Argentina: Disputing the Power of Provinces

A burgeoning fight over hydrocarbons between Argentina's national and provincial governments is beginning to take center stage in Buenos Aires. Governors from 10 oil-producing provinces will meet with Argentine Planning Minister Julio de Vido on June 3 and President Cristina Fernandez de Kirchner on June 9. The ostensible reason for the meetings is to discuss the standardization of provincial taxes on state-owned energy company YPF. The national government is pushing for provincial taxes of no more than a 3 percent on the company's gross income. The real question is whether the firm can force provincial governments to offer better, more consistent terms. The implications of this political struggle go far beyond YPF and will help set the stage for a more favorable investment climate for foreign companies.