Argentina in Fresh diplomatic row over energy nationalisation

[grouchy13]

Argentina's planned nationalisation of energy firm YPF energy of which Spanish Energy group Respsol has a majority stake of 57.4% has brought about a fresh diplomatic impasse for Fernandez de Kirchner administration. The Spanish Government has strongly condemned the move while Respol executives have said that any such move will not go unpunished.

http://www.bbc.co.uk/news/world-europe-17739204

YPF Repsol: Spain says Argentina shot itself in foot



Demonstrators in Buenos Aires backed the nationalisation of YPF on Monday


Spain has said Argentina shot itself in the foot with its decision to nationalise the Spanish majority stake in the YPF oil company.
Foreign Minister Jose Manuel Garcia-Margallo said he had warned the Argentine ambassador of damage to relations between the two countries.
The majority stake in YPF is owned by Spanish oil firm Repsol, whose shares fell by 6% in Madrid.
The nationalisation alarmed investors but is said to be popular in Argentina.
Repsol has vowed to demand compensation, saying it could seek international arbitration over its 57% stake in YPF.
Analysis

Tom Burridge BBC News, Madrid
The rhetoric shows that there is real anger in Madrid but the best course of action for Spain's government now is less clear.
It will want to send a signal to Buenos Aires to show that its plan to take over Repsol's stake in YPF is not acceptable. However Spain and Argentina are strong trading partners, and when your economy is facing trouble at home, you need all the help you can get from abroad.
There will also be concern over other large Spanish companies based in Argentina, like the mobile phone operator Telefonica or Spain's biggest bank, Santander.
Madrid already has support from the EU and, on his scheduled trip to Colombia and Mexico, Spain's Prime Minister Mariano Rajoy will want to garner support in Argentina's immediate region.

"These acts will not remain unpunished," Repsol executive chairman Antonio Brufau told reporters.
The head of the European Commission, Jose Manuel Barroso, said he was "seriously disappointed" by Argentina's decision and that the EU expected the country to "uphold international commitments and obligations".
The European Commission had been due to hold talks with Argentina later this week as part of a trade and economic treaty but the meeting was postponed and a Commission spokeswoman said "all possible options" were being considered.
'Friendship' strained The Spanish foreign minister said he had told Ambassador Carlo Antonio Bettini that it was "bad news for Spain but dreadful news for Argentina".
"I believe that Argentina has shot itself in the own foot and what worries me the most is that this means the disruption of the long fraternal relations and as I said before it damages the Argentines and that is what must concern us all," he said.
He warned that Spain could retaliate economically against Argentina.
Spanish Prime Minister Mariano Rajoy is travelling to Mexico and Colombia, where he is expected to seek support for Madrid's position.

President Fernandez de Kirchner's policies have won support among ordinary Argentines


Argentine President Cristina Fernandez de Kirchner has dismissed the threat of reprisals, saying: "This president isn't going to respond to any threats... because I represent the Argentine people.
"I'm the head of state, not a thug."
The nationalisation was announced to applause on Monday at a meeting she held with her cabinet and provincial governors.
Reading out a statement at the meeting, an official said YPF had been "declared a public utility and subject to expropriation of 51% of its assets".
The government took over the management of YPF with immediate effect while the bill on expropriation was sent to the Argentine Congress.
Supporters of the nationalisation celebrated in Buenos Aires, waving placards that read "YPF - we're going for everything".
Graffiti appeared on a city centre wall that read "Repsol, get out of YPF".
Nationalising YPF

• Spain's Repsol has hitherto owned 57.4% of shares with 25.5% belonging to Argentina's Petersen, 0.02% to the Argentine government and 17% traded on stock exchanges
• The Argentine government proposes to seize 51% of the shares, all of which will be taken from Repsol's stake, leaving the Spanish firm with 6.4%
• The expropriated shares will in turn be divided between the Argentine government and provincial governors
• Following the expropriation, Petersen will retain its 25.5% stake and 17% of the shares will continue to be traded

Mrs Fernandez de Kirchner stunned investors in 2008 when she nationalised private pension funds and she has also renationalised the country's flagship airline, Aerolineas Argentinas.
Many Argentines blame free-market policies such as the privatisations of the 1990s for the economic crisis which resulted in a debt default in 2001-02.
Argentina wants to reduce its expensive energy imports from elsewhere, the BBC's Tom Burridge reports from Madrid.
'Mistaken policy' According to AFP news agency, Repsol will seek compensation of at least $10bn (£6.3bn; 7.7bn euros).
YPF accounts for just over a quarter of Repsol's operating profit, 21% of its net profit and 33.7% of its investments, Mr Brufau said.
Repsol's executive chairman accused President Fernandez de Kirchner of resorting to nationalisation "as a way of hiding the economic and social crisis which Argentina is suffering".
Argentina's crisis, he argued, was rooted in "a mistaken energy policy".
He accused Argentina of running a campaign of "harassment" in recent weeks in order to push down the price of YPF shares and get a bargain price for the expropriation.
"It is not appropriate for a modern country, Argentina does not deserve this," he said.
Repsol's Argentine partner, the Eskenazi family's Grupo Petersen, has a 25.5% stake in YPF which will not be affected by the nationalisation.
However, Reuters notes that it is unclear how Petersen will be able to repay a $1.9bn loan provided by Repsol.

Interesting developments in Argentina that through up some food for thought Geo Politically, perhaps Spain could strike back with Economic measures to hurt the Argentine economy but as the piece relates this could also harm their own markets while Buenos Aires ratchets up the nationalist rhetoric, namely against Britain and now towards Spain does Argentina risk isolating itself. Will Western investors be scared off by these actions and the apparent hardening of Argentine opinion towards European interests in their country.

Or perhaps the Argentine have just seen which way the wind is blowing perhaps if Western investors are cautious in investing in Argentine energy then maybe that wind may carry them towards China, whose own Energy giant Sinopec has expressed interest in a possible buy out of YPF. Perhaps the Chinese may now move into Argentine commodities markets such as they have in Argentina's neighbour Brazil and throughout Africa.

Sino/Argentine relations are already close with Argentine agricultural exports to China already overshadowing that of those to the EU or it's Mercosur trading partners. The Chinese are also involved in the buldiing of a fast rail network known as the "G line" from Retiro to Cid Campeador, A large scale investemtn rumored to be worth around $1.4 Billion.

Would a then a movement for a further closer Sino/Argentine relationship with it's foundation in joint energy ventures through up new head aches in the Falklands dispute. The possibility of large amounts of natural resources deposited around the disputed Isles would of course be attractive to resource hungry China, perhaps an arrangement could be made where Chinese support for Argentine claims would be rewarded with exclusivity for Chinese in procurement of of said resources.

Time as always will I'm not sure if by following this course of action if Argentina is chopping of it's nose to spite it's face.

[Erebus Pasha]

Closing this as there is already a thread about the same subject here