April 19, 2012

WHEN CRISTINA Fernandez de Kirchner was reelected president of Argentina last October, we posited that she had a choice to make between continuing to pursue the autocratic populism she practiced before the election and leading her country back toward global markets and the democratic world.

This week Ms. Fernandez made her choice clear, by nationalizing the country’s largest oil company. Like her recent renewal of Argentina’s claims to the Falkland Islands, the measure won her cheap domestic applause — and ensured that Argentina’s isolation from the world, and from the economic progress of its neighbors, will continue to grow.

Ms. Fernandez claimed the expropriation, done mainly at the expense of the Spanish oil firm Repsol, was intended as “a recovery of sovereignty” over a company whose production had been dropping. But the falling output of the firm, called Repsol YPF, was produced largely by bad government policies, including a cap on domestic energy prices and controls over profit remittances. In addition to causing a rift with Spain and with the European Union, the nationalization will merely ensure that Argentina is unable to attract the foreign capital and expertise necessary to exploit its large reserves of oil and gas, including substantial shale deposits.

The president’s further lurch toward the left is bad news not only for businessmen. Since the election the government has continued to attack independent media, including the country’s two most important newspapers, Clarin and La Nacion. Economists who dare to report the true rate of inflation — upward of 20 percent — are subject to prosecution, while the official figures are doctored. Ms. Fernandez is said to be guided by a circle of militants led by her son, Maximo, and named after a leftist president of the early 1970s, Hector Campora.

It’s worth noting that Mr. Campora helped to precipitate one of the periodic political and economic collapses that have plagued Argentina for more than half a century. The curse that shadows this once-rich country is the inability of its political class to learn from its blunders — or from its neighbors. While Brazil and Mexico power ahead, integrating with the world economy and consolidating stable democracies, Argentina under Ms. Fernandez is headed inexorably toward another crash. While there is little the rest of the world can do to prevent it, one way to send a wake-up call would be to remove Argentina from the Group of 20, the supposedly elite club of nations that gathers to weigh world economic problems. Neighboring Chile, which has far surpassed Argentina in economic and political development, would be the ideal replacement.