Spain is at the head of the line, but the queue of countries complaining about this week’s decision by President Cristina Fernández to re-nationalise Yacimientos Petrolíferos Fiscales (YPF), the local subsidiary of Spain’s Repsol, is growing by the hour. As Fernández continues to make policy U-turns (see our sister publication the Brazil and Southern Cone report, RBS-12-04), confidence in the country is crumbling faster than a house of cards on a windy day; with it also vanishes the government’s ability to return to international credit markets, from which it has been barred since the 2001 default.
The rumours about the takeover had been brewing since late 2011; the recent escalation in official Spanish warnings to Argentina not to move in that direction testified to Madrid’s increasing worries that Buenos Aires would act soon. Spain’s minister of industry, José Manuel Soria, said last week that the Spanish government defends the interests of Spanish companies both “inside and outside” Spain and “if in any part of the world there are gestures of hostility against those interests, the government interprets them as gestures of hostility towards Spain and the government...and these will have consequences”.
Uncertainty over the company’s future also prompted José Manuel Barroso, the president of the European Commission, to phone Fernández. Antonio Brufau, Repsol’s CEO, spent five days in the Argentine capital trying to meet the president, but he was only received by Minister of Planning Julio de Vido.
Responses
Following the announcement of the takeover [RBS-12-04], international responses were loud and negative. Mexico’s President Felipe Calderón said the decision was “very regrettable”, and showed “little responsibility and little rationality” because this would effectively shut the door to foreign investors. “No-one in full control of their faculties invests in a country that expropriates investments...that is the worst incentive for an investor,” he said. During an event with Spanish businessmen on 18 April, and just hours before Spanish Prime Minister Mariano Rajoy started an official visit to Colombia, President Juan Manuel Santos said “when investors come, I say ‘welcome, you are our partners and if you do well, we do well too...we want you to feel that we have stable rules... that we don’t expropriate here’”.
Barroso ordered the immediate cancellation of a scheduled bilateral EU-Argentina meeting in Buenos Aires; the French government called for “European solidarity with Spain” and Foreign Minister Alain Juppé called on Argentina to “respect international law”. The British foreign secretary, William Hague, said the move is contrary to “all the commitments” made by Buenos Aires at the G20.
The European response clearly indicates that Southern Common Market (Mercosur)-European Union (EU) Free Trade Agreement (FTA) talks, which have been creeping along slowly for six years, could once again be stopped in their tracks. A rumour that has circulated in British political circles since PM Rajoy visited his British peer, David Cameron, in February is also gaining strength. According to these reports, Spain, which is a G20 observer member, would seek the support of full-members to suspend Argentina from this forum. If the Argentine move on YPF has in fact jeopardised EU-Mercosur FTA talks, Madrid may even be able to persuade Brazil to refrain from opposing the move openly, even if it does not back it outright.
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