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Argentina's renationalization of YPF: A push to manage oil on its own terms

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In a sign of strong national support, the bill to expropriate Repsol's shares received expedited approval in both the Argentine Senate and Congress, where it was even backed by opposition parties.

"What you're really seeing is a renationalization that reflects, I think, very important power changes," says Terry Karl, professor of Latin American Studies at Stanford University in Palo Alto, Calif.

That may not mean a devastating drop-off in foreign investment in Argentina, as many are predicting, however. The country recently discovered new shale and gas oil reserves, and has more than once defied dire predictions about its economy.

After a severe economic recession in the late 1990s, Argentina defaulted on nearly $93 billion in foreign debt, winning the country a reputation as a pariah. But it recovered using its own approach – against the advice of the international community.

Alienation and isolation

Kirchner insists that YPF needs to be controlled by the state so that Argentina can stop importing energy – $9.4 billion last year – and become self-sufficient. But as part of a broader protectionist policy, which includes foreign-exchange controls and restrictions on imports, the renationalization could drive away even more investors.

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