http://www.zerohedge.com/news/italy-jumps-nationalization-bandwagon-local-finance-police-seizes-20-second-largest-domestic-in
Submitted by Tyler Durden on 04/19/2012 14:00 -0400
Repsol, meanwhile, announced from Madrid that it would seek $10bn (£6.25bn) in damages from Argentina for its 57% stake in YPF.
and.....
BUENOS AIRES, Argentina (AP) — The government showed no signs of backing down Thursday from expropriating a Spanish company's controlling stake in Argentina's formerly state-owned energy company, shrugging off international condemnation while finding overwhelming support for the plan in congress.
Italy Jumps On Nationalization Bandwagon: Tax Police "Seizes" 20% Of Second Largest Domestic Insurer
At least Argentina kinda, sorta had the right idea: find an expensive foreign asset and nationalize it, impotent EU sound and fury be damned. Key word here: foreign. A few days later, the latest trade was escalation move appears to have gone viral, if with some curious, and serious, modification in the process. Minutes ago we learned that the Italian Finance police had seized a 20% stake in a heretofore unnamed firm (how does the police seize a stake? They pocket 20% of the electronic shares held in custody by the local DTCC? or they kidnap 20% of the Board of Directors? Inquiring minds want to know). We vaguely expected it would be a retaliatory move, and the firm would be based out of Latin America. No such luck. As Reuters fills in, the company "seized" is Premafin, "which controls Italy's No. 2 insurer Fondiaria-SAI as part of a judicial probe on market manipulation, the tax police and a judicial source said on Thursday."
At this point we can only say poor Italians for two reasons: 1) it appears that unlike in the US, where the SEC actively encourages market manipulation, especially if by means of High Freaks, Italians will be punished for such meddling trifles which achieve nothing but to restore some confidence in the manipulated market and 2) when you nationalize, don't, repeat do not, nationalize your own firms. Always go for the foreign ones first. Although there is some hope: "The stake in question is held directly and indirectly by two foreign trusts, the tax police said in a statement. The seizure, part of an ongoing investigation by Milan prosecutors, could complicate a planned merger of Fondiaria with peer Unipol." So ok, Italy got the nationalization part only half wrong. Good. So....first Argentina, now Italy: who is next on the nationalization bandwagon.
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http://www.guardian.co.uk/world/2012/apr/17/argentina-oil
Fernández hopes Peronist coup will revive Argentina's failing economy
Boss of nationalised oil company Repsol declares 'This is being done to cover up the social and economic crisis in Argentina'
A woman holds an Argentinian flag at the presidential palace after President Cristina Fernández de Kirchner announced that the oil company YPF would be nationalised. Photograph: Daniel Garcia/AFP/Getty Images
Even as president Cristina Fernández de Kirchner announced on TV her plan to nationalise Spanish-owned YPF, her emissaries were at the oilcompany's 35-storey Buenos Aires headquarters giving its Spanish directors 15 minutes to leave the building.
Coming two months after King Juan Carlos had personally phoned Fernández to lobby against such a move, the seizure enraged Madrid. "Argentina has just shot itself in the foot in a really bad way," said Spain's foreign minister, José Manuel García-Margallo, warning that the takeover would hamper Argentina's access to international credit and export markets. "The damage to Argentina could be irreparable," he said.
But in Argentina, Fernández's televised announcement that she was sending a bill to Congress to appropriate Repsol's majority stake in YPF was greeted with cheers of "Cris-ti-na! Cris-ti-na!" by her officials in the audience at the Casa Rosada presidential palace. Members of La Campora, the Peronist youth group founded by her son Máximo Kirchner, these young economists are masterminding the nationalist imprint that characterises her second term after a landslide 54% in last year's elections.
The tabloid Crónica headlined its front page "Dame Courage", while a crowd gathered at the Casa Rosada with banners reading "We're going for everything" – a phrase Fernández has used to describe her "national and popular" government's battle against the media and "corporations" that she has in the past accused of plotting her overthrow.
The YPF bill giving the government a 51% stake is expected to pass in less than two weeks, but opponents are outraged. "This decision is going to make things worse, rather than better and goes totally against the interests of the Argentine people, and within a year we're going to be in a worse situation than we are in now," said the capital's mayor, Mauricio Macri, of the conservative PRO party, lead contender for 2015's presidential election.
Repsol, meanwhile, announced from Madrid that it would seek $10bn (£6.25bn) in damages from Argentina for its 57% stake in YPF.
"This is being done to cover up the social and economic crisis in Argentina," said Repsol's chief, Antonio Brufau, who flew in last week in an unsuccessful bid to meet Fernández before the takeover. "She refused to hear us, just as she refused to hear the Spanish government," Brufau said.
Fernández was motivated in part by a failing energy sector, which has been unable to meet the demand of the economic takeoff of the past nine years. Growth is also threatened by inflation and by the spending on social welfare programmes and industrial subsidies that forms the basis of Fernández's popularity.
In 2012, it is estimated Argentina will import more than $12bn of gas and oil to compensate for the failure of firms such as YPF (which produces 30% of Argentina's oil) to meet demand.
YPF was privatised and sold to Repsol by a previous Peronist administration in the 1990s.
Renationalisation is aligned in the minds of Fernández supporters with the renewed demand for sovereignty over the Falkland Islands in the South Atlantic claimed by Argentina as "Las Malvinas".
"The Malvinas are Argentine, so is YPF," say posters around the country and a T-shirt that artists who support Fernández have started wearing on internet campaigns in favour of the takeover. "This ends five centuries of white Spanish domination," said a supporter. Argentina was ruled by Spain until its independence in 1816.
But opponents blame the government's erratic energy policies for the energy gap. "There is no energy plan," said María Eugenia Estenssoro, an opposition senator of the Civic Coalition party. "How can we expect the same people responsible for this problem to fix it?"
Fernández's government could use some distraction. Inflation, at 20%, threatens to accelerate following the removal of consumer subsidies on home utility rates and transport. The ensuing 500% increase in energy bills for some homes and hefty rises for train and bus tickets has alienated consumers who voted last year for continuation of an economic miracle that now seems endangered.
For the time being, Argentina is ignoring Madrid's angry words about the forced takeover. "This president won't respond to any disrespect or insolent phrases," Fernández said. "I am a head of state, not a bully."
and......
http://www.europeanvoice.com/article/imported/eu-urged-to-take-action-against-argentina/74150.aspx
EU urged to take action against Argentina
Argentine government re-nationalises oil firm.
The European Union is being pressed by Spain to retaliate against Argentina after the government in Buenos Aires expropriated an oil firm owned by the Spanish energy giant Repsol. Spain's government will hold a cabinet meeting tomorrow (20 April) to discuss “consequences in the diplomatic field, the industrial field, and on energy”, according to José Manuel Soria, its industry minister. On Monday (23 April), the EU's foreign ministers will discuss the Union's response at a meeting in Luxembourg.
“All possible options are being analysed,” said Catherine Ashton, the EU's foreign policy chief, who will chair the meeting. She described Argentina's move as a “cause for grave concern” and said she was “alarmed” by it. “The Spanish government has our full backing in this matter.”
Karel De Gucht, the European commissioner for trade, is drafting a letter to the Argentine government outlining the concerns of the Commission. José Manuel Barroso, the president of the Commission, said that he was “seriously disappointed” by Argentina's action. He said that the EU expected Argentina to meet its international obligations, notably those under a bilateral investment treaty with Spain. A Commission official said: “We are working hand in hand with Madrid.”
On Monday (16 April), Cristina Fernández de Kirchner, Argentina's president, announced that the government was seizing Repsol's 57% stake in YPL, Argentina's main oil firm, reportedly after Repsol tried to sell its stake to a Chinese buyer. A senior EU official said that Barroso had warned Kirchner against the move. “We saw it coming but thought that they might hold off a little bit longer to consider the implications,” he said.
Meeting cancelled
In a first response, the EU has postponed a meeting of the EU-Argentina co-operation committee that was scheduled to take place in Buenos Aires tomorrow. The committee, which meets every other year, gathers senior officials from both sides and would have been attended by, among others, Christian Leffler, the managing director for the Americas in the EU's diplomatic service, and Gustavo Martin Prada, director for EU development policy in the European Commission's department for development co-operation.
Antonio Tajani, the commissioner for industry, has cancelled a visit to Argentina by senior officials from his department planned for next week.
Spain's government has summoned Argentina's ambassador in Madrid. Alfonso Díez Torres, the EU's ambassador to Argentina, has conveyed European concerns to the government.
The dispute will be “a dominating topic” at a meeting of EU trade ministers in late May, an official said. “We stick to the rule of law that provides the legal certainty and stability that investors are looking for,” he said about the EU. “Argentina's knee-jerk action should not lead to a knee-jerk reaction by the EU.” He described Argentina's move as “self-defeating” because it could scare off investors in a major industry. Another official said that the dispute was important because the EU had major investments in Argentina. “Investors from many member states are concerned,” the official said.
Eurochambres and Businesseurope, the two main EU business associations, said they were “alarmed” by Argentina's “protectionist and discriminatory trade and investment measures”. They urged the EU to take all necessary action immediately “to defend the EU's commercial and investment interests in Argentina”.
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Spain has few ways to pressure Argentina over YPF
By Fiona Ortiz
MADRID (Reuters) - Spain has threatened to retaliate against Argentina for nationalising a Spanish energy firm, but Madrid will find it hard to put real pressure on a maverick nation that has been shut out of world debt markets and has ignored international fines in previous disputes.
Argentine President Cristina Fernandez said this week she would fulfil a life-long dream and solve her country's energy shortage by seizing control of its biggest oil company, YPF, a subsidiary of Spain's Repsol .
Madrid immediately threatened economic and diplomatic "consequences". But given Argentina's record with international investment and the restrictions on what sort of retaliation Spain can take, the threat may well be hollow.
"The threat really has very little credibility. What measures can they take?" said Jose Ignacio Torreblanca, head of the Madrid office of the European Council on Foreign Relations.
He said Argentina has little investment in Spain, while Spanish companies with investments in Argentina's highly regulated telecommunications and utilities sectors could suffer if tensions escalate between the two countries.
Spain will ask the European Union to file a complaint with the World Trade Organization against Argentina, a high-ranking government source said on Wednesday, though it may find difficulty winning support from all 27 EU member nations.
Spain will ask the European Union to file a complaint with the World Trade Organization against Argentina, a high-ranking government source said on Wednesday, though it may find difficulty winning support from all 27 EU member nations.
Even if it did receive EU backing, such a complaint may not succeed with the WTO, which would want proof that Argentina was acting against public interest by taking control of YPF as laid out in a Spanish-Argentine bilateral investment treaty.
"Unfortunately, there's no real WTO angle to this. This is a matter of investment and expropriation which is dealt with by the bilateral treaty," an EU source in Geneva said.
The EU, US and others are already chasing Argentina at the WTO because of its new protectionist import licensing rules.
The European Parliament is due to discuss the new dispute with Spain next week
ARGENTINA HASN'T PAID SETTLEMENTS
Under Fernandez and her husband and predecessor, the late Nestor Kirchner, Argentina has antagonised investors but still enjoyed strong economic growth and growing employment on the back of high prices for soy beans, its biggest export.
However, persistent investor jitters mean foreign investment in Argentina has fallen behind more business-friendly countries such as Brazil, Chile and Peru.
Given the business environment in Argentina, Repsol had already been working on scaling back its exposure to the country, so the effect of the nationalisation will be limited.
There is little leverage outsiders can put on Argentina except, perhaps, China, which buys 75 percent of Argentine soy beans and much of its processed soy as well.
Under the rules of the World Trade Organisation and the European Union, Spain cannot take unilateral trade action against Argentina, say by restricting imports of Argentine biodiesel or soymeal.
Its main recourse would be to take the Repsol-YPF case to the World Bank's International Centre for Settlement of Investment Disputes, known as the ICSID, to demand fair compensation for Repsol over the expropriation.
But Argentina could argue that it is in its public interest to expropriate YPF and a fight over the valuation of the firm is already on, as Argentina has said it does not intend to pay the $9.3 billion (5.8 billion pounds) that Repsol is demanding for its 51 percent of YPF.
Argentina also has a very bad record at the ICSID. Fully one quarter of all global cases handled by the body have been brought against Argentina.
"Argentina is among the worst in terms of compliance with ICSID judgements, if not the very worst," said Ana Palacio, a former secretary general of the ICSID and former Spanish foreign minister.
In March, U.S. President Barack Obama said he would suspend trade benefits for Argentina because it has failed to pay more than $300 million in compensation awards in two disputes.
European Union officials have publicly lamented Argentina's move against Repsol but Torreblanca of the European Council on Foreign Relations said the EU would give little more than moral support to Spain.
An EU trade official said Spain cannot limit any imports from Argentina without winning a dispute at the WTO. The EU's 27 members would also have to agree on the limitations.
"We don't do tit for tat. Just because there is a knee-jerk action by Argentina does not necessarily mean that there should be a knee-jerk reaction from the European Union," said another EU official, who asked not to be named.
GLOBAL RULE-BREAKER
Despite years of warnings that Argentina risks isolation, Fernandez has reinforced the country's reputation as a global rule-breaker, which began when it staged the biggest sovereign debt default in history in 2002.
And with the YPF move Fernandez has only cemented policies rooted in an ideology that has aligned Argentina with Venezuela's leftist President Hugo Chavez.
Argentina has repeatedly flouted world trade rules - drawing criticism from 40 countries earlier this year - by restricting all kinds of imports as it tries to reduce its trade deficit in order to increase foreign currency reserves to use to pay down debt, since it cannot access global credit markets.
Private companies, both domestic and foreign, have long been cowed by Fernandez and Kirchner, who have publicly called for boycotts or launched tax investigations against companies that got on the wrong side of their government.
The Argentinian government even has an enforcer, Domestic Commerce Secretary Guillermo Moreno, who personally calls company executives to warn them to keep down prices of products and to limit purchases of foreign currency.
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Ignoring The World, Argentina Is Fast-Tracking The YPF Takeover
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Top officials also suggested that Argentina won't pay anywhere near the $10.5 billion sought by Repsol-YPF SA for its stake, and that the company might not see any money at all before years of battles in international courts, if then. Repsol shares have tumbled 17 percent this week, and Standard and Poor's downgraded the company's stock Thursday to one step above junk.
Argentina's Senate is fast-tracking the expropriation measure, with only a handful of lawmakers opposed ahead of a floor vote next Wednesday. Some opposition members complained it seemed hastily prepared, but said they would vote for it anyway. Even Mauricio Macri, the Buenos Aires mayor who hopes to oust the government in 2015, said Thursday in a radio interview that he would keep YPF state-owned if elected, "now that the damage is done."
Sen. Anibel Fernandez said authors of the bill initially did not realize that YPF Gas SA, the nation's largest natural gas distributor, was separate from Repsol-YPF's Argentine oil operations, so its expropriation was added to the legislation at the last minute.
The Spanish company had no immediate reaction to the addition of the gas company to the expropriation legislation. "We are not commenting," a Repsol spokesman, Kristian Rix, said in Madrid.
The impact on Latin America's energy sector remains unknown. While Repsol stocks plunged YPF shares closed nearly 10 percent higher at $14.42 in New York trading Thursday after losing half their value this week, a network of other companies also have stakes in Repsol, and vice versa.
Mexico's state-owned Petroleos Mexicanos, for example, has nearly 10 percent of the company, while Repsol in turn owns sizeable stakes in other gas, fertilizer and chemical companies operating in Argentina.
The takeover prompted a flurry of meetings across Latin America as energy companies doing business in Argentina sought assurances. Executives of France's Total Austral gas subsidiary met with Argentine Planning Minister Julio de Vido in YPF's offices in Buenos Aires Thursday and promised to increase its natural gas production at sites co-owned by YPF by 2 million cubic meters a day — enough to grow Argentina's overall gas supply by 2 percent, de Vido announced.
Petrobras President Maria das Gracas Foster also planned to sit down with de Vido on Friday, likewise promising increased production and demanding the reinstatement of a lease revoked by the province of Neuquen, which accused the Brazilian company of failing to develop the site. The same argument was used to justify Repsol's ouster.
Meanwhile, Spain's Foreign Minister Jose Manuel Garcia Margallo said he asked U.S. Secretary of State Hillary Clinton for help in retaliating against Argentina, possibly at the World Bank, the International Monetary Fund, the G-20 nations and the Paris Club of financial officials from leading economies.
State Department spokesman Mark Toner said that "we're very concerned" about the nationalization move and urged Argentina again Thursday to "normalize its relationship with the international financial and investment community." But he didn't advertise what if any actions the U.S. would take to support Spain.
Interior Minister Florencio Randazzo told reporters in Buenos Aires Thursday that the government "makes decisions thinking about the Argentines and not about what the U.S. or Spain may think."
World Bank President Robert Zoellick called this attitude a mistake.
"I think it is a symptom that we have to watch out for," he said, when countries under economic pressure "respond with populism, respond with protectionism. I think it is the wrong thing to do," Zoellick said.
Argentine Economy Minister Hernan Lorenzino, appearing at the annual IMF and World Bank meetings that began Thursday in Washington, countered that both organizations have proven to be failures at rescuing economies.
"The only reality is that the people and internal markets suffer from austerity measures," he said.
"It's clear that this isn't our vision for emerging from the crisis. We have experience," he said, referring to Argentina's world-record default and devaluation in 2002. Both populism and protectionism have been government standards since then.
"We have come through with growth, employment, an internal market and social inclusion," he said. "This is what we've done since the most tremendous crisis in modern Argentine history in 2002."
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