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The European Parliament has slammed Argentina’s decision to nationalize leading oil company YPF in a resolution passed Friday and called for a partial suspension of tariffs that benefit Argentine exports into the EU.
In a resolution approved Friday by a vote of 458 to 71, European politicians “deplored” the “unilateral and arbitrary” decision by Argentine President Cristina Fernandez to nationalize YPF, and called on the EU’s executive arm, the European Commission, to consider a partial suspension of tariffs that benefit exports from the South American country into the EU, the Daily Telegraph reports.
The parliament also urged the Commission to use “all the available settlement tools within the World Trade Organization and G20” to retaliate to the expropriation, which it said breached Argentina’s “obligations stemming from international agreements.”
According to Reuters, Friday’s resolution – which is non-binding – also warns that Buenos Aires’ actions could “put a strain on the climate of understanding and friendship needed to reach” a trade deal currently being negotiated between the EU and the Mercosur bloc of Latin American countries led by Argentina and Brazil.
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Fernandez announced on national television on Monday that a bill would be presented to Argentina’s Senate enabling her center-left government to seize a 51 percent share in Buenos Aires-based YPF, in order to boost state control over the country’s crude reserves and stem a rise in fuel imports.
The Senate is expected to defy mounting international condemnation and rubberstamp the bill next week.
Shares in Repsol, which has a 57.5 percent stake in YPF, have lost almost a fifth of their value since Monday’s announcement.
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Repsol denies Argentina’s claim that it has failed to invest enough in local oil resources to help reduce the Latin American country’s surging import bill. Repsol’s chairman, Antonio Brufao, has vowed to fight the move in international courts if necessary, with the firm seeking $10 billion in compensation for its stake in YPF.
The BBC, citing regulator filings of a 2008 agreement, has also reported that Repsol may be obliged to buy a minority shareholder’s YPF stake if it does lose majority control, although Repsol denies this, claiming that Argentina’s seizure of its controlling stake invalidates that deal.
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Madrid has already threatened retaliation over the expropriation, raising the prospect of a trade war between the countries.
Spanish Prime Minister Mariano Rajoy expressed his “profound unease” at the move on Tuesday, while Secretary of State for European Union Affairs Inigo Mendez has warned Argentina that it is set to become “an international pariah.”
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