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European Parliament calls for sanctions against Argentina

THE European Parliament passed a resolution condemning Argentina’s nationalisation of YPF and called for a partial suspension of tariffs that benefit exports from the South American country to the EU.

The EU assembly branded the takeover of Repsol’s controlling stake “depolorable” and “an attack on business” and urged the “use of all diplomatic avenues available to solve the situation with Argentine counterparts”.

The resolution followed calls by Repsol last night to fight its corner. "I think that the European authorities, not just the Spanish Government, should try to force Argentina to come back to the right road," Antonio Brufau, chief executive of Repsol said in a television interview.

“There are a lot of measures that they can take in order to force Argentina to be a normal country," he insisted.

Spain’s government is expected to announce measures it will use to respond to the expropriation by Argentina following a cabinet meeting Friday lunchtime.

Argentina appeared to soften its defiant stance yesterday over the price it will pay Repsol for seizing a controlling stake in oil company YPF, conceding it would "sit down and negotiate" with the Spanish company.

Buenos Aires, however, pressed ahead with the nationalisation of the oil company, expected to be rubberstamped by a Senate vote next week, despite mounting international condemnation.

Argentina confirmed it would also seize YPF Gas, a local liquified petroleum gas distribution company. "We supposed it was a unit of YPF, but it isn't, it's a separate company," Senator Anibal Fernandez said on Wednesday night.

The World Bank's outgoing President, Robert Zoellick, said yesterday that Buenos Aires' decision to expropriate 51pc of YPF was a "mistake" and the "wrong thing to do", while Spain hailed US support in opposing the Argentine move.

Repsol has demanded at least $10bn (£6.24bn) in compensation for its YPF stake, a sum that was initially rejected out of hand by Argentina's deputy economy minister, Axel Kicillof. Mr Kicillof had said valuations used by Repsol were "reckless" and told fellow Argentine politicians on Wednesday: "We're not going to pay what they say."

But in a later interview with Argentine state television, he conceded: "I don't know if the value is $10bn, the only thing I can say is that I don't know how this figure was reached.

"They [Repsol] are welcome to sit down and negotiate the price," he said.

Repsol insisted the value of its stake would be determined by legal statutes that were set by Argentina at the time the Spanish company invested in YPF. A source said: "They fixed the price when they sold it in 1999 so they know the price ... perhaps they are realising that it will be difficult to dispute their own figures."

Spain's cabinet meets today to discuss its response to the actions, buoyed by an apparent promise of support from the US. Spain's foreign minister, José Manuel García–Margallo, met US Secretary of State Hillary Clinton yesterday and said they had agreed to "explore all ways in which we can co–operate to restore international legality".

He said they would examine actions that could be taken by the World Bank, the IMF or the G20. The issue is to be discussed at IMF and World Bank meetings this weekend.