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The next Venezuela? Argentina to nationalize oil company

President Kirchner's plan to nationalize the Spanish-controlled oil company, YPF, is raising fears of more expropriations of privately run companies and has set off a furor in Spain.

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A sign reading in Spanish 'They are ours. CFK. YPF. They are Argentine' hangs in Buenos Aires, Argentina, Tuesday. President Cristina Fernandez pushed forward a bill to renationalize the country's largest oil company on Monday despite fierce criticism from abroad and the risk of a major rift with Spain.

Natacha Pisarenko/AP

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When Argentine President Cristina Fernández de Kirchner abruptly left the Summit of the Americas, it was reported that she did so over the lack of support for her country's claim to the British-controlled Falkland Islands.

Yesterday, President Kirchner revealed another reason she returned to Buenos Aires: to announce the nationalization of the Argentine oil company, YPF, whose majority stakeholder is the Spanish energy firm, Repsol.  The move has infuriated Repsol and Spanish officials, and raised concerns that this may be the first of many expropriations of privately run companies in Argentina, putting the government on the path toward a Hugo Chávez-type model of state control over key resources.

“Once you start expropriating you don’t know where it will stop,” says Boris Segura, an analyst at the New York investment bank Nomura.  “Mrs. Kirchner is now running close to Mr. Chávez’s model,” Segura says.

During a passionate speech at the presidential palace yesterday afternoon, Kirchner announced that her government will seize 51 percent of Repsol’s shares in YPF. Spanish industry minister José Manuel Soria immediately declared the move “hostile,” and said measures would be taken in the next few days against Argentina.

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