely it would have changed the state's rationale for action. Repsol was already investing more into YPF than it was getting from it, and there is no reason to believe that Sinopec would have behaved differently.

The impact of the move on Repsol itself has been a 6 per cent overnight fall in its share price, but where it goes from here depends on how many concessions it manages to extract from Argentina. The company is demanding $10bn compensation for the move, but the government seems unlikely to fork it over, with the deputy economic minsiter saying:

We are going to determine [YPF’s] real value. We are not going to pay what [Repsol] say.

Unless Argentina volunteers to enter arbitration, as Repsol is demanding, the real action looks to be diplomatic. Surprising nobody, Britain has entered the debate on the side of Spain. William Hague criticised the move, saying:

This is the latest in a series of trade and investment related actions taken by Argentina which are damaging to business interests, and will undermine Argentina’s economy. We will work with Spain and our EU partners to ensure the Argentine authorities uphold their international commitments.

The Spanish foreign minister, José Manuel García-Margallo, hinted at further problems which Argentina could face as a result, telling El Pais:

In my opinion Argentina has shot itself in the foot. Argentina needs 36 billion euros in funding and it could see itself cut off from credit by international investors after this measure.

An editorial in the paper is similarly damning, writing:

The fact of the expropriation, threatened for months with the intention of undermining Repsol’s resistance and cheapening YPF’s shares, goes beyond a mere breakdown of the legal security one expects in a democratic country; it is an intentional betrayal of the agreement on reciprocal protection of investments signed by Spain and Argentina in November 1991, and initiates a period of grave uncertainty for Spanish companies in Argentina, and for all foreign investors there.

But the dissenting voices have started to come out of the woodwork. In the Guardian, Mark Weisbrot writes that Argentina has made the correct decision:

Now the government is reversing another failed neoliberal policy of the 1990s: the privatisation of its oil and gas industry, which should never have happened in the first place.

There are sound reasons for this move, and the government will most likely be proved right once again. Repsol, the Spanish oil company that currently owns 57% of Argentina's YPF, hasn't produced enough to keep up with Argentina's rapidly growing economy. From 2004 to 2011, Argentina's oil production has actually declined by almost 20% and gas by 13%, with YPF accounting for much of this. And the company's proven reserves of oil and gas have also fallen substantially over the past few years.

Weisbrot seems likely to stay in the minority, however. Given the disastrous effects of price controls on oil, the massaging of inflation figures (thought to be at 18-20 per cent, rather than the official 9-10 per cent) and the aforementined high investment by Repsol into YPF, Argentina is hardly a paragon of economic rationality.

A woman jogs past a sign referencing YPF in Argentina. Credit: Getty

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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The Prevent strategy needs a rethink, not a rebrand

A bad policy by any other name is still a bad policy.

Yesterday the Home Affairs Select Committee published its report on radicalization in the UK. While the focus of the coverage has been on its claim that social media companies like Facebook, Twitter and YouTube are “consciously failing” to combat the promotion of terrorism and extremism, it also reported on Prevent. The report rightly engages with criticism of Prevent, acknowledging how it has affected the Muslim community and calling for it to become more transparent:

“The concerns about Prevent amongst the communities most affected by it must be addressed. Otherwise it will continue to be viewed with suspicion by many, and by some as “toxic”… The government must be more transparent about what it is doing on the Prevent strategy, including by publicising its engagement activities, and providing updates on outcomes, through an easily accessible online portal.”

While this acknowledgement is good news, it is hard to see how real change will occur. As I have written previously, as Prevent has become more entrenched in British society, it has also become more secretive. For example, in August 2013, I lodged FOI requests to designated Prevent priority areas, asking for the most up-to-date Prevent funding information, including what projects received funding and details of any project engaging specifically with far-right extremism. I lodged almost identical requests between 2008 and 2009, all of which were successful. All but one of the 2013 requests were denied.

This denial is significant. Before the 2011 review, the Prevent strategy distributed money to help local authorities fight violent extremism and in doing so identified priority areas based solely on demographics. Any local authority with a Muslim population of at least five per cent was automatically given Prevent funding. The 2011 review pledged to end this. It further promised to expand Prevent to include far-right extremism and stop its use in community cohesion projects. Through these FOI requests I was trying to find out whether or not the 2011 pledges had been met. But with the blanket denial of information, I was left in the dark.

It is telling that the report’s concerns with Prevent are not new and have in fact been highlighted in several reports by the same Home Affairs Select Committee, as well as numerous reports by NGOs. But nothing has changed. In fact, the only change proposed by the report is to give Prevent a new name: Engage. But the problem was never the name. Prevent relies on the premise that terrorism and extremism are inherently connected with Islam, and until this is changed, it will continue to be at best counter-productive, and at worst, deeply discriminatory.

In his evidence to the committee, David Anderson, the independent ombudsman of terrorism legislation, has called for an independent review of the Prevent strategy. This would be a start. However, more is required. What is needed is a radical new approach to counter-terrorism and counter-extremism, one that targets all forms of extremism and that does not stigmatise or stereotype those affected.

Such an approach has been pioneered in the Danish town of Aarhus. Faced with increased numbers of youngsters leaving Aarhus for Syria, police officers made it clear that those who had travelled to Syria were welcome to come home, where they would receive help with going back to school, finding a place to live and whatever else was necessary for them to find their way back to Danish society.  Known as the ‘Aarhus model’, this approach focuses on inclusion, mentorship and non-criminalisation. It is the opposite of Prevent, which has from its very start framed British Muslims as a particularly deviant suspect community.

We need to change the narrative of counter-terrorism in the UK, but a narrative is not changed by a new title. Just as a rose by any other name would smell as sweet, a bad policy by any other name is still a bad policy. While the Home Affairs Select Committee concern about Prevent is welcomed, real action is needed. This will involve actually engaging with the Muslim community, listening to their concerns and not dismissing them as misunderstandings. It will require serious investigation of the damages caused by new Prevent statutory duty, something which the report does acknowledge as a concern.  Finally, real action on Prevent in particular, but extremism in general, will require developing a wide-ranging counter-extremism strategy that directly engages with far-right extremism. This has been notably absent from today’s report, even though far-right extremism is on the rise. After all, far-right extremists make up half of all counter-radicalization referrals in Yorkshire, and 30 per cent of the caseload in the east Midlands.

It will also require changing the way we think about those who are radicalized. The Aarhus model proves that such a change is possible. Radicalization is indeed a real problem, one imagines it will be even more so considering the country’s flagship counter-radicalization strategy remains problematic and ineffective. In the end, Prevent may be renamed a thousand times, but unless real effort is put in actually changing the strategy, it will remain toxic. 

Dr Maria Norris works at London School of Economics and Political Science. She tweets as @MariaWNorris.