The U.S. Treasury Department announced today that it would increase its stake in Citigroup, the nation’s banking giant struggling to find its pulse, from 8% to 36%. See http://www.nytimes.com/2009/02/28/business/28deal.html?_r=1&hp. That’s not a majority share, of course, but it amounts to effective control–effective nationalization.
Nationalization of industry (banks, healthcare, what have you) is considered by most to be a hallmark of socialism, still an unpopular concept here in the United States. In terms of this nation’s policy towards South America, movements to nationalize industry by our neighbors to the south almost invariably lead to frosty relations. Take Venezuela and Bolivia. When they nationalized their oil and gas industries, the drift widened markedly.
It stands to reason that as the U.S. nationalizes its own banks–or at least one, very large bank–it will be less likely to criticize nationalization abroad. This can only help relations between the U.S. and countries like Bolivia and Venezuela. Incremental improvement, perhaps, but improvement nonetheless.
-N. Fromherz
P.S.–I’m not saying I support the Citigroup move; that’s a whole different debate. But if it’s going to happen, we might as well find a silver lining.
