Repsol itself has threatened legal action for violation of both national and international laws, even as it moved to reassure it investors that the expropriation will not hurt its business. Repsol, The unlawful expropriation of YPF does not affect Repsol’s growth capacity outside Argentina (Repsol Website, April 17, 2012).
But Repsol has done more.
The move would discourage external partners from providing the investment YPF needs to exploit vast shale oil deposits discovered within the Latin American country and is the latest attempt by Repsol to fight back against the illegal seizure of its subsidiary.
“We reserve the right to take legal action against any party investing in the YPF and its assets following the unlawful expropriation of the company,” Kristian Rix, a spokesman for Repsol in Madrid, told the Daily Telegraph on Monday.The Spanish energy company believes billions of dollars are required to develop Argentina’s prospects including at least €25bn a year over the next decade to exploit the Vaca Muerta shale discovery made last year.Julio De Vido, Argentina’s Planning Minister has already approached Brazil’s state-run oil company Pertobras over investment in YPF and plans to contact other foreign oil companies including Exxon, Chevron and ConocoPhilips.
Both the Spanish government and the European Union moved to protect their interest as well.The development comes amid yet more rhetoric from Argentina as government sources insisted the offer of compensation would be “zero pesos”. (Fiona Govan, Argentine government to pay Repsol ‘zero pesos’ for YPF seizure as Spanish oil company issues legal warning, The Telegraph (UK), April 25, 2012.)
The Spanish government, meanwhile, adopted a carrot-and-stick approach.Foreign Minister Jose Manuel Garcia-Margallo sounded conciliatory, saying Spain historically had very good relations with Argentina and wants to recover them. He said Spain would try to convince Argentina it needed to reach agreement with Repsol on fair compensation for nationalizing YPF, which he nonetheless said was a mistake that would scare off foreign investors.“It is in Argentina’s interest not to end up isolated in the world,” the minister said.At the same time, he said, Spain has proposed to EU partners a series of retaliatory measures against Argentina, such as filing a complaint with the World Trade Organization or downgrading trade relations.The EU could strip Argentina of trade benefits provided to developing countries or halt free-trade talks between the EU and the South American bloc called Mercosur. That would mean dealing bilaterally with Mercosur’s non-Argentine members, which are Brazil, Uruguay and Paraguay, Garcia-Margallo said in Luxembourg. (Alan Clendenning, Repsol threatens to sue firms that help Argentina, Houston Chronicle, April 25, 2012 )
In this picture released by Argentina's Press Office, President Cristina Fernandez, left, greets supporters during the inauguration of an energy plant in San Juan Argentina, Thursday April 19, 2012. Argentina's government showed no signs of backing down Thursday from expropriating a Spanish company's controlling stake in YPF, Argentina's formerly state-owned energy company, shrugging off international condemnation while finding overwhelming support for the plan in congress. Photo: Argentina's Press Office / AP. From Alan Clendenning, Repsol threatens to sue firms that help Argentina, Houston Chronicle, April 25, 2012
The expropriation, then, suggests the tensions created as the global economic order moves from one that was primarily based on the supremacy of the state, and their domestic legal orders, to one that de-centers the state and reduces its role to that of partner within webs of legal and contractual relations between states, states and non-state actors and international organizations. It suggests the way that the power of law is being countered by the expanding power of governance contract, and one in which the monopoly of state control within its territory is being challenged by the authority of international actors to reach into states through norm and contract. More importantly, it suggests that power within a territory may not be as central to sovereign development as the Argentine action–grounded in that 20th century view of autonomous national development, might appear. Argentina may be able to do as it likes within its territory, but it has little power to move outside actors–states and non-state organizations–from engaging with it in its now more risky economic development plans.
To a large extent, the expropriation marks a rear guard action of the state, and an expression of longing for a time half a century old, of the Third World’s New Economic Order. That is a world in which corporations are understood as creatures of the state in which they are chartered, one in which the ovberriding needs of the people, as determined by its government, makes law voidable and contingent. It is a world that the internal logic of globalization opposes. The Cuban State has been quick to see the struggle in those terms, and to weigh in on the side of the Argentine state apparatus.
Ministry of Foreign Affairs DeclarationThe Ministry of Foreign Affairs of the Republic of Cuba has learned of the decision made by the government of the Republic of Argentina to expropriate 51% of the oil company YPF, as stipulated in national legislation. Yacimientos Petrolíferos Fiscales is a subsidiary of the Spanish corporation Repsol which operates in Argentine territory.The company YPF, originally an Argentine state enterprise, was among the many privatized or sold at implausibly low prices by President Carlos Saúl Menem, who governed the country between 1989 and 1999, within the framework of neoliberal policies which were imposed on Our America during this period given the insistence and collusion of the United States.Cuba reiterates its unconditional solidarity with the Argentine Republic and affirms that the country is acting within its rights to fully exercise its sovereignty over its natural resources, including oilfields. The country’s action is based on international law and numerous related decisions which have been adopted by the General Assembly of the United Nations. (Republic of Cuba, Ministry of Foreign Affairs, Declaration, Havana, April 19, 2012, reprinted in Granma, April 20, 2012).