Argentina nationalises YPF despite Spanish/EU warning

Although it had appeared that external and domestic opposition to the decision to nationalise YPF had stalled the Argentinean government’s plans for the takeover, it wasannounced on Monday that President Christina Fernandez de Kirchner had askedher government to take control of 51% of the Spanish owned company. Kirchnerhad also signed an executive order, effectively seizing outright control of YPF for 30 days, with control given to planning minister Julio Miguel De Vido.

The remaining 49% ofthe company’s shares will be shared amongst oil producing provinces inArgentina.

The Spanish government,which has a vested interest in the future of YPF because of Repsol’s 57.4% stake in the company, had already threatened to use “all its might” to fightagainst the move. The Spanish government has yet to outline a course of action.

Maria Dolores Cospedal, a spokesman for the Spanish government said, “The government has to decide on its response, but I don’t have the slightest doubt that it will be the mostappropriate response to defend national interests and Spanish interests and asufficient and complete response to defend the interest of Spanish companies in Argentina.”

The Argentinean government has reportedly based its decision to take over YPF on the fact thatit has failed to increase output and investment. Critics of Kirchner’s regime, however, argue that frequent and unpredictable policy changes have made investment in the country too risky.

Rather than solving the problem of investment, many analysts are seeing this dramatic step as a sign that further investment would be unwise. Exactly how negative the outlook for future investment will be depends on what, if anything, the Argentinean government chooses to pay Repsol and YPF’s other former owners for the expropriation.

Edited from various sources by David Bizley

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