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OP-ED | 13-06-2020 08:30

Vicentin a V-sign – but which way?

Whether taking the kindest or the harshest view of Monday’s intervention of the food conglomerate, the government stands to lose either way.

If a V-shaped recovery is the best case scenario for emerging from pandemic lockdown and an L-shaped the worst, the government might fancy that the first letter of Vicentin augurs the former, but this shot in the dark looks far more likely to lead to the latter with the “L” standing for a lose-lose situation. Whether taking the kindest or the harshest view of Monday’s intervention of the food conglomerate, the government stands to lose either way.

If we see it as a well-meaning bid to salvage a debt-riddled company with the interests of thousands of workers and farmers denied income uppermost and Santa Fe’s moderate Peronist Governor Omar Perotti as the main driving-force, it is still potentially catastrophic as coming at the start of a crucial week in foreign debt negotiations – an administration supposedly unable to pay a cent for almost its entire term suddenly having at least an extra US$1.3 billion or so to absorb Vicentin’s mammoth debts sends entirely the wrong message, all the more so with export-linked coupons reportedly the latest offer to creditors.

Yet the consequences arising from the worst fears are far more alarming – not least because they are likely to dominate the interpretations of an outside world inclined to judge by appearances. The obvious suspicion of any government including Vice-President Cristina Fernández de Kirchner, given her presidential track record, is that this Vicentin move is a “food sovereignty” stalking-horse for a wholesale state invasion of lucrative grain markets – if a left-leaning administration is denied the cash cow of Vaca Muerta shale by collapsing world energy markets (and here the choice of YPF Agro for the trusteeship takes on significance), then grab grain because a post-pandemic globe will continue to eat. It should be said that the Vicentin issue is far more complex with a murky debt history –one in which the previous Mauricio Macri presidency is far from innocent –  and none of it is none of this government’s making. But the outside world is not going to see all this – the prevalent conclusion will be that if it barks like a dog and wags its tail like a dog, then it is a dog.

At home this audacious move has triggered a powerful backlash which quickly had the government accepting dialogue and fudging on expropriation (although going immediately ahead with the trusteeship) but maybe we should not judge by appearances – this intermediate formula could be their real strategy rather than any maximum objectives. Even if La Cámpora militants are seen as the main driving-force behind this rather than the likes of Perotti, it should be recalled that the Kirchner approach towards public services always favoured power without responsibility – the utilities in private hands to this day and YPF oil with Repsol or Aerolíneas Argentinas under Marsans for many years. The plan might thus well be to replace the National Grain Board urged by fundamentalists with a state-fuelled Vicentin as a dominant force in the sector along the lines of YPF among oil companies (with YPF Agro the perfect trustee for that aim). Such plans ignore the basic fact that this sector dictates world players who understand that global grain markets are defined in Chicago and China, not Rosario and Buenos Aires – Vicentin was never in that league and if it ever aspired to be a Cargill or Louis Dreyfus, it was only by virtue of its partnership with Glencore and over-ambitious investments leading to its colossal debts.

The timing of this move is unfortunate from the standpoint of YPF, as well as debt talks, since it came on the next working day after a Manhattan judge ruled that the trial of the oil company’s expropriation would be remaining in New York. Both this setback and the mushrooming concessions to creditors in those debt negotiations in a determined bid to avert default might well lead to the Vicentin move being seen as primarily a distraction by those pundits who like to see all politics as diversionary tactics – but if a distraction, its consequences might well prove to be dire, as with any default.

Much more could be written but perhaps space only remains to highlight the dangers to legal security when the state and not the judge names the trustee in bankruptcy proceedings (and not even with a state company since YPF has only 51 percent public ownership). It might be over the top to point out that Vicentin and Venezuela begin with the same letter but the government may well have embarked on a slippery slope swooshing straight downwards rather than any V-shaped recovery.


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