Argentina's socialist government has been on a nationalization tear. It recently seized a major gas company owned by a Spanish conglomerate. Nationalization of assets is a total repudiation of property rights and while citizens tend to cheer such moves because they erroneously assume they will somehow benefit, the economic effects will absolutely stop the flow of capital to such nations. The economic blow back will be severe.
Facing intense criticism over the nationalization of its biggest oil firm, Argentina on Thursday ordered the seizure of YPF Gas, another group controlled by Spain's Repsol, a move expected to further inflame tensions. In a case that has sparked fears of a new wave of expropriations, a statement published in the official gazette said the Argentine government was declaring YPF Gas a public utility and taking 51 percent of the shares. YPF Gas is not technically part of the YPF oil group ordered nationalized this week, leading to global condemnation, but a separate company. However, an 85 percent stake in the gas firm is owned by Repsol Butano SA, a division of the Spanish energy giant. Officials said the move was an extension of the takeover of YPF, the big unit of Repsol that Argentina decided to seize this week.
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