Argentina was poised on Thursday night to launch the forced takeover of assets from the Spanish energy group Repsol, risking a diplomatic showdown with Spain and scaring investors needed to unlock the country's vast shale gas reserves.
As we have detailed recently, everything is set for a showdown in a not so distant future. YPF was originally a state oil company but today is 53% owned by Repsol.
There is nothing wrong with trying to nationalize oil resources in Argentina, but this is not an isolated trend in terms of relationships between countries. Just a few weeks ago, Argentina tried to intercept, inside Uruguayan territorial waters, Spanish vessels travelling to the Falkland Islands.
In Argentina, the anti-British campaign is gathering pace in the context of a ruinous financial situation as a consequence of which the Argentinean state is having troubles when trying to obtain foreign currencies. Also in this context, it is easy to understand why the Argentinean government has implemented regulations to control parity exchanges to try and keep in Argentina as many US Dollars as possible.
Lending institutions - including British banks - were threatened because they are providing financial support to oil exploration companies in the South Atlantic.
Reports were issued indicating that Hilary Clinton, the American Secretary of State, asked for classified information regarding the state of mind of Argentinean President Cristina Fernández Wilhelm and this happened before Hilary Clinton visited Argentina. This is an additional reason to be worried. We all assume that a Democratic Argentina would not dare to become engaged in an illegal invasion. Unfortunately, the unpredictable behavior of the Argentinean government is telling us that we must be on our guard.
In 1982, a desperate Argentinean Military Junta launched the invasion of the Falkland Islands. In 2012, a mentally unstable Argentinean President might try to do exactly the same. There are certainly parallels between General Leopoldo Fortunato Galtieri and Cristina Fernández Wilhelm. The present Argentinean President is using the populist card to divert attention from the internal financial chaos