Argentina's National Airline Renationalised

Any general overview of Latin American economic history will show you how attitudes for or against nationalisations and privatisations swing back and forth over time with a pendulum-like consistency.

The 1980s and 1990s saw the pendulum of state vs. private debate swing back in favour of privatisation after the presumed overreach, corruption and mismanagement of the state-owned enterprises of the mid-20th century. SOEs were meant to have fuelled economic development in many a Latin American country. Unsurprisingly, perhaps, it wasn’t long before the pendulum swung back the other way and privatisation became a word that any politician sought to distance themselves from as far as humanly possible. Of course this didn't always stop them from implementing privatisation. In Bolivia during the 1990s, President Gonzalo Sánchez de Lozada was somehow able to hood-wink the Bolivian people into believing that when he was selling off the rights of the country’s natural resources to foreign multinationals, it wasn’t so much 'privatisation' but rather 'capitalisation'. Yes, there is a difference, but it’s a slight one at best. And it ultimately left the Bolivian government unable to benefit from the huge windfalls that were soon to be made from Bolivia's recently discovered huge natural gas reserves. But more on that in my dissertation paper...

Anyway what drew my attention today through my daily trawl through the BBC website was the news that the Argentine government is to renationalise its floundering airline, Aerolineas Argentinas - Argentine Airline Set For Bumpy Ride. The national airline was one of many companies to been sold off rapidly when Carlos Menem was Argentine President back in the 1990s. Now with the left-of-centre and so-called ‘back-to-the-roots populist Peronism’ of the Kirchner's in hold of the Casa Rosada (Buenos Aires's answer to the White House) a number of the sectors once privatised by Menem have been renationalised.

It seems pretty obvious that it’s going to be hard, if not impossible to bring Aerolineas Argentinas back into profit. Then this nationalisation isn’t just about making a profit. Okay there is the nationalistic sentiment – something Argentines have in bucket loads - that goes hand-in-hand with having a national airline. And with a majority of Argentines actually favouring the government taking control of the airline, it would make political sense for under-pressure President Cristina Kirchner to do something that for once wouldn’t have half the nation up in arms. However I think in a country like Argentina, a country that is so immense in its geographic dimensions, with numerous far-away provinces that depend upon a direct link to the capital, needs a national airline. An airline that is more concerned with servicing these far-away communities than with make a profit at the end of the year.