Spain-Argentina oil spat threatens special ties

By Jorge Sainz

Associated Press

Published: Thursday, April 19 2012 10:15 a.m. MDT

Also, Spain belongs to the 27-member European Union, which could freeze trade accords with Mercosur, the trade bloc that is made up of Argentina, Uruguay, Brazil and Paraguay.

It is taken for granted that Spain will air its complaints in all international forums, including the Group of 20 industrial powers. Its summit in Mexico in June could bring Fernandez and Spanish Prime Minister Mariano Rajoy together face to face for the first time.

"If Argentina's message is that it will continue to do what it feels is right to defend its interests but in a unilateral way, agreement will be difficult even in the event (the two leaders)can meet face to face," Malamud said.

Besides economic relations, there is another, less tangible link between the two countries — a form of international "brotherhood" and solidarity that Spanish Foreign Minister Jose Manuel Garcia-Margallo said was broken by the YPF expropriation announcement.

The countries have enjoyed warm relations since Argentina gained independence from Spain in 1810. There are strong cultural links as well as family ties, both from the colonial period and modern times.

In the worst stretches after the Spanish civil war of 1936-39, tens of thousands of Spaniards chose Argentina as a place to emigrate and start a new life. Decades later, military dictatorship in Argentina and then the crisis known as the "corralito" — when people could not withdraw their money from banks in 2001 — saw thousands of Argentines come to Spain.

"This is a relationship forged over the course of a century. These are intensive ties with very intensive migratory movements also," Malamud said.

"The movement of intellectuals, writers, scientists and professors has been constant, if you track the intellectual history of the two countries," he added.

In that sense, Malamud said the YPF case threatens historical, preferential relations between the two countries.

"The worst-case scenario we are facing is the severing of diplomatic relations. This is a scenario that cannot be ruled out," he said. "The two sides should tone down their language and their message, which encourages nationalism on both sides."

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Ciaran Giles contributed to this report.

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