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Spain threatens 'decisive' action as Argentina moves to nationalize oil firm

Spain threatened economic retaliation against Argentina Tuesday after Buenos Aires took control of an oil company said to be worth $18 billion.

Argentina's President Cristina Fernandez de Kirchner replaced the chief executive officer of oil firm YPF -- the country's biggest firm -- and said she would send a bill to congress to take a 51 percent stake in the company, the Bloomberg news agency reported.


Spanish oil firm Repsol is the major shareholder in YPF and it said it would seek compensation on the bases that YPF was worth $18 billion. However, its shares dropped by more than eight percent Tuesday, Reuters 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," Spanish industry minister Jose Manuel Soria said, according to Reuters.

He added that the government would take "clear and decisive" measures, according to Bloomberg.

Madrid called in the Argentinean ambassador in a rapidly escalating row over the nationalization order, Reuters said.

Fernandez: I'm 'not a thug'
Fernandez's move delighted many of her compatriots but alarmed some foreign governments and investors. 

"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, according to Reuters. 

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

"If this [the YPF's] policy continues -- draining fields dry, no exploration and practically no investment -- the country will end up having no viable future, not because of a lack of resources but because of business policies," she said. 

Repsol described Argentina's move as "clearly unlawful and seriously discriminatory." "This battle is not over," Repsol chairman Antonio Brufau said. 

Spanish media condemned the Argentinean action, which Reuters said was believed to be the biggest nationalization in the natural resources field since the seizure of Russia's Yukos a decade ago. 

Right-wing newspaper La Razon 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. The business newspaper La Gaceta de los Negocios branded the takeover "an act of pillage". 

On the left, El Periodico spoke of "The New Evita", pointing out that Fernandez had announced the nationalization in a room decorated with a portrait of Eva Peron, the actress who was married to a president and revered by many Argentineans for her populist politics. 

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