What will happen? Well, Setty pointed out that we have seen this movie before. In general, I think he is correct ... with a wrinkle.
- Nationalization;
- Giant compensation claims from Repsol ... say, I dunno, $10.5 billion;
- Long loud wait;
- Long drawn-out arbitration;
- Payment from Argentina ... well after Cristina’s term ends in 2016!
There is, however, a wrinkle. That wrinkle is that Argentina is the first country to try to stick it to ICSID. They have just said no. That has, shall we say, annoyed other countries. Consider that the Obama Administration has imposed sanctions on Argentina ... the first time that an American president has used the 1974 authority. The diplomatic reaction from Spain ... and Britain, and the European Union, and Mexico and Chile and (OMG!) Bolivia ... has been ferocious. This is looking much more like 1968 or 1938 than it is like more recent expropriation events.
It might play out quicker than we expect. The big if is the European Union. If it uses its muscle, regardless of legality, then Argentina is going to hurt. If it does not, then the Setty calendar will play itself out.
Either way, it will be a show.
Though I must say I wasn't expect such a strident response from Spain:
http://bloggers.com/post/humor-rajoy-cristina-tenemos-a-messi-no-intervenga-ypf-6256217
Posted by: pc | April 18, 2012 at 09:06 PM
Still holding? I feel a non-zero risk that Fernandez will not offer $19+, and the dividend is obviously going to be cut.
Posted by: Bernard Guerrero | April 19, 2012 at 11:37 AM