YPF Expropriation: Everyone Loses

Prof. Xavier Vives on Argentina's Takeover Decision


YPF Expropriation: Everybody Loses

Argentina’s controversial decision to expropriate its largest oil company, YPF, which belonged to Spain’s Repsol, may well backfire, according to IESE Prof. Xavier Vives. Besides Spain, many other European countries, not to mention the U.S. and China, have substantial investments in Argentina and, given this populist maneuver, may now think twice about injecting further capital in the country.

Argentina's recent decision take control of its largest oil company YPF, which belonged to Repsol of Spain, is a "misguided act," says Prof. Xavier Vives of IESE Department of Economics. And the move will have far-reaching negative effects on Argentina, as well as its neighboring countries.

Argentina is moving toward a brand of populism based on Peronism, which will make companies based in Europe, the U.S. and Asia think twice before making further investments in the country. "It is an example of how not to do things and from this, basically, there can only be losers," Vives says. It is also an example of opportunism and a government changing the rules of the game only after a company has invested in it.

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