The European Commission (EC) today warned that the Argentine government expropriation of 51% of YPF’s capital, controlled by the Spanish firm Repsol would send a “very negative” to investors and could seriously damage the business climate in the country.
“A expropriation by the Argentine government would send a very negative signal to investors, national and international, and could seriously damage the business climate in Argentina,” said EU trade spokesman, John Clancy.
Clancy said the European Commission’s desire that the differences between the Argentine government and Repsol YPF can be smoothed through a common solution that satisfies both parties.
The EU executive argues in this regard to find a “mutually agreed solution that will not harm the business climate and the relations between the EU and Argentina.”
Last week, the EC President, Jose Manuel Durao Barroso sent a message to the office of Cristina Fernandez through the Commission delegation in Buenos Aires in which he showed his concern and called for respect for the country’s commitments with foreign investment.
Earlier, the EC had made public that he was “on the side of Spain” in this dispute with Argentina, while acknowledging that currently has no legal mechanisms to pressure the Latin American country to meet its commitments on investment companies from EU countries.
Although the Treaty of Lisbon (2009) the EC acquired skills on community investments in third countries, there is still no legal instruments, so that the legal framework that applies in this case is the treaty of bilateral investment protection ( BIT) between Spain and Argentina.
The framework agreement on trade and economic cooperation in 1991 between the European Economic Community and Argentina allows for cooperation and joint actions, but it gives the EU the possibility to take action against the South American country on issues related to trade or investment.
In parallel, EU sources stated that the World Trade Organization (WTO) “does not cover issues of protection of investment and there are no commitments at the multilateral agency with Argentina, so that the EU” has no chance to react “not on that base.
The next 19 and April 20 is scheduled to meet the EU-Argentina joint committee in Buenos Aires.
Before the adoption of the Lisbon Treaty, the EC and successfully exerted diplomatic pressure on Argentina to dismiss its intention to adopt a law on public services that many Member States considered detrimental to their investments in the country.
Category: Business News