Spain vows to fight ‘New Evita’ over oil firm seizure

AN INCENSED Spain has threatened swift economic retaliation against Argentina after it announced plans to seize YPF, the South American nation’s biggest oil company, which is owned by Spanish energy giant Repsol.

Madrid yesterday called in the Argentine ambassador in a rapidly escalating row over the nationalisation order made on Monday by Argentina’s populist and increasingly assertive president, Cristina Fernandez, a move that delighted many of her compatriots but alarmed some foreign governments and investors.

Promising action in the coming days, Spanish industry minister Jose Manuel Soria said: “With this attitude, this hostility from the Argentine authorities, there will be consequences that we’ll see over the next few days. They will be in the diplomatic field, the industrial field, and on energy.”

Repsol said YPF was worth $18 billion (about £11bn) and it would be seeking compensation on that basis. Repsol described Argentina’s move as “clearly unlawful” and said it would take legal action.

“This battle is not over,” Repsol chairman Antonio Brufau said. “The expropriation is nothing more than a way of covering over the social and economic crisis facing Argentina right now.”

But Fernandez dismissed the risk of reprisals. “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,” she said.

European Commission president Jose Manuel Barroso said he expected Argentina to uphold international agreements on business protection with Spain. “I am seriously disappointed about yesterday’s announcement,” he said in Brussels. Spanish media, meanwhile, condemned the Argentine action, believed to be the biggest nationalisation in the natural resources field since the seizure of Russia’s Yukos oil giant a decade ago.

La Razon newspaper carried a photograph of Fernandez on its front page in a pool of oil with the headline: “Kirchner’s Dirty War”, referring to her full name. El Periodico spoke of “the New Evita”, pointing out that Fernandez had announced the nationalisation in a room decorated with a large portrait of Eva Peron, the actress who was married to a president and revered by many Argentines as a populist mother of the nation and champion of the poor.

YPF has been under pressure from Fernandez’s centre-left government to boost oil production, and its share price has plunged in recent months on speculation about a state takeover.

Through the nationalisation move, Argentina runs the risk of frightening off foreign investors, key to contributing money to help develop one of the world’s largest reserves of shale oil and gas recently discovered in the Vaca Muerta area.

Fernandez said the government would ask Congress, which she controls, to approve a bill to expropriate a controlling 51 per cent stake in YPF by seizing shares held exclusively by Repsol, saying energy was a “vital resource”.

She has also renationalised the country’s flagship airline, Aerolineas Argentinas. Such measures are popular with ordinary Argentines, many of whom blame free-market policies such as the privatisations of the 1990s for the economic crisis and sovereign debt default of 2001-2 – the biggest in history.

Argentina has been frozen out of global credit markets since then and analysts said seizing YPF might make it even harder for it to get fresh financing.