HispanicBusiness

Spain and the United States will take joint action in response to Argentina's forced nationalization of the YPF oil company, Spanish Foreign Minister Jose Manuel Garcia-Margallo said Thursday.

"We will explore all ways in which we can cooperate to restore international legality," Garcia-Margallo said after meeting US Secretary of State Hillary Rodham Clinton on the margins of a NATO meeting in Brussels.

He did not go into specifics, but mentioned the World Bank, the International Monetary Fund, the G20 and the Paris Club of creditor countries as institutions where Argentina's move could possibly face censure.

Earlier, Garcia-Margallo criticized the Argentine government, saying its decision to strip Spain's Repsol of its controlling stake in YPF may "help hide its shortcomings" in the short run, but would eventually backfire.

Related story: "Argentina To Expropriate Spanish-owned YPF Oil Company"

"Very soon it will be shown that a policy of isolation from the world is the worst policy that you can have in the 21st century," he said.

The US initially declined to take sides in the Argentinian-Spanish dispute, but overnight, after some prodding from Madrid, it said that it viewed the expropriation of YPF as "a negative development."

The European Union meanwhile reiterated its support for Spain in the dispute. An attack against Spain was an attack on all of the European Union, European Justice Commissioner Viviane Reding told Spanish National Television.

Spain has also received the backing of Chile and Mexico, though Venezuela sided with Argentina. The World Economic Forum for Latin America rejected protectionism at a summit which concluded in Mexico on Wednesday.

Argentine President Cristina Fernandez has accused Repsol of not investing sufficiently in oil exploration and production, partly blaming the company for Argentina's energy supply problems.

Many Argentinians have welcomed the nationalization of YPF. But critics of the Argentine government say it is using the affair to make the public forget about corruption allegations and an annual inflation rate that reaches 25 percent, by some accounts.