facebook
twitter
rss
account
search
search
 

Argentina faces isolation over YPF seizure

April 19, 2012 at 6:15 PM   |   Comments

BUENOS AIRES, April 19 (UPI) -- Argentina faces international isolation over its seizure of Spanish-controlled national energy company YPF, a decision critics say the government will regret and pay heavily for.

Critics of the hurriedly decreed nationalization of YPF include the Obama administration, members of Latin America's trade bloc Mercosur and other regional organizations, the European Union and the World Bank.

China is quietly reviewing its multibillion-dollar investment plans for Argentina, business analysts said.

Argentina blames Spanish parent Repsol YPF SA for declining oil and natural gas production since 1998.

The nationalization plans may also affect natural gas producer YPF Gas S.A. even though it's not part of YPF, ruling party Sen. Anibal Fernandez said.

The nationalization has also put a pall over a long-orchestrated diplomatic campaign by Argentine President Cristina Fernandez de Kirchner to win over Latin American neighbors in support of her claim over the British-ruled Falkland Islands.

"The more we look at this, we view it as a negative development," U.S. State Department spokesman Mark Toner told reporters in Washington.

"These kinds of actions against foreign investors can ultimately have an adverse effect on the Argentine economy and ... further dampen the investment climate in Argentina."

He said the Obama administration agreed with Spain that Argentina's decision "creates a very negative investment climate" on an international scale.

EU senior officials canceled scheduled talks that were to pursue the idea of closer collaboration with Argentina and explore moves toward an EU-Mercosur free trade accord. With founding member Argentina facing isolation, Mercosur's long-held hopes of securing a trade foothold in Europe have been dashed, analysts said.

U.S. and European officials said Argentina's action would further delay the country's reintegration into the international financial community after its ignominious exit with a sovereign default in its 1999-2002 economic crisis.

Last month Obama withdrew U.S. preferential trade privileges that Argentina enjoyed as part of international help toward its recovery. Officials said Argentina failed to use a decade of grace to meet its obligations, including repaying debts.

Support for Argentina's nationalization has come from Venezuelan President Hugo Chavez, who launched a series of nationalizations for an intended fairer distribution of wealth that has yet to materialize. Oil-rich Venezuela is in deep recession for the third consecutive year.

Argentina's plans for YPF or their extension to YPF Gas S.A. have yet to outline ways the government will use to boost production beyond levels achieved by YPF or parent Repsol.

Argentina's energy industry is already in turmoil over business failures and disenchantment with government policies that have driven investors away.

The YPF takeover is to be the biggest nationalization in the natural resources field since Russia seized the Yukos oil company in 2004. Yukos investors surprised the Russian state by taking it to the International Court in The Hague.

Repsol has said it will sue Argentina for compensation in excess of $10 billion.

YPF's fate will dominate a meeting this weekend of the World Bank and International Monetary Fund.

For pointers to what lies ahead, financial analysts want Argentina to look again at the aftermath of the Yukos takeover. Argentina's fragile financial state and its previous sovereign default make it more vulnerable than Russia after the Yukos seizure.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
Most Popular
1
Stratosphere crash driver commits suicide Stratosphere crash driver commits suicide
2
U.S. intercepts two Russian fighter jets near Alaska
3
Pope Francis will name Spokane bishop as the next archbishop of Chicago Pope Francis will name Spokane bishop as the next archbishop of Chicago
4
Police closing in on suspect in Pennsylvania state trooper killing Police closing in on suspect in Pennsylvania state trooper killing
5
Boko Haram, Nigeria negotiating release of kidnapped girls Boko Haram, Nigeria negotiating release of kidnapped girls
Trending News
Video
x
Feedback