Natacha Pisarenko, Associated Press
BUENOS AIRES, Argentina — Argentina accused Spain's Repsol oil company on Tuesday of hiding the true value of its Argentine YPF unit and said a thorough review of its books after seizing control of its offices will affect the compensation paid to its shareholders.
The allegations by Deputy Economy Minister Axel Kicillof came as Spain, Argentina's leading trading partner, denounced the takeover of YPF and warned of potentially damaging retaliation.
Kicillof told Argentina's Senate that the company has major debts to pay, and suggested that environmental cleanup costs could be deducted from whatever the Argentine government pays for Repsol's expropriation. "only from the inside can we know the environmental damage, much of surely has not been published in their balance books."
Repsol estimates that the 51 percent stake in YPF that Argentina is expropriating is worth $10.5 billion. Kicillof cast doubt on that, and said that Repsol will be responsible for any debts and damage it caused while running the company.
"We're going to see where they threw out each cubic meter of contaminated water," he vowed.
Spain's government had warned that Argentina's nationalization of the Spanish-controlled energy company would be seen as an attack on the South American country's leading trading partner, and responded sharply Tuesday to President Cristina Fernandez's announcement that she is making good on the threat.
The move spoils the good relations that had existed between Argentina and Spain, and "greatly affects the international reputation of Argentina," Spanish Prime Minister Mariano Rajoy said at a World Economic Forum meeting in Puerto Vallarta, Mexico.
Fernandez on Monday decreed that Spain-based Repsol's majority stake in YPF is a "public good" and subject to expropriation. She put two of her top political appointees in charge of the company, whose executives were forced to abandon their offices in Buenos Aires. She also asked her majority in Congress to quickly ratify the re-nationalization of YPF, which was state-owned for decades before its privatization in the 1990s.
"No one can say that we're taking away something that was theirs," said Kicillof, a Marxist economist, in Senate debate on the expropriation measure.
Repsol's president, Antonio Brufau, accused Fernandez of trying to quell increasing unrest at home and boost her popularity with the "unlawful" bid, which caused the group's shares to plunge more than 7 percent on Tuesday.
Argentina's move also affects Mexico's state-owned Petroleos Mexicanos, which owns 10 percent of Repsol and is among many shareholders around the world who watched the announcement with dismay.
"I am absolutely convinced that the road to economic growth and development is not the road of expropriations," said Mexican President Felipe Calderon, though his country each year celebrates the 1938 nationalization of its own oil industry.
Spain's government prepared retaliatory measures, the European Commission indefinitely postponed a bilateral trade meeting between the European Union and Argentina, and other countries were considering diplomatic, legal and economic counter-measures.
"This creates an uncertainty which is not helpful to our economic relations and to the economy as a whole," European Commission President Jose Manuel Barroso said.
Fernandez and her ministers have complained that Repsol failed to invest enough in Argentina's energy future, taking profits out of the country in the form of dividends, and exporting too much of Argentina's oil to profit from world prices, rather than supplying price-controlled markets within Argentina.
Brufau said the company is insisting on compensation, saying Fernandez "carried out an unlawful act and made unlawful charges after a campaign aimed at knocking down YPF shares and allowing expropriation at a bargain price."
- Wyoming ranked third in US in percentage of...
- Test anxiety: How cold feet are ruining your...
- Hometown pastor says community stands by...
- Sen. Harry Reid's retirement recalls his...
- 'A marvellous work and a wonder': A look back...
- Drownings along Rio Grande spike after...
- O'Malley: Presidency 'not some crown'...
- Hundreds rally against Indiana law, say it's...
- Student loan recipients on 'strike'... 89
- Obama expected to stay overnight in... 59
- The latest developments on religious... 44
- Sen. Harry Reid's retirement recalls... 42
- Indiana lawmakers try to quiet... 40
- Hundreds rally against Indiana law, say... 27
- Why businesses are speaking out on... 21
- State Department says Hillary Clinton... 16