When Cristina Fernandez signed away the nationalization of YPF in Argentina, it was reverse gear driving.
Oil biz is lucrative and many a Governments around the world survive only on their oil wealth. Including the whole of Middle East OPEC countries and then the famous Venenzula oil company, which drives the full economy of that country and Cuba. Russia also nationalized Grazprom and incarcerated the major shareholder on account of tax frauds.
But to manage a country with oil wealth is different from managing a country with jurisprudence and market economy.
Government does not know, how to do business and is not trained either to run companies. It only knows stamping and signing papers and searching for enough reasons of obstructing business. Hence , no matter how lucrative business it runs, the chance of it being sucked dry is very high.
On the other side, business, which do not continuously invest for growth and are a major part of the economy of a nation, also are cripplers of that country.
The fair position would have been the right constitution of the board and putting enough state directors to steer private investment and not Government investments.
Now the Government funds, which need to build the state infrastructure like schools, hospitals, highways, goes into running of a company inefficiently.
India did the same thing many years back of nationalizing all the sick running textile companies and for decades these textile mills have sucked the tax payers money with no return to the shareholders.
Bolivia last week did a similar U Turn on a Power plant. Where is all this going to take the South American economy to is not known.
Oil biz is lucrative and many a Governments around the world survive only on their oil wealth. Including the whole of Middle East OPEC countries and then the famous Venenzula oil company, which drives the full economy of that country and Cuba. Russia also nationalized Grazprom and incarcerated the major shareholder on account of tax frauds.
But to manage a country with oil wealth is different from managing a country with jurisprudence and market economy.
Government does not know, how to do business and is not trained either to run companies. It only knows stamping and signing papers and searching for enough reasons of obstructing business. Hence , no matter how lucrative business it runs, the chance of it being sucked dry is very high.
On the other side, business, which do not continuously invest for growth and are a major part of the economy of a nation, also are cripplers of that country.
The fair position would have been the right constitution of the board and putting enough state directors to steer private investment and not Government investments.
Now the Government funds, which need to build the state infrastructure like schools, hospitals, highways, goes into running of a company inefficiently.
India did the same thing many years back of nationalizing all the sick running textile companies and for decades these textile mills have sucked the tax payers money with no return to the shareholders.
Bolivia last week did a similar U Turn on a Power plant. Where is all this going to take the South American economy to is not known.
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