1. LEAKED CABLES RATTLE THE AMERICAS (The Miami Herald)
By Jim Wyss And Tim Johnson 1 December 2010
Argentine politicians defended their leader’s mental health, Bolivia denied its president had a tumor and Venezuela accused the United States of dividing the region, as WikiLeaks continued to rile Latin America with the release of some 251,000 confidential and secret U.S. diplomatic cables.
Among the disclosures this week are reports that Cuban spies have a direct line to Venezuelan President Hugo Chávez — often overshadowing Venezuela’s own intelligence agency — and that Secretary of State Hillary Clinton asked the U.S. Embassy in Buenos Aires to delve into the psyche of Argentina’s President Cristina Fernández de Kirchner.
Only 290 of the 251,287 diplomatic cables have been released by the controversial, whistle-blower website, but they provide a snapshot of U.S. government interests in the region.
According to WikiLeaks, nations in South and Central America are mentioned 33,805 times, or in about 8 percent of the communications.
Topping the list is Venezuela, which appears 3,435 times, Brazil at 3,070 times and Colombia at 2,896 times.
Among the controversial revelations made so far is a cable dated Dec. 31, 2009 by the State Department’s Bureau of Intelligence and Research that asked probing questions about the mental health of Fernádez de Kirchner and her late husband, former President Nestor Kirchner.
“How is Cristina Fernández de Kirchner managing her nerves and anxiety?” asked the secret cable. “How does stress affect her behavior toward advisors and/or her decision making? . . . Is she taking any medications?”
Delving into the personalities of foreign counterparts may be integral to modern diplomatic give-and-take. But the bluntly worded cable asking about the Argentine leader’s “nerves” and “emotions” may further test up-and-down relations between Washington and Buenos Aires.
The cable also suggests that Washington saw Kirchner and her husband, who died Oct. 27, as prone to emotional instability.
On Tuesday, former presidential chief of staff Alberto Fernández blamed a 2006 magazine article — it suggested the president might be bipolar — for the State Department’s line of questioning.
Venezuela has also been caught in the WikiLeaks cross-hairs.
Late Tuesday, Spain’s El País newspaper — which has been given a preview of the full cache of cables along with a handful of other media outlets — posted a communication from Jan. 30, 2006 titled “Cuba/Venezuela the Axis of Mischief.”
The secret memo issued by the U.S. Embassy in Caracas said Cuban spies were so influential in the country that Venezuela’s own intelligence services often took a back seat.
“Cuban intelligence officers have direct access to Chávez and frequently provide him with intelligence reporting unvetted by Venezuelan officers,” the cable posted on El País’s website said. “Cuban intelligence officers train Venezuelans both in Cuba and in Venezuela, providing both political indoctrination and operational instruction. They also may work in other Venezuelan government ministries, unconfirmed sensitive reporting suggests.”
Chávez — a rabid U.S. foe who has called Cuba’s political system worthy of emulation — has raised the alarm among some of his neighbors.
Buried in a fresh batch of cables published Tuesday on the WikiLeaks website was a series of conversations between the U.S. Ambassador to Brazil and Nelson Jobim, the minister of defense.
A Feb. 20, 2008 cable said Jobim “shared the ambassador’s concern about the possibility of Venezuela exporting instability” but feared efforts to isolate Chávez “would lead to further posturing from Chávez and a greater risk of spreading instability among neighboring countries.”
In a cable from Nov. 11, 2009, Jobim “all but acknowledged” the presence of Colombian FARC guerrillas in Venezuela, but said raising the issue publicly “would ruin Brazil’s ability to mediate.”
On his website, Chávez blasted the State Department for ordering U.S. diplomats to collect biometric and financial information on regional leaders and United Nations delegates.
“It’s a failed state, an illegal state that has thrown its ethics and respect for its allies overboard,” Chávez wrote. “The United States doesn’t have allies or friends. It has interests.”
In a cable dated Jan. 22, 2009, Jobim also confirmed that Bolivian President Evo Morales had a “serious sinus tumor” and had been invited to Brazil to have it treated.
In Bolivia on Tuesday, presidential spokesman Iván Canelas told Bolivia’s Red Erbol network of radio stations that it was common knowledge that Morales had been operated on for a “problem with his nasal septum” but he denied Morales had a tumor.
With thousands of cables yet to be published, “cablegate,” as some media call it, will likely roil the region for weeks.
One of the leaked cables detailed Argentine umbrage at Assistant Secretary of State Arturo Valenzuela’s suggestion in late 2009 that U.S. businesses had concerns over “rule of law and management of the economy in Argentina.”
“Once again, the Kirchner government has shown itself to be extremely thin-skinned and intolerant of perceived criticism,” the cable said.
The Argentine anger at Valenzuela contrasted with the good relations it held with his predecessor, Thomas Shannon, an Oxford-educated U.S. diplomat with a smooth demeanor.
According to the Madrid daily El País, a not-yet-public cable dated Sept. 2, 2008, reveals how Shannon convinced Kirchner that Washington did not have anything against Morales, Bolivia’s first indigenous leader, and did not seek to break apart his country.
“Evo is not an easy person,” Kirchner told the U.S. ambassador in Buenos Aires at the time, according to the cable cited by the newspaper.
Whatever does come out next, Latin America will be listening. On Monday, Ecuador’s Deputy Foreign Minister invited WikiLeaks founder Julian Assange, who has gone into hiding, to set up shop in the country.
“We want to invite him to Ecuador so he can exhibit his work freely,” Kintto Lucas told El Comercio newspaper. “Not just over the Internet.”
But on Tuesday, President Rafael Correa said Lucas was speaking for himself and not the government.
2. U.S. ANALYSTS SOUGHT DETAILS ON MENTAL HEALTH OF ARGENTINE PRESIDENT (CNN.com) David de Sola November 30, 2010
Washington (CNN) — State Department analysts raised questions about the psychological state and health of Argentine President Cristina Fernandez de Kirchner, according to a December 2009 cable recently published by WikiLeaks.
The analysts were curious about the “interpersonal dynamics” of the president and her husband Nestor Kirchner, who was also his wife’s immediate predecessor as president.
The cable, which was sent from the secretary of state’s office and signed by Hillary Clinton, said that the analysts had “a much more solid understanding of Nestor Kirchner’s style and personality than we do of Cristina Fernandez de Kirchner,” and wanted to develop “a more well-rounded view” of the then-president’s personality.
Among the questions put to the U.S. Embassy in Buenos Aires was a series about President Fernandez de Kirchner’s mental state and health: how she managed her nerves and anxiety, how stress affected her behavior toward advisers and decision-making, whether she was on medications, and how she calmed down when distressed.
The cable also asked about President Fernandez de Kirchner’s approach to dealing with problems, and whether she shared her husband’s “adversarial view of politics.” It also asked about how the Argentine first couple divided up their day and on what issues each of them took the lead or deferred to the other.
The 2009 cable also asked about the health of former President Kirchner. He died of an apparent heart attack last month in October.
President Fernandez de Kirchner was elected to office in October of 2007, at the same time then-Sen. and former first lady Clinton was seeking the Democratic nomination for the 2008 presidential election in the United States.
3. WIKILEAKS LAYS BARE US CONCERNS ON FERNÁNDEZ (Financial Times) Jude Webber November 30, 2010
Washington sees Argentina ‘s government as “acid”, “impervious to advice”, inept at foreign policy, and “extremely thin-skinned”, and last year sought information about the mental health of Cristina Fernández, the president, and her ability to control her emotions and manage stress, according to confidential cables revealed by Wikileaks.
The leaked documents, splashed all over the papers and given lengthy airtime on television, have so far drawn no official response.
The State Department last year dismissed as a “contretemps” the Argentine government’s outrage at concerns about the business climate expressed by Arturo Valenzuela, the US government’s assistant secretary of state for western hemisphere affairs, on a visit to Buenos Aires in December 2009.
“Once again, the Kirchner government has shown itself to be extremely thin-skinned and intolerant of perceived criticism,” it said in leaked confidential cable number 242241 devoted to the fallout from Mr Valenzuela’s remarks.
“Concerns about the weakness of Argentina ‘s institutions, and the rule of law in particular, are a dime a dozen in the Argentine press,” the cable continued, adding that many Argentines saw the government’s denials as “laugh lines or cynically disingenuous statements”.
But the incident nonetheless prompted Hillary Clinton, the secretary of state, to request information on the mental and physical health of Ms Fernández and the internal power dynamics between the president and Néstor Kirchner, her husband and predecessor.
The leaked cables come at a delicate time, just over a month after Mr Kirchner’s sudden death of a heart attack. Ms Fernández, whose popularity has risen on an outpouring of sympathy, has broken down in public several times since then before swiftly regaining her composure. She has so far shown little desire to change either the government’s policies or style in the run-up to presidential elections next October.
In cable number 242255, the State Department asked its embassy in Buenos Aires for information on how Ms Fernández dealt with stress and anxiety, if she was on any medication, whether her emotions affected her decisions and how she unwound when agitated.
“How is Cristina Fernández de Kirchner managing her nerves and anxiety … Does stress affect her…decision making?” the cable bluntly asked.
It also sought to clarify whether she shared her husband’s “adversarial view of politics” or sought to moderate him, as well as an update on his gastrointestinal problems and clues about what triggered his temper.
The cables also revealed Argentina ‘s disgust at being made to wait longer than Brazil for a meeting with Barack Obama and Washington’s dim view of the Argentine government’s foreign policy skills, as shown by Ms Fernández’s fruitless trip to El Salvador after Manuel Zelaya, the Honduran president, was deposed.
Another US document described the presidential power couple as “acid”, “impervious” to outside advice and “paranoid” about power, but noted, too, that they had always been that way since Mr Kirchner took office in 2003.
4. ARGENTINA HOUSE HOLDS 1ST-EVER ABORTION DEBATE (The Washington Post.com) November 30, 2010
BUENOS AIRES — A key committee of Argentine legislators is launching a first-ever debate on legalizing abortion in the largely Roman Catholic country.
The proposed law would legalize abortion during the first 12 weeks of pregnancy and has been signed by about 50 lawmakers in Argentina’s 257-person House of Deputies.
The debate in the congressional Commission of Penal Legislation is expected to be lengthy. Tuesday marks the final day of this year’s legislative session, shifting talks into 2011.
Abortion is prohibited in Argentina except in cases of rape or when pregnancy threatens a woman’s physical or mental health.
5. OBAMA’S TROUBLING ACCEPTANCE OF SOVEREIGN DEFAULT (Forbes.com) By Hal S. Scott November 30, 2010
Ireland, Greece and other nations on Europe’s periphery are laboring mightily to avoid default, swallowing their austerity medicine as they repair their balance sheets. This is what responsible nations do, since default should only be a last, disgraceful resort. They deserve Washington’s encouragement and support.
Contrast their efforts–and, as important, Washington’s response–to another sovereign debt challenge: Argentina, a G-20 member and one of South America’s most important economies.
Argentina has emerged as the world’s most egregious serial defaulter, jilting bondholders six times in its modern history. Its most opprobrious default occurred in 2001 to the tune of $81 billion. This is by far the largest sovereign debt default in global financial history.
When restructuring its debt in 2005, Argentina offered creditors a take-it-or-leave-it deal: 25 cents on the dollar. It did this despite having the capacity to pay much more. Today, Argentina trumpets the fact that it has over $54 billion in reserves.
Over the last decade, the Argentine central bank has become a pawn of the government. It has squirreled reserves away in the Bank of International Settlements (BIS) in Switzerland, the bank for central banks, in an effort to evade the enforcement of lawful judgments issued by New York courts. Multiple governors of Argentina’s central bank openly criticized the Argentine government for its growing infringement on central bank independence.
Argentina has defaulted on its debt and creditors are entitled to be paid. They have rightly sought relief in the courts. U.S. creditors won a significant victory earlier this year when they successfully seized $105 million of reserves purportedly held by the Argentine central bank at the Federal Reserve Bank of New York. Those funds had been blocked since 2005, but until this year Argentina had succeeded in delaying their disbursement.
District Court Judge Thomas Griesa, ruling in favor of bondholders, said at the time, “in all the years of litigation, the [Argentine government] has shown not the slightest recognition of obligation to pay. And it is clear beyond any question that the [Argentine] Republic, as it went on from the crisis of 2001, has at times had resources at its command to pay the judgments, or at least to make substantial part-payments.
But the Republic thus far has paid nothing on these judgments.” The court ruled that the New York Fed account really belonged to Argentina, not the Argentine central bank, the independence of which the government had destroyed.
Lost amid the midterm election mayhem was a move by the Obama administration in this case. Early in November the departments of Justice, State and Treasury filed a joint brief before the United States Court of Appeals for the Second Circuit supporting the Argentine government against American creditors. The brief advocates overturning Judge Griesa’s ruling.
The administration worries that in response to the Judge’s ruling, other countries might permit attachment of U.S. government accounts abroad. But this would happen only if the U.S. government defaulted on its debt, something the Obama administration has rightly and forcefully argued is not possible. Furthermore, over 90% of U.S. reserves are held in gold, at Fort Knox and safe from foreign creditors.
The New York Fed in its own brief conjures the nightmare scenario of other foreign central banks withdrawing their reserves to reduce the risk of suffering the same fate as Argentina. Such fears are unfounded. Other countries need only fear attachments if they default on their debt, fail to offer a fair restructuring and have non-independent central banks.
The major reserve holders are China and Japan, which are not in any danger of defaulting. Indeed, the prospect of attachment serves as an indispensable form of market discipline ensuring sound and prudent debt stewardship. Furthermore, the account at the New York Fed has been blocked for nearly five years, and not a dollar of reserves has been withdrawn.
But let’s suppose the New York Fed is right and foreign countries withdraw their reserves. The administration argued that this will weaken the dollar, drive up interest rates and increase our balance of payment deficits. Those claims are all patently false.
While it is perhaps true that withdrawn dollars could be moved outside the U.S., those dollars would continue to be held elsewhere, probably at the BIS. Where dollars are held has no effect on U.S. interest rates or dollar soundness; only the sale of those dollars does that.
There is a bigger picture the Obama administration is missing concerning other nations that might be tempted by the siren call of default. With the United States at the center of the global financial system and architect of many of its norms, what signal does it send to distressed nations at Europe’s periphery when the U.S. government sides with sovereigns that default?
Argentina has felt free to flout international financial norms and stiff its creditors for years. When the U.S. government sides with Argentina against those creditors, you can be sure that financial officials in Dublin and Athens as well as Lisbon, Rome and Spain all take keen notice.
The Obama administration must reaffirm America’s commitment to the sanctity of contract. And U.S. courts would be best served by not letting misguided policy arguments influence the rule of law.
6. INFLATION AT 30% DRIVES $4.6 BILLION IN LOCAL DEBT SALES: ARGENTINA CREDIT (Businessweek.com)
By Drew Benson and Camila Russo November 1, 2010
Argentine inflation of almost 30 percent will drive local governments to borrow 18.4 billion pesos ($4.6 billion) next year to pay for rising wages and budget deficits.
Provincial financing needs will jump from 17.3 billion pesos this year as salaries increase an average of 20 percent in 2011, according to research firm Economia y Regiones. Municipal deficits will climb 38 percent to 9.9 billion pesos next year, equal to 0.6 percent of gross domestic product, the firm says.
Goldman Sachs Group Inc. estimates inflation is 25 percent, while Economia y Regiones says it will be 26 percent in 2011. The government reported a rate of 11.1 percent in October, the fastest inflation in Latin America after Venezuela. Government wages account for more than half of provincial budgets and municipalities will step up spending ahead of October elections, said Veronica Sosa, an analyst at Buenos Aires-based Economia.
“Inflation, to the extent that it so greatly outpaces economic growth, runs up spending more than the benefit it delivers on increased tax revenue,” said Patricio Esnaola, who analyzes regional governments at Moody’s Investors Service in Buenos Aires. “The result is more pressure, greater financing needs.”
Provinces are increasing debt sales as borrowing costs fall and record-low interest rates in the U.S. and Europe fuel demand for Argentine bonds.
Yields Fall
Average yields on government dollar bonds sank 278 basis points since February to 9.24 percent after President Cristina Fernandez de Kirchner swapped $12.2 billion of defaulted notes in June. Argentine government bonds yield 406 basis points, or 4.06 percentage points, more than Brazilian dollar debt, according to JPMorgan Chase & Co.
The capital city of Buenos Aires and the provinces of Buenos Aires, Cordoba and Chubut are selling almost $2 billion of bonds this year in international markets. The city also wants to sell $500 million in bonds overseas in the first quarter of 2011 and is seeking a loan of about $1.4 billion from the Export-Import Bank of China to help pay for a new subway line.
Felisa Stangatti, the spokeswoman at the Buenos Aires province Economy Ministry, didn’t return a call seeking comment.
Local government tax revenue may increase 27 percent, while spending rises 28 percent, Sosa said in a telephone interview. Economia y Regiones is led by Rogelio Frigerio, a former Economy Ministry secretary. Founded in 1999, the research institute focuses on regional economies and their relation to the central government.
Municipalities are also seeing a decline in financing from the federal government, Sosa said.
Debt Financing
“Most of the financing will be through debt because the nation practically cut its financial assistance programs” to the provinces, Sosa said. “While close to 10 billion pesos was financed by the nation in 2009, this year that amount will be sought in the market.”
Fernandez is spurning the overseas bond market, instead relying on $6.6 billion of central bank reserves to help meet this year’s financing needs. The president plans to use another $7.5 billion of reserves next year and the government expects to meet its needs without selling bonds in 2011, Finance Secretary Hernan Lorenzino said in a Nov. 17 interview.
The extra yield investors demand to hold Argentine dollar bonds instead of U.S. Treasuries rose 27 basis points to 582 yesterday, according to JPMorgan Chase & Co. data.
Paris Club Talks
The cost of protecting Argentine debt against non-payment for five years with credit-default swaps rose 36 basis points to 739, according to data compiled by CMA. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
Warrants linked to economic growth fell 0.18 cent to 13.01 cents, according to data compiled by Bloomberg.
The peso declined 0.1 percent to 3.9847 per dollar.
Demand for Argentine bonds may rise if the country is successful negotiating the repayment of about $6.7 billion of debt to the Paris Club group of creditor nations, said Christian Cavanaugh, who oversees 850 million pesos at RJ Delta, a unit of Raymond James Financial Inc., in Buenos Aires.
Fernandez announced plans last month to negotiate with the group and Economy Minister Amado Boudou said Nov. 24 that he plans to travel to Paris as soon as Dec. 9 to start talks.
“If Argentina strikes a deal with the Paris Club that should favor new issuances from Argentine companies and provinces,” Cavanaugh said. “The provinces want to raise money and the market is waiting to finance them.”
IMF Moves
RJ Delta started a fund in September that primarily invests in provincial and municipal debt, Cavanaugh said.
Argentina asked the International Monetary Fund last month to help revamp the national consumer price index amid investor concern government data doesn’t reflect the true inflation rate.
The pricing index has been questioned by private economists and politicians, including former Economy Minister Roberto Lavagna and Vice President Julio Cobos. They say the government has underreported the rate since January 2007, when then- President Nestor Kirchner shuffled national statistics agency personnel.
Rising prices will weigh on provincial budgets next year, Economia’s Sosa said.
“Inflation increases spending because salaries account for a heavy proportion of the budgets,” she said. “Also 2011 is an electoral year, so we expect more public works and plans the provinces have that will increase spending more than income.”
7. ARGENTINA EXPECTS CHINA TO AGREE ON CORN IMPORTS (Bloomberg News)
December 1, 2010
Argentina, the second-largest corn exporter, expects to agree on supplies to China in the first quarter of 2011, Minister of Agriculture Julian Dominguez said.
China, the second-biggest corn user, has made no commitment yet to buy, Dominguez told reporters in Beijing. Argentina may have 20 million tons of corn surplus next year, he said.
Argentina was in talks with China on a so-called sanitary protocol that would allow it to export the grain to the Asian nation, the South American nation’s Ministry of Agriculture said Nov. 12. It expects to speed up discussions with China next year to become an alternative supplier, the ministry said, without providing further details. China’s Minister of Agriculture Han Changfu held talks with Dominguez last month in Argentina.
China, the second-biggest corn consumer, has bought about 1.5 million tons of the grain from the U.S. this year, the most since about 1995, as the government sought to cool local prices that surged about 27 percent in the year before November, when the government began a crackdown on inflation. Prices of corn in Chicago surged 53 percent in the same period partly on expectation China may need to boost imports to meet demand.
8. ARGENTINE TAX AGENCY SAYS EXPORTER MOLINOS OWES $150 MILLION (Bloomberg News)
By Silvia Martinez and Rodrigo Orihuela
November 30, 2010
Argentina’s tax agency is investigating Molinos Rio de la Plata SA, the country’s fourth largest soybean oil exporter, for allegedly evading $150 million in taxes.
The probe into Buenos Aires-based Molinos is part of the same investigation of local units of Minneapolis-based Cargill Inc. and Bunge Ltd., an official at the tax agency, who asked not to be named under agency policy, said today in a telephone interview.
In September, the agency said four of the country’s 10 biggest cereals and soybean exporters and processors had underpaid taxes. The agency raided Bunge’s Buenos Aires offices on Oct. 1, saying that the White Plains, New York-based company owed more than 1 billion pesos ($253 million) in taxes. Two Cargill executives were charged for failing to pay all the unit’s taxes from 2000 to 2003, the agency said Oct. 8.
A phone call and an e-mail to Molinos seeking comment weren’t immediately returned.
Molinos dropped 50 centavos, or 2.2 percent, to close at 22.80 pesos at 4:58 p.m. in Buenos Aires, the biggest drop since Nov. 12.
Molinos is controlled by Argentina’s billionaire Perez Companc family.
Argentina is the world’s largest exporter of soybean oil, the second-largest of corn and third-largest of soybeans.
Cargill, Bunge and Aceitera General Deheza SA are the three largest soybean oil exporters in Argentina, according to Buenos Aires-based researcher J.J. Hinrichsen.
DRY SPELL HURTING SOUTH AMERICAN CORN, SOY CROPS, CORDONNIER (Bloomberg News) By Jeff Wilson November 30, 2010
Nov. 30 (Bloomberg) — Corn and soybean crops in Brazil and Argentina will be smaller than forecast by the U.S. government because dry weather delayed planting, said Michael Cordonnier, the president of forecaster Soybean & Corn Advisor Inc.
Soybean output in Brazil, the biggest producer after the U.S., will slide to 67 million metric tons from 69 million tons last year and 67.5 million estimated by the U.S. Department of Agriculture on Nov. 9, Cordonnier said. The corn crop will fall to 50 million tons from 56 million tons last year and 51 million estimated by the USDA, he said.
“Everyone is worried about the poor start to the rainy season,” Cordonnier said today from Hinsdale, Illinois, after completing a three-week tour of Brazil’s main growing region. “The soybeans were planted late and rains have been scattered.”
Dry weather in December will increase the chances of lower yields because farmers were forced to replant some soybeans and delayed sowing of corn, he said.
Argentina, the third-biggest producer, will harvest 50 million tons of soybeans this year, down from 54.5 million collected last year and 52 million estimated by the USDA this month, Cordonnier said. Corn production may total 23.5 million tons, less than the 25 million estimated by the USDA, he said. Last year, farmers harvested 22.5 million tons.
“Argentina crops are at the greatest risk to further yield losses from dry weather in December,” Cordonnier said.
10. CLINTON PROBED ARGENTINE LEADER’S ‘NERVES,’ ‘ANXIETY,’ ‘STRESS’ (McClatchy Washington Bureau)
By Tim Johnson
30 November 2010
MEXICO CITY — Seeking a frank evaluation of Argentina’s president, the office of Secretary of State Hillary Clinton asked the U.S. Embassy in Buenos Aires late last year to delve into her psyche.
“How is Cristina Fernandez de Kirchner managing her nerves and anxiety?” asked a cable dated Dec. 31, 2009, and signed “CLINTON” in all capital letters.
The cable, sent at 2:55 p.m. on New Year’s Eve, and originating in the department’s Bureau of Intelligence and Research, asked a series of other probing questions as part of what it said was an attempt by her office to understand “leadership dynamics” between Kirchner and her husband, former President Nestor Kirchner.
“How does stress affect her behavior toward advisors and/or her decision making?” the cable continued. “What steps does Cristina Fernandez de Kirchner or her advisers/handlers, take in helping her deal with stress? Is she taking any medications?”
Delving into the personalities of foreign counterparts may be integral to modern diplomatic give-and-take. But the bluntly worded cable asking about the Argentine leader’s “nerves” and “emotions” may further test up-and-down relations between Washington and Buenos Aires. The cable suggests that Washington saw Kirchner and her husband as perhaps prone to emotional instability.
The cable was one of several related to Argentina released in the latest batch of U.S. diplomatic traffic made public this week by WikiLeaks, the whistle-blowing website that publishes sensitive government documents.
Under Kirchner and her husband, who ruled the country from 2003 to 2007 and who died Oct. 27 after an apparent heart attack, Argentina has sought alliances with neighboring Bolivia and Venezuela, countries led by strong critics of the United States.
The Clinton cable, classified as “secret,” also inquired into the mindset of Kirchner’s husband, who was her closest adviser prior to his death.
“Long known for his temper, has Nestor Kirchner demonstrated a greater tendency to shift between emotional extremes? What are most common triggers to Nestor Kirchner’s anger?” the cable asked.
The cable described Nestor Kirchner’s governing style as “heavy-handed,” and asked U.S. diplomats in Buenos Aires to determine whether Cristina Kirchner viewed “circumstances in black and white or in nuanced terms?” Does she have a “strategic, big picture outlook” or does she “prefer to take a tactical view?” it asked.
Other leaked cables offered insight into U.S. interest into a foreign minister’s past links with leftist Montoneros guerrillas, and suggested that Argentina had offered to intercede with Bolivian President Evo Morales, who expelled the U.S. ambassador to La Paz in September 2008.
Another confidential cable detailed Argentine umbrage at Assistant Secretary of State Arturo Valenzuela’s remarks in late 2009 suggesting that U.S. businesses had concerns over “rule of law and management of the economy in Argentina.”
“Once again, the Kirchner government has shown itself to be extremely thin-skinned and intolerant of perceived criticism,” the cable said.
The Argentine anger at Valenzuela contrasted with the good relations it held with his predecessor, Thomas Shannon, an Oxford-educated U.S. diplomat with a smooth manner. According to the Madrid daily El Pais, a not-yet-public cable dated Sept. 2, 2008, reveals how Shannon convinced Kirchner that Washington did not have anything against Morales, Bolivia’s first indigenous leader, and did not seek to break apart his country.
“Evo is not an easy person,” Kirchner told the U.S. ambassador in Buenos Aires at the time, according to the cable cited by the newspaper. It said then-Argentine Foreign Minister Jorge Taiana called a Bolivian counterpart three times to try to lower U.S.-Bolivian tensions.
11. FUTURE U.S.-ARGENTINA RELATIONS JEOPARDISED BY LEAK OF DIPLOMATIC DOCUMENTS (IHS Global Insight Daily Analysis)
By Irenea Renuncio Mateos 30 November 2010
Following the whistle-blowing Web site WikiLeaks’ massive leak of sensitive documents pertaining to U.S. foreign policy, Spain’s El Pais newspaper, which gained advance access, yesterday published sensitive material about Argentina’s president Cristina Fernández de Kirchner. According to the documents released by WikiLeaks and published by El Pais, most of which are confidential U.S. diplomatic cables sent during the past three years, U.S. secretary of state Hillary Clinton questioned the mental health of President Fernández. Clinton apparently asked U.S. diplomats to find out if Fernández was taking medication to help her “calm down”. Questions included how stress affected the Argentine president’s behaviour toward advisers and/or her decision-making, and if she was taking any particular medication to deal with mental health problems.Significance: Clinton said yesterday that the U.S. government deeply regretted the release of classified information but the damage is done.
Venezuela’s president Hugo Chavez was the first in Latin America to react, criticising Clinton and expressing his “solidarity with the president of Argentina”. The publication of the cables could not have come at a worse time, a month after the death of Cristina’s husband, former president Néstor Kirchner. The leaks will undoubtedly harm bilateral relations with the United States, at least in the short term, and will serve to reverse the recent thaw between the United States and Argentina, complicating U.S. foreign policy in the region further.
12. ARGENTINA INVESTIGATES MOLINOS FOR POSSIBLE TAX EVASION (Dow Jones News Service) By Taos Turner 30 November 2010
BUENOS AIRES (Dow Jones)–Argentina’s tax agency is investigating the grain-export and food-manufacturing company Molinos Rio de la Plata SA (MOLI.BA) for possible tax evasion totaling $153 million.
The investigation is part of a broad effort by the agency, AFIP, to uncover and persecute what it says is massive tax evasion in Argentina.
A spokesman for Molinos could not be reached for comment.
The investigation, confirmed Tuesday by a government official familiar with the case, comes after a court in October had issued indictments against two executives from agricultural giant Cargill Inc.
The court froze 100 million pesos ($25 million) of assets each for Cargill Argentina Chairman Hector Orlando Marsili and Cargill Uruguay executive Javier Gustavo Fernandez.
AFIP said the executives conspired to defraud the government of millions of pesos in taxes from 2000 to 2003 through a scheme in which Cargill Argentina on paper sold grains to a related company in Uruguay for re-export, when in fact the merchandise was exported directly from Argentina.
Cargill said the allegations have “no substance” and added the company has given “extensive factual evidence demonstrating so to the court.”
Grain exporters have come under especially intense scrutiny, with 500 tax inspectors raiding the offices of global grains giant Bunge Ltd (BG) earlier this year.
AFIP accused Bunge of not paying ARS1.2 billion in income taxes through a scheme in which grains were sold below cost to Bunge’s Uruguayan unit before being resold for export to Europe. Bunge has denied the charges and said it will defend itself in court.
Bunge also said that grain exporters were pressured by the government in September to make advance income tax payments or face “serious problems.”
According to AFIP, four of the country’s 10 largest grain exporters didn’t pay a peso in income tax last year.
13. HIGHER PRICES ATTRACTING TIGHT GAS E&P TO ARGENTINA’S NEUQUEN: GOVERNOR (Platts Commodity News)
By Charles Newbery
30 November 2010
Buenos Aires (Platts)–30Nov2010/1158 am EST/1658 GMT
Neuquen, a southwestern province of Argentina, has attracted $250 million in natural gas exploration and production investment projects through pricing incentives and three licensing rounds, according to Governor Jorge Sapag.
The federal government, which controls prices, is allowing producers to sell output from new supplies in traditional gas fields at $4/MMBtu-$5/MMBtu, compared with the domestic average of $2.49/MMBtu at the wellhead.
But to spur shale and tight gas projects, the federal government has agreed to allow the wellhead price for supplies from such projects to run between $4.50/MMBtu-$7.50/MMBtu, Sapag said.
“These prices are encouraging investment in exploration and production,” he said at a press conference late Monday, according to a transcript posted on the provincial government’s website Tuesday.
Sapag said Argentine President Cristina Fernandez de Kirchner will make an announcement on the unconventional gas pricing incentives in the next few weeks. It could come as soon as the first few days of December, he said.
Neuquen is pushing its opportunities for shale and tight gas exploration and production to help compensate for dwindling traditional gas output.
The province’s gas output fell 18% to 63 million cu m/d in 2010 from 77 million cu m/d in 2004-05. National output, meanwhile, has only fallen 7.8% to 132 million cu m/d from 143.1 million cu m/d in 2004.
The Neuquen Basin, which runs under La Pampa, Neuquen and Rio Negro, is thought to have 257 Tcf of unconventional gas reserves, according to federal Energy Secretariat data released earlier in November.
Companies like ExxonMobil, France’s Total, US-based Apache and Spain’s Repsol-backed YPF are developing or plan to develop unconventional gas projects in the basin.
Production of shale and tight gas is expected to rise to 6.6 million cu m/d this year from 3 million cu m/d in 2009. Output will increase to 8.5 million cu m/d in 2011 from 11 unconventional gas projects in development in the basin, according to industry estimates.
The federal government is betting that the development of these unconventional reserves will help cut the country’s rising imports of LNG and Bolivian gas to meet demand as domestic gas supplies dwindle. Argentina relies on gas for 55% of its energy needs.
Gas y Petroleo del Neuquen, the provincial oil company, is spearheading the licensing rounds in Neuquen. It is preparing to drill two wells at Aguada del Chanar with Enarsa, Argentina’s state energy company, Sapag said.
“It is the first time in 20 years that the state [of Neuquen] has invested in exploration,” he said.
14. ARGENTINA PROBES MOLINOS FOR SUSPECTED TAX EVASION (Reuters News) By Luis Andres Henao and Karina Grazina 30 November 2010
* Tax agency probes another grains exporter -source
* Source says Molinos suspected of $150 million evasion
BUENOS AIRES, Nov 30 (Reuters) – Argentina’s tax agency is investigating Molinos Rio de la Plata , a local grains exporter and food manufacturer, for suspected evasion, a senior source at the agency said on Tuesday.
News of the probe comes a month after an Argentine court indicted two executives of agribusiness giant Cargill [CARG.UL] on tax evasion charges.
A week earlier, authorities also raided the local premises of global grains exporter Bunge Ltd after the AFIP tax agency accused the company of evading close to $300 million in income tax between 2007 and 2009. Bunge and Cargill have denied any wrongdoing.
The source said Molinos, which is controlled by local businessman Gregorio Perez Companc, was suspected of using an agreement between Argentina and Chile to evade some $150 million in taxes. Molinos is Argentina’s No. 5 soy exporter.
“We’re talking about a company that operates in Argentina, ships its product from an Argentine port but is receiving payments in a third country,” the source told Reuters on condition of anonymity.
No one at Molinos could immediately be reached to comment.
In September, the AFIP agency accused four of the country’s largest grain exporters of evading taxes in 2009, but it did not name them at that time.
Soy is Argentina’s biggest export earner, and the government partly justifies high export levies — 35 percent on soybeans — as a way of redistributing the country’s farming riches in a country where tax evasion is rife.
Argentina’s tax agency said on Tuesday that it would sign an agreement in December with China, the top buyer of Argentine soy, to share information in the fight to combat tax evasion.
Molinos shares closed down 2.1 percent at 22.80 pesos per share.
15. ARGENTINE RAINS SEEN TOO LIGHT TO HELP FARMERS (Reuters News) 30 November 2010
* More light rains forecast, not enough to speed sowing
* Dryness may force farmers to plant more late-seeded soy
* Corn yields seen at risk without heavy rains in December
BUENOS AIRES, Nov 30 (Reuters) – Rains will remain scarce in Argentina’s crop belt over the coming weeks as La Nina starts raising concerns that 2010/11 soy and corn output could fall, meteorologists said on Tuesday.
Argentina is the world’s No. 3 soybean supplier and persistent dry weather has helped push U.S. soy futures higher in Chicago in recent days.
The South American country, which is also the world’s No. 2 corn exporter after the United States, received scant, scattered rainfall in some farming areas this week and more light showers are forecast for the next few days.
They are not expected to be heavy enough for growers to resume delayed soy plantings, forcing some farmers to plant quicker-growing soy varieties later in the season that tend to produce lower yields.
“If soy sowing doesn’t pick up, some areas will not be planted at all. That’s the fear,” said Eduardo Serra, a weather specialist with the Buenos Aires Grains Exchange.
However, another agricultural meteorologist said forecasts for scant rainfall in December would not drive farmers to scrap their sowing plans, although it could lead to more later-planted beans.
“It’s hard to talk about cuts to the area because people are going to sow anyway because of current prices,” said German Heinzenknecht, a forecaster at the Applied Climatology Consultancy in southern Buenos Aires province.
The Agriculture Ministry estimates a record soy planting area of 18.65 million hectares (46.08 million acres), slightly more than last season, when the country gathered 52.7 million tonnes of the oilseed.
“I think this area will end up being completed. It would have to be a very serious situation for farmers not to sow,” Heinzenknecht said.
Hamburg-based oilseeds analysts Oil World said on Tuesday that dry weather was not yet causing serious alarm over the state of the soy crop, but acknowledged the risk of downward revisions to current production estimates.
They estimate Argentina’s 2010/11 soy output at 52 million tonnes, matching the forecast by the U.S. Department of Agriculture, but exceeding a more recent estimate of 49.5 million tonnes by the Rosario Grains Exchange.
Argentine growers are close to completing 2010/11 corn sowings and, while most young plants are in good shape, more rains are needed to guarantee yields as they start to enter key growth stages.
“Corn is really lacking a lot of rain, and in the short- and medium-term, it doesn’t look like we’re going to get it,” Heinzenknecht said.
“If it doesn’t rain in the first half of December, if this situation continues, corn in Entre Rios and central Santa Fe is going to suffer losses in terms of production,” he added.
16. WIKILEAKS AND LATIN AMERICA: SAME OLD IMPERIOUS U.S. DIPLOMATS (States News Service) 30 November 2010
The following information was released by the Council on Hemispheric Affairs:
by Former Senior Research Fellow Nikolas Kozloff
As more and more documents become available from Wikileaks, the public has gotten a novel and close up view of U.S. diplomats and their operations abroad. I was particularly interested to review heretofore secret documents dealing with Latin America, a region which has absorbed the attention of Washington officials in recent years. While it’s certainly no secret that the Bush administration, not to mention the later Obama White House, have both sought to isolate the so-called “Pink Tide” of leftist regimes in South America, the Wikileaks documents give us some interesting insight into the mindset of U.S. diplomats as they carry out their day to day work.
Needless to say, the picture that emerges isn’t too flattering.
Take, for example, a 2005 cable from the U.S. Embassy in Brasilia1 which details a high level conversation which took place between the American ambassador, John Danilovich, and Brazilian General Jorge Armando Felix. A longtime businessman, Danilovich spent 20 years in the shipping industry in London and it was there that the American organized voters for George Bush and his father. A big time GOP donor, Danilovich proved a loyal lieutenant at his post in Brasilia, specifically by opposing the left turn in South America.
In 2005, Hugo Chavez was at the height of his political powers, challenging the unpopular Bush regime throughout the region. Over in Bolivia meanwhile, Washington fretted that an erstwhile coca farmer, Evo Morales, might win his country’s presidential election. For Washington, Brazil had become a country of vital geopolitical importance: if President Lula could be persuaded to drop his support of neighboring Venezuela, then the U.S. would certainly be more successful at halting the region’s leftist advance. In the effort to turn back the Pink Tide, Danilovich was a key figure.
Speaking with the Brazilian daily O Estado de São Paulo, the diplomat accused Chavez of actually funding political forces within Bolivia. Seeking to foster a common U.S.-Brazilian front, Danilovich said the funding was a concern for Washington and ought to preoccupy officials in Brasilia as well. When reporters asked Danilovich whether he was accusing Chavez of directly funding Morales’ campaign, the diplomat would not specify [Morales himself denied the U.S. allegations].
Behind closed doors, Danilovich continued his diplomatic offensive. After lunching with General Felix, the ambassador broached the subject of Venezuela, noting that Chavez was “disrupting Brazil’s efforts to play a leading role politically and economically in South America.” It’s unclear from the cable what Felix might have thought about the ambassador’s comments, though reading between the lines it seems the military man may have been sympathetic toward the U.S. and disagreed with his own government’s official policy toward Venezuela.
Since we don’t have the full text of Danilovich’s cable, it’s unclear whether the diplomat approached other figures in the Lula government about Venezuela, let alone military officials. To be sure, at the time of this meeting Felix was working as Lula’s own Minister of Internal Security and as such no longer occupied an official post within the ranks. Yet, there are some disturbing parallels to the historic past here. Consider that it was not too long ago that Washington collaborated with the anti-Communist Brazilian military which overthrew democracy in a coup. Later, the armed forces hunted down leftists both within the country and abroad through so-called “Operation Condor.”
From Brazil to Argentina
Elsewhere in South America, the U.S. has faced political opposition from some unlikely quarters. Take for example Argentina, up until recently a fairly reliable U.S. ally which followed the Washington economic consensus. With the coming to power of Nestor Kirchner and his wife Cristina Fernandez de Kirchner however, U.S.-Argentine relations have taken a nosedive. A fierce critic of the International Monetary Fund, Nestor also pursued an unprecedented diplomatic alliance with leftist Venezuela.2
Wikileaks cables document the deteriorating relationship between Washington and Buenos Aires and show U.S. diplomats as imperious and scheming. Take for example a diplomatic spat between Obama’s Assistant Secretary of State for Hemispheric Affairs Arturo Valenzuela and Argentine officials, an incident that I wrote about at the time.3 An American of Chilean descent and a Chavez critic, Valenzuela made his way to Buenos Aires late last year. Causing a diplomatic firestorm, Valenzuela declared before the local media that Argentina lacked adequate legal protections. When the government protested that such was not the case, Valenzuela clarified that he had personally spoken with representatives of American companies through the U.S. Chamber of Commerce who were upset about management of the economy. They were reluctant to invest due to lack of legal protections, Valenzuela added.
As if he had not annoyed the government enough already, Valenzuela then declared that he personally had detected a change in the investment climate between 1996 [the height of Argentina's flirtation with neo-liberal economics] when “there was a lot of enthusiasm to invest,” and the present day. In a communique, the Argentine foreign ministry angrily retorted that the government “had not received complaints from U.S. companies which had interests and investments” in the country.
The irate chorus continued with Interior Minister Florencio Randazzo regretting that some U.S. officials had gone back to “the old practices” even though “there was an expectation in Argentina of the inauguration of a new U.S. foreign policy” during the Obama era. The Minister of Justice added that Valenzuela’s remarks were “very unusual and unjustified.” By far however the most incendiary remarks came from former president Nestor Kirchner who accused Valenzuela of behaving like a “viceroy.”
Far from feeling contrite toward Argentina, U.S. diplomats treated the Valenzuela episode rather flippantly and superciliously. In a cable sent to Washington, recently released through Wikileaks4 , American officials in Buenos Aires wrote that the local press had “sensationalized” and over dramatized the incident. “Once again,” diplomats remarked, “the Kirchner government has shown itself to be extremely thin-skinned and intolerant of perceived criticism.” Downplaying the tenor of Valenzuela’s remarks, the authors added that many Argentines routinely complain about the weakness of governing institutions and the rule of law.
It’s difficult to parse what Washington’s policy might be toward Argentina in the Obama era. Judging from another cable released by Wikileaks5 , U.S. officials are still trying to sort it all out and seek to acquire as much information about the Kirchners as possible. Prior to Nestor’s recent death, Secretary of State Clinton personally wrote to the American Embassy in Buenos Aires, remarking that the U.S. was drawing up “a written product examining the interpersonal dynamics between the governing tandem.”
Clinton added that State had a pretty “solid understanding” of Nestor’s style and personality, but Cristina remained a mystery. Specifically, Clinton wanted to know how Cristina managed “her nerves and anxiety.” Somewhat bizarrely, Clinton then asked her subordinates whether Cristina was taking any medications. Again and again, the Secretary of State pressed for details about Cristina’s psychological and emotional profile.
Though certainly intriguing, the Wikileaks cable fails to answer a vital question: why would Clinton seek a psychological evaluation of Cristina in the first place? Perhaps, the United States government simply lacked information about the Argentine president and wanted to know who it was dealing with in South America. Another darker reading however is that the U.S. does not trust Argentina and is seeking to manipulate Cristina or uncover some dirt. A Machiavellian if there ever was one, Clinton is surely capable of playing political hardball and engaging in diplomatic intrigue.
For far too long, the U.S. public has remained ignorant of its government’s overseas efforts to turn back Latin America’s leftist Pink Tide. Though scant thus far, Wikileaks’ release of documents pertaining to Latin America is telling. From Brazil to Argentina, American officials have emerged as an imperious and cynical lot. Hopefully in the days ahead we may learn more about the Bush and Obama administration’s handling not only of Brazil and Argentina but also Venezuela, Bolivia, and Honduras.
Nikolas Kozloff, Ph.D. is a former COHA Senior Research Fellow and is the author of Revolution! South America and the Rise of the New Left.
17. AEROLINEAS ARGENTINAS TO JOIN SKYTEAM; ALLIANCE EXPANDSREACH IN SOUTH AMERICA, SOUTHERN HEMISPHERE (PR Newswire (U.S.) 30 November 2010
BUENOS AIRES, Argentina, Nov. 30, 2010 /PRNewswire/ — Aerolineas Argentinas, the flag carrier of Argentina, has signed an agreement to join SkyTeam in 2012. Aerolineas will be SkyTeam’s first South American member, adding 38 new destinations to the SkyTeam network.
The signing ceremony was held yesterday in Buenos Aires, under the patronage of the President of Argentina, Mrs. Cristina Fernandez de Kirchner. SkyTeam is actively working to strengthen its presence in Latin America, a region with strong growth figures and a positive outlook for the future. The emerging economy of Argentina is driven by natural, cultural and industrial resources. As the first South American member, Aerolineas Argentinas fits well in SkyTeam’s expansion strategy, enhancing the network in the region by offering multiple new destinations in the southern hemisphere.
Through direct services by Aeromexico, Air Europa, Air France, Alitalia and Delta Air Lines to Buenos Aires, SkyTeam already offers Argentinean customers daily access to North America and Europe, with convenient connections to Africa, the Middle East and Asia. The extensive domestic and regional service of Aerolineas Argentinas brings 38 new destinations to the SkyTeam network, including Cordoba, Mendoza, Asuncion and Montevideo. With Buenos Aires serving as a Latin American hub with flights to and from key destinations in the region, SkyTeam customers will benefit from improved access to the southern part of South America and Patagonia in particular, popular destinations with travelers from all over the world.
Fleet renewal and improving quality and consistency
Aerolineas Argentinas has initiated a long-term plan to expand and revitalize its business. Key elements of this plan include fleet renewal and rationalization, adding key international destinations such as New York and London, increasing the density of the domestic and regional network and improving product quality and consistency.
Mariano Recalde, President and CEO of Aerolineas Argentinas said: “Aerolineas has started a new chapter under the direction of the Argentine Government and for more than one year we have taken several measures to strengthen our business model. One of the key elements is to reinstate Aerolineas into the industry standards and improve our customers’ experience. Joining SkyTeam is a major step towards fulfilling our goals and market recognition for our efforts and commitment. As a result, Aerolineas’ passengers will benefit from unprecedented global connectivity through the alliance hubs and networks in Europe, America and Asia, and will also have access to a wide variety of SkyTeam products.”
Marie-Joseph Male, Managing Director of SkyTeam, said: “As our 10th anniversary year comes to a close, we can look back on an extraordinary period of growth for the alliance. We have seen our member base in Asia grow tremendously with the announcements of China Eastern, Shanghai Airlines, China Airlines and Garuda Indonesia. Welcoming Aerolineas Argentinas is the next significant step in expanding our presence in Latin America. Together with its plans to expand intercontinental services to New York, London and Paris, I am convinced that joining SkyTeam will help Aerolineas Argentinas position itself as a major player in Latin America.”
About SkyTeam
SkyTeam is a global airline alliance providing customers from member airlines access to an extensive global network with more destinations, more frequencies and more connectivity. Passengers can earn and redeem Frequent Flyer Miles throughout the SkyTeam network. SkyTeam member airlines offer customers over 420 lounges worldwide. The thirteen members are: Aeroflot, Aeromexico, Air Europa, Air France, Alitalia, China Southern, Czech Airlines, Delta Air Lines, Kenya Airways, KLM Royal Dutch Airlines, Korean Air, TAROM and Vietnam Airlines. SkyTeam offers its 385 million annual passengers a worldwide system of over 12,500 daily flights to 898 destinations in 169 countries. SkyTeam celebrates its 10th anniversary in 2010. www.skyteam.com
About Aerolineas Argentinas
Aerolineas Argentinas, the national airline of Argentina, is one of the leading South American carriers. From its home base in Aeroparque Jorge Newbery and Ezeiza International Airport in Buenos Aires, Aerolineas Argentinas flies to 18 international destinations in The Americas, Europe and the South Pacific. Along with Austral Lineas Aereas, Aerolineas operates flights to 34 destinations in Argentina, flying to more cities in the Argentine territory than any other airline. Since March 2010 the airline provides dynamic links between Argentina and the region through its relaunched hub in Aeroparque. Aerolineas is carrying an ambitious fleet renewal program, which begun in 2009 with the addition of 12
Boeing 737-700s Next Generation and the acquisition of 20 Embraer 190s. For
more information about the company visit www.aerolineas.com.
18. ARGENTINE ALPARGATAS FOSTER FASHION CHARITY TREND (The Washington Post) By Michael Warren November 30, 2010
BUENOS AIRES, Argentina — In a world where fashion and charity are usually associated with glitzy high-society events, a shoe company has proven that anyone can help save the world – one pair of funky canvas shoes at a time.
“Buy a pair, give a pair” remains the motto of Toms Shoes, which started up four years ago in a little barn outside Buenos Aires, with 12 people stitching together slightly more fashionable versions of the traditional slip-on alpargatas worn by Argentine cowboys for centuries.
The company gave away 10,000 pairs to poor Argentine children that first year, in soup kitchens, schools and Guarani Indian communities.
Helped by a vigorous Internet marketing strategy, Toms Shoes quickly caught on, especially after celebrities like Cameron Diaz and Demi Moore started promoting them. The company now sells six different models in dozens of colors, even wedding versions. The latest is a wedge that makes women appear a few inches taller.
The giving has expanded, too – to 28 countries and counting, with other factories opening in China and Ethiopia to meet the demand.
A few weeks ago, founder Blake Mycoskie’s dream came true when the company donated its millionth pair of shoes, to a poor child in Argentina’s Misiones province, where Toms has supported Guarani Indian communities.
The milestone is “an opportunity to say thank you to the million people who have bought Toms Shoes,” Mycoskie told The Associated Press while visiting Argentina. “We see it as the beginning of what we hope will be something greater – we’re helping kids avoid diseases like hookworm in Guatemala, and podoconiosis in Ethiopia – a terribly debilitating disease that’s completely preventable with shoes.”
Mycoskie, an entrepreneur who tasted fame as a contestant in the “Amazing Race” reality show, discovered the traditional $4 version of the shoe during a polo-playing vacation to Buenos Aires, where he learned of a shoe drive being organized for the city’s poor. He quickly saw an opportunity, founding the company with his Argentine polo instructor, Alejo Nitti.
They redesigned the austere alpargatas, adding bright colors and patterns and replacing the traditional jute sole with rubber, and began selling them for $38 each, promising to donate a pair to a poor Argentine child for every pair sold.
This simple idea turned out to be a great fashion equalizer: “It’s not very often that a 14-year-old or a 16-year-old can contribute to a charity or a cause. And because our shoes are very moderately priced – 44-45 bucks is the classic – it allows young people to participate,” Mycoskie said.
The latest Toms trend is the wedge.
“It’s crazy – the wedge has been huge. I’ve been having women come to me and say ‘Blake, I love your shoes but I do not wear flats, i’m not that tall. For the longest time I was like ‘I don’t know, it doesn’t really fit the particular style of Toms.’ And then I thought, well, in Latin America, the espadrille wedge is traditional – the shoes that have a rope sole. So I decided, why not?
“It took me about a year and a half to design it, but once I did, it just exploded. It’s our number one selling shoe. We can’t make them fast enough,” he said.
The company’s business model builds into the cost of each purchased pair the costs associated with donating a pair – usually the classic black unisex model, since black is the color required for school in many countries.
Toms Shoes now hopes to expand further by working with developing-world entrepreneurs to set up local factories, particularly in countries where barefoot children are vulnerable to tropical diseases.
“We’ve heard from the Haitian government that shoes are critical now that there is so much debris on the ground. We’re actually working with the Clinton Foundation and several other foundations to distribute a lot of shoes there over the next year,” Mycoskie said.
Giving shoes away in Ethiopia taught Mycoskie something else – that charity alone isn’t sustainable.
“We were making shoes halfway across the world and sending them on a boat, wasting all this energy and money, where we could just make them right in Addis Ababa and put them on a truck right to the people who need them,” he realized. “What I learned was, there wasn’t very sophisticated production, but with 80 million people living in Ethiopia, they do have the capacity to do this.”
–
Andrew Sullivan on Wikileaks vs. State: “Overall, I have to say that this brief glimpse into how the government actually works is actually reassuring. The cable extracts are often sharp, smart, candid and penetrating. Who knew the US government had so many talented diplomats?”
The worst revelation of all is that we are not capable of conspiracies…which will lead our ME friends to believe that this is all “disinformatsia”… A former Ambassador
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denuncia POPULAR (tambien recibida en forma anonima) aobre que los hijos de la vieja divorciada de Bonafini cobró en DOLARES indemnizaciones (que pagamos todos) por la “muerte” de sus hijos; que están “vivitos y coliando” y hasta ANOTADOS EN EL PADRON ELECTORAL …. son fantasmas? ; desaparecidos u otro ESCANSDALOSO FRAUDE de esta IMPUNIDAD GUBERNAMENTAL (“VILES TRAIDORES A LA PATRIA”???? segun el articulo 29 de Nuestra Constitucion Nacional)