BUENOS AIRES--Argentine President Cristina Kirchner pledged on
Wednesday to double down on her government's economic program and
push ahead with plans to increase oil and gas production.
In her first public speech since having surgery to remove a
blood clot near her brain about six weeks ago, Mrs. Kirchner said
the government would "deepen" its economic policies and do whatever
is required to become energy self-sufficient again.
"The goal is to recovery our energy sovereignty," Mrs. Kirchner
told a boisterous group of young political activists gathered just
outside her office. "We're going to partner with whomever we need
to under the terms that are most favorable to our country."
Mrs. Kirchner was referring to efforts by the state-run oil
company YPF SA (YPF) to partner with major international energy
companies to revitalize Argentina's ailing energy industry.
Oil and gas production has plummeted over the past decade,
turning the country into a net energy importer to the detriment of
the government's finances. Argentina's imported fuel bill is
increasing about 25% a year and the country is on track to spend
around $12 billion this year alone on energy imports, according to
official data.
Mrs. Kirchner has been searching for outside energy investment
since she expropriated a 51% stake in YPF last year from the
Spanish oil company Repsol SA (REP.MC). Mrs. Kirchner said the
takeover was necessary to reverse falling oil and gas output.
Repsol disputes those claims and is suing Argentina for $10.5
billion in compensation.
YPF recently partnered with Chevron Corp. (CVX) in a $1.5
billion deal to produce shale oil and gas. Some analysts hailed the
deal as a key step toward unlocking Argentina's vast unconventional
energy resources. Critics say the Kirchner administration handed
Argentina's energy sovereignty over to a foreign company.
"We know this demands capital that is either not in Argentina or
is somewhere else and they don't want to put it here. I'm confident
people will understand that need we have to recover our energy
sovereignty," she said.
Mrs. Kirchner spoke to the crowd after swearing in new members
of her cabinet. After dressing in black for the past three years in
mourning for the death of her husband and predecessor, Nestor
Kirchner, she addressed the crowd in a dark but colorful skirt.
Earlier this week, she purged her economic team and named a new
chief of staff in the biggest cabinet shakeup in years. The changes
come as the administration struggles with a sluggish economy,
doubts about the president's health, and a succession struggle in
the ruling Peronist movement two years before Mrs. Kirchner is
scheduled to step down.
Mrs. Kirchner's promotion of Axel Kicillof to Economy Minister
from the No. 2 job at the ministry will likely put an end to the
Balkanization of economic policy-making that has characterized her
government.
Until now, outgoing Economy Minister Hernan Lorenzino, Mr.
Kicillof, and Guillermo Moreno, who enforced price controls and
foreign trade policies, had competed with each other for the
president's ear. Central bank president Mercedes Marco del Pont
frequently clashed with some members of the economic team over how
to address inflation, which economists say totals around 25%
annually.
The exit of Mr. Lorenzino, Mr. Moreno and Mrs. Marco del Pont
clears the way for Mr. Kicillof to assume full responsibility for
running the economy without distracting power struggles within the
ministry.
A student of Marxist and Keynesian economic theory, Mr. Kicillof
is an outspoken supporter of a significant state presence in the
economy. He is widely credited with engineering Mrs. Kirchner's
expropriation of YPF.
Mr. Kicillof will have little time to ease into his new role as
Argentina suffers fatigue from more than a decade of populist
economic policies initiated by Mr. Kirchner when he took office in
2003.
Many economists say that inflation has been running at or above
20% for almost four years due in large part to rampant government
spending financed in part by the printing of money. Argentina also
faces declining foreign currency reserves that have led the
government to ration U.S. dollars to businesses and the public.
Reserves settled at $31.9 billion Wednesday, a drop of more than
25% since the end of last year.
Analysts expect the administration to expand currency controls
and import restrictions in the coming weeks to staunch the
bleeding.
"It should become an increasingly active debate on how officials
will honor the hefty U.S. dollar liabilities with scarce foreign
exchange reserves," Siobhan Morden, head of Latin America strategy
at Jeffries, said in a note.
Write to Ken Parks at ken.parks@wsj.com and Taos Turner at
taos.turner@wsj.com
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