MercoPress. South Atlantic News Agency

YPF seizure has sent “shockwaves” globally; Argentina will “suffer consequences”

EC Trade Commissioner De Gucht: we will do everything in our power to support Spain’s compensation claims

European Trade Commissioner Karel De Gucht said Argentina is in for long term consequences after sending “shockwaves” internationally with the announced plans to expropriate 51% of YPF shares owned by Spain-based Repsol oil and gas company.

“By taking this action, Argentina has sent shock-waves through the international business community,” De Gucht said in a speech.

“The consequences for its own economic development will be felt for a long time to come,” he told the European Parliament’s Committee on International Trade (INTA).

De Gucht also said the bloc would take measures to shield itself from an insecure investment climate. The expropriation of YPF shares, “remind us all of the importance of moving quickly to equip the European Union with all the means it needs to implement an effective investment policy.”

The Commissioner said the bloc is looking into retaliation measures “taking into account of the fact that this follows a series of unjustified and damaging protectionist measures recently introduced,” De Gucht pointed out.

The EU would do “everything in [its] power” to support the Spanish government's claim for full compensation, he added.

Likewise Spain's Foreign Minister José Manuel García Margallo said that the Argentine government plans for the expropriation of YPF shares will end up a case at the World Bank International Centre for Settlement of Investment Disputes (ICSID).

“It doesn’t look like it worries Argentina’s authorities very much since when they loose, they don’t pay,” the Spanish official told Chilean conservative newspaper El Mercurio.

“The case will end at the World Bank International Centre for Settlement of Investment Disputes, in Washington. Argentina accounts for 50% of the world’s cases registered at the ICSID and for 50% of the South America’s arbitrations,” Garcia Margallo remarked.

The Foreign minister also openly criticized President Cristina Fernández government by saying her administration had “no direction” and that it would cause “serious damage to Argentina.”

Garcia Margallo condemned Argentina for affecting commercial relations between Europe and the Mercosur.

“It is not fair for the countries of the Mercosur to be left out of the system for tariff preferences because Argentina cannot respect the rules.”

ICSID is considered to be the leading international arbitration institution devoted to investor-State dispute settlement. The primary purpose of ICSID, according to the World Bank, is to provide facilities for conciliation and arbitration of international investment disputes.