SPAIN has threatened to retaliate against Argentina for nationalizing a Spanish energy firm, but Madrid will find it hard to put pressure on a maverick nation that has been shut out of world debt markets and has ignored international fines in previous disputes.

Argentina has rejected Repsol YPF SA's demand for US$10.5 billion in compensation after President Cristina Fernandez seized its YPF SA unit, saying it hasn't invested enough in the South American country.

Madrid threatened economic and diplomatic "consequences." But given Argentina's record with overseas investment and the curbs on retaliation Spain can take, the threat may be hollow.

"The threat really has very little credibility. What measures can they take?" said Jose Ignacio Torreblanca, head of the Madrid office of the European Council on Foreign Relations.

He said Argentina has little investment in Spain while Spanish firms investing in Argentina's highly regulated telecom and utilities sectors could suffer if tensions rise between the two countries.

Source:shanghaidaily.com