Natacha Pisarenko, Associated Press
BUENOS AIRES, Argentina — Argentina's takeover of its top energy company from Spain's Repsol might solve the country's short-term energy needs, and it thrills Argentines who blame privatizations for their economy's collapse a decade ago. But analysts say it sends a terrible signal to anyone wanting to invest in Argentina.
President Cristina Fernandez made Spain furious by decreeing that her government will recover YPF by expropriating Repsol's majority stake in the company.
Fernandez, who already nationalized Argentina's flagship airline and private pension funds, said her aim is nothing less than to recover her country's sovereignty. She accused Repsol of provoking an energy crisis by exporting too much of Argentina's oil and failing to invest locally even as it paid huge dividends abroad.
Re-nationalizing YPF is a gamble that could boost her popularity ratings, which dropped from 70 percent in January to 50 percent in April, according to the Poliarquia tracking poll, following a scandal involving her vice president, soaring inflation, a cooling economy, reductions in utility and transportation subsidies and a deadly train crash.
Crowds turned out Tuesday to cheer the move, including a group that briefly invaded a YPF plant in La Plata and replaced a Repsol flag with Argentina's. Then they stomped on the Spanish banner and drove a car over it for good measure.
But Argentina's effort to control its energy future has provoked an avalanche of diplomatic protests and vows of retaliation from Spain and its allies.
It also could scare off investors just when YPF needs billions of dollars and long-term commitments to exploit what could be the world's third largest unconventional energy reserves, in Argentina's Patagonia region.
"It sends off a terrible image of Argentina because the country is once again violating property rights as it did during the debt default or the nationalization of the Anses state pensions fund," said Sergio Berensztein, who runs Poliarquia, a Buenos Aires consulting firm.
"Argentina's reputation is going to suffer a lot and many investments will be lost," Berensztein predicted. "I don't think Argentina has a socialist ideology like Chavez's Venezuela but it is evidently becoming more radicalized and in both cases the state will continue to intervene in companies."
The takeover comes after months of pressure on YPF to increase its Argentine oil and gas production. Provincial governments have rescinded YPF licenses in major oil fields, alleging the company broke its contracts by failing to invest more. Repsol denies this, saying it has invested billions in the fields over the years, and planned to ramp up production even more.
Fernandez named Planning Minister Julio de Vido and Deputy Economy Minister Axel Kicillof to run the company, which had been state-owned since the 1920s and a source of pride for Argentines until it was privatized in the 1990s.
At a heated senate hearing to discuss the bill on Tuesday, De Vido asserted that many energy companies had expressed interest in the last few hours in replacing Repsol. He said the intervention would be short, and would turn YPF into a stronger, forward-looking company, not one that is "silly, foolish and autistic."
Energy-rich Argentina has gone from being a major exporter of natural gas and oil to a major buyer of expensive energy imports that erode its trade surplus, which has helped sustain Argentina's high economic growth over the past nine years.
Repsol President Antonio Brufau dismissed the criticism and accused Fernandez of trying to cover up Argentina's economic and social ills with the "unlawful" expropriation, which caused the group's shares to plunge more than 7 percent on Tuesday. He said the company aims for compensation of at least $10.5 billion.
Kicillof cast doubt on that figure, saying YPF has major debts to pay and suggesting that environmental cleanup costs also will be deducted from whatever his government pays.
- Judge rejects motion, clearing way for Steven...
- Oklahoma court: Ten Commandments monument...
- Religious schools and universities on edge...
- A world apart: 2 women with birthdates in...
- Who is in, and about to get in, the GOP race...
- Don't blink or you might miss the leap second...
- Convicted killer thought fellow escapee was...
- NBC to Donald Trump: You're fired
- Religious leaders ponder next steps... 60
- Oklahoma court: Ten Commandments... 45
- White House lit in rainbow colors after... 33
- Woman removes Confederate flag in front... 25
- Religious schools and universities on... 25
- NBC to Donald Trump: You're fired 24
- Obama delivers unvarnished race lecture... 13
- U.S. Supreme Court overturns EPA's... 13