Archivos de la categoría ‘ARGENTINE UPDATE’


14 noviembre, 2013


“I never changed my opinion on Bergoglio” -Adolfo Pérez Esquivel

Sunday, November 10, 2013
Born: November 26, 1931 (age 81)

Alma Mater: University of La Plata

Hobbies: Painting, Sculpting and writing

Current position: President of Serpaj human rights organization

Awards: Nobel Peace Prize winner, Pacem in Terris Award, the Pope John XXIII Peace Memorial
In an interview given to the Herald earlier this month, the 1980 Nobel Peace Prize winner Adolfo Pérez Esquivel spoke of his beginnings in the human rights movement, his opinion of the country’s current political situation and why he decided to support Pope Francis when some questioned the role he played during the dictatorship.
What do you think is the most important human rights issue in Argentina today?
Many things, such as seeking truth and justice so that state terrorism doesn’t happen again. But we need to expand our understanding beyond the crimes of the last dictatorship. We now have environmental problems, indigenous human rights problems, large companies using toxic chemicals. I think the government often confuses development with exploitation.
Do you think the Nobel Peace Prize has lost credibility because of some questionable winners?
I think it depends how it is used. The Nobel committee always changes; it is renewed every four years. If you receive a Nobel Peace Prize for your own personal advancement that’s the wrong path. It should be used for the people.
What do you think about the ongoing trials on crimes against humanity from the dictatorship era crimes?
This is the only country in the world in which the trials are conducted by normal courts. Argentina is creating a judicial precedent that is very important. Human rights crimes don’t have a statute of limitation but at some point we will have to start closing this chapter. I don’t know when that will be but I do know that as long as there is impunity there can’t ever be true democracy.
If you compare this government’s human rights policies with that of former president Raúl Alfonsín (1983-1989) and former president Carlos Saúl Menem (1989-1999), which is better?
I choose this one, without a doubt. But the problem with this government is that it equates human rights solely with the dictatorship era and not to present day. The human rights movement that we knew in the past doesn’t exist anymore. Many human rights organizations that I respect and love like the Mothers and Grandmothers (of Plaza de Mayo) have aligned themselves with the government and lost their independence.
Is there anyone you would like to see win the presidency in 2015?
I think Kirchnerism has become a very personalized party with very little dialogue and this is not good for democracy. But I also see a strong weakness in the opposition. There isn’t a clear project for the country. None of the political leaders have any real ideas. The governors are feudal lords that don’t govern for the people but for themselves. Ultimately, very few candidates propose any real alternative.
Before Jorge Mario Bergoglio became Pope Francis you made comments calling his role in the last dictatorship “ambiguous” but later you supported him and said he wasn’t complicit with the crimes of that era. What led to the change?
I never changed. (Horacio) Verbitsky accuses the Pope of being complicit with the dictatorship. I said that he wasn’t complicit but also that he wasn’t a bishop who actively spoke up against the dictatorship. Others were complicit. Bergoglio was a Jesuit leader, and very young —he didn’t have access to the government. I learned that he would go to impoverished neighbourhoods to work with the people. This is what we need to value.
But you also wrote a preface to a 1988 book (The Complicity of Church and Dictatorship in Argentina by Emilio Mignone) that calls into question Bergoglio’s complicity with the military.
Look, I said that he wasn’t complicit with the dictatorship. I don’t know exactly what Bergoglio did with (Orlando) Yorio and (Franz) Jalics (the two priests who were detained in the dictatorship and had accused Bergoglio of turning them in, although Jalics later said he reconciled with him). This issue isn’t closed, nothing is closed. When I said Bergoglio wasn’t complicit, I did it for many reasons. One is because I saw that he went to slums and other people praised him and so I thought this guy can’t be bad. Another reason was that the church named a Latin American pope for the first time, getting out of its usual Eurocentrism. If there are doubts, people should continue investigating.
What is the difference between Verbitsky’s and Mignone’s interpretation?
Look, Bergoglio could have done more, but others in the church could have done more as well. Many of us thought different things about this. We can have differences of opinion.
If you compare the accusations of Bergoglio’s complicity with General César Milani, the head of the army, they are similar because there is little evidence against them. Yet, you denounce Milani when he was promoted, and not Bergoglio. Why?
No, no, no—Milani is something else entirely. He is a military man. Bergoglio was chosen Pope in a very important moment for the Church, when people are fed up with it. We should at least wait a bit, to see what he does. But they immediately began attacking him. He cannot be accused of being complicit with the dictatorship. Maybe he committed errors like anyone else could have done, but complicity is something else. If there are accusations against Milani, they should be investigated. I don’t know his entire history just like I don’t know Bergogolio’s.
But you didn’t say that with Bergoglio.
Look, Milani was part of the military structure, Bergoglio was not. I think he was a religious man who perhaps did not act with courage and I said that.
…Bergoglio was also part of a Church structure that was complicit with dictatorship.
If they freed Yorio and Jalics after six months, then he must have done something.
Yet nothing was said about that until now, after he was named pope. It took 37 years for that to come to light.
Look there are many things that we know now. I did what I did, not only because of who Bergoglio is, a pastor of the church but also because he is fulfilling a mission. Up until now, he has changed a lot of things and is trying to reform the Church. If this man committed errors then it should be proven. But we should also try to protect the head of the Church, if not we will destroy everything.
I find it difficult to understand how someone who kept quiet while thousands of Catholics were being killed in Argentina can be named pope? Don’t you think that’s a contradiction?
It was not necessarily like that. Nobody has the absolute truth. We are in a difficult moment. Now, we have this pope and if he made a mistake then he should make amends to the best of his ability.
By Arturo C. Porzecanski
November 12, 2013
Carlos Mauleon, the former Barclays Capital investment banker who handled Argentina’s 2005 debt restructuring, recently wrote a guest post on beyondbrics justifying that infamous transaction: “Whatever you may think of Argentina, … the one good decision its leaders made was to aggressively restructure [the public] debt back in 2005” because “the question is, did [Argentina] have a better choice? Not really.”
But it did. Here’s why.
After discussing the case of Greece in 2011-12 and its supposed relevance to Argentina’s situation in 2005, Mr Mauleon concluded with a plea that while “the rhetoric and economic policies of the Argentine government post restructuring muddle the justification of their approach and provide ample ammunition for the holdouts, the courts as well as public opinion to throw the country under the bus,” we should refrain from doing that, at least in our minds.
However, it was Argentina that threw its creditors under the proverbial bus a dozen years ago – and needlessly so.
To recall, President Eduardo Duhalde stopped debt-service payments to bondholders and official bilateral creditors in January 2002, and in the sixteen months that he was in office, he never reached out to his local and international investors to explain himself – never mind to work out collaboratively on a solution to cure the default. By the time he stepped down at the end of May 2003, and his elected successor Néstor Kirchner took the reins of power, next-door Uruguay had already successfully refinanced its public debt in a creditor-friendly manner without ever missing a single payment – and despite having had to face fiscal, currency, banking, and economic shocks fully comparable to those in Argentina.
Second, President Kirchner took another twenty months until he finally presented bondholders with a punishing, take-it-or-leave-it debt exchange offer – a delay of three years since January 2002 intended to encourage creditor capitulation to whatever proposal Argentina would finally put on the table. His economy minister at the time, Roberto Lavagna, went so far as to announce that the government would regard any investor participation rate above fifty percent as having effectively cured the country’s default. The clear implication was that even if nearly half of all bondholders failed to accept the terms of the ruinous debt exchange, they would be ignored and go unpaid. To ensure that the message was heard loud and clear, the government passed a law forbidding the reopening of the debt exchange in the future – the so-called “Lock Law” which has been cited by the courts as evidence of the country’s ill will.
Third, Argentina’s economy was sufficiently recovered by early 2005, largely thanks to a commodity export boom, such that the government only needed a modest amount of debt-service relief from its creditors. For example, the country’s official international reserves had doubled from early 2003 to early 2005, from under $10bn to over $20bn, and so had government tax revenues measured in dollars between 2002 and 2004. And yet, the authorities pleaded on-going and future poverty by referencing a proprietary debt-sustainability model which failed to reflect the strong economic rebound underway, incorporated excessively pessimistic forecasts, and was never validated – never mind endorsed – by the IMF, as was customary in prior sovereign debt restructurings. During 2006-12, the economy ended up growing twice as fast as the government’s estimates as of late 2004, with actual export earnings and tax revenues outperforming official gloomy forecasts by even wider multiples.
The good news about Argentina’s economic and fiscal recovery of 2003-04 began to circulate around the international investor community, and thus the credibility of the government’s plea to be treated as if the country was still in the midst of an economic emergency started to erode. The improvement in Argentina’s capacity to pay was already so evident by early 2005, when the government put its demand for massive debt forgiveness on the table, such that one-fourth of the bondholder universe (by par value of claims) refused to enter into the debt exchange. The holdout component would surely have been larger still if the authorities had not intimidated the investor base as aggressively as they did, encouraging large-scale creditor capitulation.
Therefore, it should be crystal clear that Argentina and its financial advisors did have much better choices: they should have put forth a more reasonable and credible proposal based on consultations or negotiations along the lines of the Uruguay refinancing; better yet, they should have done so much earlier (say, in 2002) to restore their reputation and thus their access to the world’s financial markets.
By early 2005, the government had the financial wherewithal to put forth a debt exchange that would have been viewed as realistic and thus fair, because it captured the strong economic recovery and the favourable winds that were blowing in Argentina’s direction at the time. Such a proposal could have gathered the usual degree of support (around 95 per cent, as per many other sovereign debt restructurings), minimizing any holdout problems. However, for domestic political reasons, the authorities chose to default and then exhibited protracted unwillingness to pay, choosing a confrontational path which has haunted Argentina and its creditors to this day.
It has set such a bad example that no other nation has dared to follow it since.
Professor Arturo Porzecanski is Director of the International Economic Relations Programme at American University, Washington DC. During 2000-2005, he was a managing director and the head of emerging markets sovereign research at ABN Amro.
By Eliana Raszewski
November  12, 2013
Eric Francos, a French doctor on a three-week vacation with his wife and two children, was huddled off to one side of a pedestrian thoroughfare clogged with shoppers in downtown Buenos Aires, taking $100 bills out of his money belt as illegal money-changers beckoned with calls of “dollars, euros, exchange.”
“I know the risks, but so far I’ve never had problems, I try to be careful,” Francos, who plans on touring vineyards in the province of Mendoza, which lies 1,100 kilometers (680 miles) west of the Argentine capital and is renowned for its Malbec wine, said last week as he stuffed pesos into his front pants pocket. “Changing dollars in the streets is worth it.”
Tourists like Francos, who got 9.7 pesos per dollar compared with 5.9729 at the official rate, are turning to the black market to obtain local currency and shaving as much as 40 percent off their vacation costs. They’re also depriving the central bank of the foreign reserves the government uses to pay its debt, which is the most expensive to protect against non-payment anywhere in the world using credit-default swaps.
Visitors who spent $622 million during the second quarter sold only $342 million through official channels including banks, a 48 percent plunge from a year earlier, according to government data.
Last month, in an attempt to get more dollar inflows into the country, the government said Argentines who bring in foreign currency to pay taxes will be exempt from a bank deposit requirement.
Reserve Plunge
Lured by a widening gap between official and illegal exchange rates as President Cristina Fernandez de Kirchner tightens limits on foreign-currency purchases, tourists are contributing to the longest stretch of reserve declines in at least two decades and helping to reduce dollars held at the central bank to a six-year low of $33.05 billion.
“The numbers show that tourists are changing their dollars in the illegal market to take advantage of the higher rate,” Belen Olaiz, who wrote a report on the illegal market for research firm, said in a telephone interview from Buenos Aires.
An official at the central bank didn’t return phone calls seeking comment on the decline in reserves.
Reserves cover 27 percent of outstanding foreign-currency debt, the lowest in seven years, according to Orlando Ferreres y Asociados.
Arbolitos, Caves
Argentina has been unwilling to pay borrowing costs that are almost double the average rate for emerging markets to tap global credit markets since its 2001 default on $95 billion of debt. In 2010, Fernandez ordered the central bank to pay investors who received bonds in two restructurings with reserves.
Since then, the government has drawn down more than $39 billion of central bank funds to pay debt, contributing to an unprecedented streak of 12 straight months of declines in reserves.
The country is using reserves to reduce its debt levels, which have fallen in the past years, said an official at the Economy Ministry with direct knowledge of the mater who asked not to be named due to internal policies.
The country’s foreign-currency debt held by private creditors fell to 9.3 percent as of June 30, from 11.9 percent at the end of 2010, data compiled by the Economy Ministry show.
‘Blaming Tourists’
Tourists who change money illegally face the risk of receiving fake bills or being robbed. Street money-changers, known colloquially as “arbolitos,” Spanish for “little trees” because they’re like a fixed part of the landscape, often ply their trade within a few yards of policemen.
An alternative is to visit one of the small shops or back-street offices known as “caves” that use tourist agencies or dealerships in antiques, gold and coins as a front for trading currencies.
Sanctions for illegal currency trading range from a fine of 10 times the transaction if it’s the first time a person is caught to as many as eight years in prison.
Some shops and restaurants accept foreign currency as payment, giving clients more for their dollars or euros than they would get at a bank or using credit cards.
Pablo Romano, a 24-year-old employee in a clothing store on Florida Street, where Francos exchanged dollars for pesos, says he offers tourists who make purchases an exchange rate of nine pesos per dollar.
Foreign Investment
“We shouldn’t be blaming tourism for the drop in reserves rather government policies,” said Jose Luis Espert, who runs research firm Espert & Asociados in Buenos Aires. “High public spending makes the government print more pesos which Argentines don’t want.”
Foreign-direct investment in Argentina fell 32 percent in the first half of 2013 from the same period a year earlier to $5.2 billion, while investment in neighboring Brazil and Chile was $39 billion and $10.4 billion, respectively, according to the Santiago-based United Nations Economic Commission for Latin America.
“What we have in Argentina is a dollar supply problem, not demand,” Ricardo Delgado, director of Buenos Aires-based Analytica Consultora, said in an interview. “The big problem is that we’re not receiving dollars because investors don’t have confidence in the country.”
Investors demand an extra yield of 8.23 percentage points over U.S. Treasuries to hold Argentine debt, as of 5:24 p.m. in Buenos Aires, according to JPMorgan Chase & Co.’s EMBI Global Diversified index.
Tourism Deficit
With the depreciation of the peso lagging annual inflation that economists estimate has run at more than 20 percent for at least four years, Argentina has become more expensive for foreign tourists.
The rising costs have also encouraged greater numbers of Argentines to buy goods abroad while on vacation and to withdraw cash to exchange in the black market at home. While the government slapped a 20 percent charge on the transactions to discourage consumers, the implied rate of 7.176 per dollar is still cheaper than the black market.
As a result, the country will run up an $8 billion tourism account deficit, or the difference between what foreign tourists spend in Argentina and what Argentines spend abroad, according to Delgado.
Fernandez may act to cut off access to dollars further for Argentines traveling abroad, both Olaiz and Delgado said.
“The government may decide to adjust credit cards payments of foreign-currency purchases,” Delgado said. “Still, any ideas the government may have are only palliatives if it doesn’t boost confidence in the country to solve its deeper problems.”
For now, Francos, the French doctor, will continue to spend in cash to finance his trip to Patagonia in the south and Salta in the north rather than swipe his foreign bank cards at the official rate.
If it weren’t for the cheaper rate, “many items are as expensive as in Europe,” Francos said.
By Whitney McFerron
November  12, 2013
Argentina, the world’s biggest biodiesel exporter, is increasing shipments of the fuel on stronger U.S. demand, Oil World said.
Argentine exports of biodiesel made from soybean oil will climb to 450,000 metric tons in the three months through December, more than double the year-earlier 221,000 tons, the researcher said today in an e-mailed report. The U.S. may account for two-thirds of purchases from September through the end of the year, it said. Argentina’s biodiesel production this quarter may jump 57 percent from a year earlier to 670,000 tons.
“The U.S.A. has become the leading export destination for Argentine biodiesel,” Hamburg-based Oil World said. “A large part of the U.S. biodiesel imports is destined for re-export to African and Asian countries.”
U.S. biodiesel output rose to a record 128.3 million gallons in August, according to the most recent monthly data from the Department of Energy. Inventories of soybean oil used to make the biofuel fell to an eight-year low of 773,000 tons at the end of the 2012-13 season on Sept. 30, and supplies may slide further to 741,000 tons by the close of 2013-14, the U.S. Department of Agriculture estimates.
Argentina’s annual biodiesel exports still will decline in 2013 to 1.224 million tons from 1.558 million tons a year earlier, Oil World said. Shipments to the European Union tumbled as the 28-country bloc made plans to institute anti-dumping tariffs on both Argentine and Indonesian biodiesel, the researcher said last month.
Argentina’s government may raise its mandate for domestic biodiesel usage, with the Ministry of Industry calling for a 10 percent blend level in fuel by the end of the year, according to Oil World.
In Indonesia, biodiesel exports dropped 22 percent from a year earlier to 118,000 tons in August, Oil World said. Shipments in 2013’s first eight months were still a record 1.04 million tons, 12 percent more than the prior season, according to the report.
12 November 2013
The following is a press release from Standard & Poor’s:
– On July 4, 2013, we placed our global scale ratings on the four rated Argentinean local and regional governments (LRGs)–the city of Buenos Aires, and provinces of Buenos Aires, Cordoba, and Mendoza–on CreditWatch negative after lowering the institutional framework assessment score on Argentinean LRGs.
– On Sept. 13, 2013, we lowered the foreign currency global scale ratings on these entities to ‘CCC+’ from ‘B-’ after Argentina’s downgrade. We maintained the CreditWatch negative listing on the ‘B-’ local currency global scale ratings on these entities until we concluded the assessment on whether any of them could comply with the requirements to be rated above the sovereign.
– We now believe that neither the provinces of Cordoba, Buenos Aires, or Mendoza fulfills the necessary conditions to be rated above the ‘CCC+’ local currency sovereign rating. Consequently, we are lowering our local currency global scale ratings on these three provinces to ‘CCC+’ from ‘B-’. The outlooks are negative.
– On the contrary, we consider that the city of Buenos Aires presents a measurable likelihood that its credit characteristics will remain stronger than those of the sovereign in a scenario of economic and political stress. Consequently we are affirming our ‘B-’ local currency global scale rating on the city. The outlook is negative.
BUENOS AIRES (Standard & Poor’s) Nov. 12, 2013–Standard & Poor’s Ratings Services lowered its local currency global scale ratings on the provinces of Cordoba, Buenos Aires, and Mendoza to ‘CCC+’ from ‘B-’ and removed them from CreditWatch negative. The outlooks are negative. At the same time, we affirmed our ‘B-’ local currency global scale rating on the city of Buenos Aires and removed it from CreditWatch negative. The outlook is negative.
“These rating actions follow the Sept. 10, 2013, downgrade of Argentina to ‘CCC+’ from ‘B-’ and our subsequent assessment of characteristics of each LRG and their capacity to withstand a sovereign scenario of default,” said Standard & Poor’s credit analyst Delfina cavanagh.
According to our criteria, the local currency global scale ratings on Argentinean LRGs could be above the sovereign ratings if there’s a measurable likelihood that their credit characteristics will remain stronger than those of the sovereign in a scenario of economic or political stress. At the same time, given that the sovereign is rated in a low-speculative grade, we incorporate additional specific considerations, because we have more visibility on the potential sovereign default scenario at this rating level.
Conversely, the foreign currency global scale ratings on Argentinean LRGs are capped at the sovereign’s current transfer & convertibility (T&C) level of ‘CCC+’. Consequently, we cap our foreign currency global scale ratings on all Argentinean LRGs at ‘CCC+’.
12 November 2013
Argentina reached 7.3mn fixed and mobile connections at the end of the first half of the year, an increase of 1.78% compared to end-2012, according to the latest broadband barometer study released by Cisco.
The country saw a 9.9% increase in fixed broadband 2.0 connections (above 2Mbps) in the first half of the year to reach 3.4mn connections. This figure represents a penetration of 8.2%, according to Cisco’s latest Broadband Barometer study, carried out by tech consultancy IDC.
Cable modem connections expanded 5.6% during the first half of the year, while xDSL connections grew 1.7% during the same period, according to Cisco’s barometer. These two technologies represented 98.6% of total fixed broadband connections at end-June.
The report also stated that 55.4% of total fixed broadband connections in the country had access speeds of over 2Mbps.
Meanwhile, mobile broadband connections totaled 1.2mn at the end of June, or 16.2% of total broadband accesses in the country. Mobile broadband connections declined 5.3% in the first half of the year, according to the study.
Cisco’s study also forecasts a total of 9.2mn fixed and mobile broadband connections by 2017. Mobile connections will account for 11.2% of total connections.
Cisco’s country manager for Argentina, Gabriel Sakata, told BNamericas that the relatively low number of devices for fixed broadband 2.0 connections is limiting growth in this segment. According to Sakata, the number of available devices for this technology is lower than in other countries in the region.
Sakata also said that connection speeds in Argentina are still slower compared to other countries such as Brazil and Chile. The average connection speed in the country is 2.4Mpbs. Sakata said that ISPs are currently offering higher access speeds maintaining the same tariffs for subscribers.
The executive also highlighted that some provinces in the country still lack sufficient infrastructure for broadband services. However, he added that fixed, mobile and cable operators have been significantly investing in backbones.
By Pete Sepp
November 12, 2013
Amid all the recent political brawls between the White House and Congress over government funding for the current fiscal year and the federal debt ceiling, many Americans likely haven’t noticed that other nations’ financial practices can be much worse, while still impacting their wallets here at home. That’s why the National Taxpayers Union, along with 14 other groups in the limited government movement, wrote to Congress last week to draw attention to the alarming news that the World Bank is considering $3 billion in new loans to Argentina.
In the letter, which was co-organized with the Taxpayers Protection Alliance, we urged Congress to send a strong message to the administration to oppose these World Bank loans, and for the U.S. Treasury to withhold funding from the bank if it continued to underwrite “financial rogue” states like Argentina. Such a stance is especially important, given matters such as:
Argentina’s continual defiance of the U.S. judicial system: Argentina’s economic and political leaders, who have mired their nation in statist, anti-free-market policies, have expressed they would rather default than abide by U.S. court determinations. To date, the government of President Cristina Kirchner has actively ignored more than 100 such judgments, totaling billions of dollars. And in a new video clip Argentina’s counsel is seen telling the U.S. Second Circuit Court of Appeals that Argentina “would not voluntarily obey” their rulings.
Argentina’s continual defiance of its international obligations to investors and lenders: According to the Financial Times, “of a total of 439 legal disputes between countries and companies at the World Bank tribunal, no fewer than 50 involve Argentina – far more than anywhere else, with socialist Venezuela lagging some way behind in second place.” Many companies that hold International Center for Settlement of Investment Disputes claims against Argentina are American. While Argentina just settled five of its ICSID cases last month, 45 cases remain outstanding, in addition to unresolved debts with the Paris Club, various nationalizations and ongoing censure by the International Monetary Fund for failure to comply with basic obligations.
Argentina’s currency policies which, some say, have the effect of actively encouraging money laundering within its borders: During the summer, the Argentine government allowed its residents to trade in their U.S. dollars, which are running short, for a new “pseudo currency” and receive tax amnesty while doing so. International observers criticized the plan as a way to legalize dirty money. The Financial Action Task Force, the inter-governmental body developing and promoting policies to combat money laundering and terrorist financing, determined this month that Argentina will remain on its “grey list”  for the time being, alongside the countries of Afghanistan, Angola, Cuba and Sudan.
These are just some examples of how Argentina’s misconduct impacts American investors, taxpayers, and international rule-of-law. It’s therefore no wonder that advocates of limited government have long expressed concerns about our Treasury helping to prop up these bad actors.
To give just one example, NTU submitted comments in 2010 to the New York Legislature, which was holding hearings on the impact of the 2001 Argentinian default on its debts. At the time, we noted that “Argentina’s pattern of fiscal irresponsibility and economic mismanagement has left U.S. taxpayers to shoulder the burden of such recklessness, and has exacerbated the already battered and fragile state of our own economy. Repayment of Argentine debt in full is the only option to relieve the misery caused by Argentina’s negligence.” In 2012, NTU released a study authored by Alex Brill and James K. Glassman calling for a restructuring and reform of the G-20, a multi-country economic policymaking forum. Utilizing a rational set of data-driven criteria, Brill and Glassman recommended that four nations, including Argentina, be removed from G-20 and replaced with others.
The United States has a reputation to uphold in opposing future lending to Argentina. Following the adoption of a U.S. policy in 2011 to oppose all multilateral development banks’ lending to Argentina, several other nations followed suit, including the United Kingdom, Spain, Germany, Japan, the Netherlands and Canada. It remains in American taxpayers’ best interest for this policy to continue while Argentina chooses to behave like an international scofflaw in the financial sphere.
November 12, 2013
Neuquen Province in Argentina has extended the exploration period for the Roch SA-operated Coiron Amargo Sur block by 1 year until Nov. 8, 2014, said 35% working interest owner Madalena Energy Inc., Calgary.
The northern part of Coiron Amargo, known as Coiron Amargo Norte, is under a 25-year exploitation concession that the province approved in 2012.
The extension provides the four-company group time to satisfy remaining work commitments, Madalena said. After satisfying these, the partners have the ability to extend Coiron Amargo Sur through further exploration, evaluation, and exploitation phases.
Madalena said the group has reentered the CAN.XR-2(H) well and is drilling horizontally in the Sierras Blancas light oil reservoir. This is the first horizontal well drilled into one of the six Sierras Blancas conventional light oil pools discovered on the block to date.
After this well, the group plans to drill an additional Vaca Muerta shale delineation well (CAS.x-15) in the southern part of the block.
Coiron Amargo interests are Roch and Gas y Petroleo Neuquen SA 10% each, Apco Oil & Gas International Inc. 45%, and Madalena 35%.
November 12, 2013
In what is probably every divorced parent’s worst nightmare, a Colorado father has been waiting for over three years to have his abducted children returned to the United States.
Dennis Burns’ two daughters were kidnapped by their mother to Argentina after a judge denied her request to relocate to the country with their children, and now there is no immediate end to their custody battle in sight and the Supreme Court of Argentina has even been asked to weigh in.
In 2009, Burns and his ex-wife Ana Alianelli initially agreed to keep their divorce “amicable” for the sake of their two daughters when they split up after five years of marriage. But Alianelli soon claimed Burns had abused her and requested to take their children with her to Buenos Aires, Argentina.
A judge later ruled that Alianelli’s claims of abuse were unfounded and ordered that Burns be the primary residential parent. In that ruling, the judge ordered the girls — Victoria and Sophia, who were ages 3 and 1 at the time — to remain with Burns in the United States.
“I felt a sense of relief that was just beautiful,” Burns told CNN of the decision. “And I was like, ‘I’m going to be able to spend time with my daughters, finally, and live with them and be able to teach them things, and show them things, and live here with them in Colorado.”
But three weeks later, Alianelli defied the order and took the girls to Argentina.
The U.S. State Department says they receive about 1,200 new cases similar to Burns’ each year.
According to Burns’ Facebook page “Return Burns Children Fund,” Burns has already contacted the FBI, the U.S. Attorney General’s Office, the U.S. State Department and the National Center for Missing and Exploited Children.
Even though the judge signed an order for the immediate return of the Burns children to the United States, the U.S. State Department has told Burns it could take 18 months to years to get his daughters back.
From the U.S. Department of Justice’s website:
Under federal law, prosecutors may investigate and prosecute the parent who kidnapped the child. However, prosecutors generally have no control over the custodial decisions affecting the kidnapped child or if foreign authorities will order the return of the child.
The return of kidnapped children is often settled through negotiation. The U.S. Department of State handles the coordination of efforts with foreign officials and law enforcement agencies to effectuate the return of children to the United States. In some circumstances, the return may be governed by the Hague Convention on the Civil Aspects of International Parental Child Abduction (1980).
The Hague Convention only applies if both of the countries involved in the child abduction case are signatories to the Convention — the U.S. and Argentina are — but there have been significant delays to the proceedings. While an appellate court in Buenos Aires ruled in favor of Burns, Alianelli appealed it and the case is now headed to Argentina’s Supreme Court.
A study on parents who abduct their children from the UK by the National Parents Organization found that an astounding 70 percent of the abductions are committed by mothers.
“It’s such an isolated feeling. There’s nothing to soothe the pain and the hole in my heart,” he told The Aspen Times. “I’m in unchartered waters here. I’ve always had a pretty blessed life.”
Burns has been able to see his daughters since, but he’s had to travel to Argentina to do so and last time the visit was cut short by Alianelli and her lawyer.
Burns has also enlisted the help of another dad, David Goldman, who went through a similar ordeal in 2004 when his son was kidnapped by his Brazilian-born mother. He ended up spending upwards of $700,000 to get his then 8-year-old son Sean back.
In Burns’ case, his home has already been foreclosed and he claims on his website that he was forced to declare bankruptcy after accruing so many legal fees. He is now asking the public for donations to help him secure his daughters’ return.
The financial aspect is something that I hate to face and realize at times, because it almost seems secondary to the concept that the girls are the most important focal point. But it simply cannot be ignored that unfortunately, this international incident is extremely costly. I personally know other left behind parents who have given up on trying to have their children returned after being kidnapped. Each time it has been financial constraints which have left these parents facing the unthinkable. I have cried many tears speaking with these parents and have a paralyzing fear that this quest for justice in the name of the best interests of my daughters can end due to lack of financial ability.
By Ian Mount
November 12, 2013
Jess Jackson, a San Francisco lawyer, changed the face of US winemaking when he founded the Kendall-Jackson company in California in 1982. By the time he died in 2011, the man behind the slightly sweet Kendall-Jackson Vintner’s Reserve Chardonnay was a billionaire producing more than 5m cases a year.
Yet, in spite of considerable investment, Jackson was never able to repeat his success in Argentina.
In 1996, he bought 1,100 acres in Mendoza’s Uco valley, later adding 1,750 acres and a winery, led by Randy Ullom, who ran his Chile operations.
But, in 2003, after a series of business missteps and Argentina’s debt default, which caused the peso to lose almost three-quarters of its value, Jackson sold his Argentine business to a Buenos Aires couple for $2.5m – a $5.5m loss on his investment, according to Wine Spectator magazine.
Jackson was not the only foreigner to enter the Argentine wine business only to discover that it could be a minefield of hand-shake deals, erratic government policy and economic collapse.
“The growth and excitement that Argentina has produced continues to attract people. But Argentina is not an easy-to-deal-with country,” says José Manuel Ortega, the Spaniard who runs Mendoza’s O. Fournier winery.
About $1.5bn was invested in the Argentine wine industry in the 1990s, about two-thirds of which came from foreign winemakers. This led to a surge in exports from $128m in 2002 to $920m in 2012, according to the Instituto Nacional de Vitivinicultura, the Argentine wine agency.
But high inflation and import restrictions in the past two years illustrate that doing business in Argentina can be difficult. For foreign investors, it is a reminder that success requires creativity and a willingness to do things the Argentine way.
It was a shortage of that willingness that hurt Kendall-Jackson.
From the start, Kendall-Jackson had problems getting enough water to its land, which was outside Mendoza’s traditional vineyard zone, as well as difficulties importing the US plants it wanted.
“There was a way we wanted things done: how to make wine, how to grow grapes, how to do the financial records,” Mr Ullom says. “We’re very strict and have some very focused plans. It’s our way or the highway.” In the end, the rigid Kendall-Jackson chose the latter path.
Foreigners in Mendoza have since learned from Kendall-Jackson’s experience. But overseas investors are again facing tough times. Inflation has been about 25 per cent a year since 2010 and the national government has instituted import controls to stem the outflow of central bank reserves.
For Mendoza winemakers, this means higher costs, scarce supplies and squeezed margins. The cost of making wine has doubled in the past four years, says Valeria Mutis, an analyst at Rabobank.
“The biggest problem the industry is facing is a loss of competitiveness,” Ms Mutis says.
According to Caucasia Wine Thinking, a market analysis company, in the first nine months of 2013, Argentina exported 220.3m litres of wine for $640.6m, down 19.8 per cent and 5.5 per cent respectively on the same period of 2012. The entry level has been especially hard hit: exports of bottled wine under $18/case have fallen by 37 per cent.
In response, vintners have become more creative.
Argentina’s government encourages exports by refunding various taxes to exporters, but it does so slowly. To cut the wait, Pato Reich, the Chilean chief executive of Renacer, his family’s Mendoza winery, sells wine to local companies that need to export in order to get permission to import other goods (a government requirement).
They export for Mr Reich and handle the refund delay. “There are a lot of rules that change day to day, so you have to be flexible,” he says.
Mr Reich has also learned to plan. After he was unable to import label paper, making it impossible to ship exports worth about $400,000 a month, Mr Reich began to stock 10 months’ supply of corks, paper and bottles, up from a three months’ supply before. The problem, he says, is that it ties up $200,000 of working capital.
Foreign owners also have to learn that business in Argentina runs on friendship. After applications to import oak barrels were repeatedly rejected, Mr Ortega from the O. Fournier winery explained his problems to Marcelo Barg, agro-industry minister for Mendoza, at a winery dinner.
The barrels were promptly approved, just in time for the 2013 harvest. “You have to go and plead,” Mr Ortega says.
There have been some encouraging signs of late. Carlos Clément, a Mendoza shipping agent, says all but one of his barrel import requests have been approved.
And Argentina is allowing the official peso exchange rate to devalue, thus easing inflation’s bite on exporters.
In the end, foreign wine investors have to learn the lesson of Kendall-Jackson, and understand that Argentina is cheaper because life is more difficult there.
As they say: you can’t have your cake and eat it too.

ARGENTINE UPDATE – Nov 7 & 8, 2013

9 noviembre, 2013


By Carlos Mauleon
November 6, 2013
Few are willing to speak up in favour of Argentina, given a long list of questionable economic decisions made by the current government. But whatever you may think of Argentina, its leaders and its policies, you should consider that despite all of the criticism and rhetoric from the holdouts, US judges, the IMF and the IIF, the one good decision its leaders made was to aggressively restructure Argentina’s debt back in 2005.
Now even that may be thrown by the wayside if either the Supreme Court rejects hearing the case brought against them by the holdouts or accepts the case but supports the appeals court’s recent ruling. The outcome could very well turn back the clocks to December 24, 2001, a day both Argentina and 93 per cent of its creditors would rather forget; but it would also establish a poor precedent for the chances of effectively concluding any future sovereign debt restructurings.
The fundamental argument supporting Argentina’s case is simple. When the “bid – offer” gap between debtors and creditors is massive, there is no real path to a negotiated solution. When the potential losses are huge, the stakes so high and the solutions so far apart, the chances are that a forceful twist of hand is necessary to ultimately settle the issue.
Undoubtedly this was the case with Argentina. Its decision to bypass a creditors committee, the implementation of the Ley Cerrojo and the terms of the Exchange which resulted in one of the largest nominal and net present value haircuts in sovereign debt restructuring, combined to inflict significant economic pain to Argentina’s thousands of creditors both institutional and retail.
But the question is, did it have a better choice? Not really.
Looking at Greece supports this point. The Greek restructuring was ultimately as coercive, if not more so, than that of Argentina. Once again, the bid – offer gap between the country and its creditors was massive. The anticipated nominal and net present value losses to the creditors were irreconcilable assuming the end game was to truly set Greece on a challenging but ultimately sustainable economic path.
Detractors will argue that Greece entertained a negotiated solution with the IIF lead creditor group. True. But let’s look at that process and the outcome.
Left alone to its colossal debt to GDP ratio, fiscal deficit and downward spiralling economy, Greece would have had to default, leave the EU and force creditors to incur nominal and NPV losses significantly higher than Argentina or any other country in history.
Fortunately for Greece (and its creditors) the country is a member of the EU and during its meltdown the dynamics of the European crisis placed it at the centre of a potential EU implosion, given imminent contagion spill-over to Spain, Portugal and more importantly Italy. The Troika (the EU, IMF and ECB) directly or indirectly provided Greece with an infinite amount of resources (loans, guarantees, bank liquidity) to avoid default while simultaneously pushing for a not so voluntary solution to avoid European disintegration and bring suicidal markets to calm.
Nevertheless, the Troika’s support combined with bilateral negotiations with the IIF proved insufficient to avoid a coercive restructuring process. Just think how the now famous judge Griesa would react to unilaterally back-dating collective action clauses into a fiscal agency agreement that allowed the issuer to essentially cram down every creditor under new terms. This is precisely what the Greek government did with all of the bonds issued under local law (86 per cent of the total bonds outstanding). It makes Argentina’s Ley Cerrojo look like amateur hour.
For all the months of tedious tri-lateral negotiations (including a short-lived agreement in July 2011 with the IIF that severely over-estimated Greece’s capacity to pay) what triggered a final agreement was Chancellor Merkel and President Sarkozy’s ultimatum to the IIF on the weekend of October 27, 2011. The European leaders threatened a recalcitrant IIF with an exponentially higher nominal and NPV loss or it would lose their support (in the form of billions of dollars of subsidized loans to Greece) in which case creditor losses would have exceeded 95 per cent. The chancellor and the president did not negotiate. Fed up with the impasse between the parties and the potential for EU implosion, they issued this ultimatum to force an agreement that otherwise good faith negotiations would have never have achieved. A quote from Chancellor Merkel summarises the dynamics of the discussions: “We really made only one offer,” Chancellor Merkel told reporters after the summit. “The bank delegates took that back to their representatives. And this offer was specified in such a way – and we said that it’s our last word – that they took it up.”
So yes, Argentina’s restructuring was tough on creditors. But given the gap between the parties, the restructuring process was adequate and the outcome reasonable in light of Argentina’s economic circumstances. The argument that bilateral negotiations would have helped bridge the gap is not supported by the Greek experience as the events and parties involved in this yet-to-conclude restructuring saga can confirm.
Some 93 per cent of Argentina’s creditors have licked their wounds and moved on. The holdouts are threatening to unwind the one good thing Argentina achieved through means that are arguably less coercive than those used by Greece with the complicity of the EU, the IMF and the ECB.
The market is short a global legal framework for sovereign debt restructurings and unfortunately the IIF guidelines underestimate the difficulties when the parties are miles apart. In both instances (Argentina and Greece) these guidelines underestimated the reality that the losses required to truly fix the problem (versus punting it) were much greater than what creditors would have been willing to accept voluntarily.
Unfortunately, the rhetoric and economic policies of the Argentine government post restructuring muddle the justification of their approach and provide ample ammunition for the holdouts, the courts as well as public opinion to throw the country under the bus.
But be wary when the holdouts argue for the unequivocal need for good will negotiations. They may shield their motives behind this noble cause but they too know better and we should all know that they would easily throw everyone else under the bus as long as their agreement generated them exponential returns.
Carlos Mauleon was a managing director and head of Latin America investment banking and DCM at Barclays Capital from 2001 to 2011. He lead the team at Barclays that helped implement both the 2005 and 2010 Argentine exchanges.
By Charles Newbery
6 November 2013
Buenos Aires (Platts)–6Nov2013/1229 pm EST/1729 GMT  Argentina’s state-run energy company YPF said Wednesday it expects to close an agreement with Chevron by the end of 2013 for a shale development project, unleashing additional funds to boost oil and natural gas production.
“We are expecting a final closing by year end,” Chief Financial Officer Daniel Gonzalez said on a conference call with investors.
The agreement will utilize the remaining nearly $1 billion of the $1.24 billion Chevron has committed to invest in the development of a 5,000-acre tract targeting the giant Vaca Muerta shale play. Chevron has already invested $300 million in the project on the Loma Campana block in the southwestern province of Neuquen.
YPF started drilling for shale resources there more than a year ago, and ramped up production to 12,934 b/d of oil equivalent in the third quarter from 4,000 boe/d at the start of the year. Q3 output included 7,887 b/d of crude, 2,560 b/d of natural gas liquids and 0.4 million cu m/d of gas.
With Chevron’s investment as well as cash flow and new financing from the capital markets, YPF expects to drill more than 150 wells for shale resources in 2014, Gonzalez said. That would be up from the 100 wells the company expects to have drilled by the end of 2013.
Gonzalez declined to forecast shale production growth for 2014, saying the information won’t be available for another month or so when the company finalizes its 2014 budget.
He said YPF probably wouldn’t meet its “aggressive targets” of a 4% increase in overall oil output and 1% in gas this year compared with 2012, but said he expects faster growth in 2014, helping pull the company further out of a decade-long decline of 6% annually.
“We are showing solid, sustainable growth,” Gonzalez said.
The dwindling production was a main reason the government took YPF under state control in May 2012 through the seizure of 51% of the shares from Spain’s Repsol. The government said Repsol hadn’t been doing enough to turn around the decline.
Now under state control, YPF’s crude production rose 2.5% to 235,100 b/d in Q3 compared with the year-earlier period, while gas production went up 2.6% to 35.6 million cu m/d. When compared with Q2, oil production increased 3% and gas by 7.8%, it said.
Gonzalez said the increase was driven by conventional and unconventional developments. Conventional crude production rose 1% in Q3 on the year and 2% compared with Q2, while unconventional crude rose 93% on the year and 46% on the quarter, he said.
“There is still plenty to do on the conventional side as we develop the unconventional,” he said.
YPF entered another partnership deal with Dow Chemical’s Argentine unit in Q3 to develop a shale gas pilot on the El Orejano block with a combined investment of $188 million.
Gonzalez said the agreement is “another milestone in our objective to profitably develop the shale, monetize our resource base and have the country return to oil and natural gas self-sufficiency.” LIGHT CRUDE PRODUCTION
Gonzalez said Argentina is running a scarcity of light crude production and an excess of heavier crudes. This is putting strain on refineries that mostly process lighter crudes, with imports rising in recent months.
He said the situation will change as shale oil production increases because most of it so far is light crude.
YPF is not alone in the unconventional push. Apache, ExxonMobil, Pan American Energy, Shell, Total and other companies are in the first phase of drilling to test for shale and tight gas production potential, boding well for a recovery in national production.
“The companies are six to nine months behind YPF but they are heading toward a similar trend,” Gonzalez said.
Argentina’s oil production has dropped 36% to 540,000 b/d and gas has fallen 20% to 114 million cu m/d over the past decade, largely because of limited investment, few finds and maturing reserves.
Yet with the discovery of huge shale potential in 2010, investment has been returning. Argentina is estimated to hold 27 billion barrels of shale oil and 802 Tcf of shale gas, far more than its 2.5 billion barrels of proved conventional oil reserves and 12 Tcf of proved conventional gas reserves.
The government has come out with incentives to spur investment. It has raised the wellhead price of gas from new developments to $7.50/MMBtu from about $2.30/MMBtu, and it has made it possible for companies investing more than $1 billion over five years to export 20% of their production and do as they wish with the proceeds. That skirts a requirement to repatriate all foreign earnings.
“Natural gas has become a very profitable business for us given the new pricing scheme,” Gonzalez said.
YPF said its average price of gas more than doubled $3.91/MMBtu in Q3 from $1.67/MMBtu a year earlier.
The higher price of gas as well as of diesel and gasoline at the pump are helping improve cash flow, Gonzalez said.
YPF is relying on cash flow to fund 80% of a plan to invest $37.2 billion through 2017 to increase oil and gas production 32%.
Gonzalez said he expects the investment pace to be similar or higher in 2014 than the expected $5 billion-$5.5 billion this year.
He said the company has $1.2 billion in cash on hand for investment as well as the $1 billion due from Chevron, plus untapped lines of local credit and the possibility of selling bonds abroad. The company sold $150 million in notes last month at a price to yield less than 8% annually, he said.
“We will be pragmatic and opportunistic” in tapping the global credit markets, he said. GROWING RIG FLEET
Gonzalez said YPF will continue to increase its rig count, albeit at a slower pace.
YPF has ramped up its fleet to 63 from 23 a year and a half ago and expects to reach 66 by the end of the year. More rigs will be ordered at a tender to take the total to 75 by the end of 2014, Gonzalez said.
“We will continue to increase our rig count, but not so aggressively,” he said.

By Pola Oloixarac
November 7, 2013
BUENOS AIRES — After a decade in the public eye, Cristina Fernández de Kirchner has started to fade in her starring role as Argentina’s diva. With her party’s loss of key districts in the midterm Congressional elections, her dream of re-election in 2015 for a third term as president — “Eternal Cristina,” as her acolytes say — comes to an end. But she will not go away without putting up a fight.
After her party, the Front for Victory, performed poorly in the primary elections in August, Ms. Kirchner set about to recapture the public imagination, though her administration was flooded with bad news: inflation is unofficially at 20 percent to 25 percent, public debt is swelling while central bank reserves are falling, and a growing discontent has created factions inside the party, which until now had behaved under the whip of “la Señora.”
Ms. Kirchner needed to stir the lingering ashes of her romance with the people, who had rewarded her with 54 percent of the vote just two years ago.
She gave a rare interview to a celebrity journalist, a baron of the yellow tabloids. She dropped nine kilograms. She switched from skirts to black leggings, updating the widow’s uniform she adopted after her husband, Néstor, died in 2010. Internet memes featuring Ms. Kirchner as Catwoman made the rounds in social media.
Suddenly, the comeback froze. Her bespectacled face was seen, for the first time without makeup, in a dark car entering a hospital. It was as if the pop star of the movement were entering rehab.
Ms. Kirchner needed brain surgery to remove a blood clot in early October; it was reported that she had fallen and hit her head. The circumstances of the fall remained mysterious, but doctors prescribed a 30-day rest period. Without her leading the charge, her candidates seemed adrift.
The campaign was surrounded by scandal. A hidden camera showed a Congressional candidate, Juan Cabandié, trying to get out of a traffic ticket by arguing that he was a son of desaparecidos (the disappeared, victims of the 1976-1983 dictatorship, resurrected as moral bishops in the Kirchner board of virtue). A 22-year-old transit officer lost her job, but was rehired after the public outcry. The episode exposed an abusive political caste.
Protective of her political legacy, Ms. Kirchner was careful in delaying the choice of her dauphin. She overlooked high-profile candidates such as Daniel Scioli, governor of the mighty province of Buenos Aires, whose stoicism in the face of the humiliations he suffers at her whims makes him a possible 2015 loyalist successor.
As for her vice president, Amado Boudou, corruption scandals have made him persona non grata. Mr. Boudou goes every day to the presidential palace, the Pink House, but he no longer has Ms. Kirchner’s ear. “The only thing he can handle is a motorbike,” said Congressman Felipe Solá, referring to the acting president’s hobby. Mr. Solá is part of the Peronist “renewal” faction aligned with Sergio Massa, Ms. Kirchner’s former cabinet chief, an up-and-comer who has promised to pursue a market-friendly economic approach. Mr. Massa was the darling of the recent election, winning roughly 44 percent of the vote.
Argentina recently negotiated a loan with the World Bank for $3 billion, which would give Ms. Kirchner’s administration some breathing room. “Under these conditions of inflation, with no anti-inflation plan and such low reserves, it would be a miracle if she makes it to 2015,” said Pablo Schiaffino, an economist who lives in Buenos Aires. “It’s like a car running out of gas.”
When she was first elected, Ms. Kirchner told the country: “We deserve a new story for ourselves.” She delivered on that. Since 2008, she has woven a dramatic story line infused with villains, éminences grises and corporate powers seeking to dethrone her. With postmodernist swag, the narrative flew free from accountable issues: recently, after a train crashed in the Once Station, the government announced that it was taking over the railroads. The Peronist party had nationalized them in the 1940s, and privatized them in the 1990s. The party’s position swings to the left and to the right, but the train cars are the same as in the 1940s.
Ms. Kirchner aspires to go into history as Argentina’s biggest reformer, and some of the legislation passed on her watch supports her case, including the Universal Child Allowance (a stipend for poor families), gay marriage laws and more money for scientific research and university education. She could try to position herself as the leader who never cut back on welfare-state spending and propel herself to a glorious comeback in 2019, becoming the country’s populist icon of the 21st century, overshadowing Evita Perón.
But the economic clock is ticking. If Ms. Kirchner manages to sustain the bloated state spending two more years, she’ll secure the glory — and let the one who replaces her worry about paying the bills.
Pola Oloixarac is an Argentine novelist and author of “The Wild Theories.”
By Shane Romig
7 November 2013
BUENOS AIRES—With Argentina’s bondholders increasingly worried that an adverse court ruling in the U.S. might lead to a sovereign default, one creditor is proposing a novel solution: Investors should dig into their own pockets and pay the hedge funds that are suing to collect on defaulted Argentine debt.
Such an offer would be a way for Argentina to resolve a lawsuit that could force it to choose between defaulting on its current bonds or paying hedge funds the more than $1.33 billion they have been awarded by U.S. courts, something President Cristina Kirchner has sworn never to do.
The proposal, floated by leading creditor Gramercy Funds Management LLC, would pay the hedge funds and more than compensate the creditors who foot the bill because their bondholdings would likely rally once the risk of a default dissipates, a person familiar with the matter said.
Gramercy owns bonds Argentina issued under debt swaps in 2005 and 2010 that offered creditors about 33 cents on the dollar. Argentina passed legislation this year to launch another restructuring—on terms similar to those offered creditors in 2010—aimed at the hedge funds and other investors who still own defaulted bonds.
Under the Gramercy plan, bondholders would voluntarily give up a portion of the interest payments they receive to pay the hedge funds the difference between Argentina’s debt-exchange offer and the sum they have been awarded by U.S. courts, the person said.
If successful, the Gramercy proposal could push bond prices up by as much as 24%, Barclays economist Sebastian Vargas said in a report.
However, 85% of the holders of Argentina’s restructured debt would have to agree in order for the Gramercy deal to be binding on all creditors. The so-called holdout creditors—those who refused to accept the terms of the restructurings—would have to tender their defaulted bonds in Argentina’s latest restructuring offer. Current bondholders would give the holdouts 20% of their interest payments over the next five years, a total of almost $1.4 billion, according to Barclays.
Argentina defaulted on some $100 billion in debt during a deep economic crisis in 2001. Creditors exchanged about 93% of the defaulted debt for new bonds, but holdouts, led by hedge funds Aurelius Capital Management and Elliott Management Corp.’s NML Capital Ltd., have sued for full repayment. They have tried to seize Argentine government assets across the globe, including a naval training ship that was detained for months in Ghana last year until a U.N. tribunal ordered it released.
The plan has been met with skepticism by some bondholders and the hedge funds.
“The Gramercy proposal is impossible. Bondholders won’t give up future payments to pay the holdouts,” said Eugenio Bruno, an attorney at Argentine law firm Estudio Garrido, which represents several creditors that accepted the swap offers.
“We have approached Argentina countless times about negotiating a resolution to this dispute. It is completely within Argentina’s power to solve this problem and we have no idea why Argentina’s debts can, should, or need to be resolved without Argentina’s participation,” an NML spokesman said. “We welcome the idea of good-faith negotiations with Argentina, but we don’t see the point of negotiating with other bondholders,” he said.
A spokesman for Aurelius declined to comment on Gramercy’s proposal. A dozen other Argentine creditors either declined to comment or didn’t respond to requests for comment.
A spokeswoman for Argentina’s Economy Ministry also declined to comment.
Argentina has largely exhausted its legal options before a U.S. appellate court and its last hope could come down to a long-shot appeal to the Supreme Court. Lower courts have ruled that Argentina can’t make payments on its restructured bonds unless it also pays the holdouts.
Gramercy is one of several investors that have asked the courts not to block Argentina from making payments on the Argentine bonds they own.
By Paul Byrne and Michael Warren in Buenos Aires, Argentina, and Luis Andres Henao in Santiago, Chile
November 7, 2013
STANLEY, Falkland Islands — Falkland Islanders on Thursday elected a new government to manage the transition of the small British territory as oil exploration turns to development.
Five members of the Legislative Assembly were selected to represent Stanley, the capital, and three for Camp, which is everywhere else in the South Atlantic territory of mostly remote sheep farms and small settlements.
For the first time, the legislative positions will be full time. Those elected will receive a salary and must quit any other jobs.
Officials said 75 percent of Stanley voters participated and just over 85 percent of the Camp constituency cast ballots. That was 1,046 votes in Stanley and 242 for Camp.
The main issues facing the legislators are Argentina’s continuing claim to the islands and preparations for the oil wealth expected from offshore drilling. Oil exploration is already pumping millions of dollars into the economy and most islanders seem concerned about the potential for problems from rapid change brought by the new industry.
“Some now, unfortunately, are dazzled by the figures being bandied about, but until commercial oil is actually flowing and royalties being received we must proceed with caution,” Jan Cheek, who is one of the five new legislators for Stanley, said in her campaign manifesto.
Michael Poole, another Stanley lawmaker, believes Falklanders need to reach out more to Latin American countries to tell the territory’s position and offset Argentina’s campaign to get sovereignty.
While the Islands are internally self-governing, Britain is responsible for defense and foreign affairs. Argentina claims the territory it refers to as the “Islas Malvinas” despite nearly 180 years of British control and a failed occupation 30 years ago.
In a referendum in March, 99.8 percent of Falkland Island voters backed keeping their government as a British Overseas Territory.
By Daniele Lepido and Manuel Baigorri
November  8, 2013
Telecom Italia SpA (TIT) unveiled plans to sell its Argentine business, assets including wireless towers in Italy and Brazil, and a mandatory convertible bond to raise a total of about 4 billion euros ($5.4 billion) to help pare debt.
The carrier received a binding offer for its 22.7 percent holding in Telecom Argentina SA and its board voted yesterday in favor of the disposal, Telecom Italia Chief Executive Officer Marco Patuano said on a conference call. Fintech, the investment firm founded and led by Mexican billionaire David Martinez, is the bidder, said a person familiar with the matter, asking not to be named as the discussions are private.
Patuano, taking over from Franco Bernabe, who resigned last month after clashing with top shareholder Telefonica SA (TEF), is attempting to turn around Italy’s largest phone company. The carrier’s debt was cut to junk last month by Moody’s Investors Service. Standard & Poor’s, which has said it’s likely to follow suit, will complete its review this month.
“These measures show that Telecom Italia is committed to a stronger financial profile,” Patuano said on the call.
Third-quarter profit fell about 27 percent to 505 million euros, missing the 524.6 million-euro average estimate among analysts compiled by Bloomberg.
Net Debt
Adjusted net debt totaled 28.2 billion euros at the end of September. That’s more than double the company’s market value. Telecom Italia plans to trim its debt to less than 27 billion euros by the end of the year. It aims to cut the ratio of net debt to earnings before interest, taxes, depreciation and amortization to 2.1 times by 2016, compared with 2.9 times this year.
Telecom Italia fell as much as 5.6 percent and traded 4 percent lower at 69.2 cents at 9:30 a.m. in Milan, giving the carrier a market value of 12.6 billion euros.
While Telecom Italia declined to give financial details for the Argentine asset, the stake has a market value of about $1.4 billion. The board authorized negotiations to conclude the deal, according to the Milan-based company, which expects the transaction to be completed in mid-2014.
Argentina is one of Telecom Italia’s three core markets, along with Italy and Brazil, and accounted for about 13 percent of its 2012 revenue. The stake is through a holding company called Sofora, and the Italian carrier has a presence in Paraguay as well through its indirect stake in the Buenos Aires-based company.
‘Big Picture’
Still, Telefonica, which in September increased its holding in Telecom Italia, favors selling the Italian company’s Brazilian division, Tim Participacoes SA (TIMP3), people familiar with the matter have said. Tim has a market value of $11.6 billion and Telecom Italia owns a 67 percent stake.
“A sale of the Argentine asset is a small part of a bigger recovery picture that Telecom Italia needs to complete,” said Carlo Alberto Carnevale Maffe, a professor of business strategy at Milan’s Bocconi University.
Fintech has investments in Argentina’s sovereign debt as well as in many restructured companies including a stake in the country’s largest cable company, Cablevision SA. A former priest, Martinez lives half of the year in London and the other half in Manhattan.
He built his fortune by buying and helping to restructure the debt of troubled countries and companies, including Telecom Argentina, according to public filings.
Annual Coupon
Martinez has also invested beyond Argentina and Latin America. In September, Fintech bought almost 5 percent of Spanish lender Banco de Sabadell SA during a share sale.
A Fintech spokeswoman in New York declined to comment. Martinez didn’t respond to an e-mail seeking comment.
Telecom Italia said today it completed the sale of 1.3 billion euros in mandatory convertible bonds due November 2016. The securities will pay an annual coupon of 6.125 percent, according to a statement. They will be exchanged into common and savings shares.
Telecom Italia said it expects to reap more than 2 billion euros from the sale of mobile-phone towers and the TI Media Broadcasting unit.
By Alejandro Lifschitz
7 November 2013
BUENOS AIRES (Reuters)—A group of Argentine bondholders will offer creditors suing for the repayment of defaulted sovereign debt a private deal to get them to abandon their litigation, the state-run Telam news agency said.
The move is being driven by investment funds from the United States and Europe, largely from the Bondholder Exchange Group, Telam reported on Wednesday night [Nov. 6], citing unnamed sources.
They propose to exchange bonds on which payments have been frozen for other paper that Argentina normally honors, with better conditions than the country has already offered. The offer will be formalized next week, Telam said.
The Bondholder Exchange Group, led by emerging markets investment specialist fund Gramercy, has supported Argentina in its long court battle in the United States against holdout creditors seeking to recover full payment from the bonds that the South American country stopped honoring after its 2002 financial crisis and default.
The Argentine Economy Ministry could not immediately be reached for comment. No one was available to talk from Gramercy’s Greenwich, Connecticut, headquarters.
“The private debt swap proposal,” Telam said, “consists of offering an exchange to the holdouts in which they drop their demand for 100 percent repayment.”
Two restructurings in 2005 and 2010 saw creditors holding around 93 percent of Argentina’s debt agree to swap their bonds in deals giving them 25 cents to 29 cents on the dollar. Bondholders who did not participate in the swaps, led by hedge funds Elliott Management Corp.’s NML Capital Ltd. and Aurelius Capital Management LP, went to court in New York to seek full payment.
Argentine President Cristina Fernandez has pledged to keep paying the restructured debt but has vowed to never pay more than other creditors received. That has created investor concern that the country could enter a new technical default in order to avoid paying the holdouts.
The case was filed in New York under the terms of the bond documents.
By Manuela Mesco And Taos Turner
7 November 2013
MILAN — Telecom Italia SpA Thursday said it received an offer for its Argentine division as the troubled Italian telecommunications provider looks to sell assets and reduce its massive debt.
According to people familiar with the negotiations, Fintech Investments Ltd. made a $960 million offer, though that also includes various small transactions. The bulk of the deal has Fintech offering $750 million was for 68% of Telecom Italia’s shares and voting rights in Sofora Telecomunicaciones SA, a holding company that controls Telecom Argentina. The rest of the bid was for a host of smaller assets.
A sale could be a part of Telecom Italia’s broader effort to raise about €4 billion by 2016 in order to slash its hefty €28.2 billion debt. For years, the company’s domestic business has shrunk in the face of fierce competition and a protracted economic downturn throughout Europe. The poor finances prompted ratings firm Moody’s to cut Telecom Italia’s credit rating to below investment-grade status in October.
David Martinez, a Mexican investor based in New York who runs Fintech, could not be reached for comment.
The potential sale also could mark Telecom Italia’s first major move since Spanish telecom operator Telefonica SA announced plans to become Telecom Italia’s dominant shareholder.
Telecom Argentina accounted for almost €2.86 billion, or 14%, of Telecom Italia’s total revenue in the first nine months of 2013. Telecom Argentina has fixed and mobile operations in Argentina, as well as mobile services in Paraguay.
Analysts have estimated the value of Telecom Italia’s stake in Telecom Argentina at up to $1.5 billion, but operating in the South American nation poses challenges and risks. Among other things, Argentina’s government micromanages public utility prices and bans companies from sending dividends abroad—potentially making the unit less appealing.
Telecom Italia–whose third-quarter net profit fell 27% on the year to €505 million–said the sale of Telecom Argentina, if approved by Telecom Italia’s board of directors, could be completed by mid-2014.
Speaking with analysts Thursday, Chief Executive Marco Patuano ruled out selling the company’s Brazilian division, which accounted for 26% of Telecom Italia’s revenue through September. “There’s of course a price for anything, but right now Brazil is core,” Mr. Patuano said.
However, Telecom Italia’s Brazilian operations could complicate Telefonica’s efforts to take the reins of the Italian company. Telefónica agreed earlier this year to raise its stake in Telco, the holding company that owns 22.4% of Telecom Italia. As a result of the transaction, Telefónica will have effective control of the Italian giant in January.
That is likely to spark antitrust problems because of the dominant position Telefonica would hold in Brazil. Yet Mr. Patuano didn’t explain how Telecom Italia might resolve such regulatory concerns without selling its Brazilian holdings.
By Danilo Masoni and Leila Abboud
7 November 2013
* New CEO aims to strengthen balance sheet
* Investment plan to upgrade networks in Italy, Brazil
* Launches convertible bond worth up to 1.3 bln euros
* CEO does not rule out Brazil sale but says is “core asset”
* Biggest shareholder Telefonica backs the moves
* No comment on dividend plans
MILAN/PARIS, Nov 7 (Reuters) – Telecom Italia will sell its Argentina unit and other assets while issuing a convertible bond, aiming to raise around 4 billion euros ($5.3 billion) to stave off a credit rating downgrade and strengthen operations in Italy and Brazil.
Italy’s biggest telecoms operator, which is in the middle of a strategy shift under new Chief Executive Marco Patuano, said it had received an unsolicited offer for its 22.7 percent stake in Telecom Argentina and planned to sell.
Argentine newspapers Clarin and La Nacion said late on Thursday that the buyer would be investment fund Fintech, which already holds shares in Telecom Italia’s Argentine unit. Fintech could not be reached for comment after office hours.
Telecom Italia also plans to sell and lease back more than 17,000 mobile towers it owns in Italy and Brazil, and unload an Italian digital broadcasting unit, aiming to reap more than 2 billion euros from these deals.
The moves represent a major change for the debt-laden former Italian telecom monopoly and show the influence that its largest shareholder, Spain’s Telefonica, is having after it agreed to raise its ownership of the holding company that owns 22.4 percent of Telecom Italia.
Patuano’s new strategy, which has been backed by Telefonica, aims to chart a course out of Telecom Italia’s high debts and deteriorating business in its home market by ploughing money into upgrading its creaky Italian network.
The asset sales could help stave off further credit downgrades. Moody’s already cut Telecom Italia’s rating to junk last month, while Fitch and Standard and Poors have it one notch above. Further downgrades will be costly because the company has to roll over large amounts of debt next year.
Moody’s credit analyst Carlos Winzer said the agency would not count the convertible bond as equity until it converts to shares in 2016, so it would not help its rating for now.
“From our perspective as a rating agency, this is an immediately neutral move, and will be credit positive and strengthen the balance sheet only in year three when the bonds convert to equity.”
The plan also puts a renewed emphasis on the group’s Brazilian business, which sources have told Reuters that Telefonica is aiming to sell from the second half of 2014 onwards. TIM Brazil is the second-biggest mobile operator behind Telefonica’s own Brazilian unit in the growing emerging market.
Patuano did not rule out a sale but said that Brazil was important to the group as shown by a new pledge to spend 11 billion reais ($4.78 billion) on network upgrades there between 2013 and 2016.
“Brazil is a core asset. You can never say never. There is a price for everything, but the price for a core asset must be a price that can convince me and the board to change the strategy we set today in which Brazil is an important component.”
In Italy, the group also pledged to boost investment in high-speed fibre broadband and fourth-generation mobile technology. It will target around 9 billion euros in domestic capital expenditures from 2014 to 2016.
With the convertible bond of 1.3 billion euros, Telecom Italia avoided a straight capital increase, which sources earlier had told Reuters was an option. That may soothe shareholders because straight capital increases tend to be issued at a discount to the current share price, unlike the convertible bond.
Robin Bienenstock, analyst at Bernstein Research, said equity investors had been expecting a cash call of up to 2 billion euros, so the fact that Telecom Italia was undertaking asset sales and a convertible bond would likely be viewed positively.
“Since the mandatory convertible is at a premium to today’s share price, it is arguably a better way to raise capital than a capital increase done at a discount,” she said.
Telecom Italia declined to say anything about its dividend policy in the coming years.
Books for the November 2016 bond, convertible into ordinary and saving shares, will close by Friday, it said in a statement, adding that the coupon was expected to be of 5.75-6.5 percent. A source briefed on Thursday’s meeting of the Telecom Italia board said Telefonica planned to take up its share.
In a separate statement, the company reiterated its financial targets for 2013, but added that “actual results may differ, even significantly, from those forecast for the whole 2013″.
Telecom Italia said nine month revenues fell 7.6 percent to 20.38 billion euros, dragged lower by weakness in its recession-hit domestic business, while core profits fell 10.5 percent to 7.93 billion euros. Both were broadly in line with market expectations. Adjusted net debt stood at 28.23 billion euros at the end of September, also in line with analysts’ expectations.
Telecom Italia shares closed down 4.3 percent at 0.72 euros before the announcements. They have risen 5.4 percent since January, underperforming the European telecom index, which is up nearly 30 percent.
By Charles Newbery
7 November 2013
Buenos Aires (Platts)–7Nov2013/445 pm EST/2145 GMT   Argentina plans to increase the ethanol blend in gasoline to meet rising demand and stem surging imports of the fossil fuel as car sales surge, a government official said Thursday.
“We will gradually increase the blend,” Manuel Herrero Rosas, head of biofuels at the Energy Secretariat’s Department of Fuels, said on the sidelines of an ethanol conference in Buenos Aires.
He said the first step is to raise the ethanol blend to 10% in 2014 from an average of 6% this year, and then take it to 12% in 2015 before gradually increasing it to a target range between E18 and E26.
“We have the raw materials for the blend, we just need to make changes in the automotive manufacturing chain,” he said.
Argentina launched an E5 blend in 2010, generating domestic demand for about 282,000 cu m/year, or nearly the installed cane-ethanol production capacity of 300,000 cu m/year at that time. Corn growers started producing ethanol in 2012, helping to increase total production to an expected 480,000 cu m/year in 2013 from 200,000 cu m/year in 2012.
More corn- and sugarcane-ethanol plants are due to come on line to nearly double production to 820,000 cu m/year in 2014 and then to 1.08 million cu m/year in 2015 and 1.27 million cu m/year in 2016, according to government estimates. That would be enough for a 13.5% blend in gasoline in 2016, Javier De Urquiza, the national director of promotion at the Planning Ministry, which oversees energy affairs, said at the event.
Herrero Rosas said that the holdback for increasing the blend more quickly is the automotive industry, which must modify its manufacturing process to produce motors that can handle higher ethanol blends. He said the government is in talks with the sector, and that an E12 blend will be tested in motors next year after implementing the E10 blend.
A source at the Argentine Automakers Association said the sector doesn’t object to E10 as long as the international standard of 3.7% oxygen is enforced.
The push to use more ethanol comes as rising gasoline consumption leads to increased imports. Car sales rose 19% in the first nine months of this year compared with the year-earlier level.
This is pushing up gasoline consumption, which is on track to rise 3.4% to 46.2 million b/year in 2013 from 44.7 million b/year in 2012, and then rise another 7.6% to 49.7 b/year in 2014 and continue going up to 59.1 million b/year in 2016, according to government forecasts.
The increase in demand is putting strain on refiners, which are processing crude at 90% run rates to keep pace. Oil refining capacity has remained largely unchanged since the 1990s, as price controls, regulatory uncertainty and dwindling crude production discourage investment to build the 150,000 to 200,000 b/d of additional crude processing capacity the country needs to keep up with demand.
Herrero Rosas said that oil refiners could expand processing capacity to reduce gasoline imports by instead importing crude. But he said refiners find it cheaper to import gasoline under a government tax-free program than to invest in new capacity.
Ethanol producers are keen to increase the blend so they can boost operating capacity and build new plants.
Manuel Ron, president of Bioetanol Rio Cuarto (BIO4), said that without an increase in the ethanol blend, he is only able to operate his 82,000 cu m/year corn-ethanol plant in Rio Cuarto, Cordoba, at 75% to 80% of installed capacity.
“With a higher blend, I could increase capacity,” he said on the sidelines of the event. “And this would help the country to reduce gasoline imports.”
By Maximilian Heath
7 November 2013
BUENOS AIRES, Nov 7 (Reuters) – As Argentina gets closer to a 2015 presidential election that might usher in policy reforms making the key agriculture sector more profitable, investors are taking a new look at the country’s farmland.
Argentine President Cristina Fernandez’s allies took a beating in October’s mid-term elections, shrinking her majority in Congress, ending chances of a constitutional change to allow her to run for a third term and kicking off the contest to succeed her.
Most of the opposition figures known to be interested in running for the top job in 2015 are considered more market-friendly than Fernandez.
She has feuded for years with the farm sector over her interventionist policies, which growers say kill profits and scare off investment in the agriculture sector.
“With the mid-term election, investors’ reading of the 2015 presidential race has changed significantly … in the sense that now might be the right time to make a long-term investment because government policies might change,” said Roberto Frenkel Santillan, head of the CAIR Rural Real Estate Chamber.
“We are getting more inquiries. More people are coming in to visit and look at land,” he added. “It looks like the market might slowly firm up.”
Argentina is the world’s top exporter of soyoil and soymeal as well as the No. 3 supplier of corn and soybeans. But growers complain that the country is not reaching its potential as a food exporter due to constant friction with Fernandez’s government.
A 35 percent export tax is levied on soybeans and limits are enforced on corn and wheat shipments to ensure ample domestic food supplies. Argentina nonetheless suffers from galloping inflation, pegged by private analysts at 25 percent.
Land prices have been driven down over the last two years, in part due to government farm policies that provide little incentive for investment.
“The mid-term election that followed in October confirmed the impression left by the primary, and gave a little oxygen to the land market,” said Emir Carrillo, head of the rural real estate firm Emir Carrillo and Associates. “We are getting more calls and the market is starting to move.”
Carrillo said the price of prime land in the Pampas grains belt has fallen up to 15 percent over the last two years while the price tag on marginal tracts has slumped by up to 35 percent.
The U.S. Department of Agriculture forecasts Argentina’s 2013-14 soy crop at 53.5 million tonnes, with the South American country’s wheat harvest pegged at 12 million tonnes and corn seen at 26 million tonnes. (Writing by Hugh Bronstein, editing by G Crosse)
10. MALBEC: A TASTE TO TANGO WITH (The Wall Street Journal Online)
By Will Lyons
7 November 2013
IN ARGENTINA THEY PLANT their vineyards high. In some areas, like the Andean foothills, the altitude can be a dizzying 2,000 meters, and sometimes higher. To put that into a more easily graspable European context, that is more than six times the height of the Eiffel Tower. It’s the altitude that explains the unique flavor and character of Argentinian wines. In short, the higher the vineyards the more intense the sunlight, hence the thicker the skins grow and the more acidity the grapes acquire.
I have only ever seen this light from above, flying over the Andes on my way to Santiago. But speak with any Argentinian winemaker and they will wax lyrical about it. When I mentioned Argentina to wine consultant Michel Rolland, his eyes lit up as he talked about the purity of the mountain air and the intensity of the light.
Malbec is the grape variety that thrives in Argentina. In the past decade its renaissance in the vineyards to the west of the country, in and around the area of Mendoza, has seen its popularity soar. Indeed, such is its ubiquity in the U.S. and Europe that if you are reading this column I have no doubt you will have sampled its glorious, floral flavors.
This wasn’t always the case. A thirsty domestic market in Argentina meant that as recently as 15 years ago very few examples were exported. In Europe, Malbec is mainly limited to France. Although grown in Bordeaux, where it has been prized for its dark color, it is in the Cahors region of southwest France that one generally finds it today. There, it produces deep, black-red wines that are unapproachable and tannic when young, but then mature into luscious, spicy reds.
In Argentina, I find Malbec has a smoother edge. The wines are generally softer and very generous. They give immediate pleasure: one sniff, one sip and it feels as if the inside of your mouth has been lined with velvet. I always admire their consistency; the makers have mastered the idea of a uniform, reliable taste profile and achieve a pleasant, smooth ripeness. Why Malbec performs better in Argentina can be partly explained by the climate, but Hugh Johnson, writing in his “Wine Companion,” says it could also be down to the fact that the grape was introduced from France in the mid-19th century, before France’s vineyards were devastated by phylloxera.
On the flip side, however, I do struggle with the high alcohol level of these wines, and I would be lying if I said they were among my favorite reds. Too often I find them a little overpowering. But there is no doubt that when blended with either Cabernet Franc or Cabernet Sauvignon, Malbec experiences a refreshing lift.
To reacquaint myself with this popular grape variety, I have recently tasted a number of examples from some of Argentina’s top estates. Mendoza is an obvious standout region, but for a little more refinement and floral flavor look for the Valle de Uco and the Upper Mendoza River, also known as the “Luján de Cuyo y Maipú.” Further north (where the temperature rises), the vineyards are planted even higher. In Salta, I found the Malbec to have a more intense, savory character. A pretty good match with Argentina’s tender, grass-fed beef or a mouthful of carbonada—a spicy stew of lamb or beef served in a large, hollowed-out pumpkin.

ARGENTINE UPDATE – Nov 1, 4 & 5, 2013

6 noviembre, 2013


friday Nov One… 

By Julia Pomares
October 31, 2013
Joshua Tucker: Continuing our series of Election Reports, we are pleased to welcome the following post-election report on the Oct. 27 Argentinian mid-term elections from political scientist Julia Pomares, Director of the Program on Political Institutions at CIPPEC.]
On Oct. 27, Argentines went to the polls to renew half of the lower chamber of the national legislature and a third of the Senate. It was the last mid-term election before the end of Cristina Fernández de Kirchner’s second and last term in office. Although a challenger from Peronism obtained a landslide victory in the most important district (the province of Buenos Aires), Fernández succeeded in maintaining majorities in both chambers. However, this electoral result put an end to any attempt at constitutional reform to secure a third term for Fernández and shapes the scenario toward the 2015 presidential election in a highly fragmented party system.
Electoral reforms
Since the return to democracy in 1983, there have been few changes to the national electoral system — mainly, those introduced by the 1994 constitutional reform — but numerous reforms to other electoral rules. Over the last several years, every national contest came with an electoral innovation. In 2011, open primaries – compulsory for both parties and voters — were introduced, and they are now the only way to nominate candidates for all national offices. On the same day, all parties or coalitions of parties willing to compete must go to primaries. Even if the candidate is the result of an elite arrangement, her ballot needs to be there and she has to obtain 1.5 percent of the votes to get to the general election. This threshold tries to reduce the number of parties competing for the election.  Argentina can boast of producing not only the best soccer players in the world, but also one of the largest party systems. At the moment of enactment of the law, 38 national parties and 659 district-level parties (who can compete for national legislators) were registered.
This 2013 election was not an exception and came with a new electoral reform. Argentina entered the small club of countries that lowered the voting age to 16. Young voters are given the right, but not the obligation to cast a ballot as the rest of electorate. This is so because of a practical issue rather than the outcome of an ethical debate: under-18s cannot be fined for not showing up to vote. Interestingly, a survey conducted by CIPPEC on the August primaries in Greater Buenos Aires showed that voters strongly support selecting candidates in primaries but do not favor youth vote.
What was at stake?
The lower chamber is elected from 24 multi-member districts for four-year terms and renewed by halves. The deputies are elected from closed party lists using the D’Hondt form of proportional representation. There is high variation in district magnitude — that is, the number of deputies elected from each district — ranging from five to 70. Moreover, Argentine lower chamber exhibits one of the most malapportioned electoral systems of the world. In the Senate, each district elects three members, two representing the majority, and one from the minority. They serve a six-year term and are renewed by thirds. Every two years, eight districts renew their seats.
Fernández’s party, the incumbent Frente para la Victoria (FPV), held a comfortable majority in both chambers. Because of the small number of seats that FPV had up for reelection, it was likely to keep the majority, even in the case of a bad election. However, the main issue at stake was whether the government would be able to secure a large enough majority in Congress that could provide the legitimacy to call (or pose a credible threat) for a constitutional reform that would allow Fernández to run for a third term. Yet, as the open primaries that took place on Aug. 11 anticipated, the results were quite different from what FPV was expecting.
The results
In a federal country with a fragmented party system, reporting national-level results of a legislative election is a tough challenge for a political analyst. And it is also deceiving since aggregate data hides important information about electoral strategies. Unlike Brazil, where the possibility of building different coalitions across offices was prohibited in 1998 (“verticalização de alianças”), in Argentina each party can decide its own strategy of alliances in each of the 24 districts. Both types of crossed alliances (across districts and offices) are allowed. That is why, for example, in the city of Buenos Aires, the right-wing PRO (the local incumbent) competed against anti-FPV peronist party and in other districts the two parties built a coalition to beat the FPV.
With this caveat in mind, the election results aggregated at the national level are as given below in Table 1.
Argentina Election Results (Table: Julia Pomares/The Monkey Cage)
The FPV got a third of the votes for both chambers and continues to be the largest bloc in both chambers. The Peronist coalitions challenging FPV (which include Mayor Sergio Massa’s electoral front and others) got 25 percent. The Radical party and allies got another 25 percent. Radicalism keeps the second largest bloc in the Senate.  The Left showed a good electoral performance and succeeded in gaining three seats in the lower chamber.
However, if we take a look district by district, we get a different picture. The FPV lost the election in the four largest districts of the country: the province of Buenos Aires, the City of Buenos Aires, Santa Fe and Córdoba. In fact, in the last three districts, FPV ended up in the third place.
The main district of the country, the province of Buenos Aires, concentrates 24 percent of the electorate and received the largest media attention.  Massa, a 41-year-old politician and former chief of Cabinet during Fernández’s first term in government, was the leading actor of the election. Now the mayor of a municipality in the Northern Greater Buenos Aires, he decided to compete against the FPV shortly before the primaries and took on board several powerful mayors of the Greater Buenos Aires previously aligned with the FPV. On the Sunday election, the FPV was hoping to replicate the results of the primary elections, which Massa had won by a margin of six points. Instead, Massa was able to double his margin of victory and got 44 per cent of the votes.
The road to 2015: Welcome to a normal (but not boring) country
If you don’t know anything about Argentina, you might still be thinking that this was an excellent election for the FPV. After 10 years in government (which included handling the effects of an international economic crisis), the incumbent party was capable of preserving the majority in both chambers, even with a president who has only two years left in office. But framing is a key part of politics, and these results ruined the government’s framing of the elections. After the landslide victory of Fernández in 2011 – 54 percent of the votes, the most striking presidential election since 1983 – some FPV leaders fueled the illusion that a plausible constitutional reform could give Fernández the possibility of a third term. With the current results in hand, the idea of a constitutional reform is completely buried. Moreover, three days before the election, the Supreme Court cancelled a gubernatorial election from a small district which would also have taken place this past Sunday. Claiming a very controversial interpretation of the recently reformed provincial constitution (which only allows for two terms in office), the governor was seeking a third term. The cancellation of the election was a signal to the other governors: unlimited reelection is off the table.
Since 1983, there was only one case of a mid-term legislative election before the end of the two-term presidential cycle. It was in 1997, before the end of Carlos Menem’s second term in government. The result was quite similar: The incumbent succeeded in maintaining control of the chambers but received a hard defeat in the province of Buenos Aires, anticipating alternation in 1999 (See Graph 1 below).  However, the current party system is a very different creature from that of 1997. The level of party system fragmentation is higher and so is the level of intra-party fragmentation, especially within the Peronist party. In 1997, Menem was defeated in the province of Buenos Aires by a coalition of the Radical Party and a newly formed urban center-left party (FREPASO). In this 2013 election, it was a Peronist faction that defeated Fernández’s party, not only in Buenos Aires but in other districts as well. Along with Massa, several Peronist governors can be listed as the willing-to-be presidential candidates. Those better positioned seem to be willing to move the party to the right. Within the non-Peronist spectrum, there are also potential presidential contenders among those who garnered the victories in the large districts (Mendoza, Santa Fe and the City of Buenos Aires). The big test for the newly-introduced primaries might come in 2015. Will they be able to translate all these candidacies (especially within the Peronist camp) into stronger and fewer ones for the presidency?
Figure: Julia Pomares/The Monkey Cage
Other sources of uncertainty facing the country include the economy and the health of the president. Fernández had to go into surgery three weeks before the election and has been out of the political scene since then. The pace of her recovery is still unclear. Also, what will happen to the economy? Will the government continue the path to a more closed economy pursued over the last two years (which has not paid good electoral results)? A weak party system must be able to guarantee governance over the next two years and give way to a takeover in 2015. A tough and uncertain mission. But, there is one certainty: after 30 years of democracy, constitutional rules (well, and soccer) are the only game in town. Welcome to a normal country. But, not boring. Don’t worry.
October 31, 2013
BUENOS AIRES, Argentina — Argentina’s broadcast regulator has given Grupo Clarin 15 days to formally respond to his latest notice that it must sell off most of its television and radio licenses.
“This law must be applied, and what we’ve done today … is initiate the process,” Martin Sabbatella said Thursday outside Clarin’s headquarters, where he personally delivered another ultimatum following the Supreme Court’s approval of ownership limits for broadcast media licenses.
Clarin said Sabatella’s show of delivering notice to Clarin’s newspaper and the offices of TodoNoticias, Canal 13 and Radio Mitre violate the letter and the spirit of the court’s ruling, by treating the group differently than its competitors. Clarin said it proves “the government is driven to advance against one of the few independent voices left in Argentina.”
October 31, 2013
MINE OUT: Canada’s Barrick Gold is indefinitely suspending construction of its troubled gold mine straddling the Chile-Argentine border.
WHY: It’s part of a cost-cutting effort that also involves 10 other mining projects around the world. Restarting the $8.5 billion Pascua-Lama mine will depend on a rebound in metals prices.
BACK STORY: The world’s largest gold mining company has already spent $5 billion on the mine. Earlier this year, Chile’s environmental regulator stopped construction on its side of the project, and imposed sanctions citing “serious violations” of its environmental permit.
By Alistair MacDonald and Judy McKinnon
1 November 2013
Barrick Gold Corp. the world’s largest gold miner by output, said Thursday it will suspend construction of its massive Pascua-Lama mine to cut costs amid slumping prices for gold and continued troubles in countries where it operates
Toronto-based Barrick, which earlier this year took a $5.1 billion charge on the troubled project straddling the border between Chile and Argentina, said the suspension will shave up to $1 billion from its capital costs in 2014.
The announcement of the project suspension came as Barrick reported third-quarter results that mirrored what has been an encouraging quarter for the beleaguered gold sector, marked by lower profit but also better-than-expected declines in costs.
Pascua-Lama’s suspension, though, raised questions about the project’s prospects, given that Barrick said expenses were still rising and regulatory and permitting issues remained.
“A decision to proceed to the next stage will depend on reduced risks and improved economics,” Jamie Sokalsky, Barrick’s president and chief executive, said on a conference call.
Barrick said it earned $172 million, or 17 cents a share, in the third quarter, down from $649 million, or 65 cents a share, a year earlier. Revenue fell to $2.99 billion from $3.40 billion.
By Prof Arturo C Porzecanski.
October 31, 2013
Letter to the Editor
Sir, Your editorial “No easy way out of Argentina’s dispute” (October 28) argues that, after more than a decade of deadlock with many of its creditors, “Argentina’s bond dispute badly needs fresh thinking”. That is true, but you put the onus on creditors rather than on the authorities in Buenos Aires.
You endorse the idea, being floated by a hedge fund acting on behalf of the Argentine government, that bondholders who took huge losses in 2005 should give up part of their future interest earnings and hand them over to holdout creditors in return for stopping their pursuit of justice in the US courts. But what kind of precedent would be set by investors adding insult to their earlier injury by forsaking a portion of their rightful coupons, given that Argentina has the ability to pay the holdouts what it owes them? What you are sanctioning is a bond market version of the Stockholm syndrome experienced by many hostages.
You disparage dissident investors, claiming that if they had accepted Argentina’s harsh terms in 2005, they would have recouped much of their loss by now thanks to payments under GDP warrants linked to Argentine economic growth. In fact, said payments have amounted to a mere 18 cents so far, a fraction of the nearly 70 cents on the dollar that creditors were told to write off, and small consolation also when compared to the very low coupons that creditors were forced to accept. Incidentally, the dissidents are not just a handful of hedge funds who are leading the fight for creditor rights; among the holdouts are some 50,000 Italian retail bondholders who are pursuing their claims through the International Centre for Settlement of Investment Disputes (ICSID), the World Bank’s premier dispute resolution centre.
Finally, you are too willing to accept that “given the positions fiercely and very publicly taken”, there is no chance that the Argentine government will change its mind for the better. And yet, this is exactly what it did two weeks ago, when it suddenly decided to settle with five foreign creditors who had won arbitral awards mostly through ICSID. After its poor showing in last Sunday’s congressional elections, who knows – we may see some fresh thinking where it is needed most: in Argentina.
Arturo C Porzecanski, Director, International Economic Relations Programme, American University, Washington, DC, US
By Ms Nicola Stock.
October 31, 2013
Letter to the Editor
Sir, I read with interest Benedict Mander’s article “Goodbye to all that?” (Analysis, October 30). This is an important subject for the 50,000-plus Italian small bondholders who hold $1.2bn in Argentine bonds defaulted on in 2001, and who are represented by Task Force Argentina in an ICSID arbitration.
I wish to point out that Argentina’s holdout creditors are not only “vulture” funds but also a very large number of retailers from Italy, Germany, the US and Japan: people who laid their trust in Argentina by investing their life savings.
Despite the continuous and exasperating bad faith tactics applied by the Argentine government in its relationship with all holdout creditors and international institutions, I can personally confirm that the door to constructive negotiations, with the aim of realising a definitive and mutually acceptable debt restructuring, has always been, and still is, wide open. But in order to achieve this goal, two willing partners are required, just like to dance the “tango”.
Besides, we all must consider that failure to observe the rules, and the international authorities’ tolerance towards the strategies adopted by Argentina, may give rise to “copy-cat” behaviour from other countries.
Nicola Stock, President, Task Force Argentina (TFA), Rome, Italy
2 November 2013
Defeat where it mattered leaves the president diminished–and makes Sergio Massa (pictured) the man to watch
AT FIRST glance, the headlines after the mid-term election on October 27th were confusing. Tiempo, a newspaper that supports President Cristina Fernández de Kirchner, boasted that her branch of Peronism, called the Front for Victory (FPV) had “consolidated its majority”. La Nación, which is critical of the president, insisted that her party was clobbered and that the result augured a new political era.
On paper, Tiempo was right. With 33% of the vote for the lower house of Congress, the FPV remains the largest single political force. It narrowly retained a majority in both houses; its seat-count barely fluctuated. But those numbers hide a significant political change. The seats the party was defending were the hard core it had kept in 2009, when Ms Fernández’s popularity plunged temporarily because of the world recession and her fight with farmers over export taxes. Overall, its vote plummeted by about 20 percentage points compared with the 2011 general election, when the president cruised to a second term. The best that could be said for the latest result was that the FPV’s national reach (helped by the government machine) gave it a narrow advantage over a divided opposition.
The FPV was thrashed where it mattered most. It lost in Santa Cruz, Ms Fernández’s windswept Patagonian home province, and in the country’s five most populous voting districts. In Buenos Aires province, home to over a third of Argentines, the FPV had piled up almost 57% of the vote for the lower house of Congress in 2011. This time it won only 32%, beaten by a rival Peronist list headed by Sergio Massa, a popular young mayor who broke with Ms Fernández only in June and whose list captured 43% of the vote. His defection is telling: as her cabinet chief in 2008-09, he was happy to defend her populist and protectionist economic policy, her government’s fiddling of inflation statistics and its assault on the farmers.
But over the past two years the government has begun to fail on the two issues that matter most to Argentines, the economy and crime. The central bank has printed money to finance the government’s mounting fiscal deficit, pushing up inflation. Price controls and hostility to foreign investment mean that a resource-rich country has spent $10 billion importing energy so far this year. That in turn has eroded foreign-currency reserves. To stem the outflow, the government clamped down on the sale of dollars. On the black market, a dollar now commands nearly 10 pesos compared with the official rate of 5.9. Along with economic frustration, crime and the fear of it have soared, too. Although official statistics are sketchy, studies by the Catholic University of Argentina suggest 30% of adults were victims of crime in 2012, compared with 24% in 2004.
Ms Fernández has attempted to take control of institutions that have not bent to her will. In April she rushed through Congress an unpopular reform to “democratise” the judiciary, only for this to be blocked by the Supreme Court. In opinion polls, over two-thirds oppose a rumoured plan to lift term limits, allowing Ms Fernández to run for a third term in 2015. This would have required the backing of two-thirds of Congress and is now out of the question.
So the election marks the twilight of the Kirchner era, which began with the election of Ms Fernández’s late husband Néstor in 2003. But who and what will replace it? Mr Massa has become a front-runner for 2015. Peronism, an amorphous movement, has in differing guises governed Argentina for all but two of the past 24 years. Mr Massa’s version may comprise the moderation, but not abandonment, of many of his former boss’s policies.
He presents himself as friendly to business; he has criticised the doctoring of inflation statistics and export taxes on agricultural products. But he opposes a big devaluation and supports Ms Fernández’s cash-transfer programme for poorer families (though this is less well-targeted than many others in the region). As mayor of Tigre, a northern suburb of the capital, he reduced crime partly by installing cameras.
But Mr Massa will now be just one among 257 congressmen, and his political block is a ragbag. He faces a powerful potential rival in Daniel Scioli, the Peronist governor of Buenos Aires province. Mr Scioli has temporarily lost the initiative by opting to stay with Ms Fernández, but he remains popular and will compete for the same political base as Mr Massa.
Beyond Peronism, the opposition is split into two blocks. The bigger one, with several presidential hopefuls, is a coalition of the Radicals (who governed in the 1980s and in 1999-2001) and the small Socialist party. Mauricio Macri, the mayor of the city of Buenos Aires, declared his presidential candidacy this week. He is widely regarded as having been an effective mayor in difficult political circumstances, and his conservative party topped the poll in the city and made some gains elsewhere. But it still lacks a national presence.
To add to Ms Fernández’s woes, a question-mark still hangs over her health. She has rested for the past four weeks, on doctors’ orders after they found sub-cranial bleeding following an unexplained fall in August. But she is not quite finished yet. “We must be careful not to think we are already living in 2015,” cautions Luis Tonelli, a political scientist at the University of Buenos Aires. On October 29th the Supreme Court upheld a controversial broadcasting law, approved in 2009, whose main practical effect would be to break up the media empire of the Clarín group, one of her leading critics. That is an important symbolic victory for Ms Fernández, but it will not halt the waning of her power.
2 November 2013
President Fernández should build bridges to her opponents–or risk leaving office early
POWER in Argentina is like mercury. It drains swiftly from troubled leaders, flooding towards their most likely successors. That is the prospect facing the president, Cristina Fernández de Kirchner, after a mid-term congressional election on October 27th. Having driven her country’s economy close to a precipice, she still has two more years in office. They look as if they will be bumpy ones–even assuming she makes a full recovery from the head injury that prevented her campaigning during the last four weeks.
On paper, Ms Fernández did not fare badly in the election. She retained a narrow majority in Congress. Her opponents are divided three ways. Her group within Argentina’s all-embracing Peronist movement remains the country’s largest single political force. But it won only 33% of the vote, down from the 54% she secured in winning a second term in 2011. In politically crucial Buenos Aires province, it was trounced by a rival Peronist list led by Sergio Massa, who served as Ms Fernández’s cabinet chief before breaking with her (see “Argentina’s mid-term election: Jostling in Kirchnerismo’s twilight”).
The election has killed off any lingering hope the president might have had of lifting term limits to allow her to run again in 2015, a measure that would need the backing of two-thirds of Congress. And she has no obvious successor. To a more consensual leader, none of this would matter much. But Ms Fernández and her late husband and predecessor, Néstor Kirchner, have ruled Argentina since 2003 through permanent confrontation–with bondholders, the IMF, political opponents, the media and, lately, the judiciary. Their main weapon was a booming economy. They were fortunate to preside over a surge in the world prices of farm exports from the bountiful Pampas. They shovelled the proceeds into public employment, loss-making state companies and welfare programmes.
To keep this show on the road, Ms Fernández’s government abandoned common sense. It lied about inflation. It imposed price and exchange controls, as well as import curbs. It expropriated the controlling stake held by Repsol of Spain in YPF, an oil company. As Talleyrand said of the Bourbons, the Kirchners learned nothing and forgot nothing from Argentina’s failed statist protectionism of the past.
The road is now running out: growth has slowed to a crawl, the bill for energy imports is mounting and the black-market exchange rate is 60% higher than the official one. The most closely watched statistic in Buenos Aires is the level of usable international reserves–which, at around $25 billion, are barely enough to last two years on present trends.
Dump the bullies and dismantle the controls
Argentines have begun to lose faith in the Kirchner model (see the Latinobarómetro poll, page). Ms Fernández’s instincts remain intransigent: to press on regardless of the economic damage and let her successor pick up the pieces. Yet a controlled retreat and a recognition that a political transition has begun would be in her own interests as well as her country’s. After this election many people will no longer feel so intimidated by her. Her majority in Congress may melt away. As her grip weakens, there is a danger that Argentina topples into a familiar spiral of inflation and devaluation. If so, she risks being driven from office prematurely.
To prevent this requires Ms Fernández to dump some of the bullies, cronies and Marxists through whom she governs and to start building bridges to her rivals and opponents. It would mean dismantling the most destructive economic controls, cleaning up official statistics and settling with holdout bond investors and Repsol. Impossible? Ms Fernández might recall that the Bourbons came to a sticky end.
By Pablo Gonzalez
October 31, 2013
Mosaic Co. (MOS), the world’s largest phosphate-fertilizer producer, is selling its Argentina and Chile operations, a company spokesman said.
“After significant evaluation and review, Mosaic has decided to pursue a sale of our operations,” Rob Litt, a Mosaic spokesman, said in an e-mailed statement today in response to Bloomberg questions. “We will immediately begin preparations for a sale process and will work quickly to complete a transaction.”
Litt declined to comment on reasons for the sale in a telephone interview from Plymouth, Minnesota. He also declined to confirm that the unit on the sales block produces 550,000 tons a year of fertilizer, employs 130 workers and has annual sales of $300 million, as reported earlier today by the Buenos Aires-based newspaper La Nacion.
“It is clear Mosaic’s strategic plans are in a different part of the world,” Pablo Bussetti, president of the producers association called Fertilizar, said in a telephone interview from Bahia Blanca, Argentina. “They are the largest producers of phosphate in Argentina, with more than half of the market share, and I am sure they will receive many offers.”
Mosaic produces phosphate north of Buenos Aires in a factory near Rosario, Argentina, and handles distribution from Chile.
Mosaic agreed Oct. 28 to acquire a mine and other assets from CF Industries Inc. for $1.2 billion to boost its output of the crop nutrient in Florida.
9 November 2013
2013 NOV 9 (VerticalNews) — By a News Reporter-Staff News Editor at Journal of Transportation — Boeing [NYSE: BA] and Aerolineas Argentinas, the flag carrier of Argentina, have completed an agreement for 20 Next-Generation 737-800 airplanes. The agreement, valued at $1.8 billion at list prices, will play a key role in Aerolineas Argentinas’ continued efforts to modernize its fleet and increase passenger satisfaction. When the order is finalized, it will be posted as a firm order to the Boeing Orders and Deliveries website.
At a signing ceremony in Buenos Aires today, Dr. Mariano Recalde, president of Aerolineas Argentinas and Austral Lineas Aereas, and Van Rex Gallard, vice president of Sales, Latin America, Africa and the Caribbean for Boeing Commercial Airplanes, formalized the agreement, which will help Aerolineas build on a fleet of 26 Next-Generation 737s currently operated by the Argentine carrier.
“This is a landmark order for our company, both in the number of aircraft and in what they signify for our fleet,” said Dr. Recalde. “This agreement is a key part of a greater plan to renew our fleet and prepare our operations to accommodate growing demand. The Boeing Next-Generation 737-800, which has more seats than our current single-aisle fleet, will give us more flexibility to operate both domestic and regional routes.”
Gallard noted that the agreement extends a long legacy of partnership between Boeing and Aerolineas Argentinas. “Our partnership with Aerolineas extends back to the days of the Douglas DC-3,” he said. “We have worked side by side with Aerolineas to help provide world-class aviation to the people of Argentina.”
“Aviation is a key element in economic growth and development, and the success of Aerolineas Argentinas’ transformation strategy, helped by the addition of the most efficient single-aisle airplanes flying, will help drive Argentina further ahead in the 21(st) century,” Gallard said.
The Argentine government’s investment in the Next-Generation 737 helps build the foundation for industrial development in Argentina, providing capacity to fuel its economic objectives. At the heart of Argentina’s domestic and intra-South American network, the 737 fleet will unlock demand for air transport there and shape its infrastructure modernization.
Aerolineas Argentinas accomplished another key milestone in its strategy by joining Sky Team alliance in 2012. Aerolineas Argentinas provides Sky Team with a major opportunity for growth in South America offering a rapidly growing menu of destinations across the continent.
The Boeing 737-800 is one of the best-selling versions of the highly successful Next-Generation 737 family, the most technologically advanced airplanes in the single-aisle market. The Next-Generation 737′s market success has been confirmed by investors who consistently rank it as the most preferred single-aisle airplane due to its wide market base, superior performance efficiency and lowest operating costs in its class.
By Maximiliano Rizzi
31 October 2013
BUENOS AIRES, Oct 31 (Reuters) – Big farming companies are renting less land in Argentina due to lower profits caused by high inflation and government interventions including a clampdown on dollar purchases in the world’s No. 3 soybean and corn exporting country.
Falling profits are hitting many of the large-scale growers who fueled Argentina’s soy production boom over the last decade, and smaller-scale farmers are starting to work lands the big players have left behind.
“Land rental prices have stayed the same while other costs of production have risen,” Rafael Llorente, a major producer who last year planted 25,000 hectares in the northeastern corner of the farming-intensive Buenos Aires province, told Reuters.
Llorente now expects to only seed 20,000 hectares in the 2013/14 season, which starts this month.
Agriculture is the main pillar of the Argentine economy. But farmers have been at odds with President Cristina Fernandez’s government for years, blaming her for the sector’s problems due to state-centric policies including strict export regulations and heavy taxes.
The government limits corn and wheat exports to ensure ample domestic food supplies, and soybean shipments are taxed at 35 percent.
El Tejar Ltd, the world’s No. 1 grain producer – with close to 700,000 hectares under cultivation in Argentina, Brazil, Uruguay, Paraguay and Bolivia – is cutting the amount of land it uses in Argentina while local farm production company Los Grobo is focusing its expansion plans across the border in Brazil.
Problems facing the private sector in Argentina include inflation clocked by private estimates at 25 percent and tight foreign exchange controls that limit access to dollars.
While farmers pay for some of their inputs at the black-market exchange rate, they get paid at the official interbank rate, which offers a nearly 70 percent discount per dollar.
“For the first time in many years, the agricultural margins of corn, soy, wheat and sun seeds are producing losses,” said Ernesto Ambrosetti, economist at Sociedad Rural Argentina.
“Some big players have been pulling back because it hasn’t been an easy year, and going forward the picture doesn’t look good either,” said Marcelo Carrique, who cultivates some 6,000 hectares in Daireaux, in western Buenos Aires.
U.S.-based company Mosaic, one of the world’s top fertilizer manufacturers, will sell its plant located in the key Argentine grains hub of Rosario, a union official representing workers at the factory said on Wednesday.
The plant, which opened seven years ago, produces about 250,000 tonnes of fertilizer annually.
“They have notified the workers,” Herme Juarez, an official with the SUPA port workers union, told Reuters. No one at the company could be reached for immediate comment.
Fertilizer sales in Argentina totaled 3.14 million tonnes in 2012, under the 3.2 million to 3.8 million tonne range in previous years, according to Argentina’s Chamber of Fertilizer and Agrochemicals.
The planting area for Argentina’s three main crops – soy, corn and wheat – encompasses some 30 million hectares.
“Large producers have retreated and other people with a different model have come in their place,” Carrique added.
Compared with the cost-heavy frameworks of large pools that form to plant grains in Argentina’s vast Pampas farm belt, smaller farmers are often more flexible.
“There’s been a lot of movement this year. The business is really tight: costs keep rising, grains prices fall and that makes you rethink the business,” said Carrique.
The U.S. Department of Agriculture forecasts Argentina’s 2013/14 soy crop at 53.5 million tonnes, with the South American country’s wheat harvest seen by the USDA at 12 million tonnes and corn at 26 million tonnes.
31 October 2013
BUENOS AIRES/LONDON, Oct 31 (Reuters) – Argentina’s state-run energy firm YPF launched a tender to buy two dozen additional liquefied natural gas (LNG) cargoes for delivery in 2014, industry and trade sources said on Thursday.
Earlier this month, Argentina’s state-run energy firm YPF picked BP to supply the bulk of its LNG needs in 2014 and 2015, following the South American country’s annual tender to secure approximately 5.57 million tonnes of the fuel.
The state-run firm also chose Spain’s Gas Natural Fenosa (GNF) to deliver around 2.7 million tonnes of LNG.
Of the cargoes out for tender, 11 are for delivery into the Bahia Blanca import terminal and 13 will be shipped to the country’s other terminal at Escobar on the Parana River, trade sources citing the tender document said.
Deliveries into Bahia Blanca will be carried out using normal sized 130,000 cubic metre vessels.
For Escobar’s river terminal, where shallow waters bar fully laden tankers from entering, YPF seeks partial deliveries from January through September, traders said.
The tender is to close on Nov. 13 and an award is due to be made on Nov. 15, according to the tender document.
The pricing of deliveries into both terminals will be based on U.S. Henry Hub gas prices, according to the document.
YPF, which brokers the fuel purchases on behalf of fellow state-run energy company Enarsa, declined to comment.
Fuel imports have been growing in Argentina due to a persistent fall in local production and an increase in demand, especially for gas.
Argentina’s fuel imports rose 13.8 percent in September from the same month last year. Led by LNG purchases, fuel imports totaled $651 million for the month, according to data from Argentina’s energy secretary.
Analysts forecast that fuel imports will reach some $14 billion this year. That is a worrying figure for Argentina’s government, which aims to keep the trade balance in surplus, as the country has been locked out of international capital markets since a 2002 sovereign default.


Monday 11/4 – Tuesday 11/5

On Mon, Nov 4, 2013 at 7:18 AM, BuenosAires, IRC<> wrote:

November 1, 2013
ARGENTINES hoping to preserve their 30-year-old democracy had reason to cheer this week when midterm congressional elections resulted in a decisive defeat for President Cristina Fernández de Kirchner. The president’s party lost in 12 of 23 provinces, including the capital and Buenos Aires province, which contain more than a third of the population. The vote virtually ensured that Ms. Fernández, who is in uncertain health following brain surgery, will not be able to change the constitution and run for a third term in 2015, and it gave a boost to a couple of moderate rivals who oppose her authoritarian populism.
Sadly, however, Ms. Fernández and her cronies still pose a threat to the country’s democratic institutions. That became clear Tuesday, when the Argentine Supreme Court, under heavy pressure from the president’s office, upheld a law aimed at destroying one of South America’s most important media firms, Grupo Clarín. The company operates one of Argentina’s biggest newspapers, called Clarín, which has been one of the few media outlets to challenge Ms. Fernández’s policies. The law would force the company to auction off cable television and Internet businesses that provide most of its revenue, thus reducing potential funding for Clarín’s newsroom.
Government officials have claimed that the law, which a lower court declared unconstitutional, is meant to prevent media monopolies and inject more diversity into news coverage and public debate. That doesn’t explain why other private media companies with multiple properties were exempted from the law, or the trumped-up criminal charges that were brought against Clarín’s owners, or the government’s seizure of the only newsprint producer or its ruthless campaign to starve Clarín and two other newspapers of advertising.
For years, Ms. Fernández and her late husband, who preceded her as president, have worked to concentrate power in their own hands. Major private companies, including the largest airline and oil company, were nationalized, along with private pension funds; according to the Inter American Press Association, 80 percent of media now parrot the government line. The membership of the Supreme Court was doctored in an attempt to stack it with a government majority. After it nevertheless struck down a government attempt to neuter the judiciary this year, it came under heavy pressure to approve the media law. The newspaper La Nación reported that Ms. Fernández and her legal adviser privately lobbied the chief judge and another justice.
The wave of authoritarian populism that swept across Latin America a decade ago is receding, and Argentines who hope to undo the damage done by the Kirchners have reason for hope. They could use help, however, from the hemisphere’s democracies, including the three that along with Argentina are members of the Group of 20. The United States, Brazil and Mexico should be asking whether a nation in the Western Hemisphere that stifles freedom of expression deserves to have its voice amplified through invitations to elite summit meetings. The obvious answer is no.
By Ken Parks
1 November 2013
Argentina plans to offer investors up to $1 billion of U.S. dollar-denominated infrastructure development bonds as President Cristina Kirchner tries to boost the country’s sagging foreign currency reserves.
BUENOS AIRES—Argentina plans to offer investors up to $1 billion of U.S. dollar-denominated infrastructure development bonds as President Cristina Kirchner tries to boost the country’s sagging foreign currency reserves.
The bonds, known as Baade by their Spanish acronym, will be issued in one or more tranches and the overall size of the placement could be increased if demand warrants, the Economy Ministry said in a statement Friday.
The ministry didn’t say when it would issue the three-year bonds that pay a 4% annual interest rate. A ministry spokeswoman didn’t respond to a request for comment.
The bonds are part of a tax amnesty that Mrs. Kirchner’s economic team announced in June with a view to alleviate hard currency shortages that have crimped economic growth and fueled a black market for dollars. Argentines who are thought to hold tens of billions of undeclared dollars or other currencies under mattresses or in offshore bank accounts have the opportunity to bring that money home penalty and tax free. The only catch is they must exchange their dollars for Baade or central bank-issued certificates of deposits that can only be used to fund construction projects or buy real estate. Investors who didn’t participate in the tax amnesty can also buy the bonds.
Baade are a way for companies to access dollars at a favorable exchange rate, even though they aren’t a perfect substitute for the greenback, says Deutsche Bank economist Gustavo Canonero.
“It helps. It’s obviously not a definitive solution” to falling reserves, he said.
Mrs. Kirchner extended the amnesty until the end of the year after it brought in less than $400 million during the third quarter. The government blamed the meager haul on banks who were overzealous in reporting suspected money laundering operations.
Inflation that has been running at or above 20% for almost four years is at the root of Argentina’s currency problems. Most economists put inflation at 25%, with no signs of easing even though the economy is widely expected to grow just 3% this year. While the central bank has cooled the rate of monetary expansion, the money supply increased 32% on the year in September as the monetary authority printed pesos to fund the government.
Mrs. Kirchner has also refused to fight inflation by cutting government spending, and instead extended price controls on 500 supermarket items through the end of 2013.
This week, Argentines observed the second anniversary of the currency rationing system that Mrs. Kirchner put in place to prevent jittery businesses and individuals from swapping their pesos for dollars. Argentines now have to seek permission from the government to buy foreign currency for international travel or to pay for imported goods and services. Buying dollars for savings is banned.
Argentines have responded by turning to a small but vibrant black market where the dollar can be purchased for about 10 pesos. That is a 69% spread over the limited amounts of greenbacks the government dolls out at the relatively cheap rate of 5.91 pesos to the dollar.
Argentina’s long history of devaluations and rampant inflation have made the dollar a sort of benchmark for middle class Argentines worried about their savings and purchasing power. Argentines watch the black market dollar rate, called the “dollar blue” in local slang, much like Americans follow gasoline prices. The government also watches the blue dollar closely because of its impact on public sentiment toward the peso and its influence on prices.
Currency rationing and attempts to limit imports haven’t stopped the decline in reserves, which stood at a six-and-a-half year low of $33.4 billion Thursday. Debt payments, capital flight and fuel imports have more than offset the shrinking dollar inflows Argentina receives from its exports.
Even so, Argentine bonds and stocks have rallied in recent months after legislative elections ended speculation that Mrs. Kirchner might get enough political support to change the constitution so she could run again in 2015. Investors are betting that any new government will be more business friendly than Mrs. Kirchner, whose legacy of job creation has been marred by high inflation and nationalizations.
Now, attention has turned to how the government will address high inflation and falling reserves during the next two years. Mrs. Kirchner isn’t expected to resume her duties until later this month after she had emergency surgery Oct. 8 to remove a blood clot near hear brain.
On Thursday, Cabinet Chief Juan Manuel Abal Medina signaled that the government might adjust its economic policies, but ruled out any major changes to policies that he says underpinned a decade of economic growth.
“I think it’s in their best interests to quickly reduce [reserve] outflows before investor sentiment deteriorates further,” says Siobhan Morden, head of Latin America strategy at Jeffries. Investors will give the administration “weeks, not months” to announce new policies, she said.
By Phoebe Sedgman
November 4, 2013
Corn fell for a fourth day to trade near a three-year low on expectations that supplies in the U.S. will be bigger than the government estimates, and as rain in Argentina aided planting.
The contract for December delivery lost as much as 0.2 percent to $4.2625 a bushel on the Chicago Board of Trade and was at $4.27 at 1:17 p.m. in Singapore. Futures dropped to $4.2575 on Nov. 1, the lowest level since August 2010. Prices fell 2.9 percent last week for a second weekly decline.
Corn lost 39 percent this year as the U.S. crop may reach an all-time high of 13.8 billion bushels, the U.S. Department of Agriculture estimates. Farmers may harvest 14.029 billion bushels, according to a survey of 36 analysts and trading firms by Bloomberg. In Argentina, drier weather early this week will favor planting after heavy rain helped ease dryness in some regions, MDA Information Systems LLC said Nov. 1.
“Seasonal harvest pressure continues to weigh heavily on the corn market,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a note today. “Excellent rainfall has arrived in Argentina, providing a much improved outlook for summer crop planting and establishment.”
About 59 percent of U.S. corn was harvested by Oct. 27, from 39 percent a week earlier, the USDA said on Oct. 28. The agency is scheduled to update its crop estimates on Nov. 8. Rains in Argentina’s Pampas region will accelerate planting, the Rosario Grains Exchange said Nov. 1.
Farmers around the world will gather a record 948.4 million metric tons in the season started July 1, the International Grains Council said Oct. 31. That’s up 5.2 million tons from its prior estimate and compares with a crop of 862.7 million tons in 2012-2013. The group lifted its estimate for Argentina by 1 million tons to 26 million tons, compared to 2012-2013 production of 30 million tons.
Soybeans for January delivery rose 0.3 percent to $12.5575 a bushel as futures rebounded from a weekly loss. Wheat for delivery in December advanced 0.2 percent to $6.6925 a bushel.
By Christie Smythe and Patricia Hurtado
November 1, 2013
A U.S. appeals court in New York rejected a bid by holders of defaulted Argentina debt to immediately enforce a ruling favorable to them.
The U.S. Court of Appeals in Manhattan today denied a request by holders of $1.5 billion of the defaulted bonds, led by Elliott Management Corp.’s NML Capital and Aurelius Capital Management LP, to lift a stay on enforcement of the ruling. The stay was granted to allow time for an appeal.
The court said in August it would delay the effect of the ruling until the U.S. Supreme Court decides whether to review the case. The high court last month opted not to take up an appeal of an earlier ruling concerning whether defaulted bondholders should be paid. It could still take action if an appeal of the August ruling is filed.
The ruling would force the country to pay holders of the defaulted bonds as ordered by a federal judge in New York.
Argentina in 2001 defaulted on a record $95 billion of foreign debt. Holders of about 91 percent of the bonds agreed to take new exchange bonds in 2005 and 2010, at a deep discount, while some holders of the defaulted debt continued to seek payment in court.
The appeals court ruled in August that the country must pay holders of $1.5 billion in its defaulted bonds when it makes a payment to investors who took the restructured debt.
Argentina has claimed it may be forced to default on $24 billion in restructured debt if the stay isn’t maintained.
The lower court case is NML Capital Ltd. v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan). The appeal is NML Capital Ltd. v. Republic of Argentina, 12-00105, U.S. Court of Appeals for the Second Circuit (New York).
By Meg Shen
November 1, 2013
(Reuters) – China Gezhouba Group Co Ltd (600068.SS), known for building the country’s Three Gorges Dam, said it would build two hydroelectric dams in Argentina worth $4.7 billion.
The project, in which Gezhouba holds a 60 percent interest and Argentina’s Electroingenieria SA the rest, will involve designing and building the dams in Patagonia and maintaining them for 15 years, Gezhouba said in a filing to the Shanghai Stock Exchange on Friday.
The dams – named after former President Nestor Kirchner and a former regional Governor, Jorge Cepernic – are located along the Santa Cruz River and will have a combined generating capacity of 1,740 megawatts.
They will take 66 months to complete, said Gezhouba, which has handled overseas projects in Africa, the Middle East and other parts of Asia.
The project is unlikely to have any impact on Gezhouba’s results in 2013, it said.
Argentina’s Economics Ministry will apply for financing and loans from Chinese banks.
Shares in Gezhouba, whose net profit rose 1.8 percent to 1.3 billion yuan ($213 million) in the first nine months of the year, gained 1.4 percent to 4.26 yuan on Friday, outperforming the Shanghai Composite Index finance/markets/index?symbol=cn%21SHI”>.SSEC which ended up 0.37 percent.
By Charles Newbery
1 November 2013
Buenos Aires (Platts)–1Nov2013/1122 am EDT/1522 GMT   Argentina plans to sell as much as $1 billion in bonds to finance energy projects, including to develop the country’s large shale resources, the government said Friday.
The government will reopen Argentine Savings Bonds for Economic Development (BAADES) to investors, saying the bonds will be sold in one or more tranches depending on demand, according to a resolution published in the Official Bulletin, the government’s newspaper of record.
The government said the dates of the sales have yet to be determined.
The three-year, dollar-denominated bonds will pay 4% annual interest.
The government first announced the issue of BAADES in May as part of a June-September tax amnesty program that has since been extended until the end of the year. The amnesty allows companies and individuals to voluntarily bring into the financial system undeclared funds — held overseas or locally — without penalties.
The amnesty, however, failed to gain much traction, with only $379 million entering the country, far less than the $4 billion the government sought. Of the $379 million, 90% went to real estate investments and 10% to BAADES.
Interest in BAADES resurfaced in early October after Bridas, the country’s second-biggest energy group, said it would buy more than $500 million of the bonds with declared cash of its own and investors. The deal has not yet closed.
Bridas, which is a partner with China’s CNOOC in Argentina, said the investment would finance projects for developing conventional and unconventional hydrocarbon resources, including in the giant Vaca Muerta shale play in southwest Argentina. It is thought to have among the world’s greatest potential for shale oil and gas production.
The government said the $1 billion issue of BAADES will be open for declared cash, unlike the tax amnesty.
Argentina is seeking funds to rebuild oil and gas production after a decade of decline has forced it to ramp up energy imports, reducing the trade surplus and putting a dent in public finances. Oil production has dropped by a third and gas by 20% over the past decade.
The government is running low on dollars for investment. The central bank’s hard-currency reserves — a main source of funds for paying the national debt — have declined 38% to $33.4 billion, from a record $54 billion in January 2011, as people take their savings out of the country on concerns of slowing economic growth, high inflation and fast currency depreciation. The government cannot easily sell bonds on global markets to rebuild the reserves, pay debt or finance energy projects because of lawsuits by creditors stemming from a $100 billion debt default in 2001 to is not fully settled.
7. ARGENTINA POLITICS: THE POST-ELECTION OUTLOOK (Economist Intelligence Unit – ViewsWire)
1 November 2013
In the aftermath of the October 27th mid-term election it has become clear that the president, Cristina Fernández de Kirchner, will not be able to run for re-election in 2015. This is shifting attention to the race to succeed her. However, Ms Fernández is not a lame duck, and must make important economic policy decisions in the two years before the next administration takes office. The policy direction could determine whether Argentina avoids a balance-of-payments crisis in the remainder of her term of office.
The presidential race is kicking into gear a full two years before the election is due. Boosted by his resounding victory over the ruling Frente para la Victoria (FV) in the key province of Buenos Aires, the mayor of Tigre, Sergio Massa, has emerged as the frontrunner in the race to succeed Ms Fernández. At the moment, Mr Massa is the only candidate that appears capable of unifying the many different factions of the Partido Justicialista (PJ, better known as the Peronist party), which dominates Argentinian politics and is one of only two parties in the country with a strong nationwide presence.
Massa takes the lead
It is notable that Mr Massa won in the so-called Conurbano (the Buenos Aires metropolitan area), a stronghold for the government since 2003, reflecting the gradual but relentless shift of local Peronist leaders from the government’s ranks to Mr Massa’s, a process that seems likely to occur within Congress itself from December, when the next legislative session begins.
The defection of government supporters to Mr Massa’s ranks has been driven by the perception that the Kirchner era is nearing an end, with voters demanding a renewal of the country’s leadership. This is a reflection not only of a natural weakening of political power after a decade in office, but also of the country’s economic difficulties, which are perceived as having resulted from economic policy mismanagement in the president’s second term of office. During this period La Cámpora, a left-wing Peronist youth movement, has gained influence within Ms Fernánez’s inner circle at the expense of traditional Peronist leaders. Since Mr Massa emerged at the clear head of a viable anti-government Peronist movement, these traditional Peronists have wasted no time in joining his ranks.
Mr Massa has therefore gained the advantage over his main opponent, the governor of Buenos Aires province, Daniel Scioli, who had until recently been regarded as Ms Fernández’s most likely successor. Like Mr Massa, Mr Scioli appears to represent a more moderate Peronism than that of the government. However, Mr Scioli appears to have failed to grasp the desire for political change that has boosted Mr Massa’s campaign. Unlike Mr Massa, he has not formally broken ranks with the FV, and is now in an extremely uncomfortable position. Formally, he is close to the government (he appeared at an FV rally on election night in place of Ms Fernández, who is recovering from surgery). However, he is not close to the president, who is currently thought to be likely to back a different candidate (such as the governor of Entre Ríos, Sergio Urribarri, or the governor of the Chaco, Jorge Capitanich) in the 2015 race.
Mr Massa’s emergence as frontrunner has also shaken up the opposition. Sensing failure to secure an alliance with dissident Peronists, the popular mayor of the capital, Buenos Aires city, Mauricio Macri, formally launched his candidacy after the mid-term elections. But his party, the right-wing Pro, lacks a national presence (it performed poorly outside of Buenos Aires in the mid-term elections), and for this reason he seems unlikely to emerge victorious. Hermes Binner of the Partido Socialista, and Julio Cobos of the Unión Cívica Radical (UCR) will face similar problems.
A more moderate president?
Two years is a long time in Argentinian politics, and it is far too early to conclude that Mr Massa will beat the challenge of his numerous competitors both within and outside of the Peronist party and win the presidency. In the meantime, although her own prospects have dimmed, Ms Fernández is not a lame duck. Power is concentrated in the presidency in Argentina, and in many areas Ms Fernández will retain the power to rule by decree (powers originally given during the 2001 economic crisis but repeatedly extended since then). Ms Fernández has lost mid-term elections before, in 2009, and managed to push through her agenda with little difficulty. What the president decides to do next is, therefore, important. Broadly speaking, she seems to have two policy options: compromise and secure her legacy, or continue as before and risk leading the country down the path to economic crisis.
Ms Fernández has long taken a combative stance in most areas of policymaking and alienated most of the country’s most powerful groups (including the media, the judiciary and the Catholic Church) in the process. Economic policy decisions made in the past two years-while relying on an increasingly small circle of advisers-have contributed to economic distortions that are ultimately raising the risk of a sharp peso devaluation and some sort of balance-of-payments crisis.
Amid the steady fall in the foreign reserves of the past year and, after stumbling in the October mid-term elections, there are some signs that the government recognises a need for change in some aspects of economic policymaking. A recent agreement to compensate a number of firms in line with the rulings of the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) after a long delay, provides the most recent evidence of a more pragmatic stance. On balance, we also view a moderate post-election tightening of fiscal and monetary policy as likely. Similarly, there is a chance that the government will finally pursue a negotiated settlement with “holdout” creditors (who continue to pursue repayment in full of defaulted debts from the 2001 crisis) in order to secure access to much-needed international finance.
Removal of foreign exchange and import controls remains unlikely, as does an end to the ad hoc interventionism that has deterred investment. Any sort of rapprochement with the president’s political opponents is even more unlikely. But our benign baseline assumption is that there will be some modest improvements in economic policymaking, if only to avert a balance-of-payments crisis in the next two years.
Health concerns
For the moment, the biggest unknown in this scenario is the state of Ms Fernández’s health. The president is continuing to recover from surgery after suffering a subdural haematoma and has not been seen in public in a month. She was not on the campaign trail ahead of the mid-term elections, nor has she made any public statements since. This has given rise to rumours that Ms Fernández will stand down and hand the presidency to her current vice-president, Amado Boudou. The government continues to stress that the president is recovering well and will soon return to work, in line with medical advice. Ms Fernández has seemed to relish her time in power, and we think it unlikely that she will decide to leave office early, unless her health demands it. When she does return to work, many difficult policy decisions-and a revitalised opposition-will await her.
By Nate Raymond
1 November 2013
NEW YORK (Reuters)—A U.S. appeals court on Friday [Nov. 1] said it would leave a freeze in place on an order requiring Argentina to pay $1.33 billion in favor of bondholders suing for repayment in the wake of the country’s 2002 default.
The 2nd U.S. Circuit Court of Appeals in New York denied a motion to lift a stay it issued in favor of Argentina pending U.S. Supreme Court review of a ruling for the holdout bondholders in August.
The request to lift the stay was made Oct. 15 by bondholders led by hedge funds NML Capital Ltd., a unit of Elliott Management Corp., and Aurelius Capital Management LP.
The case is one of many lawsuits filed by bondholders in the wake of Argentina’s $100 billion sovereign default in 2002. In two restructurings, creditors holding about 93 percent of Argentina’s bonds agreed to swap out their bonds in deals that gave them 25 cents to 29 cents on the dollar. But bondholders who did not participate in the restructurings, including NML and Aurelius, sued for full payment.
The litigation was filed in New York under the terms of the bond documents. In 2012, U.S. District Judge Thomas Griesa ruled Argentina had violated a clause requiring the equal treatment of creditors. The 2nd Circuit largely upheld that order in a decision that the U.S. Supreme Court recently declined to review.
As part of its October 2012 decision, the 2nd Circuit sent the case back to Judge Griesa to clarify how the injunctions he had issued would function. Judge Griesa issued a new order last November that required Argentina to pay $1.33 billion into a court-controlled escrow account in favor of the holdout bondholders.
The 2nd Circuit upheld that decision, but stayed its impact pending a second appeal by Argentina to the U.S. Supreme Court.
After the 2nd Circuit’s ruling, Argentine President Cristina Fernandez pitched a voluntary swap of foreign debt in exchange for bonds governed by local law. But Judge Griesa said last month the proposal would violate an injunction he had issued.
Following Judge Griesa’s latest order, NML and Aurelius asked the 2nd Circuit to lift its stay.
Representatives for NML and Aurelius and a U.S. lawyer for Argentina did not immediately respond to requests for comment.
The case is NML Capital Ltd. et al v. Republic of Argentina, case No. 12-105, in the 2nd U.S. Circuit Court of Appeals.
By Shane Romig
1 November 2013
BUENOS AIRES–Argentina’s government plans to extend price controls on 500 basic supermarket items until the end of the year as it grapples with double-digit inflation that has caused distortions in the foreign exchange market.
Earlier this year, the government brokered a deal with supermarkets to keep prices steady on 500 goods, including food, cleaning and hygiene products. Stores that don’t respect the price accord risk fines or closure.
Those price controls will be extended “at least until the end of the year,” state news agency Telam reported Friday, citing consumer defense under-secretary, Maria Lucila Colombo.
A spokesman for the trade group that represents Argentina’s supermarkets couldn’t immediately be reached for comment.
President Cristina Kirchner’s administration has turned to price controls to tame annual inflation that most private economists say is around 25%, more than double what the government reports.
Inflation has stoked heavy demand for U.S. dollars, as nervous residents scramble to protect the purchasing power of their savings. The government’s response–capital controls and trade barriers–hasn’t stopped its foreign-currency reserves from falling to a six-and-a-half-year low of $33.4 billion.
The government’s policy of rationing the foreign currency that Argentines can buy has sent some people to the black market, where the dollar fetches a 69% premium over the regulated exchange rate.
Critics of Mrs. Kirchner’s economic policies say that inflation would be less of a problem if the central bank wasn’t printing so many pesos to finance government spending. While the central bank has cooled the rate of monetary expansion, the money supply increased 32% on the year in September.
The government regularly blames rising prices on greedy businessmen.
Mrs. Kirchner has also sponsored a program to deploy thousands of people belonging to unions, activist groups and churches to police store prices.
However, there are frequent complaints of shortages of the goods on the list.
In July, agents from the Domestic Commerce Secretariat briefly closed four supermarkets owned by companies including Wal-Mart Stores Inc (WMT) and Chile’s Cencosud SA (CNCO) for not stocking all of the 500 goods subject to price controls.
By Carmen Wymer
3 November 2013
Miami University; Miami, OH – news
A group of Miami University honors students will be taking their learning experiences far outside the classroom this winter term with a 10-day backpacking trip through rural Argentina. The two credit hour course, HON 281: Outdoor Leadership in Argentina, requires students to meet once a week during the fall semester to prepare for the trip over the winter term.
According to former instructor Mark Freidline, the class was first offered in 2009 as an option to satisfy new honors requirements. At the time, the course was co-taught by Freidline and Mike Maxam, who currently teaches the course. The goal is to teach leadership and basic outdoor skills.
“We want to focus on leadership, and the outdoors is a means to do that,” Freidline said.
Students first stop at a large city, which will be Mendoza this year, to learn about Argentinean culture. Most of the students will have to overcome a language barrier and cultural differences during those first few days.
Miami sophomore Rachael White expressed excitement about this part of the trip.
“I hope to get out of my comfort zone and try something new,” she said.
Argentina’s leisurely, family oriented culture contrasts America’s fast-paced, more distant culture, Maxam said.
“In Argentina, they like to sit around, just enjoy peoples’ company and talk,” said Maxam. “It kind of takes all the crazy things students have going on and shrinks it down to your bare necessities. It puts things in perspective. You really understand what you need and what’s important in your life.”
The second and longest part of the trip is the backpacking portion, which usually takes place in a remote location. This year, students will backpack in the Patagonia region. During class time at Miami, students learn how to use harnesses, about mountaineering and how to take safety precautions for that portion of the trip. They look at possible dangers in case studies and discuss the solutions.
Despite these preparations, things can still go wrong, Maxam said. A student fell ill on a past trip due to a pre-existing medical condition. Her trip to the hospital took a 12 hour hike and a four hour drive because they were in a remote location.
“We use those [case studies] as a discussion piece to learn that it’s beautiful in the mountains, it’s going to be a fun trip and there’s lots of great things to see,” Maxam said. “But, yes, there’s a very realistic side we need to prepare for.”
Everyday things can be more dangerous as well, simply due to the outdoor environment. When students are hours or even days away from the nearest hospital, the instructors are very concerned about safety.
“One of the most dangerous things in the backcountry is cooking because it’s not in a controlled environment,” Freidline said. “If the stove is on a wobbly rock, it can tip over and burn you.”
White said that the backpacking portion of the trip is what she is most nervous about.
“I’ve never done anything like this,” White said. “But [Maxam] seems like a good leader.”
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October 27, 2013
BUENOS AIRES, Argentina — President Cristina Fernandez’s governing bloc held onto control of Congress in Sunday’s congressional elections, but the results buried hopes of changing the constitution to let her run for a third term and a former loyalist proved himself a political threat.
The president’s former Cabinet chief, Sergio Massa, beat the candidate that Fernandez hand-picked to lead her slate for Congress, Martin Insaurralde, by a decisive 12-point margin in Buenos Aires province, where 37 percent of Argentina’s voters live.
With 72 percent of the votes counted nationwide, the governing Front for Victory won 33 percent of the congressional votes overall, far short of the 54 percent that Fernandez carried in her re-election in 2011.
Cabinet Chief Juan Manuel Abal Medina predicted that when all the votes were in, the front would gain five seats in the 257-seat Chamber of Deputies and maintain a “comfortable majority” in the 72-member senate.
The Front for Victory remains the only nationwide political force and still holds more seats in Congress than any other bloc.
But its losses in Argentina’s most populous districts suggested growing unhappiness and a weakened presidency. And the increasing appeal of Fernandez’s rivals elected Sunday could pose new threats to her all-or-nothing style of governing.
The president’s opponents won more than enough seats to block any constitutional changes, ruling out a “re-re-election” in 2015. Without that threat, it might prove harder for Fernandez to keep rivals in check as Argentines begin marking the end of a government that she and her husband, the late President Nestor Kirchner, have led for a decade.
Massa, whose calls for consensus and rising popularity have already peeled away some Fernandez loyalists, will be sworn in Dec. 10 as a deputy in Congress after receiving the most votes of any politician running Sunday.
“We accept our differences, plurality, and as our Pope Francis says, harmony, which is the best way to build our society,” Massa said Sunday night in calling on all Argentine politicians to “please listen to the message of the people.”
For the moment at least, the results position Massa to make a presidential run in 2015.
“This is an overwhelming response by the people to our times,” said Dario Giustozzi, a member of Massa’s Renewal Front who also won a seat in Congress. “This is the end of an era, a new space. Now the people have a place where they can be heard.”
Massa, however, will no longer be the successful mayor of the wealthy Tigre municipality, where many of Argentina’s rich and famous live in gated communities. Now he’ll need to make his voice heard while leading the third-largest force in Congress, with about 19 seats, compared to 131 for the ruling bloc.
Before Fernandez, 60, was diagnosed with a head injury Oct. 6, she had appeared with Insaurralde at every major campaign event, sometimes doing all the talking.
But since her skull surgery, she has remained in seclusion, a very unusual situation for a country accustomed to seeing her on television every day. While her doctors say her condition is improving, they ordered her to rest for a month and avoid any stress.
Her vice president, Amado Boudou, is nominally in charge while she recuperates, but even top ministers have struggled to describe how decisions are being made, contradicting each other about how much she’s following the news. She was unable to vote or visit Kirchner’s tomb Sunday, which was the third anniversary of his death from a heart attack.
With Boudou’s political future clouded by corruption investigations, Fernandez could now spend her last two years struggling to keep rivals in line during an intense succession battle within the always fractious Peronist party, to which her center-left Front for Victory belongs.
Along with Massa, would-be presidents include the governor of Buenos Aires province, Daniel Scioli, and the mayor of the capital of Buenos Aires, Mauricio Macri. Both are seen as more business-friendly and centrist than Fernandez.
October 25, 2013
BUENOS AIRES, Argentina — Argentine President Cristina Fernandez faces an election Sunday that will open a fierce struggle to reduce her powers, and her aides say she’s not even watching the news.
Fernandez, 60, has been secluded in the presidential residence, recovering from skull surgery in the run-up to congressional elections that will decide how much control she’ll have over Argentine politics during the final two years of her presidency.
Polls suggest the ruling Front for Victory and its allies will lose ground in both houses, burying the idea that her government will win the super-majority needed to change the constitution and enable her to run for a third straight term.
Without the threat of a “re-re-election” to keep rivals in line, come Monday it would be anything goes in the multifaceted Peronist party that dominates Argentine politics, some analysts say.
“It will initiate the internal succession process within Peronism, and the first very visible expression of this will be lawmakers switching sides,” Argentine political analyst Ignacio Fidanza, who directs, told The Associated Press.
Fernandez underwent more follow-up tests Wednesday to make sure the blood on her brain discovered on Oct. 6 hasn’t reappeared. While her doctors said she’s recovering well, they also ordered that she avoid anything stressful until at least the second week of November. Fernandez had been the main attraction for slates of ruling party candidates, but now she won’t even be part of the jostling for new positions that happens immediately after any election.
Interior and Transport Minister Florencio Randazzo said the president wasn’t even told this week about a train crash that injured nearly 100 passengers and is causing new headaches for the government. “The president doesn’t know about what happened,” he said. “I don’t think it would contribute to her recovery to learn about the episode.”
Some polling suggests the ruling Front, known as the FPV, and its allies will barely hold onto their majority in the lower house and are more likely to lose the Senate.
She needs a majority in each house to reach a quorum and push through her agenda, and the ruling party has already lost some sure votes in the current Congress. Of 257 seats in the Chamber of Deputies, the FPV has 115 official seats, but can depend on only 109 or 110 votes from its own members, which together with allies provides her with the total she needs.
In the current Senate, the FPV has 32 seats, and can count on allies for a total of 38 votes, barely more than the 37 needed for a majority in the 72-member chamber.
“It remains to be seen what will happen with the ruling party’s allies, who could begin to move to the other side,” said Mariel Fornoni, director of the Management & Fit consultancy.
Sunday’s vote represents the beginning of the end of a cycle that began in 2003, when Fernandez’s late husband, Nestor Kirchner, won the presidency. Kirchner restored power to the presidency and his wife has tightened her grip over the reins of the state after he died of a heart attack on Oct. 27, 2010.
Fernandez lost ground in congressional elections during her first four-year term, but she won back enough allies to push through an economic emergency law granting her power to unilaterally make major financial decisions without further consulting Congress. Fearful of losing that power after Sunday’s vote, the government recently extended the “emergency” until the end of 2015.
The biggest threats for this president, Fidanza predicted, will be managing Argentina’s immediate economic challenges and keeping rival politicians in line as a lame duck leader.
October 27, 2013
Sixteen and 17-year-olds will be able to vote for the first time in Argentina’s mid-term elections Sunday. Critics see the 2012 law that lowered the voting age as a cynical bid to bolster the leftist government, but others say it will bolster democracy.
Ignacio Cura, a floppy-haired high-school student, belongs to a new generation of voters that will cast some of its first ballots tomorrow in Argentina’s mid-term elections.
President Cristina Fernández de Kirchner’s ruling Peronist alliance, the Front for Victory, passed a controversial law last year that lowers the voting age from 18 to 16. More than half a million youngsters in this nation of 40 million people have since opted to join Mr. Cura on the electoral roll.
Critics see the law as a blatant attempt by President Kirchner to harness extra votes in uncertain times for her leftist government, which is popularly believed to count young people among its most fervent supporters. But others say it is a tool for widening democracy and a political extension of Kirchner’s liberal social policies.
“This started as a government plan to capture a new mass vote,” says Sergio Berensztein, a political analyst at Poliarquía, a Buenos Aires consultancy. “But that vote is not homogenous.”
The general consensus here is that views among young people are more nuanced – perhaps giving weight to the claims of Diana Conti, a Front for Victory lawmaker, who said the law was “neither opportunistic nor demagogic.”
Pro-Kirchner groups, for instance, have not been elected to run any of the student associations at the University of Buenos Aires, the biggest university in Argentina with more than 300,000 students. And Cura, who is 16, says he will not vote tomorrow for the Front for Victory.
In a recent Poliarquía poll, 49 percent of 18- to 29-year-olds across the country said they would vote for opposition parties.
A focus on youths
Kirchner has made youth participation a cornerstone of her political discourse, and pro-Kirchner youth organizations have flourished in recent years.
Young people, Kirchner said last year, are the “custodians of this political legacy.” She often refers to that legacy as “the winning decade,” a reference to 10 years of “Kirchnerism,” interventionist rule by Kirchner and her late husband and predecessor, Néstor Kirchner.
“Kirchnerism has triggered an enthusiasm in young people,” says Julio Burdman, head of the politics department at the University of Belgrano.
There is a general consensus here that political debate and activism are at their highest levels since Argentina returned to democracy 30 years ago following a brutal military dictatorship – from 1976 to 1983 – that crushed dissent and “disappeared” an estimated 30,000 people.
“What we’re seeing now is similar to what I experienced in the 1980s as a teenager,” says Marcelo Ronco, discussing the elections with his 12-year-old son, Simón. “Today, young people are informed about politics; before, it was a ‘no-go’ subject.”
Divisive policies
Many here, however, complain that the pro-Kirchner youth organizations – capable of packing stadiums and plazas for the president’s speeches – implement a top-down, rather than grassroots, structure in an attempt to indoctrinate followers.
Others say a government plan that has seen nearly 3.5 million laptops given to high-school students – who say they come pre-loaded with Peronist propaganda – is indicative of short-term populism, rather than long-term educational reform.
But poorer students have benefitted from the program. “There are seven of us at home with just one desktop computer,” says 18-year-old Santiago Andreu, who will vote for the Front for Victory. “I can study better now with the laptop.”
Many young people identify with Kirchnerism because of social policies like child benefits, which poor families can receive if they ensure their children attend school. More than 3.5 million children are currently enrolled in the program.
Others are drawn by Kirchnerism’s record on human rights: Mr. Kirchner overturned amnesty laws that had protected the perpetrators of crimes against humanity during the dictatorship. They also laud the current president’s attempt to break up media conglomerates, as well as reforms such as a 2010 same-sex marriage law and a 2012 law that allows people to legally change their gender without prior medical or judicial approval.
“It’s a rounded model that promotes a better future,” says Soledad Prado, an 18-year-old medical student who is applying for a government grant to subsidize her living costs. She will cast her ballot for the Front for Victory, too.
‘The end of the Kirchnerist cycle?’
But tomorrow’s vote – in which a half of the lower house and a third of the upper house will be elected – takes place against a gloomy backdrop for Kirchnerism. While it is unlikely to lose control of Congress, other political forces are budding. They have capitalized on widespread discontent with the government, especially corruption allegations and a perception that violent street crime is rising.
Sergio Massa, a mayor who was Kirchner’s cabinet chief for a brief spell in 2008 and 2009, is spearheading a breakaway Peronist alliance. He leads Front for Victory candidate Martín Insaurralde in the province of Buenos Aires, Argentina’s most populous, by eight percentage points, according to Poliarquía. If he wins, Mr. Massa is expected to use victory as a springboard for a presidential bid in 2015.
“This is the end of the Kirchnerist cycle,” says Mr. Berensztein, the analyst.
Kirchner is a potent personality, but the Constitution bars her from running for a third consecutive term. And a government source, who preferred not to be named for fear of losing his job, says officials fear for Kirchnerism’s future without her. That leadership vacuum has become clear in recent days as Kirchner recovers from brain surgery.
Rival politicians also sense vulnerability. “Kirchnerism is in crisis,” says Elisa Carrió, an outspoken opposition lawmaker who is running for re-election.
Still, many young people here see Kirchnerism as the only guarantor of leftist rule. Older voters, meanwhile, are tired of Kirchner’s aggressive manner and crave a more moderate president, like Massa.
In a family in a middle-class neighborhood of Buenos Aires, that contrast is clear: Giuliana Pécora, who is 18, will vote for the Front for Victory. She believes it is the only party that will broaden civil rights and correct social injustice through the redistribution of wealth.
But echoing a view held by many in his age bracket, her father, Luis Pécora, feels that the welfare state is fueling a generation of indolence. He rues high inflation, which economists put at 25 percent, saying it is a symptom of deep-seated economic problems.
“A winning decade? I have my doubts,” Mr. Pécora says. “For Kirchnerism, Monday marks the start of the end.”
By Taos Turner
28 October 2013
BUENOS AIRES — President Cristina Kirchner appears to have retained her congressional majority in midterm elections Sunday, but her candidates were trounced in a crucial district, setting the stage for a fight within Argentina’s ruling Peronist movement to succeed her.
The president’s candidates received more votes nationwide than any other party, television station C5N reported shortly after voting booths closed, citing people close to the government. Official preliminary results were expected late Sunday.
But the Victory Front’s poor showing in Buenos Aires province and the apparent victory of her former cabinet chief Sergio Massa, a current mayor in the province, poses risks for the current president.
For one, it now seems unlikely she will be able to muster enough political support to change the constitution so she can run for president again in 2015, a move lawmakers and ministers in her party had called for.
Equally dire for Mrs. Kirchner, since non-Peronist opposition parties remain fragmented by ideological divisions, political analysts say some Victory Front legislators could defect to other Peronist factions seen as better positioned to take the presidency.
Peronist moderates like Mr. Massa and Daniel Scioli, the influential governor of the province, have already signaled plans to seek the presidency.
Although Argentines voted across the country, the nation’s attention focused on the race between Mr. Massa and Martin Insaurralde, another Buenos Aires provincial mayor. With almost 40% of Argentines calling it home, strong support in Buenos Aires province is critical for any presidential hopeful.
Under Argentina’s proportional election system, both mayors were virtually guaranteed to win congressional seats. The more votes a party leader gets, the more candidates on that ticket win congressional seats.
Argentina has hundreds of political parties, though many fall within the dominant Peronist movement. Half of the Lower House and a third of the Senate were up for grabs.
But Mr. Insaurralde’s apparent victory was overshadowed by that of Mr. Massa, who outpolled Mr. Insaurralde by about 10 percentage points, reported television news station TN, giving him added momentum ahead of a possible presidential campaign.
In an interview last week, Mr. Massa was noncommittal about his presidential plans should he win the office, but he acknowledged that at the age of six he knew he wanted to be president.
Mr. Insaurralde’s poor performance represents a blow to Mrs. Kirchner, who had campaigned actively with him before undergoing emergency surgery Oct. 8 to remove a blood clot near hear brain.
Mrs. Kirchner’s absence added to the gravity of the elections. The 60-year-old president hasn’t been seen or heard from since her surgery. Her doctors prescribed 30 days of rest
The Victory Front’s results were similar to primary elections held in August, C5N said. In that election, the front and its allies won about 30% of the national vote.
Argentines headed to the polls at a time when the economy has slowed dramatically since Mrs. Kirchner won a second term with 54% of the vote in October 2011.
Most economists say the economy will grow around 3% this year with annual inflation of at least 25%. Restrictions on the purchase of U.S. dollars for travel or as a hedge against inflation have angered middle class voters.
Mrs. Kirchner, however, will continue to wield significant power until the end of her term in December 2015. She will still be able to govern largely through presidential decree, thanks to an emergency powers law.
By Andres D’Alessandro and Chris Kraul
28 October 2013
The party of ailing Argentine President Cristina Fernandez de Kirchner lost ground in Sunday’s congressional elections, in effect killing chances that loyalist legislators would amend the constitution to allow her to run for a third term in 2015, as many supporters have urged her to do.
If trends continue, Fernandez’s Victory Front party could maintain its majority but win about five fewer seats than she and her allies now control in the Chamber of Deputies. Their preelection tally was 134 out of 257 seats, far less than the two-thirds needed to approve a constitutional amendment.
The president’s favored candidates and allies also appeared to be losing ground in the 72-seat Senate, where her bloc now controls 40 seats. To amend the constitution, she would need 48 Senate seats.
With 72% of the ballots counted nationwide, the president’s party and allies were garnering just 33% of the vote, down from the 54% her bloc won in 2011 when she was elected to a second term.
Fernandez’s cause was hurt by rising crime, corruption and inflation, and by her absence from the campaign trail since Oct. 8, when she underwent surgery to repair a brain hemorrhage. She has not been seen or heard from since, and her administration has released few details about her medical condition except to say that her convalescence is proceeding normally.
After casting his ballot in the southern city of Rio Gallegos on Sunday morning, the president’s son, Maximo Kirchner, told reporters that his mother is improving and that expressions of support “do us a lot of good.”
Fernandez’s doctors ordered her to take 30 days off to recover and prohibited air travel during that period, which meant she could not travel to campaign events or vote Sunday at her home base in Santa Cruz in southern Argentina. In recent years, Fernandez, 60, has been plagued by health problems related to high blood pressure.
The election results show a sharp weakening of her political power.
Fernandez has not formally announced her intention to seek an amendment that would permit her to run for a third term, but some analysts said they thought it likely if she had adequate legislative support.
“Like all political phenomena, you can’t single out just one cause,” said Cecilia Mosto, political analyst at the Buenos Aires consulting firm CIO, when asked to explain the president’s weakened influence.
One reason was perceived ineptitude of government ministries in the management of public policies and services, she said.
Another was the horrific wreck of a Buenos Aires commuter train in February 2012 at the Once railroad station, which killed 51 and injured hundreds.
“A big blow to Cristina’s image was the Once disaster,” Mosto said, because it exemplified government corruption and mismanagement. “The sad event synthesized and exposed in the worst possible way her weaknesses.”
By Charlie Devereux and Eliana Raszewski
October 28, 2013
Argentine President Cristina Fernandez de Kirchner’s ruling coalition lost Buenos Aires province, the country’s largest, while keeping a majority in both houses of Congress in midterm elections yesterday.
Sergio Massa, the former cabinet chief who now heads a group of dissident Peronist Party members, took 44 percent of the vote in Buenos Aires province, a 12 percentage point lead, over ruling alliance candidate Martin Insaurralde, with 95 percent of the votes counted. Fernandez’s ruling alliance received 32 percent of votes nationwide, according to the preliminary results. The government increased its majority in the lower house by five seats, Cabinet Chief Juan Manuel Abal Medina said.

The result ends any hope Fernandez may have harbored of pushing through constitutional changes to seek a third term in 2015 after failing to obtain a two-thirds majority in Congress, according to Mariel Fornoni, director of polling company M&F. Fernandez has used her majority in Congress since winning re-election in 2011 with 54 percent of the votes to nationalize the country’s largest energy company YPF SA last year and re-open an offer to restructure bonds left over from the country’s $95 billion default in 2001.
“It’s an important difference in votes,” Daniel Scioli, governor of Buenos Aires province who is an ally of Fernandez, said. “We have to respect the will of the people.”
Fernandez, 60, was notably absent during the campaign as she follows doctor orders to rest for a month after Oct. 8 surgery to drain blood near her brain. Her popularity recovered to 44.4 percent in October from 34 percent the previous month, according to the M&F poll.
Absent Fernandez
Argentines elected 127 lawmakers for the 257-seat lower house and 24 for the 72-member Senate. Turnout was about 77 percent of 31 million registered voters, Interior Minister Florencio Randazzo said.
Buenos Aires is Argentina’s most populous province, accounting for 39 percent of the country’s population and 36 percent of its gross domestic product. The ruling coalition also lost in the populous provinces of Cordoba, Mendoza and Santa Fe.
The race for the 2015 presidential elections kicked off after Buenos Aires Mayor Mauricio Macri announced his intention to stand.
Massa and other opposition candidates have attacked Fernandez’s record on inflation, which private economists estimate at 25 percent, and failure to combat crime, which figure as the biggest concerns for voters.
‘Policy Reaction’
Argentine dollar-bonds have rallied 14 percent since Massa won Aug. 11 primaries and the ruling alliance garnered about 30 percent of votes on expectations that Fernandez will be replaced by a more market-friendly president when she ends her mandate in 2015.
With foreign reserves at a six-year low of $34 billion and a widening gap between the official exchange rate and a black market rate, the government will have to make important economic decisions to ride out the last two years in office, according to Jefferies Group LLC.
“The actual results are perhaps less important than the subsequent policy reaction,” Siobhan Morden, head of Latin America strategy at Jefferies in New York, wrote in an Oct. 25 note. “The more important question is whether surviving the latest election cycle the administration will finally correct macro imbalances or whether the status quo continues of just muddling through.”
October 28, 2013
Argentine President Cristina Fernandez’s governing bloc took a drubbing in Sunday’s midterm elections, shrinking her congressional majority and snuffing out chances of a constitutional change to allow her a third term.
Opposition leader and the president’s former cabinet chief Sergio Massa beat out the president’s handpicked candidate in the country’s largest voting district, Buenos Aires province.
Massa, the mayor of the affluent town of Tigre, is widely expected to be a presidential candidate in the 2015 presidential election.
Some lawmakers had wanted a constitutional amendment to allow the president to run for a third time, but the poor showing by Fernandez’s branch of the Peronist party has dashed those hopes.
The 60-year-old president was not able to campaign for her congressional candidates after an operation earlier this month to remove blood from inside her skull and to relieve pressure on her brain.
Her condition may have come from hitting her head during a fall in August.
President Fernandez, who has been in office since 2007, had her thyroid glands removed last year after she was diagnosed with cancer, although later tests indicated no cancer was present.
Her husband, former president Nestor Kirchner, died after a heart attack in 2010.
October 27, 2013
BUENOS AIRES — Argentine leader Cristina Fernandez’s allies took a beating in Sunday’s midterm congressional election, snuffing out chances of a constitutional change to allow her a third term and kicking off a succession struggle ahead of the 2015 presidential vote.
Voters went to the polls under sunny Southern Hemisphere skies to choose half of the lower house of Congress and a third of the Senate in Sunday’s vote, marking 30 years of democracy following a 1976-1983 military dictatorship.
Re-elected in 2011 on promises of increasing state control in Latin America’s No. 3 economy, Fernandez’s political coattails were trimmed by inflation, clocked by private analysts at 25 percent, while heavy-handed currency controls and falling central bank reserves have dented confidence.
Candidates sponsored by Argentine opposition leader Sergio Massa won the House of Deputies’ midterm by a 10-percentage-point margin in the key province of Buenos Aires, according to exit poll announced on local television. About the size of Italy, Buenos Aires province is home to 40 percent of Argentina’s population and most of the country’s agricultural output.
Massa, the mayor of the affluent Buenos Aires town of Tigre, headed his own list of candidates for Congress and is seen as a possible, business-friendly presidential contender in 2015.
”Tomorrow, we start with a new political map,” said Buenos Aires mayor Mauricio Macri, another possible presidential candidate who promises a shift toward market-friendly policies.
No third term
Other exit polls announced on television showed Fernandez’s candidates losing in key provinces around the country.
Some legislators had said they wanted a constitutional amendment to allow the ailing president to run for a third term. But the poor showing by Fernandez’s branch of the Peronist party in Sunday’s mid-term dashed those hopes once and for all.
To push through the legislation, they would need two-thirds support in both houses. If the exit polls prove accurate, Fernandez would not come close to achieving that level of support for another run for the presidency.
Fernandez was unable to campaign for her congressional candidates since an October 8 operation to remove blood that pooled on her brain after she fell and hurt her head in August. She is expected to continue convalescing for another few weeks.
The surgery marked the latest in a series of health issues for the 60-year-old leader, including low blood pressure and a thyroid tumor that also was surgically removed.
Speaking to local television, Fernandez’s son, Maximo Kirchner, declined to speculate on when his mother would return to work. “She’s OK. She’s in a good mood,” he said.
High stakes
As expected, Massa beat his rival, Martin Insaurralde, Fernandez’s handpicked Buenos Aires candidate.
Massa – who vows to fight crime, combat inflation and improve farm profits – appeared well positioned to run for president. But Argentine history shows midterm victors are rarely able to sustain momentum and clinch the nomination.
A dark horse could appear within the next two years, as was the case with former president Carlos Menem, who burst onto the scene in 1989, and Nestor Kirchner in 2003.
Sunday was the third anniversary of the death of Kirchner, who was married to Fernandez, preceded her as president and set the tone for her policies.
At play in 2015 is policy in one of the world’s top grains exporters as it struggles to keep up with rising world food demand and attract investment needed to exploit the vast Vaca Muerta shale oil and gas formation in Patagonia.
Argentina’s peso weakened past 10 to the U.S. dollar in informal trade last week, widening its breach with the formal rate of 5.88 pesos per greenback. Central bank international reserves are at $34 billion, down from $43 billion in January.
But stocks and bonds have rallied on hopes of market-friendly policy changes ahead.
The blue-chip Merval stock index is up nearly 50 percent since the August 12 midterm primary.
Sunday’s vote also tested the support of presidential hopefuls Julio Cobos, a Radical Party member from Mendoza; Hermes Binner, a socialist from Santa Fe; and Buenos Aires Governor Daniel Scioli, an ally of the president despite his market-friendly views.
By Hugh Bronstein
27 October 2013
BUENOS AIRES, Oct 27 (Reuters) – Argentine President Cristina Fernandez’s allies took a beating in mid-term elections on Sunday, shrinking her majority in Congress, ending chances of a constitutional change to allow her a third term and kicking off the contest to succeed her in 2015.
Voters chose half of the lower house of Congress and a third of the Senate. With 62 percent of ballot boxes counted, the government said the opposition was ahead throughout the country.
Re-elected in 2011 on promises of increasing state control in Latin America’s No. 3 economy, Fernandez’s political coattails were trimmed by inflation, clocked by private analysts at 25 percent. Heavy-handed currency controls and falling central bank reserves have dented confidence in her government.
“Seven of every 10 votes cast today went against the government. This election was a triumph for the opposition,” said local political analyst Rosendo Fraga.
Candidates sponsored by opposition leader Sergio Massa led the House of Deputies’ contest by 43 percent to 32 percent in the key province of Buenos Aires, Interior Minister Florencio Randazzo said, citing partial results.
Buenos Aires is home to 40 percent of Argentina’s voters and most of the country’s agricultural output. The loss in this strategic province was expected to shrink the majority that Fernandez’s alliance has in Congress to just a few votes.
Massa, the mayor of the affluent Buenos Aires town of Tigre, headed his own list of candidates for Congress and is seen as a possible, business-friendly presidential contender in 2015.
“Tomorrow, we start with a new political map,” said Mauricio Macri, mayor of capital city Buenos Aires and another possible presidential candidate who promises a shift toward market-friendly policies.
Sunday’s vote also tested the support of other presidential hopefuls. Julio Cobos, a Radical Party member from Mendoza, won his race, as did Hermes Binner, a socialist from Santa Fe.
Buenos Aires Governor Daniel Scioli, an ally of the president despite his market-friendly views, campaigned with her candidates and shared in their defeats, his position weakened.
Over the months ahead, the jockeying among these potential presidential candidates is expected to increase with financial, grains and energy markets watching for signs of policy changes ahead.
At play in 2015 is policy in one of the world’s top grains exporters as it struggles to keep up with rising world food demand and attract investment needed to exploit the vast Vaca Muerta shale oil and gas formation in Patagonia.
Some legislators had said they wanted a constitutional amendment to allow Fernandez to run for a third term. But the poor showing by her branch of the Peronist party in Sunday’s elections dashed those hopes once and for all.
To push through the legislation, they would need two-thirds support in both houses. If the exit polls prove accurate, Fernandez would not come close to achieving that level of support for another run for the presidency.
She was unable to campaign for her congressional candidates since an Oct. 8 operation to remove blood that pooled on her brain after she fell and hurt her head in August. She is expected to continue convalescing for another few weeks.
Speaking to local television, Fernandez’s son, Maximo Kirchner, declined to speculate on when his mother would return to work. “She’s OK. She’s in a good mood,” he said.
As expected, Massa beat his rival, Martin Insaurralde, Fernandez’s handpicked Buenos Aires candidate.
Vowing to fight crime, combat inflation and improve farm profits, Massa appears well positioned to run for president. But Argentine history shows mid-term victors are rarely able to sustain momentum and clinch the nomination.
A dark horse could appear within the next two years, as was the case with former President Carlos Menem, who burst onto the scene in 1989, and Nestor Kirchner in 2003.
Argentina’s peso weakened past 10 to the U.S. dollar in informal trade last week, widening its breach with the formal rate of 5.88 pesos per greenback. Central bank international reserves are at $34 billion, down from $43 billion in January.
But stocks and bonds have rallied on hopes of market-friendly policy changes ahead.
The blue-chip Merval stock index is up nearly 50 percent since a mid-term primary vote on Aug. 12.
27 October 2013
BUENOS AIRES (AFP)–Voting in midterm elections began in Argentina Sunday in balloting likely to confirm the beginning of the political end of President Cristina Kirchner.
More than 30 million voters were eligible to cast ballots and elect half the lower chamber of Congress and a third of the Senate.
The president’s popularity has hit record lows, polls show, and Mrs. Kirchner may lose her majority in Congress.
Though the South American country is still one of the world’s breadbaskets–exporting massive amounts of soy, wheat and meat–Mrs. Kirchner’s government has presided over expanding market controls, and sky-high inflation.
Mrs. Kirchner, the 60-year-old standard bearer of the populist Peronist movement, will be barred from running for a third term in 2015, and many see the vote as the start of the race to replace her.
Mrs. Kirchner’s young and relatively inexperienced former chief of staff, Sergio Massa, 41, who broke with the president and formed a splinter Peronist party, is considered the man to watch.
The president’s Front for Victory faction is expected to retain control of Congress’ lower house and still be Argentina’s leading political force.
But polls suggest it will lose seats to both Mr. Massa’s Peronist movement and to the divided right and left-wing opposition parties.
The economy is sluggish, the protectionist government sets an official exchange rate with the dollar– fueling black market trading–and violent crime is increasingly common.
Mrs. Kirchner, Argentina’s first democratically elected female president, has seen her approval rating slide to about 30% since she was swept back into office for a second term in 2011.
She followed her late husband, Nestor Kirchner, as Argentina’s president. Nestor Kirchner was president from 2003-2007.
11. ARGENTINA RIVALS SQUARE OFF (The Wall Street Journal)
By Ken Parks and Shane Romig
26 October 2013
MAR DEL PLATA, Argentina — The important question heading into midterm elections isn’t whether the ruling Peronist movement will win, but which of its dueling factions will gain the upper hand in the run-up to presidential elections in 2015.
A third of the Senate and half of the Lower House are in play on Sunday. The Victory Front’s majority in the house looked safe against a divided opposition, though its slim majority in the Senate could be in jeopardy.
But all eyes will be focused on how the results affect the race to find a successor to President Cristina Kirchner, the Victory Front leader, who won a second term in 2011 but is constitutionally barred from seeking a third.
Primaries in August largely dashed any hopes that her supporters could win enough seats Sunday to garner the two-thirds majority needed to change the constitution — setting off a race to find her successor.
Moderates like Sergio Massa, mayor of a Buenos Aires suburb, are challenging Mrs. Kirchner as the de facto leader of the powerful Peronists, offering voters an alternative to the combative brand of left-wing Peronism identified with Mrs. Kirchner and her late husband and predecessor, Nestor Kirchner.
Mr. Massa, who also served as Mrs. Kirchner’s chief of staff, quit the Victory Front in June to field his own list of congressional candidates, including himself, in Buenos Aires province under the banner of the Renovation Front.
The winner of the showdown in the province will be seen as having the upper hand at representing the party in 2015. With 37% of voters, Buenos Aires province has significant sway in national elections.
Non-Peronist opposition parties remain fragmented by ideological divisions. That means whoever leads Peronism, a populist political machine long known for its ability to close ranks around a leader and win over Argentina’s working and middle classes, will automatically be front-runners for the 2015 vote.
Recent polls give Mr. Massa as much as an eight-point lead over rival Martin Insaurralde, who was a relatively unknown mayor until Mrs. Kirchner tapped him to lead her Victory Front ticket in the province.
If Mr. Massa’s candidates defeat the president’s slate, that could also signal the start of a shift toward more market-friendly politics than the populism espoused by Mrs. Kirchner, whose increases in government spending have fueled rampant inflation, economists say.
An orderly transition between now and 2015 is possible if moderates in the government assert themselves, said pollster Jorge Giacobbe. But if the “fanatics” that currently surround the president continue to dictate policy, the administration could end “in a train wreck,” he said.
Mr. Massa, the 41-year-old mayor of Tigre, a bedroom community of about 376,000 people, hasn’t officially declared his candidacy for president, but he makes his intentions clear.
“What had Barack Obama led before he became president? For six years, I managed the social-security system, which represents half of government spending. I have experience in national and local government,” Mr. Massa said in an interview on a recent day during the short flight to a campaign event in the beach resort of Mar del Plata.
“I’m told that at school, when I was 6 years old, the teacher asked us what we wanted to do when we grow up. I answered: president,” he added.
Joining him on the flight was New York’s former mayor, Rudy Giuliani, whom Mr. Massa has hired as a security consultant.
Mr. Massa spent the day flashing smiles, slapping backs and kissing the cheeks of voters. Hundreds of people squeezed into an auditorium to listen to his proposal to give city governments a greater role in policing. Mr. Giuliani was on hand to talk about policing.
Mrs. Kirchner’s government is widely believed to manipulate statistics about inflation, which most economists say is around 25%, more than double official estimates. High inflation led to a run on Argentina’s foreign-currency reserves in 2011, pushing her to ration hard currency and block imports. Those measures have scared off foreign investment and crimped growth, denting Mrs. Kirchner’s popularity.
Mr. Massa’s reformist pitch contrasts with his track record in government. Mrs. Kirchner nationalized private-pension savings during his stint as cabinet chief and the doctoring of economic data that started in 2007 continued in full force.
By Ed Stocker
25 October 2013
Argentines head to the polls on Sunday to vote in mid-term elections expected to deal a severe blow to the current government and dent possible reelection plans of President Cristina Fernández de Kirchner.
The 60-year-old leader, recovering from brain surgery earlier in the month and reportedly not following events in the media, has been notably absent as she complies with her doctors’ wishes for strict rest.
The elections will determine the makeup of Congress — half the seats in the Chamber of Deputies and a third in the upper chamber Senate are up for grabs — and could turn out badly for the government if August’s primaries are an indication. August’s ballot essentially acted as a test-run for Sunday, with the government’s Victory Front coalition winning just 26 per cent of the national vote.
“It’s likely that the government will lose its absolute majority in both houses on Sunday,” said Ignacio Labaqui, professor of Latin American politics at the Argentine Catholic University in Buenos Aires. “It will be more difficult to pass legislation than in the last couple of years — but we’re, of course, not going to see something like the U.S. shutdown.’’
These mid-term elections have become a litmus test for the durability of Kirchnerismo, the “national and popular project” that became government doctrine when Fernández de Kirchner’s now-deceased husband Néstor Kirchner assumed the presidency in 2003 and continued when the mantle was passed to her in 2007.
The main challenge to its enduring legacy is in Buenos Aires Province, Argentina’s agricultural heartland and home to a third of the electorate. Heading the polls for national deputy there is Sergio Massa, mayor of Tigre and a former government ally who broke away to form his own Renovation Front earlier this year. Recently published figures from Buenos Aires-based pollster Poliarquía give him 41.2 per cent of the vote, ahead of the officially nominated candidate, Martín Insaurralde, who was trailing with 33.2 per cent.
Massa cut a confident figure on Thursday when he addressed voters in Tigre during his campaign-closing speech. “Starting Oct. 28, we will surely have an enormous responsibility,” he said.
The center-right, business-friendly candidate has become a focal point for dissatisfaction with the government, including perceived spiraling crime levels, currency controls and an inflation rate that private economists estimate to be around 25 per cent.
Massa has promised to get tough on crime, even bringing in former New York Mayor Rudy Giuliani to make a speech about his “zero tolerance” record at a campaign rally earlier in the month. He also tried to cut a conciliatory figure on Thursday, saying he wanted to bring together “all political sectors.”
“The government was defeated in the primaries and more than anything else in Buenos Aires Province,” said Facundo Martínez, head economist at M&S Consultants in Buenos Aires. “Massa is a candidate with a different interpretation of day-to-day realities in Argentina. This is an election about where the country is heading politically in the future.”
If Massa does well on Sunday, he may well be a candidate in presidential elections in two year’s time.
Fernández de Kirchner has already exhausted her two-term limit and is not eligible, although government insiders have suggested in the past that she wants to change the constitution in order to put herself forward. She would need a two-thirds majority in Congress in order to push such amendments through — and it appears unlikely the government coalition will get such numbers on Sunday.
“Before the primaries, the government was playing the card of changing the constitution,” said Labaqui, the university professor. “Either it was real or they were trying to delay a succession struggle, which would shift the focus away from the president as leader and turn her into a lame duck.”
What’s certain is that the government has no clear successor at the moment. The one-time darling of Peronism and current Vice President Amado Boudou has fallen out of favor after being embroiled in several corruption scandals. Although he is in charge while the president is on sick leave, the party has been at pains to keep the profile of the electric-guitar-playing, Harley Davidson-riding former economy minister as low as possible.
Walking near one of the capital’s main thoroughfares, Corrientes Avenue, 41-year-old Rodrigo Castari said he wouldn’t be voting for Victory Front candidates, who are also trailing opposition members in the city.
“They’re a disaster,” he told The Miami Herald. “Voting for them means more corruption and the same as before.” Castari, who lives outside the city limits in the province, said he would be voting for Massa.
“He’s the best — he’s the only one who can do anything,” he added.
The major winner in Sunday’s vote could well be the candidate from Buenos Aires Province. But whether this clears the way for a run by Massa in 2015 is another issue.
“The challenge Sergio Massa will have is sustaining momentum,” explained Labaqui. “Two years in Argentine politics is a very long time.”
By Hugh Bronstein
27 October 2013
BUENOS AIRES, Oct 27 (Reuters) – Argentine President Cristina Fernandez is expected to lose some of her congressional clout in Sunday’s midterm election as the ailing leader faces complaints over galloping inflation and a weakening currency.
Re-elected in 2011 on promises of increasing state control of Latin America’s No. 3 economy, Fernandez’s political coattails have been shortened by inflation, clocked by private economists at 25 percent, while heavy-handed currency controls and falling central bank reserves dent confidence.
Voters will choose half of the lower house of Congress and a third of the Senate in Sunday’s vote.
Fernandez has been unable to campaign for her congressional candidates since an Oct. 8 operation to remove blood that pooled on her brain after falling and knocking her head in August. She is expected to continue convalescing for another few weeks.
The surgery marked the latest in a series of health issues for the 60-year-old leader, including low blood pressure and a thyroid tumor that also was surgically removed.
Candidates backed by Fernandez won just 26 percent of the vote in the August midterm primary, half of what her alliance got in 2011, and her handpicked congressional candidate did poorly in the key province of Buenos Aires.
Some legislators had said they wanted a constitutional amendment to allow her to run for a third term. But a poor showing by Fernandez’s branch of the Peronist party in the primary dashed those hopes. To push through reform, they would need two-thirds support in both houses.
Unless Fernandez’s forces defy the opinion polls and clinch a strong congressional majority, the outcome will trigger a succession struggle ahead of the 2015 presidential election.
At play on Sunday and in 2015 is the fundamental policy stance of one of the world’s top grains exporters as the country struggles to keep up with rising world food demand and attract billions of dollars in investment needed to exploit its vast Vaca Muerta shale oil and gas formation in Patagonia.
Argentina’s peso weakened past 10 to the U.S. dollar in informal trade last week, widening its breach with the formal rate of 5.88 pesos per greenback. Central bank international reserves are at $34 billion, down from $43 billion in January.
But stocks and bonds have rallied on hopes of market-friendly policy changes ahead.
The blue-chip Merval stock index is up nearly 50 percent since the Aug. 12 primary, and analysts see more gains if Fernandez’s candidates get thumped again on Sunday.
Presidential hopeful Sergio Massa, the business-friendly mayor of Tigre, near the capital, could broaden his advantage in opinion polls over rival Martin Insaurralde, Fernandez’s handpicked candidate in the key province of Buenos Aires.
About the size of Italy, the province contains 40 percent of Argentina’s population. Massa and Insaurralde head lists of candidates whose fortunes will rise or fall according to the votes won by the two opposing political chieftains.
Massa – who vows to fight crime, combat inflation and improve farm profits – may end up well positioned to run for president. But Argentine history shows midterm victors are rarely able to sustain momentum and clinch the nomination.
A dark horse could appear within the next two years, as was the case with former President Carlos Menem, who burst onto the scene in 1989, and Nestor Kirchner in 2003.
The midterm will also test the support of presidential hopefuls Julio Cobos, a Radical Party member from Mendoza; Hermes Binner, a socialist from Santa Fe; Buenos Aires Governor Daniel Scioli, an ally of the president despite his market-friendly views; and the capital city’s mayor, Mauricio Macri.
14. ARGENTINA ECONOMY: AN END TO THE DEBT SAGA? (Economist Intelligence Unit – ViewsWire)
25 October 2013
The interests of the main actors in the Argentinian debt saga are aligning, and the chances of an agreement between the government and “holdouts” (holders of defaulted bonds that continue to demand repayment in full) may be rising. Bondholders that took part in the sovereign-debt restructurings of 2005 and 2010 have waded into the argument and now seem to be willing to grant part of their interest earnings to the holdouts in order to avoid a technical default that would cause the price of the bonds that they hold to plunge. However, obstacles remain, with the holdouts calling for direct negotiation with the government.
The impetus to fresh negotiations has come from the increasing perception that Argentina will enter into technical default at some point in 2014 or 2015, once it runs out of legal options in its battle with litigant holdouts in the US. Most recently, the US Supreme Court has rejected a review of Argentina’s unsuccessful appeal against a ruling that would force the sovereign to pay holdouts in full, when holders of restructured bonds are paid (via the Bank of New York Mellon in the US). Argentina is now appealing against an associated appeals court ruling, and the case will drag out into 2014 (and possibly 2015). In the meantime, a stay on the original ruling remains in place, protecting Argentina from the possibility of technical default.
However, the latter appears a growing possibility once the appeals process is exhausted, assuming that a final ruling goes against the sovereign and that the stay is removed. In this case, statements by the administration of the president, Cristina Fernández de Kirchner, suggest that the sovereign will continue to refuse to pay the holdouts and will instead change the jurisdiction of payments currently made in the US (and therefore subject to risk of seizure), triggering a technical default. Such a situation is undesirable both for holdouts, who after years of litigation would still not be paid, and to restructured bondholders, as Argentinian bond prices would then sink.
Restructured bondholders put a proposal on the table
According to a proposal made by bondholders’ representatives, current bondholders would be willing to yield 5% of their interest payments in the next five years to holdouts, if the latter give up their case against Argentina in the US courts and agree to the deal. For the proposal to succeed, at least 85% of bondholders (a proportion set under existing collective action clauses in the restructured bonds) need to accept a change in the bonds’ terms. For these bondholders, future gains through higher bond prices are expected to offset the interest payments granted to holdouts fully.
Holdouts would receive bonds issued under the conditions of the 2010 debt restructuring from the government (in September Congress passed a bill reopening the 2010 debt swap to this purpose), as well as the amount yielded by bondholders. In total, holdouts would receive payments equivalent to nearly 100% of debt’s face value. Considering that many holdouts bought defaulted bonds at a steep discount, such an agreement appears favourable. For the Fernández government it would also be advantageous. First, the political costs would be minimal, as the government would finally succeed in imposing its conditions on the “vulture funds” by refusing to pay any more than other restructured bondholders have received. Second, as the extra funds for the holdouts would come from the bondholders themselves, the agreement would not violate clauses included in the restructured bonds that explicitly forbid the government from offering better terms in any subsequent debt swap. Finally, it would allow an end to a debt default saga that has dragged on for more than ten years, during which time Argentina has had no access to global capital markets, complicating economic policy management and leaving the country vulnerable to a fresh balance-of-payments crisis.
Obstacles remain
There are still serious challenges to a deal. Among these is the problem of achieving an acceptance level of 85% of bondholders: many could opt to free-ride, choosing not to yield interest earnings but then obtaining the same benefits in the form of a boost in bond prices. For their part, the holdouts, while acknowledging that they are willing to negotiate an extra-judicial agreement, have insisted that the Argentinian government must be a part of the deal, presumably to assure its commitment with terms.
In the event that the bondholders’ proposal does not succeed, an alternative for the Fernández government would be to enter into technical default and then begin negotiations with the holdouts. However, recent moves by the government suggest that it may be hoping to avoid such a scenario. In particular, the government’s decision in October to pay out on a number of outstanding claims at the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID)-despite the fact that some of these claims had been bought at a steep discount by what the government would call “vulture funds”-suggests a definite softening of its stance towards foreign investors.
The need for global finance
This new attitude may be a reflection of the troubles in which the government currently finds itself. Amid growing macroeconomic imbalances and dwindling foreign reserves, the government would desperately like to access global financial markets in order to avoid a financial crisis in the last two years of Ms Fernández’s term of office (which ends in December 2015). Export earnings-the main source of foreign exchange amid continued capital flight and weak FDI inflows-are expected to suffer amid lower commodities prices in 2014. This will hit an already-weak trade surplus. In fact, despite foreign-exchange controls, the worsening of the current account, combined with growing investor fears of a devaluation, have reduced the stock of international reserves by 25% in the past year, to under US$35bn by mid-October.
Political factors may also be working in favour of a deal. The October 27th mid-term election is expected to produce a defeat for the government. It is possible that this will produce a shift in the balance of power within the president’s inner circle, away from the hardline leftists that have appeared to hold sway of late and towards figures such as the economy minister, Hernán Lorenzino, and the vice-president, Amado Boudou, who are perceived as keen to achieve a solution to the default problem. This would throw a lifeline to a government facing huge economic policymaking challenges. Although we have not changed our forecasts to include any sort of international bond issuance by Argentina in the short term, the possibility that the government will finally take steps to achieve a deal and put the 2002 default behind it appears to be growing.
By Nate Raymond
26 October 2013
NEW YORK, Oct 26 (Reuters) – Argentina urged a U.S. appeals court on Friday not to lift a hold on an order requiring it to pay $1.33 billion to bondholders who are suing for repayment following the country’s historic default in 2002.
In a late-night filing, the South American country asked the 2nd U.S. Circuit Court of Appeals in New York to leave a stay in place pending a U.S. Supreme Court review of a court ruling in favour of holdout bondholders.
“Vacating the stay now will expose the Republic and innocent third parties to a potential court-ordered default on over $24 billion,” Argentina’s lawyers wrote.
The case flows out of Argentina’s $100 billion sovereign debt default in 2002.
Two restructurings in 2005 and 2010 saw creditors holding around 93 percent of Argentina’s debt agree to swap their bonds in deals giving them 25 cents to 29 cents on the dollar.
But bondholders who did not participate in the swaps, led by hedge funds Elliott Management Corp’s NML Capital Ltd and Aurelius Capital Management LP, went to court in New York to seek full payment.
Argentine President Cristina Fernandez has pledged to keep paying the restructured debt but has vowed to never to pay more than other creditors received. That has created investor concern that the country could enter into a new technical default in order to avoid paying the holdouts.
The case was filed in New York under the terms of the bond documents.
In 2012, U.S. District Judge Thomas Griesa found that Argentina violated a clause in the bond documents requiring the equal treatment of creditors.
The 2nd Circuit largely upheld that decision in October 2012, in a ruling the U.S. Supreme Court this October declined to review. But the appeals court sent the case back to Griesa to determine how an injunction he had issued would work.
In November 2012, Griesa ordered Argentina to pay $1.33 billion into a court-controlled escrow account in favor of the holdout bondholders. The 2nd Circuit affirmed that holding in August.
In September, Argentina asked for a so-called en banc rehearing before the full 2nd Circuit, setting the stage for what is expected to be another appeal to the Supreme Court.
As part of its August decision, the 2nd Circuit stayed its impact pending review of the Supreme Court, giving Argentina and nervous investors some relief.
Following the August ruling, Fernandez proposed a voluntary swap of foreign debt in exchange for bonds governed by local law. But Griesa on Oct. 3 issued an order declaring the proposal would violate an injunction he issued previously in the case.
After Griesa’s order, NML and Aurelius asked the 2nd Circuit to lift its stay, saying the “equitable calculus has fundamentally changed.”
But Argentina in its brief on Friday said the holdouts “are wrong to claim that there is a ‘plan to evade,’ or that the Republic has been deficient in responding to disclosure requirements of the district court concerning any alleged plans.”
Argentina’s lawyers added that the holdout’s efforts were not only directed at avoiding Supreme Court review but, “to be blunt, their effort to profit from side bets on market uncertainty and a risk of default.”
Representatives for NML and Aurelius did not immediately respond to requests for comment after normal business hours.
The case is NML Capital Ltd et al v. Republic of Argentina, 2nd U.S. Circuit Court of Appeals, No. 12-105.
25 October 2013
Argentina took control of Sarmiento railway line almost a week after a third accident in the service that connects Buenos Aires with the western suburbs.
The government blamed Metrovías and Ferrovías -the two companies in charge of the operations of the Sarmiento railway- for the October 19 accident, when a train crashed at the Once terminal station, leaving 99 passengers injured.
Interior minister Florencio Randazzo said the companies failed to control the train conductor, who is under investigation for his responsibility in the train crash. The government also took over the operations of the Mitre railway line that connects Buenos Aires with the northern suburbs.
It was the third accident in Argentina’s railways in 20 months, and all of them have taken place on the same Sarmiento line.
In February 2012, 51 died and 700 were injured when a train crashed as it arrived at the Once station. Last June, another three people died and over 150 were injured when two trains moving in the same direction collided in the outskirts of Buenos Aires.
Since then the government has canceled private railway concessions along the major lines connecting Buenos Aires to the suburbs, and announced a series of investments to be made for new train cars.
On Friday October 25, the San Martin train line began operating the first Chinese cars bought by the government.
Argentines have blamed the government for the lack of investment in the railway system and as well as poor services being provided by several of the private companies in charge of the concessions. The government has been trying to reestablish safe commuting conditions, focusing on renewing the fleet and revamping signaling equipment and procedures.
It has announced a 4.9bn-peso (US$975mn) revamping plan for the Sarmiento and Mitre lines, including a complete renewal of the rolling stock by importing 409 train cars, which are expected to arrive in early 2014.


25 octubre, 2013
25 October 2013
The medical device maker Stryker will pay the federal government $13.3 million to settle allegations that it made illegal payments to government employees in five countries.
The Securities and Exchange Commission said Stryker subsidiaries made $2.2 million in illegal payments to government employees in Argentina, Greece, Mexico, Poland and Romania from August 2003 to February 2008. It said Stryker made the payments to get or retain business, but it recorded them as legitimate consulting and service contracts, travel costs, charitable donations and commissions.
The S.E.C. said on Thursday that Stryker made $7.5 million in illicit profits as a result of the payments. The company will pay the Treasury $7.5 million, plus $2.3 million in interest. It will also pay a $3.5 million civil penalty.
According to the S.E.C., Stryker had anticorruption corporate policies, but did not do enough to put them in action and ensure its regional and country operations adhered to those policies.
Stryker said the S.E.C. and the Justice Department began investigating the payments in 2007 and said it had improved its anticorruption programs. The company also said that the Justice Department had closed its investigation.
Shares of the company, based in Kalamazoo, Mich., added 10 cents to $74.07 in afternoon trading, after earlier hitting $74.16, its highest price since October 2007.
By Michael Calia
24 October 2013
Stryker Corp. has agreed to pay $13.2 million to settle charges that subsidiaries of the medical-device maker bribed doctors, government officials and others in different countries.
The U.S. Securities and Exchange Commission said Stryker units in Greece, Mexico, Poland, Argentina and Romania made $2.2 million in illicit payments in the form of charitable donations, consulting contracts, travel expenses and commissions.
The illicit payments described in the settlement date back to 2003, and netted $7.5 million in illicit profit for the company, the SEC added.
“Stryker’s misconduct involved hundreds of improper payments over a number of years during which the company’s internal controls were fatally flawed,” said Andrew M. Calamari, director of the SEC’s New York regional office.
Stryker didn’t admit to or deny the allegations under the settlement, the SEC said, although it agreed to cease and desist from committing or causing any further violations of the nature found in the commission’s allegations.
Defense counsel for Stryker, which is based in Kalamazoo, Mich., wasn’t immediately available for comment.
Stryker last week said its third-quarter earnings fell 71% as heavy recall expenses continued to weigh down its results.
By Samuel Rubenfeld
24 October 2013
Stryker Corp. settled a long-running U.S. foreign bribery case, agreeing on Thursday to pay $13.3 million to the Securities and Exchange Commission to resolve the allegations without admitting or denying them.
The Kalamazoo, Mich.-based medical device company first disclosed in 2007 that the SEC and the U.S. Justice Department had made inquiries regarding possible violations of the Foreign Corrupt Practices Act, which bars the use of bribes to foreign officials to get or keep business.
An SEC investigation found that Stryker’s subsidiaries in Argentina, Greece, Mexico, Poland and Romania made about $2.2 million in illicit payments, describing them in company books as legitimate expenses such as charitable donations, service contracts, travel expenses and commissions. The company made about $7.5 million in profit as a result of the payments, the SEC said.
“Stryker’s misconduct involved hundreds of improper payments over a number of years during which the company’s internal controls were fatally flawed,” said Andrew Calamari, director of the SEC’s New York office, in a statement.
Joe Cooper, the director of communications for Stryker, said in an email the company has enhanced its company-wide anti-corruption compliance program, and was advised that the Justice Department closed its investigation.
A Justice Department spokesman declined to comment.
The SEC issued an administrative order against Stryker requiring the company to pay $13.3 million within 10 days. The payment includes $7.5 million in disgorgement, $2.2 million in interest and a $3.5 million penalty.
The order details illicit payments made by the company and its affiliates as far back as 2003.
In one instance, Stryker’s Mexico unit, after learning that a local agency threatened to revoke a contract, directed its outside counsel to make a $46,000 payment to an employee of the agency, the order said. The law firm then billed Stryker for legal services rendered and Stryker Mexico recorded the payment as legitimate legal expenses, the order said.
The company earned more than $1.1 million in illicit profits on that contract alone, it said.
In Poland, Stryker’s local unit made 32 payments totaling about $460,000 to get or keep business at public hospitals, resulting in more than $2.4 million in illicit profits, the SEC said. For example, in exchange for the promise of future business from the director of a public hospital there, Stryker paid travel costs in May 2004 for her and her husband, the order said. Though the trip was for a one-day tour of a Stryker facility in Mahwah, N.J., the company paid for a six-night stay at a hotel in New York City, attendance at two Broadway shows and a five-day trip to Aruba.
Stryker declined to comment on the status of an investigation in Poland of its local unit.
24 October 2013
2013-229 Washington D.C., Oct. 24, 2013 – The Securities and Exchange Commission today charged a Michigan-based medical technology company with violating the Foreign Corrupt Practices Act (FCPA) when subsidiaries in five different countries bribed doctors, health care professionals, and other government-employed officials in order to obtain or retain business.
An SEC investigation found that Stryker Corporation’s subsidiaries in Argentina, Greece, Mexico, Poland, and Romania made illicit payments totaling approximately $2.2 million that were incorrectly described as legitimate expenses in the company’s books and records. Descriptions varied from a charitable donation to consulting and service contracts, travel expenses, and commissions. Stryker made approximately $7.5 million in illicit profits as a result of the improper payments.
Stryker has agreed to pay more than $13.2 million to settle the SEC’s charges.
“Stryker’s misconduct involved hundreds of improper payments over a number of years during which the company’s internal controls were fatally flawed,” said Andrew M. Calamari, director of the SEC’s New York Regional Office. “Companies that allow corruption to occur by failing to implement robust compliance programs will not be allowed to profit from their misconduct.”
The SEC’s order instituting settled administrative proceedings details improper payments by employees of Stryker’s subsidiaries as far back as 2003. They used third parties to make the payments in order to win or keep lucrative contracts for the sale of Stryker’s medical technology products. For example, in January 2006, Stryker’s subsidiary in Mexico directed a law firm to pay approximately $46,000 to a Mexican government employee in order to secure the winning bid on a contract. The result was $1.1 million in profits for Stryker. The subsidiary reimbursed the Mexico-based law firm for the bribe and booked the payment as a legitimate legal expense. However, no legal services were actually provided and the law firm simply acted as a funnel to pay the bribe.
According to the SEC’s order, Stryker’s subsidiary in Greece made a purported “donation” of nearly $200,000 in 2007 to a public university in Greece to fund a laboratory that was a pet project of a public hospital doctor. In exchange for the payment, the doctor agreed to provide business to Stryker.
The SEC’s investigation also found that Stryker’s subsidiaries bribed foreign officials by paying their expenses for trips that lacked any legitimate business purpose. For example, in exchange for the promise of future business from the director of a public hospital in Poland, Stryker paid travel costs for the director and her husband in May 2004. This included a six-night stay at a New York City hotel, attendance at two Broadway shows, and a five-day trip to Aruba.
The SEC’s order requires Stryker to pay disgorgement of $7,502,635, prejudgment interest of $2,280,888, and a penalty of $3.5 million. Without admitting or denying the allegations, Stryker agreed to cease and desist from committing or causing any violations and any future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934.
The SEC’s investigation was led by Sharon Binger and Justin Alfano of the New York Regional Office with significant assistance from the Enforcement Division’s FCPA Unit.
26 October 2013
The capital’s exclusive closed neighbourhoods face a heavy new tax
RESIDENTS of the Mayling Country Club, a gated community on the outskirts of Buenos Aires that boasts tennis courts, a polo field and a private restaurant, often carp about the Pinazo river, which runs through four holes of their verdant 18-hole golf course. If one doesn’t aim carefully, the river, which is flanked by weeping willows and navigated by ducks, swallows all the balls launched its way.
A few miles downstream, residents of Pinazo, an informal settlement that has sprung up along the riverbank, have very different complaints. During heavy rains the river overflows, inundating their makeshift aluminium-and-brick homes with sewage. Its gangs are so tough that even police fear to go in, says Pablo Atchabahian, the local health-secretary.
Such inequality is the norm in the suburbs of Buenos Aires, where a quarter of Argentina’s 40m citizens live. For the majority, life is hard. Less than half of homes have sewerage and a quarter lack access to piped water. A third have no gas; almost as many stand on unpaved streets. But amid this poverty, islands of luxury are popping up. A report by the provincial tax office in 2012 suggested that there were more than 400 gated developments around the capital, containing 90,000 homes. Most manage their own utilities and security, with CCTV and guards patrolling at all hours. Some are small towns in their own right: Nordelta, a secure mega-complex on the capital’s northern edge, is home to more than 17,000 people and has its own schools, hospitals and hotels.
A new law proposes to prise open the gates. The Law of Just Access to Habitat, promulgated on October 7th, allows the provincial government to tax new gated communities a tenth of their land, or the equivalent in cash, to pay for social housing. It also raises by 50% the tax levied on vacant lots in gated neighbourhoods, and allows the government to expropriate lots that have lain undeveloped for five years, after a three-year grace period. “The idea is to give the government more power to intervene in the regulation of land, and therefore decrease the unbelievable inequality,” argues Eduardo Reese, an urban-management professor at the National University of General Sarmiento, who lobbied for the new law.
Francisco de Narváez, an opposition congressman from Buenos Aires, has lodged a complaint that the law is unconstitutional. It “violates the right to private property and opens a dangerous door”, he says. Eduardo Constantini, the developer behind Nordelta, worries about the crackdown on empty lots. Because mortgages barely exist in Argentina, many families have to hold on to land for years before they can afford to build, he says. “The government should focus less on excessively taxing closed neighbourhoods, and instead decrease the need for them by investing more in infrastructure and security.” Whatever the impact of the new law, the rich and poor of Buenos Aires will continue to live jammed close together but worlds apart.
By Hugh Bronstein
24 October 2013
BUENOS AIRES, Oct 24 (Reuters) – Argentina’s legislative elections on Sunday will serve as a starting line for the race to succeed President Cristina Fernandez in 2015, with her support in Congress too low for allies to push through constitutional changes to allow her to run again.
Recovering from surgery to remove blood from the surface of her brain this month after she fell and hit her head, Fernandez, 60, has been unable to campaign for her candidates in the final stretch before the midterm vote.
Polls show her alliance could lose the majority it has had in both chambers of Congress since 2011, when Fernandez won a second term on promises of increasing the government’s role in Latin America’s third biggest economy.
In play on Sunday and in 2015 is future policy in one of the world’s top grains exporters at a time of booming world food demand. Growers and other investors have long feuded with Fernandez over her interventionist policies.
Argentina also emerging as a potential oil and natural gas exporter. Its Vaca Muerta shale formation in Patagonia is expected to be one of the biggest of its kind, and it needs billions of dollars of development investment.
Candidates backed by Fernandez won just 26 percent of the vote in a midterm primary vote in August, half of what her alliance got in 2011, and her handpicked congressional candidate had a poor showing in the must-win province of Buenos Aires.
Some legislators had said they wanted a constitutional amendment to allow Fernandez to run for a third term, but those hopes were dashed by the poor showing in the primary. To push through reform, they would need two-thirds support in both houses.
In Sunday’s midterm, voters will choose half of the lower house of Congress and a third of the Senate.
Unless Fernandez’s allies defy all the polls and win her a strong majority, the vote will almost certainly end speculation about constitutional reforms and start a succession struggle within Fernandez’s branch of the Peronist party.
Stocks and bonds have rallied on investors’ hopes of market-friendly policy changes ahead.
The blue-chip Merval stock index is up nearly 50 percent since the Aug. 12 primary, and analysts see more gains ahead if Fernandez’s candidates get thumped again on Sunday.
“The midterm is the beginning of the end of the Kirchner-Fernandez era,” said Alberto Bernal, head of emerging markets research at Bulltick Capital Markets in Miami, referring to the president and her late husband, Nestor Kirchner, who preceded her as Argentina’s leader.
“The markets are hoping for regime change because nothing less than that can get the economy back on track,” Bernal added.
Presidential hopeful Sergio Massa, the business-friendly mayor of Tigre, near the capital, could broaden his 5 percentage point advantage in opinion polls over rival Martin Insaurralde, Fernandez’s handpicked candidate in the strategic province of Buenos Aires.
If he does so, Massa – who vows to fight crime, combat inflation and improve farm profits – may be well positioned to run for president. But Argentine history shows midterm victors are rarely able to sustain momentum and clinch the nomination.
A dark horse could appear over the two years ahead, as was the case with former President Carlos Menem, who burst onto the scene in 1989, and Kirchner in 2003.
The vote on Sunday will also test the support of presidential hopefuls such as Julio Cobos, a Radical Party member from Mendoza; Hermes Binner, a socialist from Santa Fe; Buenos Aires Governor Daniel Scioli, an ally of the president despite his market-friendly views; and the capital city’s mayor, Mauricio Macri.
Fernandez, meanwhile, has been weakened by fears over the economy. Inflation is clocked by private economists at around 25 percent, while foreign exchange controls have cut access to U.S. dollars, Argentina’s traditional currency of choice for savers.
Import controls make it hard for some businesses to get basic supplies needed for production.
Farmers say the limits that the government puts on corn and wheat exports kill profits along with a 35 percent tax slapped on soybean shipments.
By Charles Newbery
24 October 2013
Buenos Aires (Platts)–24Oct2013/223 pm EDT/1823 GMT   Argentina’s Planning Ministry has awarded licenses for oil and natural gas exploration and development in four offshore blocks, it said Thursday.
The ministry, which oversees national energy affairs, said three of the blocks were awarded to a consortium of the Argentine units of France’s Total, Germany’s Wintershall and China’s CNOOC-backed Pan American Energy. The awards were issued as administrative decisions in the Official Bulletin, the government’s newspaper of record.
The consortium will develop the Carina Norte, Carina Sudeste and Leo blocks off Tierra del Fuego, the country’s southernmost province. Total and Wintershall each have a 37.5% share in the consortium, while PAE has 25%.
The fourth block, Tauro-Sirius, will be developed by Total (35%) in partnership with Wintershall (35%) and ENI Argentina Exploracion y Exploitacion (30%).
The announcement came a day after Total pledged to invest $1 billion in offshore natural gas projects in the country, where it is the biggest producer of the hydrocarbon. The pledge was focused on its Carina and Aries blocks, which currently produce nearly 19 million cu m/d, and the development of Vega Pleyade, a block located to the south of Carina and Aries that Total plans to put into production between 2015 and 2017 (See story, 1041 GMT).
Argentina is seeking investment to reverse a decade-long decline in oil and gas production that is pushing the country to reduce energy exports and increase imports.

ARGENTINE UPDATE – Oct 23 & 24, 2013

25 octubre, 2013



October 22, 2013
BUENOS AIRES, Argentina — Monsanto Co. is calling for more controls on agrochemicals, including its Roundup line of glyphosate-based weed-killers, in response to an Associated Press report about concerns that illegal pesticide applications are harming human health in Argentina.
“If pesticides are being misused in Argentina, then it is in everyone’s best interests – the public, the government, farmers, industry, and Monsanto – that the misuse be stopped,” the St. Louis, Missouri-based company said after the AP report was published Monday.
The company criticized the AP report as lacking in specifics about health impacts, though the story cited hospital birth records, court records, peer-reviewed studies, continuing epidemiological surveys, pesticide industry and government data, and a comprehensive audit of agrochemical use in 2008-11 prepared by Argentina’s bipartisan Auditor General’s Office.
Argentine doctors interviewed by the AP said their caseloads — not laboratory experiments — show an apparent correlation between the arrival of intensive industrial agriculture and rising rates of cancer and birth defects in rural communities, and they’re calling for broader, longer-term studies to rule out agrochemical exposure as a cause of these and other illnesses.
Asked for Monsanto’s position on this, company spokesman Thomas Helscher told the AP in an email Tuesday that “the absence of reliable data makes it very difficult to establish trends in disease incidence and even more difficult to establish causal relationships. To our knowledge there are no established causal relationships.”
Earlier, Monsanto criticized the AP report as “overbroad in indicting all ‘pesticides’ when we know that glyphosate is safe.”
“The U.S. EPA and other agencies not only say there is no evidence of carcinogenicity but go further to give it the highest rating, “E,” which means there is affirmative evidence that glyphosate does not cause cancer in humans.”
This claim of safety is part of the problem, Monsanto’s critics say. While glyphosate is less toxic in terms of acute exposure than many other herbicides, insecticides and fungicides, it is routinely blended with other chemicals when applied to crops. The spray that drifts from fields and seeps into groundwater adds to an overall chemical burden, a mix of many individual ingredients.
In 1996, Monsanto paid a $50,000 fine and agreed to “cease and desist” promoting glyphosate as “safe” after New York’s attorney general sued it for false advertising.
Monsanto acknowledged then that EPA approval “is not an assurance or finding of safety” because U.S. regulations are based on a cost-benefit analysis, which balances the potential of “any unreasonable risk to man or the environment” against the “the economic, social, and environmental costs and benefits of the use of any pesticide.”
Argentine federal law follows a different standard. It says that when “faced with the possibility of serious and irreversible harm,” the users of a chemical must make sure they protect human health and the environment, even when there’s “a lack of information or scientific certainty,” and “no matter the costs and consequences.”
Asked which standard Monsanto should follow in Argentina, the company spokesman said it follows all applicable regulations all over the world.
“It is not for Monsanto to decide or give opinion about the legal principles that rule the regulations of the country. Monsanto is respectful of the Argentine legal and regulatory framework, and will comply with the principles Argentine authorities decide,” Helscher wrote Friday in response to questions from the AP.
Agriculture Secretary Lorenzo Basso did not respond to requests for comment sent to his office, his secretary and his biotechnology deputy.
Dr. Damian Verzenassi runs a continuing epidemiological study at the National University of Rosario Medical School that has found a 90 percent increase in cancer rates since 1997.
“They said this new system of production would diminish agrochemical use in the country. They called the arrival of GMOs a second green revolution,” he said Tuesday.
Helscher acknowledged to the AP that agrochemical use has not decreased and in fact has grown beyond what would be required by the dramatic expansion of farming in Argentina alone.
The country’s “agricultural production has tripled in the last 20 years, going from around 35 to just about 100 million tons that are currently produced. In the same period, the agrochemical application per produced ton grew at a dramatically lower pace of 2.85 to 3.2 liters according to the figures of the agrochemical industry,” Helscher wrote.
The AP report cited data from CASAFE, Argentina’s pesticide industry chamber, showing a ninefold increase in the overall amount of formulated agrochemicals sold annually, from 9 million gallons (34 million liters) in 1990 to more than 84 million gallons (317 million liters) in 2012.
Agrochemical use declined at first, then jumped after 100 percent of Argentina’s soy came from genetically modified plants and farmers stopped tilling the soil to kill weeds. As resistant pests exploded, farmers found themselves with little choice but to mix in much more toxic chemicals.
“It’s an integral chemical compound — it has glyphosate, it has surfactant (to facilitate its dispersion), and on top of that they blend in 2,4,D (a hormonal weed-killer), endosulfan (an insecticide) and other agrotoxins,” Verzenassi said.
Helscher told the AP that “scientists do see a tendency for higher probability for resistance to evolve in these situations especially when there is sole reliance on a single herbicide for the management of the key weed species.” The answer, he said, is using “the appropriate combination of multiple herbicides.”
Dave Schubert, who runs the cellular neurobiology laboratory at the Salk Institute in La Jolla, California, disagrees. “People worry about genetic modification, but with herbicide resistant crops, perhaps the biggest health risk is the huge amount of herbicides currently being used,” he said Tuesday.
Schubert’s study of the shortcomings in the U.S. pesticide approval process, published in Biotechnology and Genetic Engineering Reviews in 2004, concluded that more rigorous testing by the EPA and the Food and Drug Administration is necessary, since so many other nations cite U.S. reviews for their own approvals.
“All of this stuff should be fed to pregnant animals to look for birth defects, and feeding studies should be done for at least a year to determine potential long-term toxicities,” Schubert told the AP.
Monsanto said it would keep urging farmers to follow the rules. That hasn’t happened in Argentina, where no one was punished for violating federal spraying rules from 2008 to 2011, the auditor general found.
“We deplore the misuse of any pesticides, regardless of who makes them. Monsanto’s employees work very hard to ensure that our customers and suppliers are properly trained and use the products according to label instructions, and that applies to Argentina, the United States, and everywhere else we do business,” the company said.
Given ample evidence of poor enforcement and growing complaints of human health impacts 17 years after Argentina accepted this farming system, Monsanto should do more, said Judy Hatcher, chairwoman of Pesticide Action Network International.
“Argentina was an early adopter of genetically engineered seed technology,” she wrote in an email to the AP. “As we’ve also learned in the United States, herbicide-resistant GE crops lead to dramatically increased pesticide use. And as weeds develop resistance to these chemicals, industry rolls out even more hazardous chemicals to battle the ‘superweeds. Farmers get trapped on the pesticide treadmill.”
October 22, 2013
CHICAGO — Boeing Co. said it has signed an agreement to sell 20 of its 737-800s to Aerolineas Argentinas.
The order would be worth $1.8 billion at list prices, although discounts are common. The Argentinian airline already has 26 similar planes.
The agreement was announced on Monday. A firm order has not yet been signed.
Boeing is getting ready to pivot from the current version of the 737, like the ones it is selling to Aerolineas Argentinas, to a new version called the 737 Max, which will have a new engine and other tweaks.
Boeing shares rose $1.11 to $122.53 in morning trading. Boeing shares are up more than 57 percent so far this year.
By Rudy Ruitenberg
October 22, 2013
Argentina’s drought has become “critical” in almost all of the country’s northern oilseed and grain growing regions, with risks to crop forecasts for soybeans and sunflower seed, industry researcher Oil World said.
Center and northern Santa Fe province is experiencing the worst drought in 50 years, affecting about 10 million hectares (24.7 million acres), with 1 million hectares intended for soybeans, Hamburg-based Oil World wrote in an e-mailed report.
Soybeans slipped about 8 percent this year in Chicago on an outlook for bigger crops in the U.S. and Brazil. World output of the oilseed is predicted to climb to 281.3 million tons in 2013-14 from 267 million tons, according to Oil World.
“It is not yet too late for soybeans, but soybean production prospects would deteriorate considerably if the required rainfall does not occur in November and December,” Oil World wrote.
Insufficient rainfall in the next four to eight weeks would mean not all planned soybeans are planted and would create unfavorable conditions for early growth, Oil World said. That would mean the researcher’s forecast for Argentina soybean production to rise to 53 million tons from 48.5 million tons in 2012-13 would have to be cut, it said.
Sunflower planting in Argentina reached 240,000 hectares as of Oct. 10 compared with 600,000 hectares at the same time last year, Oil World said. Planting will be 1.5 million hectares at most, the lowest in 30 years and 300,000 hectares less than intended, the researcher said.
“Our current estimate of 3 million tons for early 2014 could finally prove optimistic unless weather conditions improve sufficiently,” Oil World said.
By Eliana Raszewski
October  22, 2013
The Argentine peso tumbled in the black market to the weakest since May as demand for dollars surges on speculation the government will clamp down on access to foreign currency after Oct. 27 congressional elections.
The peso fell 1.5 percent to 10.05 per dollar in the illegal currency market at 4:20 p.m. in Buenos Aires, according to prices compiled by That’s the weakest since it slid to a record 10.45 per dollar on May 5. The peso has weakened 32.5 percent this year in the unofficial market and is now more than 70 percent weaker than the official rate of 5.8533 per dollar.
President Cristina Fernandez de Kirchner, who is recovering from an Oct. 8 surgery to drain a hematoma in her skull, has restricted dollar sales in the domestic market since winning re-election in 2011 and slapped a 20 percent tax on the use of credit cards abroad. While she has managed to reduce capital flight, the country’s international reserves are being drained at a rate of $1 billion a month and have fallen to a six-year low of $34.1 billion as the country’s energy deficit widens.
“The government will tighten controls even more by limiting the use of credit cards abroad because we have a serious problem and the government needs the dollars to pay debt,” former central bank president Aldo Pignanelli said in a telephone interview from Buenos Aires. “The question is how much longer can Argentina withstand the draining of reserves.”
The amount Argentines spent abroad with credit cards surpassed that spent by tourists in Argentina by $711 million in the first eight months of the year, according to the National Statistic Institute.
‘Cocaine’ Price
Argentine government officials are monitoring the situation at exchange houses in Buenos Aires and there’s “total calm” in the market, said Alejandro Vanoli, head of the securities regulator, according to state-run news agency Telam.
“There’s a real and virtual country; in the virtual, the media wants to represent their right-wing interests, they want to generate panic in the population ahead of the elections,” Telam reported, citing Vanoli. “They want to install an exchange rate that is in the first place illegal, as if they were publishing the price of cocaine, and is of little significance.”
The central bank sold $40 million in the official foreign exchange market today, less than half the $100 million sold yesterday.
Congressional Election
About 31 million Argentines are obliged to vote in the Oct. 27 mid-term election to renew half of the 257-member lower house and a third of the 72-member Senate. Fernandez’s candidates are forecast to replicate results of an Aug. 11 primary election, in which support for her Victory Front coalition dwindled to a 10-year low, according to a survey by Management & Fit. The primary results squashed speculation Fernandez would seek a constitutional overhaul to seek a third term in 2015.
Argentines look to buy dollars with their pesos to protect against inflation. Consumer prices rose 25.4 percent in September from a year earlier, the highest in the region after Venezuela, according to private estimates. Official inflation data, which is questioned by the International Monetary Fund, was 10.5 percent last month.
The peso has fallen 16 percent this year, more than double the rate of depreciation in the same period a year earlier.
While the 70 percent premium Argentines pay to buy dollars in the informal market is a fraction of the 750 percent gap between the official and black market rates in Venezuela, the difference may widen, according to Jose Alfredo Nogueira, director of Buenos Aires-based ABC Mercado de Cambios.
Cuban Policy
Cuba’s communist government, which has maintained two exchange rates since the mid-1990s with a difference of 25-to-1, will begin to eliminate the system to boost efficiency and trade, according to a statement published today in the state-run Granma newspaper.
“There’s higher demand for dollars because savers seek to protect their money,” said Jose Alfredo Nogueira, director of Buenos Aires-based ABC Mercado de Cambios. “The government needs to address the economic problems such as high inflation, subsidies and cut taxes. The exchange rate reflects the current situation of the economy.”
By Karina Grazina
October 22, 2013
(Reuters) – Argentina’s state-run energy company YPF will continue to buy liquid natural gas (LNG) from Spain’s Gas Natural Fenosa (GNF)(GAS.MC) despite a ruling against the purchases by an Argentine federal judge, YPF chief Miguel Galuccio said on Tuesday.
The ruling earlier this month threatened to complicate the energy-deficient nation’s ability to keep its power plants running. But Galuccio said YPF plans to continue the purchases.
“We are going to keep going,” he said. “If the justice system says no, we’ll stop.”
The Argentine company has appealed the ruling and denies allegations of a conflict of interest.
The Argentine Consumers’ Union filed a lawsuit saying another Spanish firm, Repsol (REP.MC) owns a 30 percent share in GNF while also holding a stake in YPF, which brokers the fuel purchases on behalf of fellow state-run energy company Enarsa.
Repsol holds an 11.82 percent stake in YPF following Argentina’s nationalization of Repsol’s controlling assets in the state-owned firm last year. Fuel imports have been growing in Argentina due to a persistent fall in local production and an increase in demand, especially for gas.
Argentina’s fuel imports rose 31.9 percent in August 2013 from the same month last year. Led by liquid natural gas purchases, imports totaled $942 million, according to data from Argentina’s energy secretary.
6. ARGENTINA’S SEPTEMBER TRADE SURPLUS $849 MLN VS $888 MLN (Dow Jones Institutional News)
By Ken Parks
22 October 2013
BUENOS AIRES–Argentina’s trade surplus fell 4% on the year to $849 million in September, as imports continued to expand at a faster pace than exports, the government said in a report Tuesday.
Argentina depends on trade for the U.S. dollars it needs to replenish its foreign currency reserves. President Cristina Kirchner uses those reserves to pay her government’s creditors and to buy critical imports like natural gas.
Exports rose 3% on the year to $6.99 billion in September, as a 9% rise in volumes shipped offset a 6% drop in prices, according to the national statistics agency, Indec.
Imports rose 4% to $6.15 billion, owing to a 3% increase in price and a 1% gain in volume.
During the first nine months of the year, the trade surplus fell 30% to $7.14 billion even as Argentine farmers enjoyed one of their largest soybean harvests on record. Argentina is the world’s No. 3 soybean exporter and the leader in soyoil and soymeal exports.
Argentina’s fuel imports were a major drag on the trade surplus, with the energy deficit more than doubling to $5.60 billion during the nine-month period. In 2011, the country became a net energy importer for the first time in almost 20 years.
With the final months of the year a seasonally slack period for exports, the government might struggle to reach its target of a $10.6 billion trade surplus.
The Kirchner administration has tried to limit imports and rations the dollars that people and businesses can buy to protect the central bank’s reserves.
Argentina’s politically sensitive trade deficit with its biggest trading partner, Brazil, was little changed at $1.63 billion during the January-September period.
23 October 2013
* Provisional duties already in place
* Final duties to be in place from end-November
* Argentina plans to challenge decision at WTO
* Indonesia expects industry to appeal against EU duties
BRUSSELS, Oct 23 (Reuters) – European Union member states agreed to impose punitive duties on biodiesel imported from Argentina and Indonesia, which are accused of selling it into the bloc at unfairly low prices, according to diplomats.
A majority of the EU members on Tuesday backed the European Commission’s view that producers in the two countries were dumping – selling at below fair market or cost price.
The European Commission has proposed duties of between 217 and 246 euros ($300-$340) per tonne on biodiesel imports from Argentina and of between 122 to 179 euros a tonne on imports from Indonesia, figures seen by Reuters showed.
Imports are already subject to provisional tariffs, imposed in May. The definitive duties, which are slightly higher, should be in place by the end of November after further procedural steps.
Argentina is the world’s biggest biodiesel exporter, and the two countries represent 90 percent of EU biodiesel imports. Their share of the EU market rose to 22 percent in 2011 from 9 percent in 2009.
Biodiesel is mostly made from rapeseed oil in Europe. Palm oil is favoured in Asia and soybean oil in the Americas.
The companies set to be hit by the duties on exports from Argentina include agribusinesses Bunge Ltd and Louis Dreyfus Commodities, which face duties of 217 and 239 euros per tonne, respectively.
“Finally this unjust measure, which arises from an erroneous calculation, becomes definitive. The only thing this does is cause harm to Argentina and the European consumer, who is going to pay for more expensive fuel,” Luis Zubizarreta, president of Argentina’s Biofuels Chamber (Carbio), told Reuters.
In order to calculate the cost of producing the biofuel, the EU incorrectly used international prices for soy oil, the main ingredient for the fuel in Argentina, instead of using local prices which are much lower, according to Zubizarreta.
In a recent statement, Carbio said the duties would cost Argentina more than $1 billion in lost sales to the EU this year.
Argentina is preparing to take the European Union to the World Trade Organisation to challenge the punitive duties, say people familiar with the matter.
Argentina has already launched a WTO challenge against EU rules for importing biodiesel, and the EU went to the Geneva-based trade body last December to claim that Argentine import restrictions are illegal.
Indonesia’s biodiesel companies were likely to appeal against the EU imposing permanent duties, said trade ministry official Oke Nurwan, and the government would help them.
“The government will facilitate and assist the biodiesel companies in any effort to drop the duty,” said Nurwan. “If the EU definitely imposes dumping duties for Indonesian biodiesel then the Indonesian producers will appeal to the European Court.
“If they fail to get fair treatment at the European Court, then we will take the case to the WTO.”
About 90 percent of Indonesia’s biodiesel exports of 1.5 million kl last year went to the European Union.
Industry body the Indonesian Biofuel Producers’ Association could not be reached for comment on Wednesday, but has previously said any subsidies received were only for domestic use and not exports.
22 October 2013
American Burger Franchise Stacks Up International Expansion Deals With Argentina
CHESHIRE, Conn., Oct. 22, 2013 (GLOBE NEWSWIRE) — Recognized as one of the most aggressive and ambitious brands in the United States, Jake’s Wayback Burgers has signed a deal with Wayback Argentina S.A. to open 30 new restaurants in Argentina, one of the world’s top beef consuming countries. This international deal marks the 29(th) country of the company’s international expansion.
The fast-casual franchise, with a reputation of serving up fresh, big, juicy hand-made burgers and real milkshakes, has come a long way since spearheading national franchising efforts in 2009. As burger concepts continue to thrive, Jake’s Wayback Burgers differentiates itself playing homage to high-quality burgers combined with a family-friendly atmosphere in which burgers are served up the way they used to be. Having recently expanded into 28 countries throughout the Middle East and North Africa region with international franchise development company, Topaz MENA, Jake’s Wayback Burgers adds to its international resume with the addition of Argentina. By strategically positioning itself with franchise experts, the company is confident with its growth plans for international markets.
The Wayback Argentina S.A. team, consisting of father and son duo Leonardo Llamas Trivi, President of Wayback Argentina S.A, and Francisco Llamas, Vice President of Wayback Argentina S.A., are ambitious, enthusiastic and trustworthy partners who have the passion, capabilities and drive to expand this successful U.S. burger concept in the Argentina market. At the young age of 32, Leo is ready to introduce to Argentina the fast-casual franchise as the market has a growing drive for eating out and young consumer demand. With a civil and industrial engineering degree and a MBA, Leo is quite the Renaissance man as he previously worked in the car industry for companies such as PSA Puegeot-Citroën and Honda, currently owns a successful cleanroom disinfection company called Xenium Sterilization Services that works with several pharmaceutical companies such as Pfizer and Argentina’s largest laboratory Roemmers, and is also in charge of the engineering department at F.J. Llamas S.A., his father’s own water treatment company that services clients such as Bayer, Roche, Abbott, Coca-Cola, Pepsi, McDonald’s, and more. With over 30 years of experience managing his company, Francisco will be providing on-going support as Jake’s Wayback Burgers expands in the Argentina market.
It has been several years since Leo knew he wanted to get involved in the burger business and after searching franchise opportunities online, he became immediately attracted to Jake’s Wayback Burgers’ reputation for top quality food products and diverse menu, and wanted a bite. It was Leo’s trip to Jake’s Wayback Burgers in Coconut Creek, FL in 2012 that solidified his determination to bring the concept to the Argentina market.
“After visiting the restaurant and taking one bite of the triple burger, I was sold. The fast-casual concept is lacking in Argentina and I want to fill that void,” said Leo, President of Wayback Argentina S.A. “We believe in the brand’s deeply rooted history and because of its flexibility, cost efficiency, quality and menu range, we are confident it will quickly become a franchise leader in the Argentina market.”
Jake’s Wayback Burgers currently has a presence across 23 states and operates in over 70 locations. The fast-casual burger franchise has seen four consecutive years of system-wide sales increase and has projected that increase to continue and be replicated in the Argentina market due to Argentinians love for burgers.
“We are thrilled to be working with such a successful brand that has seen incredible growth in just four short years, and are determined to bring it through Wayback Argentina S.A. as it expands in the international arena,” said Francisco, Vice President of Wayback Argentina S.A. “As we settle in the Argentina market, we would love to explore the potential opportunity to hold the rights for development in neighboring countries such as Uruguay, Paraguay, Chile and Bolivia.”


By Roger F. Noriega
23 October 2013
While visiting Argentina a few years ago, just as president Néstor Kirchner was defending the biggest default in history, I saw a televised government message that concluded with the phrase, “Argentina . . . A serious country” ( “Un país en serio”). At the time, I dismissed the ad as more farcical than Orwellian, thinking that a government more obsessed with its image than with reality is its own worst enemy. Unfortunately, such a regime finds enemies elsewhere — starting with any independent journalist or media outlet that refuses to toe the party line.
The Kirchner-controlled congress propagated a media law in 2009 aimed at silencing such critics. President Cristina Fernández de Kirchner (successor and, now, widow of Néstor) claimed that the measure served the public interest by breaking up powerful monopolies in the communications sector. By requiring the Clarín media conglomerate and others to divest themselves of lucrative cable television licenses, the government will achieve its real objective of muzzling independent newspaper, television and radio outlets.
Of course, it is all too predictable that these divested media licenses will fall in to the hands of compliant Kirchner cronies. This transparent tactic is lifted from the playbook of leftist caudillos in Venezuela, Ecuador, Bolivia and elsewhere.
The internationally respected Committee to Protect Journalists (CPJ) has vigorously criticized this media law as part of the government’s campaign to silence the independent media, attack individual journalists, and favor its supporters. The CPJ also has denounced the Kirchner administration’s practice of steering valuable government advertising contracts away from independent publishers — such as Perfíl, La Nación, and Clarín — to sympathetic media outlets. In March 2011, Argentina’s Supreme Court saw through this scheme and ordered the executive branch to strike a “reasonable balance” in allocating state advertising contracts. The CPJ has documented the complaints of local media that the Kirchner team is openly defying the court by continuing to reward friendly publishers.
Clearly, Kirchner and the courts are on a collision course over the fundamental issue of media freedom. In another ruling in April 2013, the Civil and Commercial Appeals Court struck down four provisions of the 2009 media law, including the key article requiring divestiture of media holdings. The matter is now pending before the Supreme Court, which will study and decide on the constitutionality of these controversial provisions.
For the Kirchner administration to succeed in silencing the independent media, it will have to force the judiciary to do it’s bidding — just as it has coopted and corrupted other instruments of the state since the election of Néstor Kirchner a decade ago.
However, Kirchnerismo appears to be running out of steam. The drubbing of the president’s slate of congressional candidates in the August primaries — in which her faction received a mere 26 percent of the votes cast — has many observers writing her political obituary going in to the October 27 mid-term elections.
According to reputable published reports, Cristina Kirchner and her cronies have concluded that a victory in the Supreme Court against the media giants will cheer her political allies and remind foes of the high costs of defying the Kirchner machine. A number of articles in independent newspapers have offered details of a campaign to bully Supreme Court justices to rush to uphold the constitutionality of the dubious media law before voters go the polls this weekend (October 27) to elect a new congress.
According to court insiders, the justices are coming under immense pressure — including personal calls from President Kirchner and ministers. Journalists report that the seven justices are divided on the constitutionality of the key articles of the law, with the court’s president, Ricardo Lorenzetti, and Justice Enrique Santiago Petracchi representing the swing votes.
Lorenzetti was appointed to the court in 2004 by the first president Kirchner; he has won accolades for leading a remarkably independent court that has defied the presidency on several key issues. Petracchi, 78, has served with distinction through tumultuous times since democracy was restored 30 years ago; he has resisted pressure by Kirchner loyalists urging his retirement.
Of course, the court need not rush its decision on this extraordinarily complicated and fundamental issue — least of all to satisfy the selfish and desperate demands of a politician. Many Argentines are satisfied that this matter is in the steady hands of Justices Lorenzetti and Petracchi, who must know that the fate of the free press, the reputation of the independent judiciary, and their professional legacies rest on this single decision.
Roger F. Noriega is a visiting scholar at the American Enterprise Institute. He is a former assistant secretary of State for Western Hemisphere Affairs and ambassador to the Organization of American States.
By Pablo Gonzalez
October 23, 2013
Total SA, Europe’s second most valuable energy company, will lead a $1.2 billion project to produce natural gas off the coast of Tierra del Fuego in southern Argentina.
In partnership with Wintershall AG and Pan American Energy LLC, Paris-based Total will drill as deep as 5.5 kilometers (3.4 miles) in the Vega Pleyade field, Javier Rielo, who heads the project, said yesterday in a televised announcement in Buenos Aires attended by Argentina’s Vice President Amado Boudou and Planning Minister Julio de Vido.
The project’s go-ahead comes as Argentina is striving to reduce what state-owned YPF SA Chief Executive Officer Miguel Galuccio calls a “serious” energy deficit, which was $5.4 billion through August, according to the National Statistics Agency. The Total venture will save Argentina $1.6 billion a year in fuel imports, de Vido said at yesterday’s event.
“This is by far the largest natural gas offshore investment Argentina has ever made,” Rielo said. “As operators we will make it produce as we are gas experts.”
The venture, owned 37.5 percent each by Total and Wintershall and 25 percent by PAE, plans an initial investment of between $1 billion and $1.2 billion, which may rise to as much as $1.5 billion if more wells need to be drilled, Rielo said.
The partners plan to start producing at Vega Pleyade in the third quarter of 2015 at about 6 million cubic meters a day, ramping up to 10 million. The venture will also increase the Carina field production, which currently is 8 million cubic meters a day. Output is set to rise by 1.5 million meters cubic a day in 2014’s second quarter.
‘Fernandez Farewell’
Additionally, the venture secured new concessions in an area called Leo. Total, which will operate the fields, is Argentina’s largest gas producer.
Argentina’s President Cristina Fernandez de Kirchner, whose term expires in 2015, raised gas prices to $7.50 per million British thermal units in January to boost investments.
“Total is making an strategic decision ahead of the 2015 Fernandez farewell to the presidency by investing such an amount not seen since the 1980s,” Mauricio Roitman, an analyst at energy consultant Montamat & Asociados, said in a telephone interview from Buenos Aires before the announcement. “We will see many other companies starting to make investments like this knowing they will be able to sell gas and oil at much better prices once this administration is gone.”
BP Plc owns 60 percent of PAE with the remainder in the hands of a venture between Bridas Corp. and China’s Cnooc Ltd.
By Ken Parks and Shane Romig
23 October 2013
BUENOS AIRES–Argentina’s government stepped up its crackdown against black market currency traders in an attempt to contain the weakening of the Argentine peso ahead of Sunday’s congressional elections.
Government inspectors and Federal Police raided clandestine exchange houses in the capital Wednesday afternoon, state news agency Telam reported, citing unnamed Domestic Commerce Secretariat sources.
A secretariat spokeswoman Susana Alonso confirmed the raids, saying the underground currency market has been shut down until next Monday.
The raids come a day after a similar sweep of exchange houses by secretariat and National Securities Commission agents. Argentina’s top securities and exchange regulator, Alejandro Vanoli, accused the media of trying to scare people ahead of the elections.
The black-market peso firmed about five cents to ARS10.05 to the U.S. dollar on Wednesday, after rising above ARS10.00 for the first time since May the previous day, according to the newspaper El Cronista, which publishes rates collected from black-market traders. The peso closed at ARS5.86 on the regulated wholesale market, a spread of almost 72% over the black market rate.
The end of October will mark the two year anniversary of unpopular restrictions on the purchase of foreign currency that have given rise to a vibrant black market for dollars. President Cristina Kirchner’s government has rationed the hard currencies that Argentines can buy to safe guard the country’s declining foreign currency stocks.
Inflation that most economists say is around 25% has undermined faith in the peso, leading some Argentines to buy black market dollars, known in local slang as “blue” dollars, to safe guard their savings or as a speculative bet the Kirchner administration might be forced to devalue the peso.
While volumes on the black market are thought to be small, the “blue” exchange rate influences how some businesses set prices and feeds devaluation fears among the general public.
Many economists think the Kirchner administration is set to further limit the dollars it makes available to people who want to travel abroad and companies that need to buy imported goods and services.
Tourism looks like an especially tempting target. Net dollar outflows from tourism rose to $4.53 billion in the first half as Argentines continued to travel and shop abroad even after the government slapped a special 20% tax on those activities.
But currency controls can be a double edged sword as they stoke even more demand for dollars. The government’s decision in March to increase a tax on tourist packages sold in Argentina and investigate tourism agencies suspected of skirting currency controls triggered a slide in the peso on the black market.
After weakening to a record level of around ARS10.45 to the dollar in early May, almost double the official exchange rate at the time, the government stepped in to calm the market by offering more dollars and allowing interest rates to rise.
The black market rate after the elections will depend on the amount of greenbacks the government makes available to the market and the rate of monetary expansion by the central bank, said Dante Sica, the director of economic research firm Abeceb.
“Nobody knows what the dollar is worth,” Mr. Sica said. “As long as there are currency controls, there will be a blue market.”
Argentina faces significant dollar outflows at a time when the foreign currency provided by trade, the South American nation’s only significant source of the U.S. currency, is shrinking due to surging fuel imports.
Foreign currency reserves stood at $34.1 billion Tuesday, their lowest level in six-and-a-half years, as debt payments, capital flight and fuel imports exceed dollar inflows from exports and multilateral loans.
On Sunday, a third of the Senate and half of the Lower House are in play. Mrs. Kirchner’s majority in the lower house looks safe, though her slim majority in the senate might be vulnerable.
4. ARGENTINA: COUNTRY FORECAST SUMMARY (Economist Intelligence Unit – ViewsWire)
22 October 2013
Country forecast overview: Highlights
Political polarisation, weak institutions, fickle political loyalties, powerful unions and a strong tradition of public protest will sustain risks to political stability throughout the forecast period. The quality of policymaking will remain poor under the current government. Decision-making lacks transparency and predictability, with power highly concentrated in the inner circle of the president, Cristina Fernández de Kirchner.
The Economist Intelligence Unit expects some improvement beyond the 2015 presidential election, but reforms that would successfully address long-standing institutional weaknesses will remain unlikely, and any attempt to strengthen the bureaucracy will founder on political resistance.
Following a strong pick-up in GDP growth in 2013 on the back of expansionary policies and a good harvest, growth is projected to weaken in 2014-15 as underlying competitiveness problems remain unaddressed. Combined with continued recourse to heterodox economic policies, this will increasingly impair confidence, investment and employment.
Economic performance in 2016-17 will hinge on the outcome of the 2015 election. Our forecasts are based on the most likely scenario of a change to a more pragmatic, business-friendly government, which would engender greater confidence and work to eliminate distortions. On these assumptions, we expect annual GDP growth to rise to 4.5% in 2017-18. However, our forecasts are subject to substantial risks. Addressing economic distortions and engineering a smooth adjustment to a lower-inflation, higher growth environment will be difficult.
In the context of structural imbalances, and especially if agricultural output or global soft commodities prices were to falter, there is a substantial risk that macroeconomic policy mismanagement will lead to devaluation, spiralling inflation, renewed recession and payments problems in the forecast period.
Argentina’s GDP per head is still among the highest in the region and, combined with improved access to credit, moderate rates of economic growth in the medium term will boost purchasing power and create market opportunities. However, continued high poverty rates and income inequalities will restrict the pool of effective consumers. Proximity to the large and growing Brazilian market will be an increasing advantage in the forecast period.
The stock of human capital will remain a source of comparative advantage, although educational improvements in some other Latin American countries will narrow the gap between Argentina and much of the rest of the region.
Country forecast overview: Key indicators
Key indicators                     2013 2014 2015 2016 2017 2018
Real GDP growth (%)                5.3  2.2  3.1  4.2  4.5  4.5
Consumer price inflation (av; %)   20.8 24.8 20.4 15.7 13.4 9.8
Budget balance (% of GDP)          -3.3 -3.0 -2.6 -2.0 -1.8 -1.8
Current-account balance (% of GDP) -0.5 -1.5 -2.6 -3.1 -3.2 -3.3
Lending rate (av; %)               16.4 18.3 16.4 14.7 13.3 12.4
Exchange rate Ps:US$ (av)          5.4  6.8  8.2  9.2  10.0 10.9
By Paula Diosquez
23 October 2013
According to the Argentine Statistical Office, total exports reached USD6.9 billion in September, up 3% from the same month in 2012. Exports of manufactured goods rose 9.4% year on year (y/y); however, exports of agricultural goods and from the oil sector declined 4.8% y/y and 30% y/y, respectively. Meanwhile, total imports posted the slowest annual rate of expansion since January (up 4.1% y/y), reaching USD6.1 billion. A large jump was observed in the consumer goods category (up 21.2% y/y), while imports of capital goods barely rose (up 1.1% y/y) and imports of raw materials decreased (0.2% y/y). As a result, the trade surplus in September was only USD849 million, a 4.4% reduction compared to September 2012.
Significance: In the first nine months of 2013, the trade surplus shrunk by nearly 30% when compared to the corresponding period of 2012; indeed, the rate of expansion of imports (up 11% y/y) outpaced the rise of exports (4% y/y). Stronger-than-expected imports suggest that trade barriers such as red tape, and discretionary and arbitrary delays have subsided slightly in 2013. At the same time, exports in the January–September period this year were slightly weaker than anticipated, pointing to some moderation in external demand. This is particularly worrisome for local authorities as it puts more pressure on Argentina’s foreign-exchange reserves, which have already decreased by USD4.8 billion (approximately 1% of GDP).
By Charles Newbery
23 October 2013
Buenos Aires (Platts)–23Oct2013/1133 am EDT/1533 GMT   Argentina will take legal action against the European Union at the World Trade Organization over anti-dumping duties on its biodiesel, saying the higher taxes are unjustified.
The legal action will seek to “safeguard the production, foreign sales and employment” of the Argentine biodiesel sector, one of the world’s largest, the Ministry of Foreign Affairs said late Tuesday in a statement.
This followed a resolution earlier Tuesday issued by the European Commission to recommend increasing the anti-dumping duties on Argentine biodiesel as requested by the European Biodiesel Board, which represents European biodiesel producers.
The EC has proposed definitive duties of Eur215-250/mt ($294.71-342.68/mt) on Argentine biodiesel, up from a current provisional duty of Eur105/mt put in effect for six months as of May 28. The definitive duties could take effect as soon as this year.
The Argentine ministry said the measure was “clearly protectionist” and that it would close off the EU market to Argentine product, which it said was made “efficiently and highly competitively.”
This efficiency allows Argentina to make biodiesel at a lower price, something the ministry said that EU producers could not achieve because of their smaller production scale, no vertical integration and a lack of high-quality feedstock.
European biodiesel producers have said they cannot compete with imported supplies from Argentina and Indonesia because those countries are “dumping” the product in their market, or selling it at below cost.
Argentina exported a record $1.847 billion of biodiesel supplies to the EU in 2011.
Exports have since declined because of the restrictions on exporting to the EU.
Exports fell 79% to 35,000 mt in June compared with 164,820 mt a year earlier, the latest Argentine government data shows.
By Oleg Vukmanovic
23 October 2013
* BP to supply around 40 LNG cargoes in 2014, 2015-source
* Gazprom to deliver 5, Statoil 3-traders
* Gas Natural wins Escobar part of tender
* YPF says will ignore Gas Natural ban for now
LONDON, Oct 23 (Reuters) – Argentina’s state-run energy firm YPF has picked BP to supply the bulk of its liquefied natural gas (LNG) needs in 2014 and 2015 following a major recent tender, a source with direct knowledge of the deal said.
South America’s No. 3 economy last month launched its annual tender to secure approximately 5.57 million tonnes of LNG over the 2014-2015 period to help cover its energy needs.
BP is to supply around 40 of the 48 cargoes sought by YPF for delivery into the Bahia Blanca import terminal, the source said.
Gazprom Marketing & Trading is set to bring in a further five cargoes to the terminal, 400 miles south of Buenos Aires, and Norway’s Statoil will deliver the final three, trade sources said.
Argentina will pay around $15 per million British thermal units (mmBtu) for deliveries in 2014, and a premium of around $10/mmBtu above the U.S. Henry Hub gas price for deliveries the following year, a source said.
Gazprom, Statoil and YPF declined to comment.
The state-run firm also picked Spain’s Gas Natural Fenosa (GNF) to deliver around 2.7 million tonnes of LNG into the country’s other terminal at Escobar on the Parana River.
The award was given despite an Argentine judge’s ruling last week that banned GNF from participating in the tender due to a potential conflict of interest.
It remains to be seen whether subsequent court actions could overturn the award to GNF, traders said.
The reason for the ruling given was that GNF’s major shareholder, Repsol, also holds a stake in YPF, the tender manager.
YPF, which has appealed the ruling, went ahead and awarded GNF the contract earlier this week.
Its chief Miguel Galuccio on Wednesday said of this decision: “We are going to keep going. If the justice system says no, we’ll stop.”
GNF was widely tipped to win the Escobar part of the tender after YPF’s revised terms of participation this year appeared to clear the way for the Spanish company, traders said.
Those terms include YPF’s decision to seek a single supplier for Escobar – last year Vitol supplied around a third of Escobar’s requirement, with GNF delivering the rest- as well as a marked shift in how the LNG will be priced.
Last year the pricing mechanism for Escobar deliveries was based on U.S. Henry Hub gas prices, but this year YPF proposed a link to Brent crude oil instead, which GNF prefers, two traders said.
In spite of the prefential terms, GNF is one of few global LNG suppliers that has the small ships needed to supply the river terminal, which is unable to receive standard tankers due to water depth restrictions.
As a result of that, one trader pointed out that GNF is best placed to supply Escobar at the lowest cost.
Given the shallow waters, only half-full standard sized tankers can unload at the terminal, which increases the shipping cost and lifts the overall price of LNG, energy analysts at Waterborne added in a recent report.
“Gas Natural is a collateral victim of the battle between Repsol and the state,” said one LNG trader of the ban levvied against GNF.
He was referring to a high-profile dispute between Repsol and Argentina after authorities nationalized YPF, the Spanish firm’s subsidiary at the time.
Repsol has filed lawsuits against the country for its loss of YPF valued at $10.5 billion.
Fuel imports have been growing in Argentina due to a persistent fall in local production and an increase in demand, especially for gas.
Argentina’s fuel imports rose 31.9 percent in August 2013 from the same month last year. Led by liquid natural gas purchases, imports totaled $942 million, according to Argentine government data.
By Hugh Bronstein
23 October 2013
* Key world food supplier Argentina neglects crop rotation
* Experts say too much soy, not enough corn, depleting soils
* Weaker soils seen hurting crop yields over period of decades
* USDA sees Argentine 2013/14 soy output at double that of corn
BUENOS AIRES, Oct 23 (Reuters) – Argentina’s key resource, its agricultural soils, are being depleted by lack of crop rotation as soy farming encroaches on areas once used for corn, wheat and cattle grazing, according to local experts and a government source.
The loss of fertility is a slow-burning threat to crop yields at a time when importers are counting on the world’s No. 3 corn and soybean supplier to increase output to help meet the boom in demand expected over the decades ahead.
The geopolitical stakes are high after Arab Spring and other uprisings were sparked in part by high food prices brought on by crop crises over the last six years. The United Nations forecasts a doubling of global food demand by 2050 as world population heads toward 9 billion.
On the Pampas farm belt, the trend toward soy at the expense of corn could rob Argentina of its natural advantage as an agricultural powerhouse in the decades ahead.
The country’s farm sector has long feuded with President Cristina Fernandez, who was re-elected in 2011 on promises of increasing state control of Latin America’s No. 3 economy.
Her government limits corn and wheat exports through quotas that can be raised and lowered through the year, dampening competition among buyers and pushing growers toward soybeans, which are taxed at 35 percent but not subject to export curbs.
That’s bad for soils in need of regular corn planting. The stalks left by corn provide mulch that allows rain to enter the ground. When water can’t sink in, the runoff carries away soil nutrients and makes fields more vulnerable to summer dry spells.
“Because corn and wheat cultivation is punished by the government, farmers are forced to cut their risks, focus on short-term profits and plant soy,” said Manuel Alvarado Ledesma, an agricultural consultant in Buenos Aires.
“If no incentive is provided to rotate crops, Argentina will deplete its soils, with the weakest areas turning into a sort of sand in a few years,” he said.
Argentina’s soy planting area has zoomed to a projected 20.65 million hectares for the current 2013/14 season from 14.5 million a decade earlier, according to the agriculture ministry.
Corn seedings are meanwhile projected at 5.7 million hectares this season, down from 6.1 million in the 2012/13 cycle but well above the 2.99 million hectares seeded ten years ago.
Farmers know that six million hectares of corn is not enough to balance 20 million hectares of soybeans.
“We want to provide as much grain as possible for our domestic market and for the world, and we want to do it in a sustainable way. But unfortunately our government policies do not allow us,” said farmer David Hughes, who manages thousands of hectares in the key agricultural province of Buenos Aires.
Complaints about government intervention are heard from other business sectors as well. Fernandez has nationalized the country’s main oil company, cut access to U.S. dollars in a bid to halt capital flight and increased state spending ahead of the Oct. 27 mid-term congressional vote.
Annual inflation is clocked by private economists at about 25 percent, one of the world’s highest rates.
Soy takes more out of the soil than farmers can afford to put back by way of fertilizers. Only 37 percent is restored, meaning that 63 percent of each season’s loss remains lost, according to government data.
“The process of land degradation is a fact,” said a government source with direct knowledge of the problem but who asked not to be identified.
“It is happening slowly in areas of the country with the best soils and faster in areas with lower soil quality. But it is happening,” the source said. “Over the long term, the country is losing yield potential. That’s the biggest danger.”
Corn seeds and fertilizers are about twice as expensive in Argentina as those used in soy farming, another factor pushing growers to plant soy on top of soy.
“The soil is getting burned by the lack of organic material left behind by each corn crop,” the government source said.
The area dedicated to Argentine wheat, which is also subject to export curbs, has meanwhile shrunk to 3.4 million hectares from 6 million ten years ago.
The U.S. Department of Agriculture sees Argentina’s 2013/14 soy output at 53.5 million tonnes, corn at a downwardly-revised 26 million tonnes and wheat at 12 million tonnes.
Argentina consumes little soy. Fernandez caps corn and wheat exports to ensure ample local food supply and control inflation.
Food prices in Argentina are still up as millers run short of grain to make bread and other staples due to a miscalculation in the size of the 2012/13 wheat crop that allowed for an initial rush of exports, leaving domestic stocks painfully thin.
Officials have hinted at coming modifications to the export curbs as pressure mounts on the government to come to terms with farmers. The farm sector is a key pillar of the economy even though it offers relatively few votes and carries little Congressional clout due to the low population of the Pampas.
The government will eventually have to face the fact that lower quality soils will mean lower farm tax revenue.
Locked out of the international capital markets since its 2002 sovereign default, Argentina depends on farm revenue to fund social programs for the poor, particularly in the heavily-populated Buenos Aires suburbs.
“The lack of crop rotation will not cause a disaster over the next five to 10 years, because Argentine soils are naturally very rich,” the Argentine government source said.
“Over the longer term the physical structure of the soil is being depleted. The consequences for future generations are unpredictable.”

ARGENTINE UPDATE – Oct 21 & 22, 2013

24 octubre, 2013


From the Front Lines, if You Can See Them – The New York Times\

June 6, 2013 MOVIE REVIEW
From the Front Lines, if You Can See Them

The thesis of Richard Rowley’s pessimistic, grimly outraged and utterly riveting documentary “Dirty Wars” is that America’s largely clandestine war on terror is now globally entrenched. Far from ending, the film argues, the fight has spread and begun breeding an increasing hatred of the United States that would have delighted Osama bin Laden. Because it is a hidden war, there are few Congressional restraints on how it is conducted.

The bearer of these bad tidings, Jeremy Scahill, who wrote the movie with David Riker, is a national security correspondent for The Nation and the author of the recently published “Dirty Wars: The World Is a Battlefield” and “Blackwater: The Rise of the World’s Most Powerful Mercenary Army.” Mr. Scahill, 38, narrates the film like a hard-boiled gumshoe following leads in a film noir. The cinematography includes some noirish touches, and there is somber music by the Kronos Quartet. Like “Inside Job,” Charles Ferguson’s incendiary exposé of Wall Street malpractice, “Dirty Wars” cuts to the chase.

Mr. Scahill’s journey into the heart of darkness begins in Gardez, Afghanistan, in February 2010, when two pregnant women were among those killed in a night raid. One casualty was Mohammed Daoud, an American-trained Afghan police commander. Gruesome photos of the carnage are shown here, in a movie that doesn’t turn away from images of extreme gore.

In the official United States explanation of what happened, the women were victims of a Taliban honor killing, although American soldiers were seen digging bullets out of their bodies. Mr. Daoud’s death was called “unfortunate.”

Mr. Scahill subsequently learns that during one week in Afghanistan, there were 1,700 such night raids. His sleuthing leads to his discovery that the attack was carried out by the Joint Special Operations Command, a covert military unit that operates not only in Afghanistan but also in countries on which no war has been declared. Algeria, Indonesia, Jordan and Thailand are mentioned.
The covert command fully emerged into view after the killing of Osama bin Laden. In a widely circulated image its assistant commander at the time, Brig. Gen. Marshall B. Webb, is shown sitting with President Obama and his inner circle as they observe the operation.

The film devotes special attention to the death by drone attack of the American-born Islamic cleric Anwar al-Awlaki in Yemen in September 2011. He is identified as the first American citizen killed in such a strike without due process. Two weeks later his 16-year-old son, Abdulrahman al-Awlaki, also an American citizen, was killed by a drone — “not for who he was,” Mr. Scahill surmises, “but for who he might one day become.”

Mr. Scahill travels to Yemen and Somalia and comes away convinced that conventional war, as waged by the United States in the Middle East and Africa, is being superseded by a new form of warfare waged in secrecy and often by remote control by shadowy forces working from “kill lists” and accountable directly to the White House. (Last month President Obama announced plans to restrict the use of unmanned drone strikes.)

“The world has become America’s battlefield,” Mr. Scahill concludes, “and we can go everywhere.”
Dirty Wars



By Michael Warren
October 20, 2013
BASAVILBASO, Argentina — Argentine farmworker Fabian Tomasi wasn’t trained to use protective gear as he pumped pesticides into crop dusters. Now at 47, he’s a living skeleton.
Schoolteacher Andrea Druetta lives in a town where it’s illegal to spray agrochemicals within 500 meters (550 yards) of homes, and yet soy is planted just 30 meters (33 yards) from her back door. Recently, her boys were showered in chemicals while swimming in their backyard pool.
Sofia Gatica’s search for answers after losing her newborn to kidney failure led to Argentina’s first criminal convictions for illegal spraying last year. But 80 percent of her neighbors’ children surveyed carry pesticides in their blood.
American biotechnology has turned Argentina into the world’s third-largest soy producer, but the chemicals powering the boom aren’t confined to soy and cotton and corn fields. The Associated Press documented dozens of cases where these poisons are used in ways specifically banned by existing law.
Now doctors are warning that uncontrolled pesticide use could be the cause of growing health problems among the 12 million people who live in the South American nation’s vast farm belt.
In Santa Fe province, the heart of Argentina’s soy industry, cancer rates are two times to four times higher than the national average. In Chaco, the nation’s poorest province, children became four times more likely to be born with devastating birth defects in the decade since biotechnology dramatically expanded industrial agriculture.
“The change in how agriculture is produced has brought, frankly, a change in the profile of diseases,” says Dr. Medardo Avila Vazquez, a pediatrician who co-founded Doctors of Fumigated Towns. “We’ve gone from a pretty healthy population to one with a high rate of cancer, birth defects, and illnesses seldom seen before.”
Once known for its grass-fed beef, Argentina has undergone a remarkable transformation since 1996, when the St. Louis-based Monsanto Company marketed a promising new model of higher crop yields and fewer pesticides through its patented seeds and chemicals.
Today, all of Argentina’s soy and nearly all its corn, wheat and cotton are genetically modified. Soy farming tripled to 47 million acres (19 million hectares), and just like in the U.S., cattle are now fattened in feedlots on corn and soy.
But as weeds and insects became resistant, farmers increased the chemical burden ninefold, from 9 million gallons (34 million liters) in 1990 to more than 84 million gallons (317 million liters) today. Overall, Argentine farmers apply an estimated 4.3 pounds of agrochemical concentrate per acre, more than twice what U.S. farmers use, according to an AP analysis of government and pesticide industry data.
Monsanto’s “Roundup” pesticides use glyphosate, one of the world’s most widely applied and least toxic weed killers. The U.S. Environmental Protection Agency and many others have declared it to be safe if applied properly. In May, the EPA even increased allowable glyphosate residues on foods.
Despite the wholesale adoption of Monsanto’s model, safety rules vary.
Some of Argentina’s 23 provinces ban spraying within 3 kilometers (1.9 miles) of populated areas; others say farmers can spray as close as 50 meters (55 yards). About one-third set no limits, and rule-breakers are very rarely punished.
A federal law requires toxic chemical applicators to suspend activities that threaten public health, “even when the link has not been scientifically proven,” and “no matter the costs or consequences,” but it has never been applied to farming, the Auditor General found last year.
In response to soaring complaints, President Cristina Fernandez ordered a commission in 2009 to study the impact of agrochemical spraying on human health. Its initial report called for “systematic controls over concentrations of herbicides and their compounds … such as exhaustive laboratory and field studies involving formulations containing glyphosate as well as its interactions with other agrochemicals as they are actually used in our country.”
But the commission hasn’t met since 2010, the auditor general found.
Agriculture Secretary Lorenzo Basso said people are being misinformed.
“I’ve seen countless documents, surveys, videos, articles in the news and in universities, and really our citizens who read all this end up dizzy and confused,” he said. “Our model as an exporting nation has been called into question. We need to defend our model.”
In a written statement, Monsanto spokesman Thomas Helscher said the company “does not condone the misuse of pesticides or the violation of any pesticide law, regulation, or court ruling.”
“Monsanto takes the stewardship of products seriously and we communicate regularly with our customers regarding proper use of our products,” Helscher said.
Argentina was among the earliest adopters of the “no-till” method U.S. agribusinesses promoted. Instead of turning the topsoil, spraying pesticides, and then waiting until the poison dissipates before planting, farmers sow seeds and spray afterward without harming “Roundup Ready” crops genetically modified to tolerate specific poisons. Farmers can now harvest multiple crops each year on land that wasn’t profitable before.
But pests quickly develop resistance to the same chemicals applied to identical crops on a vast scale, forcing farmers to mix in more toxic poisons, such as 2,4,D, used in “Agent Orange” to defoliate Vietnam’s jungles. Some Argentine regulators called for labels warning that these mixtures should be limited to “farm areas far from homes and population centers,” but they were ignored, the auditor found.
“Glyphosate is even less toxic than the repellent you put on your children’s skin,” said Pablo Vaquero, Monsanto’s spokesman in Buenos Aires. “That said, there has to be a responsible and good use of these products, because in no way would you put repellent in the mouths of children and no environmental applicator should spray fields with a tractor or a crop-duster without taking into account the environmental conditions and threats that stem from the use of the product.”
Out in the fields, Tomasi was routinely exposed.
“I prepared millions of liters of poison without any kind of protection, no gloves, masks or special clothing. I didn’t know anything” he said.
Teachers in Entre Rios began to file police complaints this year. They said sprayers failed to respect 50-meter (55-yard) limits at 18 schools, dousing 11 during class.
In Santa Fe, Druetta also filed complaints, saying her students fainted when pesticides drifted into their classrooms and that her school lacks safe drinking water.
A house-to-house epidemiological study of 65,000 people in Santa Fe, led by Dr. Damian Verzenassi at the National University of Rosario, found cancer rates two times to four times higher than the national average, as well as thyroid disorders, respiratory illnesses and other afflictions seldom seen before.
“It could be linked to agrochemicals,” Verzenassi said. “They do all sorts of analysis for toxicity of the first ingredient, but they have never studied the interactions between all the chemicals they’re applying.”
Hospital records show birth defects quadrupled in Chaco, from 19.1 per 10,000 to 85.3 per 10,000, in the decade after genetically modified crops were approved. A medical team then surveyed 2,051 people in six towns, finding more disease wherever people are surrounded by farms.
In the farming village of Avia Terai, 31 percent said a family member had cancer, compared with 3 percent in the ranching village of Charadai. They also documented children with malformed skulls, exposed spinal cords, blindness and deafness, neurological damage and strange skin problems.
It may be impossible to prove a specific chemical caused an individual’s illness. But doctors increasingly are calling for broader, longer-term and more independent research, saying governments should make the industry prove that the accumulated agricultural burden isn’t making people sick.
“That’s why we do epidemiological studies for heart disease and smoking and all kinds of things,” said Doug Gurian-Sherman, a former EPA regulator now with the Union of Concerned Scientists. “If you have the weight of evidence pointing to serious health problems, you don’t wait until there’s absolute proof in order to do something.”
October 20, 2013
The agrochemicals that have powered a global commodities boom have been ruled safe if used properly by the U.S. Environmental Protection Agency and many other regulators. But an Associated Press investigation in Argentina found that pesticides are used haphazardly and in ways unanticipated by regulatory science, and specifically banned by law. Doctors say people are getting sick. The  findings include:
The Monsanto Co. promised adopting genetically modified crops would enable faster, cheaper production with fewer chemicals. True at first, but the overall chemical burden has grown eightfold since 1990 in Argentina as farmers blend in more toxic chemicals to kill resistant weeds and squeeze in up to three harvests a year. An AP analysis shows Argentine farmers now use twice as much pesticide per acre as their U.S. counterparts.
Pesticides applied in windy conditions drift into buildings and contaminate drinking water; farmworkers mix poisons without supervision, in populated areas and with no protective gear; people store water in used pesticide containers that are resold rather than destroyed. A presidential commission was formed to study the health impacts of these violations, but it hasn’t met in three years. Despite soaring complaints, Argentina’s federal government has never cited a single agrochemical user since then for failing to follow national spraying regulations.
Cancer rates in provincial towns surrounded by soy farming are 2 to 4 times higher than the national average. Rates of birth defects in another province quadrupled since 1996, when Argentines adopted America’s “no-till” farming method using genetically modified seeds and companion pesticides. A study of children in one neighborhood surrounded by industrial agriculture found 80 percent carry pesticides in their blood.
By Ken Parks
19 October 2013
BUENOS AIRES — Argentina’s government has agreed to settle disputes with five  foreign investors, seeking to mend ties with creditors at a time when the country faces foreign-currency shortages and limited borrowing options.
Argentina had long asked investors that won compensation at the World Bank’s arbitration body to collect through local courts. That controversial legal strategy brought Argentina into conflict with the Obama administration, which suspended some of Argentina’s trade benefits and said it would oppose loans to the country from the World Bank and other multilateral lenders.
“We continue to strongly urge Argentina to honor other important international obligations,” a U.S. Treasury Department spokesperson said Friday.
President Cristina Kirchner’s change in strategy comes as the World Bank considers lending $3 billion to Argentina and a U.S. court reviews an appeal by her government in a legal battle with bondholders.
Investors agreed to a 25% reduction in total claims of $677 million, with payment to be made in dollar-denominated Argentine government bonds, the Economy Ministry said Friday. They also agreed to invest $68 million in Argentine infrastructure bonds, the ministry said.
The companies named in the settlement were utilities Azurix Corp. and Vivendi SA as well as investment funds CC-WB Holdings LLC, NG-UN Holdings LLC and Bank of America Corp. subsidiary Blue Ridge Investments LLC. The funds acquired cases originally filed by utility CMS Gas Transmission Co., National Grid PLC and Continental Casualty Co.
Argentina has been sued in the World Bank’s International Centre for Settlement of Investment Disputes more than any other country as foreign investors sought compensation for utility-rate freezes, currency devaluations and nationalizations following the country’s economic crisis in the early 2000s.
“It’s a step in the right direction, but it’s a small step,” said Goldman Sachs economist Alberto Ramos.
The settlement of the arbitration awards reinforces Mrs. Kirchner’s message that Argentina pays its financial obligations, a ministry official said.
However, Argentina is still at odds with many of its creditors. The country owes billions of dollars to the Paris Club of creditor nations and is widely thought to short change investors who own inflation-indexed bonds due to the belief among many economists that Argentina underreports inflation.
The Kirchner administration is also battling hedge funds seeking repayment on defaulted bonds in U.S. courts. The stakes are high because Mrs. Kirchner would likely have to choose between paying the hedge funds or defaulting on her government’s debt if Argentina loses the case.
Argentina still can’t borrow from international credit markets even after it restructured about 93% of the $100 billion in debt the country defaulted on in 2001. The battle with creditors and Mrs. Kirchner’s populist policies have made private-sector creditors wary of lending to her administration. Mrs. Kirchner has relied on the World Bank and Inter-American Development Bank to help fund infrastructure projects and social programs.
Mrs. Kirchner has put Argentines on a dollar diet, strictly rationing the foreign currency people and companies can legally buy.
Argentina’s foreign-currency reserves fell to $34.3 billion on Thursday, their lowest level since March 2007 as debt payments, capital flight and fuel imports exceed the dollars Argentina receives from exports and multilateral loans.
Shane Romig
19 October 2013
Argentina’s capital city suffered its third serious train accident in less than two years Saturday, an event that could prove politically costly for President Cristina Kirchner and her Victory Front coalition in midterm congressional elections later this month.
The government has taken an increasing role in operating and regulating Argentina’s decrepit passenger train system following a spate of deadly accidents and safety lapses since the start of Mrs. Kirchner’s second term in December 2011.
The latest accident is unlikely to sit well with voters, who will cast their ballots Oct 27. The Victory Front was already expected to do poorly after it received about 30% of the national vote in August primaries, a significant drop in support compared to the 54% Mrs. Kirchner got in 2011 when she won re-election.
At least 80 people were injured, several of them seriously, when a train on the busy Sarmiento line failed to stop as it pulled into the Once station in downtown Buenos Aires at around 6:30 a.m. est.
The Sarmiento line is usually packed with commuters making their way to work from the suburbs that ring Buenos Aires, but the passenger load was light on a weekend morning.
The Once station was the site of a weekday train crash in February 2012 that killed 51 people and injured more than 700. In June of this year, two passenger trains collided on the same Sarmiento line, killing three people and injuring more than 100.
An investigation is currently underway, and initial witness reports point to driver error, security secretary Sergio Berni told reporters. The security secretariat has published a list of victims being treated at the city’s hospitals.
None of the injuries appear to be life threatening, Alberto Crescenti, head of the national health service, Same, told reporters.
The train driver is in police custody at a local hospital, where he is being treated for nonlife threatening injuries.
“At no moment was any [mechanical] failure reported,” prior to the accident, the train operator UGOMS said in a statement. A UGOMS spokesman didn’t respond to requests for comment.
The government was quick to suggest human error as the cause of the crash.
The driver didn’t report any mechanical failure before the accident, and the brakes had been inspected Friday, interior minister Florencio Randazzo, whose ministry is responsible for regulating trains and national elections, said at a news conference.
Enraged passengers surrounded the engine car that crashed over the safety brake at the end of the tracks and came to a stop on the passenger platform. The police set up a cordon to keep back the angry crowd after passengers began to hurl stones at the train personnel, the government said in a statement.
Argentina’s rail industry suffers from decades of under investment.
In January, Mrs. Kirchner announced a two-year plan to spend 4.9 billion pesos ($845 million) to replace aging trains and improve railroad infrastructure.
Last year, Mr. Randazzo promised ARS800 million to repair the Sarmiento Line’s tracks, railcars, stations and workshops.
The accident occurred while Mrs. Kirchner is recovering from surgery earlier this month to remove a blood clot from her brain. Her Victory Front is expected to keep its majority in the lower house, but its majority in the senate might be in jeopardy. Even if she retains slim majorities in both houses, Mrs. Kirchner will be well short of the super majorities needed to change constitutional term limits so she can run again in 2015.
20 October 2013
A commuter train in Argentina slammed into the bumper at the end of the line at the same station in Buenos Aires where 52 people were killed in a similar crash last year.
This time there was no immediate report of deaths, but at least 80 people were injured, officials said.
A mob quickly formed, unleashing its fury at the train operators.
Passengers chanted, “Murderer, murderer!” at the injured driver through a shattered window. Officers intervened and the driver was soon hospitalized under police custody.
Officials said it was too early to say why the train crashed through the bumper, ending up wedged between the floor and ceiling of the platform. Police took control of the station after the crowd broke glass and threw stones in the street.
20 October 2013
A commuter train slammed into the bumper at the end of the line yesterday at the same station in Argentina’s capital where 52 people were killed in a similar crash last year. This time there was no immediate report of deaths, but at least 80 people were injured, including an 8-year-old boy. A mob quickly formed, unleashing its fury at the train operators. Security Secretary Sergio Berni said it was too early to say why the train failed to stop, crashing through the bumper at the end of the line and ending up wedged between the floor and ceiling of the platform.
By Phoebe Sedgman & Rudy Ruitenberg
October 21, 2013
Wheat rose for a third day, climbing to the highest level in four months after cold and dry weather reduced the outlook for production in Argentina, threatening to curb record global supplies.
Argentina last week forecast a wheat crop of 8.8 million tons, less than the 12 million tons predicted by the U.S. Department of Agriculture, and said 2013-14 exports of the grain may fall for a second year to 2 million tons.
The outlook “suggests a tense situation on the South American continent, this after the poor Brazil harvest,” Paris-based farm adviser Agritel wrote. “In this context the latter should be looking to the U.S. for its import needs.”
Wheat for December delivery rose 0.6 percent to $7.0975 a bushel on the Chicago Board of Trade by 5:24 a.m. after earlier touching $7.1125, the most for a most-active future since June 21. Futures trading volume was 73 percent higher than the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Milling wheat for November delivery traded on NYSE Liffe in Paris added 0.6 percent to 205.75 euros ($281.40) a ton.
About 100,000 hectares (247,105 acres) were damaged in Entre Rios and La Pampa provinces due to cold weather and lack of rain, according to the Argentine Agriculture Ministry. The country is the Southern Hemisphere’s second-biggest wheat exporter behind Australia.
Wheat prices have fallen 8.8 percent in Chicago this year as the USDA predicts global production will jump to a record 708.9 million metric tons. Prices rose 2 percent last week, advancing for a fifth straight week.
Brazilian Imports
“Lower wheat production in Argentina limits their exportable surplus and means Brazil will remain large buyers of U.S. wheat,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia (CBA), wrote in a note today.
Argentina’s wheat exports may fall from 3.1 million tons in 2012-13 and 11.4 million tons in 2011-12, the country’s Agriculture Ministry reported last week.
Russia may lose 4 million tons from its potential harvest after rains restricted planting of winter crops, the Institute for Agricultural Market Studies said last week.
Corn for December delivery added 0.6 percent to $4.44 a bushel. Soybeans for delivery in November advanced 0.3 percent to $12.945 a bushel.
By Daniel Cancel
October  18, 2013
Argentina agreed to compensate five companies that won rulings over investment disputes as the nation looks for the World Bank to approve $3 billion in loans, sparking the biggest bond rally in emerging markets.
The companies agreed to accept payment in dollar bonds and to reduce the principal amount of their awards by 25 percent, the Economy Ministry said today in a statement. The country will hand over local law bonds due 2015 and 2017 with a face value of $506 million for the $677 million of claims, the ministry said. The bonds traded in secondary markets at prices of 95.57 cents and 87.72 cents on the dollar respectively at 2:51 p.m. in Buenos Aires, according to data compiled by Bloomberg.
Argentina has been sued more than any other country in the World Bank’s arbitration court by investors, utilities and energy companies pursuing reimbursement for currency devaluations, nationalizations and rate freezes after the nation’s $95 billion default in 2001. To enforce existing arbitration judgments, the U.S., the World Bank’s largest shareholder, suspended in March 2012 Argentina’s participation in a trade program that allows certain goods from developing countries to be imported duty-free.
“The agreements with the companies that had obtained firm rulings, which allow for the normalization of $677 million of debt, were obtained in extremely favorable conditions for the country,” the ministry said. “The Republic won’t be using cash or international reserves” for the payment.
The companies involved are Blue Ridge Investments LLC, which owned rights to CMS Gas Transmission Company claims, CC-WB Holdings LLC, which owned rights to Continental Casualty Company claims, Vivendi Universal Sociedad Anonima, Cia. de Aguas del Aconquija Sociedad Anonima and Azurix Corp. Argentina also agreed to compensate NH-UN Holdings LLC, which owned claims from National Grid Plc. (NG/)
Bond Rally
In addition, the companies agreed to invest $68 million in a government bond that matures in 2016 and carries a 4 percent annual interest rate, the Economy Ministry said. Proceeds from the so-called BAADE bond will be used to finance energy projects in Argentina.
Argentina is settling the outstanding claims in part to tap World Bank loans, Buenos Aires-based newspaper Ambito said Oct. 10. The World Bank is considering lending $3 billion to be disbursed through 2016, Economy Minister Hernan Lorenzino said Oct. 10.
The World Bank hasn’t mentioned the size of the loan and approval is subject to a vote, Yanina Budkin, a press official for the lender in Argentina, wrote in an e-mailed response to questions on Oct. 16.
Argentine bonds have rallied since Oct. 10 on speculation the nation will obtain fresh funds from the World Bank and settle some of the outstanding arbitration claims in a sign the government is normalizing relations with international financial institutions.
The extra yield investors demand to own Argentine bonds instead of U.S. Treasuries plunged 49 basis points, or 0.49 percentage point, to 855 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified index. The spread was at 971 basis points on Oct. 9.
October 18, 2013
Oct 18 (Reuters) – Argentina said on Friday it had agreed to pay about $500 million to resolve disputes with several European and U.S. corporations as it seeks to rebuild foreign investor confidence amid a bitter court dispute with some bondholders.
The payment will be made in sovereign bonds to four companies that filed complaints at the World Bank’s International Centre for Settlement of Investment Disputes and one firm that took its case to the U.N. Commission on International Trade Law, a government statement said Friday.
Five agreements were signed with the companies, which agreed to a 25 percent discount on a total $677 million in claims, a communique from Argentina’s economy ministry said.
The decision coincides with a sensitive time in the South American country’s battle in U.S. courts with hedge funds that refused to take part in two debt restructurings following Argentina’s 2002 default.
Argentina hopes the Obama administration will ask the U.S. Solicitor General to present arguments to the U.S. Supreme Court on whether the case merits the court’s attention after a lower court ruled in favor of bondholders who will not accept reduced payments under a restructuring agreement.
The country is also looking to present its best face in order to help unlock additional credit lines from the World Bank, International Monetary Fund and People’s Bank of China in order to support its dwindling foreign currency reserves.
Companies to be paid in the settlement include France’s Vivendi SA, U.S.- based  water company Azurix and Blue Ridge Investments, a subsidiary of Bank of America Corp.
Other companies include CC-WB Holdings LLC, which holds the rights to claims made by Continental Casualty Company, a unit of Chicago-based CNA Financial Corp, and NG-UN Holdings LLC, which holds rights to claims by British electric and gas utility National Grid PLC at the U.N. commission.
Under the terms of the deal, the firms reduced the amount of compensation they were seeking by 25 percent.
“The proposals consist of the cancellation of those claims exclusively with public debt, for amounts which represent … a significant discount on the requested sums and a reasonable period for repayment,” said the government statement.
Argentina’s government will pay the compensation in U.S. dollar-denominated bonds known as Boden 2015 and Bonar X, which offer a 7 percent annual interest  rate.
Neither the government statement, issued as an “administrative decision” by the Cabinet chief, nor the economy ministry communique specified the amounts to be paid to each of the companies cited.
Economy Minister Hernan Lorenzino said the compensation will be paid with sovereign bonds governed by Argentine law. He said
the deal should pave the way for the country to receive about $3 billion in World Bank loans over the years ahead.
Argentina faces additional complaints at the World Bank body, including a claim by Spanish oil firm Repsol SA over the expropriation of its stake in Argentine state-owned oil company YPF SA last year. Repsol has said the value of its stake was about $10 billion, but the company has not yet disclosed the size of the claim it will make at the arbitration panel.
In May 2012, the United States suspended Argentina from the U.S. Generalized System of Preferences program, which waives import duties on certain goods from developing countries, after the South American nation failed to pay compensation awards in disputes involving Azurix and Blue Ridge Investments. It was the first time a country had been suspended from the program for failing to pay an arbitration award.
The United States imported $477 million worth of goods from Argentina under the program in 2011, which was about 11 percent of total U.S. imports from the country that year.
By CNN Staff
October 19, 2013
(CNN) — At least 80 people were injured Saturday morning when a train crashed in a Buenos Aires station, Argentina’s Security Secretary Sergio Berni told state news agency Telam.
Five of the injured sustained fractures, Berni said. The cause of the crash was not immediately known.
Saturday’s crash comes four months after two commuter trains collided near the Argentine capital, killing at least three people and injuring hundreds more.
“In addition to solidarity and pain, I feel anger and impotence,” President Cristina Fernandez de Kirchner said in June. “Because the truth is, we are putting everything (into the train system), not just economic resources and investment, but also time and human resources. When things like this happen, it hurts all of us.”
And in February 2012, a commuter train on the same rail line crashed into a barrier at a station in Buenos Aires, killing 50 people and injuring hundreds.
That crash sparked a criminal investigation. More than two dozen suspects, including former government officials, were accused of mismanagement and defrauding the public.
Now, a government consortium oversees the train line, rather than a private company.
In 1970, 200 people died when two trains crashed north of Buenos Aires.
Eight years later, 56 people were killed when a train hit a truck in Argentina’s Santa Fe province, the state news agency reported.
By Catherine Cheney
October 18  2013
Argentine President Cristina Fernandez de Kirchner was discharged from the hospital this week after undergoing brain surgery to remove a blood clot. Prior to entering the hospital last week, the president had been actively campaigning for allies running in key midterm elections to be held later this month that will determine whether her party keeps control of Congress. The vote will also be seen as a test of where the parties stand ahead of the 2015 general elections.
The president’s health is still being closely monitored, and she is unlikely to be able to return immediately to campaigning.
Argentina has been led by the Kirchner family for a decade, beginning with Cristina Fernandez de Kirchner’s husband and immediate predecessor in office, Nestor Kirchner. But August legislative primary elections for the Oct. 27 midterms “appeared to signal the beginning of the end of the Kirchner era,” said Michael Shifter, president of the Inter-American Dialogue, in an email interview.
Fernandez de Kirchner’s governing Victory Front was dealt a political defeat in the primaries by the victory of Sergio Massa, a dissident Peronist formerly in the Kirchner cabinet and the former mayor of Tigre, a town in Buenos Aires province. The midterms will likely continue the trajectory of recent months for Kirchner, Shifter said, “with a continued decline in her political support and capital.”
“The Victory Front is expected to keep its majority in the lower house, and possibly the Senate, but even if that is the case, it will lack the supermajority to change constitutional term limits,” he said. “It is probable that the next president will be another Peronist figure, from some faction of a notably diverse party.”
Massa and Daniel Scioli, the governor of Buenos Aires province, are widely considered the frontrunners for the presidency, Shifter said, with other possible contenders including Mauricio Macri of the right-wing Republican Proposal and current mayor of Buenos Aires, and Hermes Binner, a socialist who was formerly governor of Santa Fe province.
“The election in Buenos Aires is something of a dress rehearsal for the presidential contest,” Mark Jones, Joseph D. Jamail chair in Latin American studies and professor and chair of the political science department at Rice University, said. “It’s impossible to become president without very strong support in the Buenos Aires province.”
If the midterms go as the primaries did and Massa performs well, then he is likely to be the main rival to Kirchner’s allies in 2015, Jones said.
The Kirchners will leave a legacy of progress in human rights and more redistributive social policies, said Shifter, as well as an increasingly interventionist state.
Nestor Kirchner, Shifter said, will be “remembered for presiding over Argentina’s economic recovery from the profound economic crisis of 2001, even though the decision to default on the country’s debt came with a high price and was highly criticized.”
The Kirchners will also be remembered for the failure to capitalize on an era of unprecedented economic growth to take the country where it could have been, said Jones, “had they managed the finances and policies in a more confident and forward-thinking manner, like the Brazilians or Chileans have done.”
Shifter noted that the Kirchner legacy as a result of such mismanagement will also include “high inflation levels, exchange rate policy, mounting crime and certainly what is perceived to be substantial and widespread government corruption.”
“Also striking is the degree to which political polarization increased during the Kirchner years,” Shifter continued. “While the next administration may not bring any radical or dramatic changes in some key policy areas, there will likely be a greater measure of moderation and pragmatism, and less confrontational and authoritarian politics, which would improve the overall climate.”
The next president of Argentina will determine whether the country “will continue to decay and decline” or whether it will follow in the footsteps of other countries such as Chile and Brazil and think beyond the short term, he said.
Shifter said he sees Massa as someone who has the potential to make real improvements for the country, adding that the elections will have a global impact. Although Argentina “is not as important as it once was, it still has global influence, and the next president will determine which path Argentina follows.”
“Perhaps the most significant thing to watch moving forward is the state of the economy, particularly the real inflation levels, whether capital continues to leave or if new investment comes in,” Shifter said.
By Damian Pachter
19 October 2013
BUENOS AIRES, Argentina (AP) – A commuter train slammed into the bumper at the end of the line Saturday at the same station in Argentina’s capital where 52 people were killed in a similar crash last year. This time there was no immediate report of deaths, but at least 80 people were injured.
A mob quickly formed, unleashing its fury at the train operators. Passengers chanted “murderer, murderer!” at the injured driver through the shattered cabin window. Officers intervened and the driver was soon hospitalized under police custody.
Police in riot gear then took control of the Once (ohn-say) station after the angry crowd broke glass and threw stones in the street outside.
At least 80 people were injured, including an 8-year-old boy, according to the Security Secretariat. Of those, five people had broken bones, but none of the wounds were life-threatening, said Security Secretary Sergio Berni. Some of the injured here hit by shattered glass from the train’s windows, he said.
Berni said it was too early to say why the train failed to stop, crashing through the bumper at the end of the line and ending up wedged between the floor and ceiling of the platform. One end of the huge iron hydraulic bumper that protects the end of the line was driven deep into the train car, while the other end was lifted over the platform and jammed into the turnstiles.
Transportation Minister Florencio Randazzo said that driver Julio Benitez had registered negative for alcohol during a routine test before his work shift.
The newspaper Clarin quoted Randazzo as saying the driver had taken the disc from the security camera that recorded the accident but police later confiscated it from him. He also said President Cristina Fernandez knew nothing about the accident because she was in strict repose after her recent head surgery.
Jorge Ramirez, a 47-year-old cook, entered the train’s second car nine stations before the end of the line. He told The Associated Press that the driver overshot several platforms and had to go in reverse before opening the doors, and that he bypassed one station altogether. Other passengers, however, said that the train seemed to be proceeding correctly.
“This is all a tragedy. I saw people hurt, shouting, others thrown on the floor. The people in the first wagon ended up piled on top of each other,” Ramirez said.
Berni said some of the injured were waiting on the platform and were hit by glass as the train’s windows shattered.
Firefighters, police and medical personnel evacuated the wrecked train, but many passengers didn’t wait, kicking out windows to escape cars whose doors were stuck.
“Suddenly the train wasn’t stopping. It came off the rails and crashed into the ceiling, which stopped it. Then an impressive cloud of smoke came out,” said Maxi Jaquet, who sells hot dogs in the station. “We ran and began to help.”
The Sarmiento line is the busiest commuter rail line serving Argentina’s capital and is usually packed with passengers. The February 2012 crash killed 52 people and injured hundreds as the following cars crumpled. Saturday’s accident caused less damage to other cars in the formation and happened shortly after 7 a.m. on a weekend morning, so the toll was not as severe.
By Ken Parks
18 October 2013
BUENOS AIRES–Argentina’s government said Friday that it has cut a $677 million deal with foreign companies that brought international arbitration claims against the South American country before the World Bank’s International Centre for Settlement of Investment Disputes.
The deal marks a significant shift in Argentina’s strategy at the World Bank arbitration body, known as ICSID. Argentina had long demanded that companies submit ICSID awards to an Argentine court for enforcement.
President Cristina Kirchner’s sudden move to resolve those claims comes at a time when her government is more dependent than ever on organizations like the World Bank for hard currency loans as private sector creditors refuse to lend to her government. The U.S. government has opposed loans to Argentina through the World Bank and other multilateral lenders until it pays investors that have won arbitration rulings.
Five companies received payment in U.S. dollar-denominated Bonar 2017 and Boden 2015 government bonds, the Economy Ministry said in a statement.
“The haircut in nominal terms for all creditors is 25% with respect to the original amount claimed, equivalent to a fiscal savings of $171 million,” the ministry said.
The companies also agreed to invest $68 million in Argentine infrastructure bonds known as Baade.
“It’s a step in the right direction, but it’s a small step,” Goldman Sachs economist Alberto Ramos said. “I think Argentina is trying to create some good will with U.S. courts” and the U.S. government.
Argentina is fighting hedge funds in U.S. courts who are suing for repayment on defaulted Argentine bonds. Paying the ICSID awards might help Mrs. Kirchner dispel notions that Argentina is a recalcitrant debtor that is unwilling to settle billions of dollars in claims from private companies and the Paris Club of creditor nations. The stakes are high because Mrs. Kirchner would likely have to choose between paying the hedge funds or defaulting on her government’s current debt if Argentina loses the case.
A spokeswoman for the Economy Ministry didn’t respond to requests for comment.
Argentina still can’t borrow from international credit markets even after it restructured about 93% of the $100 billion in debt the country defaulted on in 2001. The legal battle with creditors and Mrs. Kirchner’s populist economic policies have made private sector creditors wary of lending to her administration.
Mrs. Kirchner has instead fallen back on the World Bank and Inter-American Development Bank to help her fund infrastructure projects and social programs.
Earlier this month, the World Bank said it would consider a new three-year lending program for Argentina, which state media put at $3 billion. Argentina currently has a World Bank program of 31 investment projects for $6.2 billion.
High inflation and an overvalued currency are at the root of Argentina’s dollar shortages as investors see few incentives to bring fresh money into the country, especially when capital controls make it almost impossible to get that money out  again.
Mrs. Kirchner has eschewed unpopular inflation fighting measures such as raising interest rates and reigning in government spending. Instead, she has put Argentines on a dollar diet, with her government strictly rationing the foreign currency people and companies can legally buy to pay for imports or overseas vacations.
But with most private sector estimates putting inflation around 25%, and bank deposits paying rates well below inflation, some Argentines see few incentives to hold pesos and instead turn to the black market for dollars.
Argentina’s foreign-currency reserves fell to $34.3 billion on Thursday, their lowest level since March 2007 as debt payments, capital flight and fuel imports exceed the dollars Argentina receives from exports and multilateral loans.
The steady decline in Argentina’s foreign-currency reserves this year has sparked a debate among analysts as to whether the Kirchner administration might have to impose further capital controls to make sure enough dollars are on hand to pay creditors before she leaves office in December 2015. Payments on the Boden 2015 alone total $5.82 billion.
18 October 2013
BUENOS AIRES (Reuters)—Argentina on Friday [Oct. 18] said it had agreed to pay about $500 million to resolve disputes with several European and U.S. corporations as it seeks to rebuild foreign investor confidence amid a bitter court dispute with some bondholders.
The payment will be made in sovereign bonds to four companies that filed complaints at the World Bank’s International Centre for Settlement of Investment Disputes and one firm that took its case to the U.N. Commission on International Trade Law, a government statement said Friday.
Five agreements were signed with the companies, which agreed to a 25 percent discount on a total $677 million in claims, a communiqué from Argentina’s economy ministry said.
The decision coincides with a sensitive time in Argentina’s the South American country’s battle in U.S. courts with hedge funds that refused to take part in two debt restructurings following Argentina’s 2002 default.
Argentina hopes the Obama administration will ask the U.S. Solicitor General to present arguments to the U.S. Supreme Court on whether the case merits the court’s attention after a lower court ruled in favor of bondholders who will not accept reduced payments under a restructuring agreement.
The country is also looking to present its best face in order to help unlock additional credit lines from the World Bank, International Monetary Fund and People’s Bank of China in order to support its dwindling foreign currency reserves.
Companies to be paid in the settlement include France’s Vivendi SA, U.S.-based water company Azurix and Blue Ridge Investments, a subsidiary of Bank of America Corp.
Other companies include CC-WB Holdings LLC, which holds the rights to claims made by Continental Casualty Company; a unit of Chicago-based CNA Financial Corp.; and NG-UN Holdings LLC, which holds rights to claims by British electric and gas utility National Grid PLC at the U.N. commission.
Under the terms of the deal, the firms reduced the amount of compensation they were seeking by 25 percent.
“The proposals consist of the cancellation of those claims exclusively with public debt, for amounts which represent … a significant discount on the requested sums and a reasonable period for repayment,” said the government statement.
Argentina’s government will pay the compensation in U.S. dollar-denominated bonds known as Boden 2015 and Bonar X, which offer a 7 percent annual interest  rate.
Neither the government statement, issued as an “administrative decision” by the Cabinet chief, nor the economy ministry communiqué specified the amounts to be paid to each of the companies cited.
Argentina faces additional complaints at the World Bank body, including a claim by Spanish oil firm Repsol SA over the expropriation of its stake in Argentine state-owned oil company YPF SA last year. Repsol has said the value of its stake was about $10 billion, but the company has not yet disclosed the size of the claim it will make at the arbitration panel.
In May 2012, the United States suspended Argentina from the U.S. Generalized System of Preferences program, which waives import duties on certain goods from developing countries, after the South American nation failed to pay compensation awards in disputes involving Azurix and Blue Ridge Investments. It was the first time a country had been suspended from the program for failing to pay an arbitration award.
The United States imported $477 million worth of goods from Argentina under the program in 2011, which was about 11 percent of total U.S. imports from the country that year.
18 October 2013
Argentina has agreed to settle five separate investment treaty arbitration claims brought before the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID), in a historic departure from the Latin American country’s refusal to comply with awards made by international investment treaty arbitration bodies.
According to a decree published in the country’s official gazette, the settlements relate to the French media conglomerate Vivendi, British electricity and gas utility National Grid, Continental Casualty Company, American water company Azurix and CMS Gas Transmission Company.
These companies were each successful in bringing claims against Argentina through ICSID over the past 12 years, with the exception of National Grid which brought its claim under the rules of the UN’s commission on international trade law.
According to the official gazette, the settlement agreement involves a reduction of 15% of the original amount of the awards (US$677mn) and 45% of the interest accrued, leading to an overall nominal discount of 25% on the amount originally claimed.
The settlement is to take the form of sovereign bonds Bonar X and Boden XV and also commits the parties benefiting from it to reinvest 10% of the amount (US$68mn) in the purchase of additional sovereign bonds (BAADE).
Argentina’s consistent non-compliance with investment treaty arbitration awards has had an impact on investor confidence around the country. The series of high profile ICSID awards which were issued and remained outstanding against Argentina have contributed to a strong reluctance in international capital markets to make credit available to the country.
Attempts have been made since 2005 to restructure the debt burdening Argentina, but the IMF has so far been limited in its ability to facilitate this due to the country’s stance on the ICSID awards. It is thought that the latest settlement may have been induced by the prospect of unlocking funds from the IMF and the World Bank to assist Argentina in resolving its ongoing financial crisis.
But in a surprise announcement, Argentina and the World Bank recently agreed on plans for a new strategic partnership for 2014-16 that could provide the South American government with loans worth around US$3bn. Furthermore, a local newspaper reported on Tuesday (Oct 15) that Argentina’s central bank is negotiating with China an up to US$10bn loan that the South American nation hopes to use to replenish its dwindling foreign currency reserves.
Still, the ongoing financial crisis faced by Argentina and the decreasing levels of foreign direct investment mean that markets can expect to see further changes in the way the country interacts with the international financial community in the coming months.
18 October 2013
Bond holdouts led by NML Capital have filed a motion with the US court of appeals to lift a stay preventing them from securing payment from Argentina, claiming the country intends to evade the court’s orders.
The stay, pending a resolution of a writ of certiorari issued as part of the court’s August 23 opinion, was followed by an order issued at the start of October by US second circuit court judge, Thomas Griesa, for Argentina to disclose within five days any plans it has and communications it has made that may have the purpose, effect or intent of violating his previous order regarding payment to bond holdouts.
So does Argentina have plans to evade the orders of the US courts and avoid payments to holdouts or not?
Argentina’s counsel, Carmine Boccuzzi, responded in a brief letter to lawyers for NML Capital that the country, “has no plans to violate the anti-evasion injunction and accordingly does not have documents responsive to paragraph 4 of the October 3 order.”
That may seem like an open and shut case. Or not?
In response, NML Capital, a unit of Elliott Management, filed a motion with the US court to vacate the stay given that the counsel’s letter did not mention, much less disclaim, the scheme that President Cristina Fernández announced at the end of August to shift the paying center by permitting exchange bond holders to trade in their bonds for identical bonds paid in Argentina.
“In light of President Fernández’ speech and Argentina’s telling failure to disavow the scheme that speech announced, the only reasonable inference that can be drawn from Argentina’s conduct is that it is now preparing to implement that evasion scheme [...] This court should not permit Argentina to exploit a stay to achieve its aim of evading the injunction,” read the motion.
Accusing Argentina of acting in bad faith, counsel for NML argued that “there can be no “good cause” for a stay given Argentina’s vow to evade the amended injunction.”
Argentina has filed a petition with the appeals court for a rehearing en banc of the appeals court August 23, 2013 decision that seems highly unlikely to succeed based on opinions of lawyers following the case.
The country’s next possible steps would be to file for a second writ of certiorari (following the failure of the first) with the US supreme court or alternatively to heed calls from Elliott to negotiate. Should it choose the former, the case could well drag on into 2014.
However, should the stay be lifted at this stage, the situation is likely to change dramatically. Argentina could find itself facing a near immediate resolution that could lead to a technical default should it refuse to pay over $1.33bn in past coupons and interest owed to bond holdouts.
That scenario would prove whether the country really has plans to evade the orders of the US courts.
By Laurence Allan
18 October 2013
Daniel Scioli, governor of the province of Buenos Aires and a key ally of the national government of President Cristina Fernández de Kirchner, yesterday (17 October) took part in a mass political rally alongside Antonio Caló , leader of the pro-government General Confederation of Labour (Confederación General del Trabajo: CGT) Balcarce labour union. The presence of Caló alongside Scioli highlighted how alliances are increasingly becoming clear between the two leading Peronist (Justicialist Party) political candidates and the country’s two most powerful trade union leaders.
Scioli enjoys the backing of Caló, while the other main Peronist candidate, Sergio Massa, is backed by Hugo Moyano of the anti-Kirchner CGT Azopardo. These alignments have developed during campaigning for the midterm elections taking place on 27 October, with both Scioli and Massa seeking explicit backing from the two leaders of the currently split CGT, which is Argentina’s main labour union with a total of 3 million members estimated in 2010 by Pablo Micheli, leader of the rival Argentine Workers’ Central (Central de Trabajadores Argentinas: CTA). Caló and Moyano, meanwhile, will be hoping that their respective political allies emerge strengthened from the 27 October elections, offering stronger influence to them from now until the 2015 presidential elections. Factional competition amongst Argentine labour unions has traditionally intensified around elections, with some past elections characterised by sporadic violence between labour union factions at public events.
Significance: Added to the currently highly polarised nature of Argentine politics –  Massa has also been the subject of intimidation and assault by political opponents whilst campaigning in La Matanza, south-central greater Buenos Aires (see Argentina: 23 September 2013: ) – these labour union dynamics have heightened the risk of civil disorder during the last few days of the current election campaign, and potentially through 2014. Mass political public events involving the labour unions in Buenos Aires and other major cities are increasingly likely to lead to provocateurs linked to the two unions sparking violence and disruption, although such events do not generally result in serious property damage or loss of life.
By Shane Romig
18 October 2013
BUENOS AIRES–Argentina saw its economic growth cool in August as the brisk rebound posted during the second quarter continued to fade.
Argentina’s August economic activity indicator rose 4% on the year and was up 0.4% from July, the national statistics agency, Indec, reported Friday.
That compares to a 5.1% on-year gain reported for July and 8.3% on-year GDP growth for the second quarter.
The indicator, known by its Spanish acronym Emae, includes most of the components used to calculate quarterly gross domestic product.
Economic activity has rebounded sharply from the lackluster 1.9% GDP growth reported last year. Higher farm output, growth in the financial sector and construction have led the gains so far, according to a report from local consulting firm Orlando J. Ferreres & Asociados, or OJF.
However, many economists accuse the government of exaggerating growth data for political gain, particularly in the run-up to congressional elections on Oct. 27.
OJF produces its own growth indicator and estimates that the economy expanded 3.7% on year between January and September.
Indec is thought to overstate growth due to the widespread belief among economists that the agency underreports inflation.
Argentina’s widely discounted consumer price index was up 10.5% on the year in  September. That stands in sharp contrast to the 25.4% annual inflation rate for September estimated by private economists in a report released earlier this month by opposition members of Congress.
The lawmakers publish inflation data on behalf of economists who fear government prosecution if they publicly release their numbers.
Indec’s inflation and gross domestic product data have been heavily criticized since 2007, when the government fired a number of long-serving staffers who complained of attempts to manipulate figures and replaced them with political appointees.
By Maximiliano Rizzi
20 October 2013
BUENOS AIRES, Oct 20 (Reuters) – Argentine scientists have found a way to transform the gas created by the bovine digestive system into fuel, an innovation that could curb greenhouse gases that cause global warming.
Using a system of valves and pumps, the experimental technique developed by Argentina’s National Institute of Agricultural Technology (INTA) channels the digestive gases from bovine stomach cavities through a tube and into a tank.
The gases – which otherwise are commonly known as burps, or “eruptos” in Spanish – are then processed to separate methane from other gases such as carbon dioxide.
Methane is the main component of natural gas, used to fuel everything from cars to power plants.
“Once you get it compressed, it’s the same as having natural gas,” said Guillermo Berra, head of INTA’s animal physiology group.
“As an energy source it is not very practical at the moment, but if you look ahead to 2050, when fossil fuel reserves are going to be in trouble, it is an alternative,” he told Reuters.
Each head of cattle emits between 250 and 300 liters of pure methane a day, enough energy to keep a refrigerator running for 24 hours.
Argentina is one of the world’s top beef exporters, with around 51 million heads of cattle. Gases emitted from those animals account for 30 percent of the country’s total greenhouse gas emissions, according to INTA, with methane having 23 times the global warming effect as carbon dioxide.
“This is also a way to mitigate that,” Berra said.


By Simon Romero and Clifford Krauss
October 21, 2013
NEUQUÉN, Argentina — On the windswept Patagonian steppe, crews of roughnecks are drilling around the clock in pursuit of a vast shale oil reservoir that  might be the world’s next great oil field.
But that ambition hinges on an improbable alliance between the American oil giant Chevron and Argentina, a politically volatile country with a history of hostility toward foreign investors. What brings them together is the dream of an enormous bounty from the field, called Vaca Muerta, or Dead Cow.
President Cristina Fernández de Kirchner’s decision to press ahead with the partnership with Chevron has her critics and supporters fuming because of the company’s long conflict with Ecuador over an Amazon pollution case. Other legal battles are raging over Argentina’s nationalization of its largest oil company, which also threaten to entangle Chevron.
And protests against hydraulic fracturing, the high pressure blasting of water and chemicals through the shale fields here in the Patagonian desert, have grown so fierce that the police have cracked down on thousands of demonstrators with tear gas and rubber bullets. Though Chevron is not directly involved in the fracturing, the popular agitation over the company’s venture here may subject other energy initiatives in this remote region to greater scrutiny.
Mrs. Kirchner’s embrace of Chevron is a striking demonstration of the lengths to which some governments, desperate for money, and energy companies, combing the world for new sources of oil, will go to emulate the shale oil revolution in the United States.
And few fields offer the potential riches of Vaca Muerta, which has estimated oil and gas reserves nearly equal to the total reserves of the oil giant Exxon Mobil.
“There is nothing close to this in the world,” Ali Moshiri, president of Chevron’s Africa-Latin America Exploration and Production, said of Vaca Muerta in an interview. “In our business risk is part of the equation.”
Even with her health in doubt, after surgery this month to drain a blood clot that resulted from a head injury, Mrs. Kirchner has shown that she is willing to turn her back on years of economic policies that discouraged some energy investments. In the process, she is testing relations with her Ecuadorean ally, President Rafael Correa, who is trying to get Chevron to pay $19 billion in damages related to oil pollution in the Amazon rain forest.
Chevron’s assets in Argentina were frozen for months last year as the Ecuadorean plaintiffs in the case began increasing pressure on the company outside Ecuador. Chevron not only continued to operate in Argentina after that initial scare, but also opted to aggressively expand here, reflecting a vital need by big oil companies to find new oil reserves even in the most politically unstable places.
The United States Energy Information Administration has ranked Argentina fourth behind Russia, the United States and China in the world, with technically recoverable shale oil reserves of 27 billion barrels. And it ranks Argentina second after China in potentially recoverable shale gas reserves, with 802 trillion cubic feet. But as in many countries outside the United States, shale development in Argentina had progressed at a snail’s pace until now because of resistance and regulatory uncertainty. Local opposition among environmentalists and Mapuche Indians remains fierce.
“This is the worst form of extracting oil by the company with the worst record,” said Enrique Viale, the president of the Argentina Association of Environmental Lawyers, who took part in a protest of thousands against the agreement with Chevron in August when legislators were voting on it. Some buildings in Buenos Aires, the capital, remain covered in anti-Chevron graffiti. A rap video on social media in Argentina excoriates the authorities for working with Chevron.
Despite all the friction, Chevron took the leap a year ago with a tentative partnership agreement with YPF, the Argentine oil company that is now controlled by the government, to help develop part of Vaca Muerta. In control of a third of the field, YPF is also preparing agreements with several other companies including Bridas Corporation, a venture including the China National Offshore Oil Corporation, or Cnooc.
Chevron initially plans to invest $1.24 billion for the drilling of more than 100 wells, and if all goes well, the Chevron-YPF venture would drill an additional 1,500 wells by 2017, requiring more than $17 billion in investment. That could raise production to 50,000 barrels of oil and three million cubic meters of gas a day over 35 years.
Few companies have had the moxie to wager so much since Argentina defaulted on its $81 billion sovereign debt in 2001. President Kirchner renationalized YPF last year, and has yet to compensate the Spanish oil company Repsol any money for its controlling interest, which Repsol says was worth $10.5 billion.
Pointing to these challenges, Miguel Galuccio, the chief executive of YPF, insisted in an interview that the future of Argentina’s economy depends on YPF’s ability to develop the nation’s shale oil resources.
Surprising critics of Mrs. Kirchner who expected her to politicize YPF, as her government had done with other state-controlled companies, Mr. Galuccio seems to have taken a different approach. He has hired respected managers and petroleum engineers, many of them Argentines who were living abroad, to fill YPF’s top ranks. And he has begun to reverse a decline in YPF’s production, repositioning the company to focus on fracturing in Neuquén which he argues will not jeopardize local water supplies.
In the interview, he lauded Chevron for its partnership with YPF, saying he was well aware of the risks, including Chevron’s legal battles in Ecuador, which persist. “This brings a level of complexity I’d like not to have,” he said. “We need more Chevrons in Argentina.”
Facing a potential financial crisis, the Argentine government reversed course on energy policy in recent months as it has often done in the past.
It is now allowing companies to sell gas at a higher fixed price, and in a move especially for Chevron, Mrs. Kirchner recently issued a decree allowing oil and gas companies to sell 20 percent of their production abroad without paying export  taxes or obligations to repatriate profits — as long as they invest more than $1 billion in the country.
Still, Chevron faces enduring problems in Argentina, highlighted by pressure from the country’s most influential journalist, Jorge Lanata, an outspoken critic of Mrs. Kirchner who has been attacking Chevron’s record in Ecuador.
Soon after Chevron and YPF signed their initial deal in 2012, two lower courts threatened the arrangement by freezing part of Chevron Argentina’s assets in the country so they might eventually be sold to pay the Ecuadoreans who are suing Chevron.
Lawyers representing Ecuadorean Amazon Indians won a judgment in a local Ecuadorean court ordering Chevron to pay more than $18 billion in damages for the dumping of toxic waste into a vast area of Amazon jungle by Texaco in the 1970s before it was acquired by Chevron years later. (Chevron insists that Texaco  cleaned up its area of operations and subsequent pollution was caused by PetroEcuador, the state company that once partnered with Texaco.)
Since Chevron has no assets in Ecuador, the plaintiffs are trying to collect on the judgment in Canada, Brazil and Argentina, where Chevron subsidiaries have significant holdings.
When the case reached the Argentine Supreme Court, Mrs. Kirchner threw her support behind Chevron despite the lobbying of President Correa of Ecuador, an ally who has publicly declared that the oil company is an enemy of his country. Her attorney general filed a brief with the court arguing that the Ecuadorean judgment could not be enforced against Chevron Argentina since the subsidiary could not defend itself in the Ecuadorean proceeding, warning that the Supreme Court needed to act to avoid “irreparable and irreversible harm to essential national interests.”
The Supreme Court agreed with the government in a June decision, opening the way to the final Chevron-YPF agreement signing in July. But lawyers for the Ecuadorean Indians say they are not finished in Argentina.
The lawyers said that the Supreme Court decision was merely a technical problem that could easily be corrected by returning to the Ecuadorean courts in the coming months to file a petition seeking to execute the original judgment against Chevron Argentina and possibly other foreign subsidiaries. Once they succeed, they say, they will demand that Argentine courts accept the Ecuadorean judgment under reciprocal legal treaties.
“I am certain the case is still alive in Argentina, of course,” said Pablo Fajardo, the lead Ecuadorean lawyer. “I believe the Supreme Court in Argentina made a mistake and should correct it. I have confidence in their judges.”
Kent Robertson, a Chevron spokesman, responded: “They have demonstrated they can get whatever they want in Ecuador. It doesn’t mean they can collect. There has been no trial against Chevron Argentina.”
Argentine oil officials said that the Chevron-YPF deal will shield the American company from financial loss connected to a change in the political winds. After the company invests $1.2 billion, 18 months later it can withdraw from operations without penalty and continue to receive net profits of 50 percent of the production from the initial wells in perpetuity.
Mr. Moshiri of Chevron said he was not focused on the Ecuador case. “That’s a separate issue unrelated to what we are doing in Argentina and in the Vaca Muerta,” he said. “We are just going to continue with our business. Chevron Argentina has nothing to do with it.”
Still, the legal battle is just one of the obstacles that both companies face.
“We’ll continue our fight to defend the land, the water and the air,” said Lefxaru Nahuel, 26, a Mapuche in Patagonia who has been leading protests. “With fracking, there is no future for us here.”
Simon Romero reported from Neuquén, Argentina, and Clifford Krauss from Houston. Jonathan Gilbert contributed reporting from Buenos Aires.
By Michelle Celarier
October 22, 2013
Former Solicitor General Paul Clement has been hired by Argentina to press its case against Paul Singer’s Elliott Management, according to Argentine press reports.
Earlier this month, the US Supreme Court denied Argentina’s first request to review an appeals-court decision that could force the South American country to pay $1.3 billion to certain creditors including Elliott.
Clement, who worked in the Bush administration between 2004 and 2008, is expected to help Argentina present its second petition to the Supreme Court to review its appeal.
“The perception is that his experience may … increase the chances of the [Supreme Court] asking the current Solicitor General for an opinion and [improve] the chances that the case is subsequently taken up by the court,” said JPMorgan analyst Vladimir Werning.
Clement — whose hiring was reported by Telam, Argentina’s state- run news agency — did not return a call for comment.
By Doug Bandow
October 21, 2013
Being a creditor is a thankless task.  People want your money but hate to pay you back.  The worst offenders are governments, whose leaders constantly promise their peoples a free lunch, dinner, and more.  When foreign nations cheat creditors, they put their own peoples at risk.
Argentina is a typical offender.  One of the world’s richest nations at the end of World War II, the South American country embraced political authoritarianism and economic populism.  The result has been disaster.  In the most recent Economic Freedom of the World rating Argentina came in at 137 of the 152 nations rated.  Its economic performance has suffered accordingly.
The country’s worst measure is rule of law.  Which is reflected in its treatment of international creditors—and steadfast resistance to U.S. court rulings ordering Buenos Aires to pay its debts.
In 2001 Argentina defaulted on nearly $100 billion in debt.  The Argentine people essentially had a wild party and woke up with a hangover.  Naturally, their first reaction was to stiff the fools who had extended credit.  Owners of roughly 93 percent of the debt gave in and restructured their paper, accepting huge write-offs.
But a few creditors, including NML Capital and Aurelius Capital Management, refused to concede.  (Some bought deeply discounted debt from owners who had given up any hope of being paid back.)  These creditors reasonably argued that Argentina should abide by its contract, which required it to obey U.S. court rulings and treat bondholders equally.
Naturally, Argentina’s government cried foul, complaining about the violation to its sovereignty—after it enthusiastically sought (and spent!) the foreigners’ money.  The very politicians who wrecked the Argentine economy called the hedge funds “vultures”; in 2005 the Argentine parliament even voted against paying the defaulted bonds.
Although Argentine politicians can dispense with the rule of law in their home country, they cannot so easily ignore legal rules overseas.  With the bonds issued under New York law, disgruntled creditors won more than 100 court judgments ordering Buenos Aires to pay up.
NML Capital alone has won decisions for more than $1.6 billion and has pursued Argentine assets around the world, including the ARA Libertad, a three-masted schooner used to train naval cadets, which visited Ghana last year.  Buenos Aires was able to use the Law of the Sea Treaty to free the vessel but Argentina knows that it faces the embarrassing threat of asset seizures around the globe.
Perhaps most significant judicial ruling was last year’s federal district court judgment, NML Capital Ltd. v. Republic of Argentina in New York—upheld on appeal in February—which prohibits Argentina from paying holders of restructured debt without paying off those holding original bonds.  In August the Argentine government unveiled a plan for exchanging restructured bonds which Judge Thomas Griese called “an apparent attempt to evade” his orders.
Buenos Aires sought a rehearing before the Circuit Court as well as review by the Supreme Court.  But in early October the high court refused to grant of a writ of certiorari to take the case.  Last week NML and Aurelius filed a motion in the appellate court requesting that it lift its stay of Judge Griese’s ruling, allowing enforcement against Argentina.
The International Monetary Fund, which for decades has subsidized spendthrift governments, considered filing a legal brief before the Supreme Court on behalf of Argentina.  However, the organization, formally dedicated to strengthening international markets, was roundly criticized for taking the position that irresponsible states should be able to more easily shed their debts and backed down under criticism.
The Fund’s vote of confidence was particularly odd given the organization’s own experience with Buenos Aires.  Argentina has rejected IMF oversight of its finances since 2006.  Earlier this year the Fund even censured Buenos Aires for not providing accurate economic data, including growth and inflation rates.  The Fund obviously has no influence, but at least the courts can hold the Argentine government to its legal promises.
Particularly misguided is support for Buenos Aires from those purporting to speak on behalf of the poor at home and abroad.  For instance, after the Supreme Court said no to review the Jubilee USA Network issued a critical press release.  “The faith community is saddened by the high court’s decision” declared Executive Director  Eric LeCompte:  “We’re praying upon another review the U.S. Supreme Court will take it.”  The organization even maintains a website on the case.  Said LeCompte:  “These hedge funds may have mountains of money, but they are morally bankrupt.”
Merely having “mountains of money” does not make one “morally bankrupt,” of course.  And the only reason NML and others bought defaulted debt in pursuit of profit is because Buenos Aires defaulted on its legal—and moral—obligations.  No one forced the Argentine government to borrow money.  No one forced the Argentine government to waste the money that it borrowed.  And no one forced the Argentine government to default
Even now Argentina is not a poor country.  Moreover, it is poorer than it should be because of government policy.  Decades of irresponsible “populist” policies, designed to win votes rather than uplift the poor, by famed dictator Juan Peron and those following in his name have ruined the economy. Argentina’s economic problems originate in government offices in Buenos Aires, not hedge fund offices in New York.
Indeed, politicians in Buenos Aires have consistently waged war against the rule of law.  They are the true vultures.  Although Juan Peron is long gone, his disrespect for legal procedure, government restraint, and constitutional rule lives on under the Peronista democracy.  This makes the position of the Jubilee USA Network and similar groups particularly perverse.  One can argue about proper standards for international debt restructuring.  But the rule of law is the best and, indeed, usually the only effective protection for the poor.
Those who are wealthy and influential do well in any system, including President Cristina Fernandez de Kirchner’s Argentina.  Redistributionist economic policies don’t mean no one prospers. Rather, such policies ensure that only the well-connected prosper.  Connected to Kirchner, her party, and other political allies.  Not to human rights and anti-poverty groups, whether Jubilee USA or other.
Buenos Aires’ lawlessness puts everyone else at risk.  Six years ago the Kirchner government forced private retirement funds to redirect more investment inside Argentina—investment made riskier because of the government’s irresponsible policies.  A year later Buenos Aires confiscated nearly $30 billion in private retirement assets to raise cash.  After all, because of its previous default the government could not easily raise money in private capital markets.
The only consistent protection against rapacious politicians is the rule of law.  In most Third World countries governments can loot and plunder without limit.  Constitutional and legal rules set Western industrialized nations apart.  Obviously  the legal process doesn’t always work well or fairly in the latter, and greedy politicians still find innumerable ways to reward the powerful and connected.  But as Judge Griese proved in ruling for private creditors, with independent courts vulture politicians don’t always win.
The New York legal battle is esoteric—but matters for all of us.  Enforcing legal rules is important for Americans.  It is even more important for those living in poorer nations.  Despite so much amiss in Washington, the Argentine debt case reminds us that the rule of law remains alive in the U.S.
By Taos Turner and Shane Romig
October 21, 2013
BUENOS AIRES–Argentina’s state-run airline, Aerolineas Argentinas, said Monday that it will order 20 Next-Generation 737-800 aircraft from Boeing Co. ( BA ) to modernize its fleet.
At current list prices, the planes are valued at $1.8 billion, Boeing said in a statement, adding that the order has not yet been finalized.
“This is a landmark order for our company, both in the number of aircraft and in what they signify for our fleet,” Aerolineas President Mariano Recalde said in a statement.
Aerolineas plans to incorporate the aircraft into its fleet between 2016 and 2018. The more fuel-efficient planes will cut its fuel costs sharply, the Argentine carrier said.
The financing terms of the deal weren’t disclosed. Argentina is currently suffering from foreign currency shortages that have led the government to cut imports and ration the U.S. dollars its citizens can buy.
Spokesmen for Boeing, Aerolineas and Argentina’s government couldn’t be immediately reached for comment.
Aerolineas has been roundly criticized by opposition political parties for requiring hefty subsidies to stay in business. Government officials, including Mr. Recalde, have said the company will eventually turn a profit even though it services many unprofitable routes in the country’s interior.
Argentina’s government seized control of Aerolineas from Spain’s Grupo Marsans in late 2008.
By the end of this year, Aerolineas plans to have 63 operational aircraft in its fleet of planes made by Boeing, Airbus and Brazil’s Embraer SA.
By Charles Newbery
21 October 2013
Argentina’s government this week will seek to reduce the margin of an expected defeat at this Sunday’s congressional election, as party insiders begin to break ranks on key issues like inflation.
Buenos Aires Governor Daniel Scioli, a close confident of President Cristina Fernandez de Kirchner, last week told business leaders at a conference that the government’s methods to reduce double-digit inflation have not worked.
“We need to strengthen our efforts, and we have to see how we address this,” said Scioli, who is thought a more pragmatic and market-friendly politician than CFK and who may seek to run for president in 2015.
The admittance of a problem with inflation comes after years of denial by authorities that the fast pace is having a negative impact on the economy. Few officials have mentioned inflation, even saying it was a good byproduct of robust economic growth.
Consumer prices started running into the double digits in 2005 and accelerated in 2006 and 2007, when the economy was expanding at an average of 8% annual, a pace that was kept from 2003 to 2011. The growth pushed up demand but supply didn’t keep pace as companies were wary to invest because rising state intervention made it harder to do business.
The government responded at first with price controls and then calling on companies to invest or face fines. Authorities also said that executives raised prices excessively to reap larger profits.
Yet its efforts failed, in part because excessive monetary expansion was feeding demand.
Unable to contain inflation, the government, then run by CFK’s late husband, Nestor Kirchner, started to intervene in the national statistics agency to show a slower pace, a practice that continues. Its numbers show consumer prices rose at 10.5% annual in the 12 months ended in September, less than half the 25% estimated by most private economists.
The high pace of inflation, as felt on the streets, has become a leading cause in the congressional election that led to a larger-than-expected defeat for the ruling party in the Aug. 11 primaries. The party won 26% of the votes, far less than the 54% that swept CFK to a second term in 2011.
Most polls suggest the loss could worsen in Sunday’s election, prompting the government and its candidates to try to regain favor with voters. Juliana De Tullio, head of the ruling party’s block in the lower house, last week said, “It would be ideal to have inflation of one digit.”
Scioli warned that Argentina must find a common ground in the fight against inflation, saying that this shouldn’t push the economy into recession, something that CFK has often warned. She has said that cooling the economy will lead to lower salaries and higher unemployment.
Scioli said that a way to tackle inflation would be to pursue “competitiveness” and growth of the domestic market, adding that the issue cannot be ignored on concerns of eventual “hyperinflation.”
The president, meanwhile, could make a comeback this week after surgery earlier this month to remove blood on the brain that put her on bed rest.
Scioli said the president, who is working from behind the scenes at home, could oversee the inauguration of a plant for manufacturing refrigerators and other home appliances.
The government will report September trade data Tuesday at 4 p.m. local (3 p.m. ET) followed Friday by supermarket and shopping mall sales for the same period.
21 October 2013
A train crashed into Buenos Aires’ Once railway station on Saturday (Oct 19), leaving 99 passengers injured and raising even more concerns about the poor conditions of the railway system in the country, with this being the third accident in less than two years.
Argentina’s interior minister Florencio Randazzo said the train entered into the station at high speed, although the motorman did not warn the control system about any failures in the breaks. Passengers have said the train had experienced problems at previous stops.
The train crashed into the Once station at 7:35 am, Saturday Oct 19, at 55km/h, twice the average speed for trains entering the station terminal, Randazzo said. The cause of the accident is currently under investigation, and the motorman is under police custody.
This is the third accident in Argentina’s railways in 20 months, and all of them took place on the same Sarmiento line, which connects Buenos Aires to the western suburbs.
In February 2012, 51 died and 700 were injured when a train crashed as it arrived at the Once terminal station. Last June, another three people died and over 150 were injured when two trains moving in the same direction collided in the outskirts  of Buenos Aires.
Since then the government canceled all private railway concessions along the major lines connecting Buenos Aires to the suburbs, and announced a series of investments to be made in new train cars.
Argentines have blamed the government for the lack of investment in the railway system and as well as poor services being provided by several of the private companies in charge of the concessions. The government has been trying to reestablish safe commuting conditions, focusing on renewing the fleet and revamping signaling equipment and procedures.
It has announced a 4.9bn-peso (US$975mn) revamping plan for the Sarmiento and Mitre lines, including a complete renewal of the rolling stock by importing 409 train cars, which are expected to arrive in early 2014.


11 octubre, 2013



By Almudena Calatrava and Luis Andres Henao
October 10, 2013
BUENOS AIRES, Argentina — Argentina’s Congress, controlled by President Cristina Fernandez, has passed a budget that inflates economic growth numbers and puts the country on track to unnecessarily pay billions of dollars in bonus payments to bondholders next year, opposition lawmakers say.
Senators passed the budget 40-27 Wednesday after debating for more than 11 hours as Fernandez recuperated from skull surgery. The Chamber of Deputies, also controlled by the president’s party and allies, approved it two weeks ago.
The budget also anticipates annual growth of 5.1 percent for 2013, even though various analysts say the economy is growing less than 3 percent this year.
Serious money is at stake: If the government reports growth of 3.2 percent or more for 2013, it will trigger billions of dollars in bonus payments to bondholders in 2014. The sweeteners were promised years ago to investors who had to write off two-thirds of Argentina’s defaulted debt in exchange for new bonds.
“The government is foreseeing growth that’s not real; this will cost the country $3.8 billion to pay its dollar-denominated debt on GDP warrants,” said opposition lawmaker Federico Pinedo.
The budget also assumes a bright 2014, with strong 6.2 percent growth and inflation of just 10 percent. But outside economists say these estimates are wildly optimistic, that gross domestic product could grow by as little as 1 percent next year, and that inflation is running at double the official estimate.
They say Argentina’s economy is much weaker than government number-crunchers are reporting, and the statistics Fernandez cites in her “victorious decade” speeches are costing the country dearly in many different ways.
“It’s completely illogical,” said Gabriel Torres, a vice president at Moody’s Investors Service who analyzes Argentina’s sovereign debt.
“Argentina pays less than it should on its peso bonds; we estimate 20 percent less, because it lies about inflation. And meanwhile, it’s paying too much to people with dollar bonds linked to growth. It’s paying too much to foreigners, and too little to its own people. I don’t understand the logic.”
The government rejects such criticism, saying its goal is social justice, not economic orthodoxy.
The official data reflect its efforts to centrally control the economy, subsidizing major industries, fixing prices and controlling currency flows to the point that it’s almost impossible now to legally trade pesos for dollars.
“We are consolidating public policies that have nothing to do with orthodox policies” like those of Europe, ruling party Sen. Anibal Fernandez, chairman of the budget committee, said during Wednesday’s debate.
He promised that government spending would boost the economy and provide strong growth despite adverse conditions globally, putting more money into Argentines’ pocketbooks.
Argentina’s inflation numbers have been in doubt since 2007, when Fernandez’s late husband and predecessor, Nestor Kirchner, had political appointees change the methodology of the official statistics agency, INDEC.
Low official inflation historically kept salaries and consumer prices from going even higher, but now even close government allies demand pay hikes of 25 percent or more to match the price increases they see on store shelves.
Proving that GDP growth is different from what a government is officially reporting is difficult, since these numbers are based on a huge amount of data including detailed productivity analyses of each industrial sector.
But economists at the University of Buenos Aires and Harvard said they did just that, and found Argentina’s growth would been much slower had the government kept the same methodology used for 25 years before 2007.
“According to official figures, Argentina is the ‘growth champion’ in the whole region: its growth accumulated an impressive 99 percent, which more than doubles the region’ average,” from 2002 to 2012, economist Ariel Coremberg concluded in the study.
However, a closer examination found Argentina’s real growth over the decade was nearly 30 points lower — 71 percent, he wrote.
Picking and choosing numbers for political reasons effectively opened a Pandora’s box, making it impossible to avoid distorting other indicators such as income distribution and poverty, the report said.
“At present, for example, Argentina has an official poverty rate at a lower level than the ones of many developed countries such as Sweden, Finland and other Nordic European countries with the best well-being indicators of the world,” the report said.
Opposition senators cited statistical manipulation as they argued against budget approval Wednesday, but the ruling party had the votes to pass it.
Sen. Carlos Reutemann said that by underestimating inflation, the government is more likely to collect revenues that can be spent without congressional approval because they weren’t anticipated in the budget.
“The executive is a vacuum cleaner that uses all the cash drawers,” Reutemann complained. “This budget is far removed from reality.”
By Frederick Bernas, Almudena Calatrava and Debora Rey
October 9, 2013
BUENOS AIRES, Argentina — The doctors who removed a blood clot from the brain of Argentina’s president said Wednesday that she’s improving “without complications.” But their terse report gave no information suggesting how long the government will be without its charismatic leader in charge.
Their three-sentence report said Cristina Fernandez’s vital signs were “normal” and her spirits “very good.” It said the 60-year-old leader would begin eating later Wednesday.
Her spokesman, Alfredo Scoccimarro, appeared briefly before a crowd outside the hospital to announce the doctors’ report, adding only that the president had slept well and “sends a big kiss to all the Argentines.”
And that was it. The only government official authorized to release details about Fernandez’s condition left without taking questions.
The lack of details frustrated Argentines such as Fernando Ballester, a 40-year-old office administrator. “She has the obligation to inform us. The president’s health is a matter of state,” he said.
“The country can’t function without Cristina,” he said. “Our political system is focused on the presidency, and especially the president we have now, who makes all the decisions.”
Laboratory worker Silvina Caceres agreed: “It’s not OK that the president of the republic doesn’t keep the people informed about her health. Her life is not private … If not, all she feeds to the people is paranoia.”
Caceres was among many who are convinced Fernandez will keep working behind the scenes. “She keeps governing from the clinic,” Caceres said.
Even Vice President Amado Boudou, nominally in charge of the executive branch while Fernandez recuperates, suggested as much on Tuesday, the day of her surgery. He declared in a speech that “to Cristina, her country is more important than her own health!”
Brain surgeons not involved in Fernandez’s surgery consulted by The Associated Press said there was no reason to think that the surgery could have lasting complications, but they said the risks would increase if she tried to go back to work too soon.
They also differed widely on how long such patients generally need to recuperate — the Argentines consulted said she could be out from 30 to even 90 days, while U.S. experts said she could be back to work in a week.
A member of the surgical team, Dr. Pablo Rubino, suggested Wednesday that Argentines have little need to worry. “Once she’s completely recovered, there won’t be any problem. She’ll be able to do any sort of activity,” he said.
But Rubino, the chief of vascular surgery at the Fundacion Favaloro, where Fernandez remained in intensive therapy, stressed that confidentiality vows prevented her doctors from saying how long she might need to recover.
“We can’t enter into details, but the information was absolutely faithful. The communications are absolutely accurate,” Rubino said. Pressed by a government radio host to say whether Fernandez could be out for a month, he said, “Some need less, some need more.”
Argentina’s looming challenges include the Oct. 27 congressional elections, in which the ruling party now lacks its top campaigner. Another devastating loan default became more likely this week when the U.S. Supreme Court rejected Argentina’s initial appeal in its debt fight. The economy has slowed, the currency is losing value and inflation is soaring.
Ruling party lawmakers were making the best of it, debating the 2014 budget Wednesday. But many had questioned Boudou’s leadership because of the corruption investigations he faces, and the presidency didn’t make public the formal transfer-of-power document that usually indicate how long a president would need to be replaced.
“It’s like we’re on stand-by,” Caceres said. “Nothing important is going to happen until she takes the reins again.”
By Andres Oppenheimer
October 9, 2013
Argentine President Cristina Fernández de Kirchner’s head surgery this week, which according to government officials will force her to rest until after key Oct. 27 congressional elections, has fueled all kinds of speculation about her country’s — and her own — future.
Already before her apparently successful surgery Tuesday to remove a blood clot from her head, Fernández’s ruling party was expected to lose badly in the congressional elections. That would thwart Fernández’s chances to change the constitution and seek reelection in 2015.
Now, speculation ranges from her recovering politically and finishing her term to her possibly choosing — for medical and political reasons — to step down and call early presidential elections. Among the possible scenarios:
•           The “Fernández recovers” scenario: According to this theory, Fernández’s ruling party does better than expected in the Oct. 27 elections, thanks to a “compassion effect’’ toward the ailing president. And her four-week-long medical rest period would save her from the embarrassment of losing the congressional elections, since she won’t be able to campaign for ruling party candidates.
Under this scenario, Fernández could win enough seats in Congress to remain a strong president until the end of her term, and perhaps become a powerful political figure beyond 2015, even if she can’t get reelected.
Skeptics say, however, that Fernández won’t benefit from a compassion vote, as she did after her late husband Nestor Kirchner died in 2010. The economy is doing much worse now, and Vice President Amado Boudou — who is acting as interim-president — is one of Argentina’s most unpopular politicians.
A poll of voters in Buenos Aires by the daily Clarín on the day of Fernández’s surgery showed that 61 percent of those surveyed said the president’s medical leave will have no impact on the congressional vote, while 15 percent said it will benefit the government, and 12 percent said it will benefit the opposition.
•           The “nothing happens” scenario: Fernández’s party loses the Oct. 27 elections, as most polls anticipate, and Fernández will muddle through the end of her term. She may try to continue strangling the private sector, and blaming business leaders and the media for the country’s steady downward course despite having benefitted from the biggest commodity export bonanza during her period.
“If she recovers, we’ll most likely see continuity, with growing government controls over the economy,” says Daniel Kerner, of the Eurasia Group consulting firm in Washington D.C.
•           The “constitutional succession” scenario: Fernández’s medical and political problems grow, and — perhaps under pressure from her children, or not wanting to defy her doctors’ orders like her late husband did before his death — she decides to step down. She would try to leave a close ally in charge, but that person would most likely not be Boudou. In addition to being unpopular, he faces several investigations for corruption scandals, and would thus have a hard time running the country. Fernández would ask Boudou to resign in favor of some other politician down the constitutional succession line.
•           The “early elections” scenario: Fernández’s health fails to improve, the country’s economic woes keep worsening, and she doesn’t have the physical energy to fight on. She decides to call early elections, hoping to help one of her own party’s politicians win.
“The market seems to be anticipating a regime change,” says Alberto Bernal, of Bulltick Capital Markets, noting that the Buenos Aires stock exchange has risen 6 percent since the August primary elections in which Fernández’s party did badly, and more than one percent since Fernández’s head surgery.
“If the president’s convalescence lingers longer than expected, Boudou would not be able to succeed her, and any change would be in a direction of a more business-friendly government,” Bernal says.
My opinion: The most likely scenario will be the “nothing happens” one, followed by the “constitutional succession” one.
Either way, Argentina has a hyper-presidential political system, and the outcome of its latest drama will depend more on medical and psychological factors, than political ones. More than ever in recent times, the country’s future will depend on what goes on in its president’s head.
The best possible outcome would be what an Argentine follower responded when I asked on Twitter what is likely to happen next in the country: “Nothing. I hope she recovers, ends her term peacefully, and allows us not to make another mistake,” the message said.
By Ken Parks
10 October 2013
BUENOS AIRES—Argentina’s Congress gave its final approval late Wednesday night to President Cristina Kirchner’s 2014 budget and legislation granting her emergency powers.
The approval comes less than three weeks before midterm congressional elections that will decide whether she retains control of Congress in the last two years of her second term. Mrs. Kirchner is barred from running again in 2015.
Mrs. Kirchner is currently recovering from surgery on Tuesday to remove a blood clot from between her skull and brain that was caused by a head injury in August.
Although her candidates might benefit from a sympathy vote, many observers expect the Victory Front to do poorly on Oct. 27 as voters express their exasperation with high inflation and a weak economy.
Senators from Mrs. Kirchner’s ruling Victory Front coalition and its allies passed the bill 40 to 27. The Kirchner-controlled Lower House approved the budget last month.
The budget calls for a 19.2% increase in spending to 859.5 billion Argentine pesos ($149 billion). Tax revenues are forecast to rise almost 26% to 1.1 trillion pesos. Mrs. Kirchner’s budgets are widely thought to deeply understate inflation, which can lead to significantly higher revenues than those outlined in the budget.
The budget’s forecasts of 10.4% average annual inflation next year following 10.3% in 2013 are less than half of most private-sector estimates of between 20% and 25%. Inflation has been at or above 20% for almost four years due to high government spending financed in part by the printing of money, economists say.
The budget also estimates economic growth at 5.1% this year and 6.2% in 2014. Many economists say those forecasts are unrealistic for an economy suffering from high inflation and capital flight that has forced the government to ration its foreign currency stocks by cutting imports.
In the budget, the Kirchner administration earmarked 77.2 billion pesos to service the public debt in 2014, up 73% from this year, while liabilities attached to the Treasury will mean payments of 81.4 billion pesos. More than half of the federal government’s debt is held by the government, through the pension-fund agency.
Mrs. Kirchner also plans to continue her controversial policy of borrowing from the central bank’s foreign-currency reserves to pay her creditors. Those borrowings will total $9.86 billion in 2014, and whatever isn’t spent on debt will be used to fund public works.
Reserves have fallen to a six-and-a-half year low of about $34.7 billion as foreign-currency outflows in the form of debt payments and fuel imports exceed waning dollar inflows from exports.
The Senate also approved bills that would extend until the end of 2015 a financial-transactions tax and emergency powers that were originally enacted in 2002 during the country’s worst economic crisis in its modern history.
Those powers allow the president among other things to regulate the exchange rate as well as set utility rates and the prices of other “critical” goods and services. Electricity, water and residential natural-gas rates have been frozen for more than a decade, which has pushed some utilities to the brink of insolvency.
By Taos Turner
9 October 2013
Argentine President Cristina Kirchner was recovering “favorably” a day after having head surgery to remove a blood clot from the surface of her brain, the president’s spokesman said Wednesday.
BUENOS AIRES—Argentine President Cristina Kirchner was recovering “favorably” a day after having head surgery to remove a blood clot from the surface of her brain, the president’s spokesman said Wednesday.
“The president rested very well all night. She continues to be in good spirits and has started eating. She sends a big kiss to everyone,” said her spokesman, Alfredo Scoccimarro, in a televised comments outside the Fundación Favaloro hospital.
Mr. Scoccimarro will provide another update on the 60-year-old president status Thursday afternoon.
On Saturday, Mrs. Kirchner was diagnosed with a blood clot that stems from an undisclosed head injury in August. Doctors ordered her to take a month off to recover. On Sunday, after noting tingling sensations and a loss of mobility in her left arm, doctors recommend surgery to drain the clot, which was located between the surface of her brain and the skull.
Medical experts say the procedure to remove the clot was relatively low risk and that under normal circumstances a typical patient would be able to return to work after a month or so of rest.
In the meantime, Vice President Amado Boudou, will be formally in charge of the government.
Mrs. Kirchner has a history of health problems. In recent years, low blood pressure forced her to suspend her activities for several days and cancel international trips.
And in January 2012, she underwent surgery to remove a noncancerous growth on a thyroid gland. Mr. Boudou held the presidency for almost three weeks during her hospitalization and recovery.
From Prof Danny Leipziger
October 10, 2013
Sir, Jay Newman’s admonition that Argentina needs to engage its creditors has a hollow ring to it since it comes from a “vulture fund” that has gone to extraordinary lengths to gain the upper hand on Argentina (“Argentina must start talking to its creditors”, Comment, October 8). This is not to absolve Argentina from its responsibilities, but rather to take issue with the country’s policy priorities as presented by one side of a legal drama surrounding the 2001 debt default and subsequent round of partial payments to extinguish those debts.
Argentina faces a whole host of challenges, including reining in its fiscal spending, abandoning its artificial exchange rate regime that has the peso wildly overvalued, and reverting to an open system of trade rather than import restrictions and export taxes. Where to begin is the policy dilemma; however, the real problem is a political one. There is simply no appetite by the incumbent administration to deal with its woes. Indeed, it prefers to engage in political warfare with parts of the media and continue to degrade independent institutions while in power. Ironically, in the matter of debt repayment, the government has a point, insofar as any deal with holdout creditors on superior terms than those accepted by the majority of creditors would open a legal can of worms. As in any debt rescheduling or debt default, there will be recalcitrant actors, which is why collective action clauses have been added to prevent a minority from derailing the necessary decision of the majority.
It is indeed odd that Mr Newman pleads his case simultaneously in the FT and the New York courts. The verdict of the courts is pretty clear; however, in the realm of policy priorities, dealing with those firms that bought defaulted-on debt in the hope of making a profit must surely rank fairly low on the impressive list of actions that Argentina needs to take to restore its economic house.
Danny Leipziger, Professor of International Business and International Affairs, George Washington University
Managing Director, The Growth Dialogue, Washington, DC, US
By Charlie Devereux and Eliana Raszewski
October  9, 2013
Argentine President Cristina Fernandez de Kirchner has had no complications in her recovery a day after undergoing surgery to remove a blood clot close to her brain.
Fernandez is in a “very good mood” and will begin eating solids today, her doctors Facundo Manes and Gerardo Bozovich said in a statement.
“The president rested very well all night,” presidential spokesman Alfredo Scoccimarro said on television.
Fernandez, 60, was diagnosed with a subdural hematoma last weekend after suffering a blow to the head Aug. 12, the day after primaries, Scoccimarro said Oct. 5, without providing further details. Prior to the surgery, doctors had recommended that she rest for a month, which would prevent her from campaigning alongside candidates before the Oct. 27 mid-term congressional elections. Vice President Amado Boudou is currently running day-to-day affairs for her.
Fernandez’s popularity has tumbled amid growing discontent over currency controls, 25 percent inflation and rising crime since she won a second term in 2011 with 54 percent of votes. After candidates from her Victory Front alliance won about 30 percent of nationwide votes in the August primaries, Argentine bonds and stocks have rallied on speculation a change of government when Fernandez steps down in 2015 will result in more market-friendly policies.
Argentina’s restructured dollar bonds have risen 5.8 percent since the primaries, according to JPMorgan Chase & Co.’s EMBI Global index. In the same period, the benchmark Merval stock exchange has surged 36 percent, touching a record yesterday.
Pope Francis, who as archbishop of Buenos Aires clashed with Fernandez over same-sex marriage legislation and poverty reduction policies, sent a note to the president today wishing her a full recovery.
“In these very particular moments, I wish to be with you through my prayers for you and the total recovery of your health,” he said, according to a statement posted on the presidential website.
By Eliana Raszewski
October  9, 2013
Argentina’s Senate today began to debate the 2014 budget bill, which proposes the use of a record $9.9 billion of central bank reserves to pay government debt.
The 72-member upper house will debate budget forecasts that envisage 6.2 percent economic growth, consumer prices rising 9.9 percent and a weakening of the peso to 6.33 per dollar by the end of next year from today’s 5.8218. The bill was approved by the lower house on Sept. 26.
“We’re maintaining a managed floating exchange rate and avoiding a currency devaluation, which would have a negative impact on income distribution and internal prices,” Anibal Fernandez, a senator from the ruling Victory Front coalition, said at Congress today. “We’re counting on more private investment that will accompany economic growth.”
Since 2010, President Cristina Fernandez de Kirchner has drained reserves to pay foreign-currency obligations, contributing to this year’s decline of almost 20 percent in central bank funds to $34.7 billion yesterday. South America’s second-biggest economy hasn’t sold bonds abroad since defaulting on $95 billion of debt in late 2001.
The budget’s economic forecasts have been questioned by opposition senators who say the government has underreported inflation and overestimated growth since 2007, when Fernandez’s late husband and predecessor Nestor Kirchner changed personnel at the statistics agency. The International Monetary Fund censured Argentina in February for failing to report accurate data.
‘Fantasy’ Budget
In the 12 months through August consumer prices rose 10.6 percent, according to the agency, while a report compiled by opposition lawmakers using statistics provided by private economists put the increase at 25.2 percent.
“This budget is a fantasy, the numbers make no sense whatsoever,” said opposition Senator Sonia Escudero in a telephone interview during the debate. “By underestimating inflation, the government will count on more funds than expected and have the power to arbitrarily allocate them.”
Tax revenue will increase 27 percent while spending will rise 19 percent in 2014 from this year, resulting in a budget surplus of 0.11 percent of gross domestic product, compared with a deficit of 1.77 percent of GDP in 2013, according to the bill.
The world’s largest exporter of soybean oil forecasts the 2014 trade surplus will narrow to $10.1 billion from $10.6 billion this year, according to the bill.
10 October 2013
BUENOS AIRES, Oct 10 (Reuters) – Argentina’s Senate has given final legislative approval to the government’s 2014 spending plan, based on projected economic growth of 6.2 percent next year, well above the threshold for payment on the country’s growth-linked debt.
The 2014 budget bill passed the upper chamber of Congress late Wednesday night by a 40 to 27 vote.
The legislature’s lower Chamber of Deputies already approved the measure. The bill becomes law once it is published in the government’s official gazette.
For 2013, gross domestic product in the South American grains exporting country is expected by the government to expand 5.1 percent.
That follows GDP growth of 1.9 percent in 2012 and 8.9 percent in 2011, according to official figures.
Last year growth was hampered by weak global demand, a drought-hit grain harvest, high inflation and the impact of currency controls on investment.
Argentina’s forecast 2013 growth is set to beat the regional average. The economies of Latin America and the Caribbean are seen expanding 3 percent this year, as a gloomier global economy restrains exports and domestic demand, a United Nations body said in July.
But many analysts are skeptical about the accuracy of Argentina’s official economic data.
By Charles Newbery
9 October 2013
Buenos Aires (Platts)–9Oct2013/904 pm EDT/104 GMT  ExxonMobil plans to take 18 months to explore for unconventional oil and natural gas resources in Argentina, senior executives said Wednesday, adding the company would then shift to the pilot stage and then full-scale development.
The company started drilling its first well on its Bajo de Choique block in August.
The next step is to drill another three wells on its operated blocks in the play, one this year and another two next year, Ricardo Livieres, an ExxonMobil exploration and production manager, said on the sidelines of the Argentina Oil & Gas Expo in Buenos Aires.
The company will then use information from drilling these four wells and from seven wells drilled with partners to understand the resources, create a production strategy and put in place an adequate drilling infrastructure, he said.
“The plan that will come after this will depend on the results from this campaign and from the evaluation of the wells that were drilled by partners,” he said.
As part of the campaign, ExxonMobil will drill 10 fractures in the lateral section of each of its vertical wells, Livieres said.
ExxonMobil along with Apache, Shell, Total and other companies are exploring for unconventional resources in a country estimated to hold 27 billion barrels of shale oil and 802 Tcf of shale gas. The focus is the Vaca Muerta, a southwest play in the Neuquen Basin estimated as the largest in the country.
ExxonMobil has secured around 870,000 net acres in shale plays in Neuquen province through partnership deals, the company has said. Its partners are Argentina’s state-run YPF, Brazil’s Petrobras, Canada’s Petrogas Americas and Neuquen’s state-owned Gas y Petroleo del Neuquen.
“We are optimistic” about the production potential of Vaca Muerta based on the geology of the play, said Kris Nygaard, a senior stimulation consultant at ExxonMobil. “As part of our forward efforts, we need to identify the resource.”
That will require more drilling, studies and research, he said.
Nygaard declined to say how long this could take, but noted it takes an average of 30 wells at its Canadian and US shale developments before the company moves to “larger scale pilots,” and then another few years before entering into the full-scale production phase.
“This is a long-term, ongoing process,” Nygaard said. “We are still as an industry in very early days in trying to broadly characterize the resource” in Vaca Muerta.
As a whole, most oil executives at the conference said they expect it would take five to 10 years to develop Vaca Muerta such that production there can replace a nationwide decline in conventional output. Argentina’s oil production has dropped 35% over the past decade while gas output has fallen 20%, leading to a surge in energy imports.
YPF has drilled 90 wells in the play that are producing 13,000 b/d of oil equivalent, of which 9,000 b/d is crude and the rest gas.
YPF has entered into partnership agreements with Chevron and Dow Chemical for projects to hike output. With Chevron, YPF plans to develop a 5,000-acre patch of Vaca Muerta by drilling more than 100 wells with 19 drill rigs with the aim of producing up to 50,000 b/d of crude and 3 million cubic meters/d of associated gas. They will then expand exploration elsewhere in the play.
By Charles Newbery
9 October 2013
Buenos Aires (Platts)–9Oct2013/545 pm EDT/2145 GMT    Eduardo Eurnekian, a wealthy Argentine businessman, said Wednesday he expects to sign a partnership deal with Argentina’s state-run energy company YPF by the end of the year to invest $500 million in the development of oil and natural gas resources.
He said the focus of the investment would be on conventional resources.
“There are blocks that have been explored and need to be developed,” he told reporters on the sidelines of the Argentina Oil & Gas Expo in Buenos Aires. “There are reserves that have been proved” that can be put into production.
Eurnekian, who made his fortune in textiles and now runs airports and hotels and is stepping up investment in the energy sector, said the development of conventional fields will help meet an immediate need for boosting oil and gas production in Argentina.
He said talks are going on with YPF and his company, Corporacion America, on the proposed venture. He said it would be similar to a venture proposed last year between the companies, only a few months after Argentina took YPF back under state control with the seizure of 51% of the shares from Spain’s Repsol.
That deal, however, didn’t pan out and YPF went on this year to sign separate partnerships with Chevron and Dow Chemical for an investment of more than $1.5 billion in developing shale resources in Vaca Muerta, a giant shale play in the southwest.
YPF CEO Miguel Galuccio said last week that the company is not actively seeking any more partnerships to develop the country’s shale oil and gas deposits, but said further joint ventures at Vaca Muerta would be considered if a decision were taken to accelerate the current production targets for the region.
Eurnekian has been increasing his interests in the energy sector, first with biodiesel production and this year with the purchase of a controlling stake in Compania Argentina de Combustibles, a local junior with exploration and production assets around Latin America.
This purchase has led to speculation he could buy more assets, with local media reporting last week that he could team up with Pluspetrol, the country’s third-biggest oil producer, to buy the assets of US-based Apache in Argentina, a leading gas producer in the country.
Eurnekian declined to comment on the speculation. SHALE DEVELOPMENT
Eurnekian said that development of the country’s shale resources is key for future energy security.
“We have a huge amount of oil and we have a new opportunity,” he said. “But we need $17 (billion) to $25 billion a year to develop it. We need a lot of investors, a lot of Chevrons and YPFs.”
Argentina, which has been producing oil for more than 100 years, is estimated to hold 27 billion barrels of shale oil and 802 Tcf of shale gas, among the most in the world. That is far more than its proved reserves, at 2.5 billion barrels of oil and 11.7 Tcf of gas.
“If the political class creates clear and stable policies, I am certain that the investment will come,” Eurnekian said.
Oil companies reined in spending in Argentina after a 2001-02 economic collapse brought a surge in state intervention in the sector as price controls, tax hikes and regulatory uncertainty cut profits and made it harder to do business.
This has reduced oil production 35% to 540,000 b/d and gas 20% to 114 million cu m/d over the past decade, leading to a surge in energy imports.
Argentine President Cristina Fernandez de Kirchner reacted last year to the decline by taking YPF under state control. She then raised the wellhead price of gas and introduced fiscal incentives on large shale projects with the hope to curb the energy imports.
9 October 2013
BMI View: Uruguay’s decision to increase production at a pulp mill on the Uruguay River has re-ignited a long-running dispute with Argentina, but we do not anticipate that this episode will put serious strain on the countries’ bilateral relationship. We believe the change being proposed is relatively minor and that much of Argentina’s objection is political in nature and may fade after the midterm election scheduled for October 27.
Uruguay’s recent decision to increase production at one of its pulp mills has triggered strong environmental objections from Argentina, but we do not believe this development will lead to a repeat of the acrimonious 2005-2010 dispute that Uru guayan President José Mujica and Argentine President Cristina Fernández de Kirchner have successfully kept under wraps for the last few years . Admittedly, Argentina has threatened to take the issue back to the International Court of Justice, and roughly 1,000 Argentine protesters marched on the San Martín International Bridge crossing between the two countries in the wake of the decision , illustrating that the dispute has the potential to escalate further . However, w hile there is some scope for increased tensions over the near term, we see three key reasons that suggest this dispute does not pose a fundamental threat to relations between the two countries.
For one, we believe the recently announced change to the status quo is much less significant than the decision to build the pulp plants in the first place, which caused the earlier dispute. The production increase is slight, boosting output at the plant owned by Finnish company UPM-Kymmene to 1.2mn tonnes from 1.1mn tonnes. This increase already represents a compromise, falling short of the 1.3mn that the company had requested.
Additionally, Uruguay has said the production increase is contingent upon new environmental measures designed to protect the river. UPM will be required to implement new systems that will prevent effluent temperatures from rising too high and limit the phosphorous content in the plant’s emissions. Absent some clear evidence of environmental degradation caused by the increase, we believe it will be difficult for opponents to maintain sustained opposition to the change.
Finally, we believe that the strong objections to the increase from Argentine officials may be election-season posturing. Argentina’s ruling Frente Para la Victoria (FPV) government is trailing in the polls ahead of the October 27 midterm election, and we believe politicians may be exploiting this issue to rally popular support. However, after the election we expect political leaders in both countries to want to resume business as usual. Uruguay has nothing to gain from a protracted dispute, which would harm its business environment and tourism industry, while potentially scaring away additional international investment . Meanwhile, t he Argentine economy is still recovering from a marked slowdown in growth in 2012 and has little incentive to provoke problems with a key economic partner and to contents
9 October 2013
The Brazilian government’s goal to include in its Marco Civil da Internet (civil internet bill) rules obliging data to be stored on Brazilian soil, and so forcing the construction of datacenters, seems “unfeasible,” Mariano Greco, Argentina’s undersecretary of management technologies, told BNamericas.
“This discussion seems unfeasible to me. Take cloud, for example…Imagine the amount of data that there is in Brazil. Public, government, the state’s data, those must be locally stored. What we need are care traffic policies,” Greco said.
Greco’s department is responsible for public procurement of information technologies in Argentina. The official was one of the participants at the second Fórum Sulamericano de Líderes de Governo de TI (South American forum of government IT leaders), which took place this Wednesday in Brasília.
“The security discussion is open. We need to reach standards that are viable. What we’ve been hearing in many cases are grandiloquent proposals, traffic restriction, use of local traffic. This is virtually impossible to put into practice,” he said during a panel at the forum.
“What we need is a mix of normative data protection by countries with adequate integration with global networks.”
The local storage obligation was one of the Brazilian government’s main ideas to strengthen data sovereignty after reports that the US National Security Agency (NSA) had been monitoring phone calls and emails of Brazilian citizens, including those of President Dilma Rousseff.
Rousseff herself has publicly asked lawmakers to approve a bill demanding the local storage of Brazilians’ data. Currently, Marco Civil is pending a vote in congress, as lawmakers finalize its details, mainly those regarding network neutrality.
The bill’s author, lawmaker Alessandro Molon, told reporters at an event in São Paulo in September that he thought the local storage issue should remain out of the bill, but be included in a separate law if necessary.
On Sunday (Oct 6), Rousseff said on Twitter that the bill is expected to be voted on in congress “in the coming weeks.” Once approved, Rousseff wants to use it as the basis for an international civil internet project to be proposed to the UN by Brazil.
Questioned by BNamericas, Greco praised Brazil’s Marco Civil, which is seen as an internet “constitution,” ensuring users’ rights and guarantees, and said that Argentina would endorse Brazil’s move to take it to the UN. “Definitely. We need an international discussion. The network is not local, it’s global,” he emphasized.
Greco also said Argentina is working on telecommunications regulations, such as one regulating the activities of ISPs and another for network neutrality, though not yet as part of a broad internet bill.
By Elizabeth Guider
9 October 2013
It’s not just the land of telenovelas and the tango. A series of panels and presentations here in Cannes have brought home the point that Argentina is a thriving, albeit financially-challenged, hub of TV production.
The country’s content and international strategy is MIPCOM’s special focus of attention this year.
In two different sessions Tuesday it was clear that the diversity and quality of local production in and around Buenos Aires has never been richer, and that a growing cadre of U.S. players are setting up shop there to tap into the talent and tease out exportable formats.
What they’re finding when they get there is an increasingly sophisticated broadcast and production scene.
On the local front, Liliana Parodi’s indie channel America TV is experimenting with what she called “in vivo” production, involving 16 hours a day of live continuous video; Claudio Villlarruel runs indie outfit On TV, which has made hard-hitting and award-winning exposes of societal ills, including the widely circulated Saint and Sinners. And Claudio Martinez, CEO of El Oso Prods., is experimenting with applying entertaining storytelling elements to educational programs about science, math and history.
As for highly exportable content, producer Victor Tevah of Pol-Ka Prods. talked about what led up to the success of Violeta, an ambitious telenovela-tinged teen soap, which has traveled far and wide.
“At some point we realized we needed to go beyond our borders — to open up to the rest of the world.” His outfit began its outside collaborations some years ago with HBO and Fox, eventually undertaking the re-versioning of ABC’s “Desperate Housewives,” and then they made an arrangement with Disney to co-produce Violeta.
“It is astonishing what talented people and companies in Argentina can do together. Although we and our co-partners had different approaches, we came together around the same goal,” Tevah said.
U.S. companies have increasingly come to regard Argentina as a fertile ground for partnerships on localized product that can migrate elsewhere.
In a second panel focused on co-production, execs repping three U.S. players with established strategies south of the border described their various approaches to the market.
Diego Piasek, executive director for the region at Ben Silverman’s Electus, talked up the company’s efforts to find “jewels that translate” and to start “producing our own IP in the territory.”
His company’s Killer Women, which will air on ABC mid-season, is based on an Argentine hit called Mujeres Asesinas.
Meanwhile, Fox Intl Channels’ SVP told the attendees that his company has set up a full-fledged production operation in Buenos Aires, which has already produced 1,000 hours of programming.
And finally Eduardo Ruiz, president of A&E Networks Latin America, talked about the variety of quality local producers that the company has been able to work with in Argentina.
“We have an executive production team that oversees production and they have identified the key players in specific genres that regularly deliver,” Ruiz said. “They have the right mix of quality of people and know-how. Even with economic problems endemic, it’s the best production home for us in the region.”
09 Oct 2013
Buenos Aires City, October 09, 2013 — The outlook for the Argentine banking system is negative, reflecting deteriorating business conditions that continue to weigh on banks financial fundamentals in 2013 and 2014, says Moody’s Investors Service in its new report “Banking System Outlook: Argentina.”
Moody’s last changed the outlook to negative from stable in September 2011. “In recent years, the Argentine government has imposed a range of policies which have negatively affected business conditions and banks’ financial strength, including dividend payment and foreign exchange market restrictions, caps on lending rates and fees, and lending requirements to targeted sectors,” said Valeria Azconegui, a Moody’s Assistant Vice President and author of the report.
“The cumulative impact of these measures, coupled with weaker external demand from trading partners, has led to a deceleration in economic growth, with real GDP expanding 1.9% in 2012 and expected to grow 3% in 2013, against 8.9% in 2011. Further, high inflation, resulting from continued expansionary monetary policies, has led to declining real income, constraining internal demand,” added Azconegui.
Moody’s expects further deterioration in the banks’ asset quality. Moody’s notes that while the system’s aggregate nonperforming loan rate has risen only slightly, to 1.6% of total loans as of April 2013, slowing economic growth and entrenched high inflation will reduce borrowers’ purchasing power and repayment capacity, leading to higher delinquency rates and associated credit costs.
Argentine banks do, though, appear to have sufficient capital and reserve cushions to absorb extraordinary losses and to support credit growth over the coming 12 to 18 months, says Moody’s. Importantly, banks’ capital levels have benefited from the regulation implemented by the central bank in 2012, which increased the minimum capital requirement to be allowed to pay dividends, added the rating agency.
Moody’s expects Argentine banks to maintain high liquidity levels in local currency as peso deposits grow in response to restrictions on foreign currency purchases and savings. Nevertheless, depositor confidence remains weak as a consequence of recurrent stress and growing policy uncertainty. Banks’ funding, therefore, is reliant on essentially short-term deposits, while high inflation means that deposit rates are deeply negative.



10 octubre, 2013


7 octubre, 2013


MONDAY, Oct. 5th
1. ARGENTINA BONDS ARE IN DEMAND (The Wall Street Journal)
By Prabha Natarajan
30 September 2013
Investors are piling into Argentine bonds ahead of the South American country’s date with the U.S. Supreme Court, in the latest sign of Wall Street’s willingness to embrace risk in pursuit of a sizable payday.
Buyers range from specialists in troubled debt to exchange-traded funds that cater to retail investors. Last week, J.P. Morgan Chase & Co. raised the portion of Argentina’s debt in its influential emerging-market government bond portfolio, which funds with an aggregate $229 billion under management use to determine which securities to buy.
Argentina’s bond maturing in 2033 on Friday traded near a two-month high at 66 cents on the dollar, a 13.4% gain this month, according to FactSet.
The bonds are rallying even as the country enters a potential endgame in its attempt to avoid paying hedge funds that own bonds dating back to the country’s 2001 default. The Supreme Court meets Monday to consider hearing Argentina’s appeal of an August ruling ordering it to settle up with holdouts or stop paying its current bondholders. If the justices decline to take the case, it could set in motion another default, analysts say. A decision could come as soon as Tuesday.
Investors buying the debt say yields approaching 13% compensate for the risk that they will be caught out should Argentina default for a third time since 1992. In its recommendation last week, J.P. Morgan warned Argentina “is not a long-term buy.”
But investors have seen their options narrow in the bond market. Years of loose monetary policies by central banks in developed countries have sent money coursing through emerging markets, forcing investors to take on more risk to generate the same returns.
“When you look at the world, there are not that many countries that offer you high returns,” said Diego Ferro, co-chief investment officer at Greylock Capital Management LLC, which specializes in risky debt and oversees $700 million. “All those countries that offer you high returns have risks like Venezuela, like Egypt, like Argentina. . .pick your poison.” Greylock has owned Argentine debt for several years, but bought more bonds in September.
It has been a bumpy ride for Argentina’s bondholders. Argentina, which defaulted on nearly $100 billion in 2001, restructured 93% of that debt. But hedge funds that hold the remaining bonds, led by Aurelius Capital Management and Elliott Management Corp.’s NML unit, have been demanding payment in full ever since.
In October 2012, a U.S. court ruled that holdout creditors should be paid along with other bondholders, who accepted heavily discounted debt in 2005 and 2010. The price of the 2033 bond, which traded at 80 cents on the dollar before the ruling, fell below 60 cents less than a month later.
The U.S. Second Circuit Court of Appeals in New York in August required Argentina to pay both groups of bondholders. The decision is on hold until the Supreme Court decides whether to hear the case. J.P. Morgan argues that Argentina could delay enforcement of a U.S. court ruling deep into 2014, such as by launching a fresh appeal arguing for sovereign immunity.
Argentina’s bonds haven’t returned to where they were before the first ruling a year ago. But J.P. Morgan’s recommendation, and the prospect of another lengthy trip through the U.S. court system, is coaxing more investors into the market.
IShares J.P. Morgan USD Emerging Markets Bond ETF, an emerging-market exchange-traded fund with $4 billion in assets that tracks the bank’s model portfolio, has increased its Argentine bondholdings by $4 million so far this month.
Ray Zucaro, portfolio manager at SW Asset Management, added to his Argentine bondholdings last week.
“Argentina’s bonds are poised to rally,” said Mr. Zucaro, who manages $382 million. “By far the biggest overhang on Argentina was the legal issue and the timeline on that has been extended.”
Other investors are staying away. They say falling commodities prices and slowing growth are hitting Argentina’s finances, which could make it difficult for the nation to pay bondholders even if it wins its fight with the holdouts. Argentina’s dollar reserves — used to pay creditors and for imports — have fallen 19% this year to $35 billion.
“Nothing has changed in Argentina since its 1992 restructuring,” said Jim Craige, portfolio manager at Stone Harbor, which has $63.9 billion in assets. “Their willingness to repay their debt is suspect and their ability to pay continues to get eroded.”
Mr. Craige sold his Argentine debt holdings after the August court ruling.
Others are looking past the Supreme Court to Argentina’s local elections in October.
If President Cristina Kirchner’s party does poorly, she may not stand in presidential elections in 2015, potentially ushering in a government friendlier to creditors.
September 28, 2013
ACCRA, Ghana — Ghana says it has resolved a dispute with Argentina that began with last year’s seizure of an Argentinian naval ship over a massive debt claim.
Last October, Ghana ordered the ARA Libertad held in the port of Tema on a claim by a Cayman Islands-based hedge fund, NML Capital Ltd. Its owner, American billionaire Paul Singer, leads a group demanding payment in full of about $350 million for Argentine bonds bought at fire-sale prices after Argentina’s 2001-2002 economic collapse.
A United Nations tribunal ordered the ship’s release in December, and it returned to Argentina this past January.
But Argentina had filed a claim against Ghana at the Permanent Court of Arbitration in The Hague.
Ghana’s justice ministry said in a statement Friday that the two countries had signed a settlement.
By Pan Kwan Yuk
September 27, 2013
In Argentina, soyabeans are the new gold bars it seems.
With private analysts predicting inflation to hit 26.1 per cent this year (against the government’s widely-questioned estimates of 10.3 per cent), Argentine farmers have turned to hoarding their soyabean crop as a protection against price rises.
Growers are stock-piling more and more soybeans on their farms, selling only 70 percent so far this season versus about 85 percent at this point last year, said Leandro Pierbattisti, an analyst with Argentina’s grains warehousing chamber.
“They prefer to save by way of beans, which are synonymous with protection from inflation,” he said.
Indeed, the economic incentives for farmers to hold on to their crops are strong.
Although soya prices have fallen by more than 26 per cent from a record $17.9475 a bushel last September, they remain high by historical standards, closing on Friday at $13.1975 a bushel.
Yet high prices have not translated into soaring profits for Argentine farmers – many of whom say they are barely breaking even after paying off a 35 per cent export tariff and converting their dollar earnings to pesos at the official exchange rate.
Given that the black market rate (of around 9.45 pesos) is now worth nearly two-third MORE than the official exchange rate (of around 5.78 pesos to the dollar), this means that farmers are in effect taking an extra haircut, on top of the 35 per cent export tax, on the soyabean price paid to them.
Add to this double-digit inflation and you can understand why farmers in Argentina are not exactly rushing to liquidate their crop into a currency that may suffer further depreciation in the months ahead.
As Roland Graham, a farm consultant in General Villegas, some 300 miles west of Buenos Aire, told a reporter earlier this year:
Everybody is selling the minimum number of soybeans possible, just to cover bills…Soy is like gold bars, a safe haven.
The hope among farmers is that Argentina’s economy and currency will stablise enough so that they can get a better conversion rate when they cash in those soyabeans for pesos.
But they might have some waiting to do given the state of disarray the Argentine economy is in. Ironically, the farmers’ move to withhold selling their crops is not going to do much to help repair the country’s finances. Cut off from raising money on international capital markets since its default on nearly $100bn in 2001, agricultural exports – and soyabeans in particular – have become a vital hard currency earner for Argentina.
By Lawrence Hurley
30 September 2013
WASHINGTON, Sept 30 (Reuters) – The U.S. Supreme Court was scheduled to meet behind closed doors on Monday to decide whether to hear a high-profile appeal by Argentina over its battle with hedge funds that refused to take part in two debt restructurings that sprang from the country’s 2002 default.
Argentina has appealed an October 2012 ruling by the 2nd U.S. Circuit Court of Appeals in New York in which the court said the government had broken a contractual obligation to treat bondholders equally.
In two restructurings, in 2005 and 2010, creditors holding about 93 percent of Argentina’s debt agreed to participate in debt swaps that gave them 25 cents to 29 cents on the dollar.
But bondholders led by hedge funds NML Capital Ltd, a unit of Paul Singer’s Elliott Management Corp, and Aurelius Capital Management went to court, seeking payment in full.
If the justices on the nine-member court agree to hear the case, the court would likely make an announcement on Tuesday. The court would schedule oral arguments and the case would be decided sometime before the next term ends in late June 2014.
The court’s online docket said the case was up for discussion on Monday. If the court decides against hearing the case, that would be made public on Oct. 7, the first day of the court’s new term.
The court could also ask the Obama administration to weigh in on whether it thinks the case merits the justices’ attention, which would delay any further action. The court has one other option, which is to take no action on the petition and delay making a decision until a later date.
The litigation is still ongoing in the appeals court in New York. In August, that court issued another ruling, upholding a lower court’s order that Argentina pay the bondholders $1.33 billion. The court stayed its decision pending Supreme Court review. Argentina also has asked the appeals court to reconsider its decision.
The case before the Supreme Court is Argentina v. NML Capital, 12-1494.
By Hugh Bronstein
28 September 2013
BUENOS AIRES, Sept 28 (Reuters) – Iran has approved a deal with Argentina to investigate the 1994 bombing of a Buenos Aires Jewish community center that courts in the South American country accuse Tehran of sponsoring, Argentine official state news service Telam said.
Argentine Foreign Minister Hector Timerman met in New York on Saturday with his Iranian counterpart, Mohammad Javad Zarif, who assured him Iran “would honor all points of the agreement” to shed light on the bombing that killed 85 people, Telam said.
The two countries will form investigative teams to meet in Geneva in November to get on with the probe.
The apparent breakthrough took place amid signs of a thaw in relations between Iran and the West.
President Barack Obama and new Iranian President Hassan Rouhani spoke by telephone on Friday, the highest-level contact between the two countries in three decades and a sign that they are serious about reaching a pact on Tehran’s nuclear program.
Iran, a major buyer of Argentine corn, has long tried to improve relations with the grains powerhouse. President Cristina Fernandez is allied with other Latin American leftist leaders who have defied Washington in their pursuit of ties with Iran.
In February, Argentina’s Congress approved a pact with Iran to set up a “truth commission” to shed light on the AMIA center bombing after years of legal deadlock.
The memorandum of understanding to form the commission needed ratification in Tehran, which Timerman told Telam has been all but granted.
“He gave us a full guarantee that the legal process has been completed,” Telam quoted Timerman as saying, referring to Zarif.
The memorandum “has been approved by Iran’s National Security Council and now awaits the signature of the Supreme Leader of the Revolution,” Ayatollah Ali Khamenei, Telam said.
Argentina, home to Latin America’s biggest Jewish community, has secured Interpol arrest warrants in the bombing case for nine men – eight Iranians and one person presumed to be Lebanese.
Tehran denies links to the 1994 bombing but offered talks with Argentina in 2011 to start “shedding light” on the case.
Jewish leaders say they doubt that Tehran will help probe the bombing in good faith. The Simon Wiesenthal Center called the proposed truth commission a farce that risks undermining the continuing judicial investigation into the attack.
Iran’s ratification of the commission “brings no benefit,” said a statement issued on Saturday by DAIA, the umbrella organization of Argentina’s Jewish groups.
27 September 2013
Industrial output fell by 1.5% on a seasonally adjusted month-on-month basis in August, producing a contraction in year-on-year terms of 0.6%, and pushing the year-to-date growth figure down to just 1.3%.
After a fairly solid recovery in the first half of the year, poor industrial output data for the rolling quarter running from June to August suggest that manufacturing is moving back into the doldrums. The decline appears to be broad-based. Seven of 12 manufacturing subsectors in the monthly index registered year-on-year contractions in August, reflecting such factors as an overvalued peso (which has hit export competitiveness) and import controls (which has complicated the supply of imported inputs).
Perhaps the main driver of the renewed downturn in industry has been the automotive sector. The latter recovered strongly in the first few months of 2013. However, a deceleration of demand evident in recent months in Brazil, the main destination for Argentina’s car exports, has hit local production. Despite still-solid growth of 5% in domestic sales, Argentina’s total automotive production fell by 3% year on year in August, on the back of a 15% fall in exports. The fall in Brazilian demand has led some local assemblers (including Fiat and Volkswagen) to halt production temporarily, and to warn about the high dependence of the car industry on Brazil. Exports account for 55% of car production, and Brazil represents 85% of total sales abroad. Dependence on the Brazilian market has in fact grown in recent years: it accounted for 62% of total exports in 2007. In 2007 Mexico, which was then Argentina’s second-largest market for car exports, accounted for 13% of the total. The EU is now Argentina’s second-largest market for car exports but accounts for just 5%. This suggests the loss of competitiveness driven by accumulated real peso appreciation over the past five years has also affected diversification of the automotive industry.
By Charles Newbery
27 September 2013
Buenos Aires (Platts)–27Sep2013/515 pm EDT/2115 GMT   Argentina’s July oil production fell 2.5% from the same month of 2012, while natural gas ouput during the month was down 5.8% year on year, according to an industry report released Friday.
Crude production fell to an average of 544,986 b/d from 559,018 b/d in July 2012, but was up 1.1% from 539,281 b/d in June, the Argentine Oil and Gas Institute (IAPG) said without specifying reasons for the changes.
Part of the year-on-year decline was the result of changes in the calculation of crude production. By government order, natural gasoline was stripped out of the calculation of total crude production, effective January 2013. The industry group has not adjusted data from prior years.
Still, Argentinean crude production has declined over the past decade, falling 36% from a record 847,000 b/d in 1998 on limited exploration and discoveries and maturing reserves, according to analysts. This has led the country to reduce crude exports and start importing supplies to meet domestic demand. Argentina now exports 10-15% of its production, down from 40% in 1997 and 1998.
Argentina’s state-run YPF produced 37% of the crude in July, trailed by China’s CNOOC-backed Pan American Energy with 18%, Argentina’s Pluspetrol with 7%, China’s Sinopec with 6.8% and Brazil’s Petrobras with 6.5%, IAPG said.
July gas production came in at 114.5 million cubic meter m/d in July down from 121.5 million cu m/d in the year-ago period and down 0.5% from June’s 115 million cu m/d, IAPG said.
Gas output has dropped 20% from a record 143.1 million cu m/d in 2004, leading to shortages. Argentina, which relies on gas to meet 50% of its energy needs, has seen consumption of the fuel surge 33% since 2003 to an average of 126 million cu m/d in 2012 on a growing economy and price controls that have made it the cheapest source of energy. The combination of falling production and rising demand is forcing the country to step up imports of LNG and Bolivian gas, which rose 40% to 28.6 million cu m/d in 2012 from 20.5 million cu m/d in 2011.
France’s Total produced 30% of the gas in July, followed by YPF with 25%, Pan American with 11.1% and Petrobras with 8.6%. REFINING ACTIVITY FELL
IAPG said crude processing fell 3.7% to 525,305 b/d in July from 545,720 b/d in July 2012 and was unchanged from 525,439 b/d in June.
Crude processing fell after a storm knocked out operations of the country’s biggest oil refinery April 2, which has still not returned to its full capacity of 189,000 b/d. YPF, the state-run company that operates the La Plata refinery, said the facility returned to 83% capacity on May 27 and likely will remain at that for the rest of the year.
Of the supplies processed in July, 6,924 b/d was imported, equivalent to 1.3% of the total. That compares with imports of 7,071 b/d in July 2012 and 7,155 b/d in June.
Output of RON 95 gasoline rose 3.3% to 100,530 b/d in July year on year, while that of RON 98 gasoline rose 5.6% to 32,899 b/d. Production of fuel oil rose 4.6% to 13,308 mt/d from July 2012, while that of diesel fell 4.8% to 195,843 b/d over the same period, IAPG said. Naphtha production fell 16% to 42,339 b/d over the same period.
The leading refiners are YPF trailed by Shell, Bridas, Oil M&S and Petrobra
30 September 2013
Fitch expects to rate YPF S.A.’s (YPF) proposed secured debt issuance for up to USD150 million ‘B-/RR4′.
The proceeds will be used to refinance existing debt and to fund capital investments for developing natural gas production in the province of Neuquen.
The notes rank pari-passu in security of payment with all other of YPF’s senior unsecured debt and will benefit from a first priority security interest in a six-month debt service reserve account. The debt service (collateral) account will be held offshore and funded with flows from YPF’s agro exports in order to help the company access foreign currency to service its debt.
The collateral account will receive approximately USD400 million per year of flows from YPF’s agro exports to four international grain-trading companies. These funds will first be used to service the notes principal and interest payments before repatriating the balance. It will also maintain 125 percent of the next two principal and interest payments. The notes will have a one-year principal grace period and will then amortize in 17 equal quarterly payments.
The notes are rated the same as all senior unsecured obligations of YPF. While positive, the credit enhancement of the transaction’s structure is not sufficient to merit a rating uplift given the short track record of YPF’s agro exports and the short-term nature of sale contracts with traders.
Key Ratings Drivers
YPF’s ratings reflect its strong linkage with the credit quality of the Republic of Argentina (Fitch local and foreign currency IDRs of ‘B-’, Outlook Negative) and the company’s low reserve life. The ratings also factor in YPF’s strong business position in the local market as well as its relatively strong credit protection measures.
Linkage to Sovereign
YPF’s ratings reflect the close linkage with the Republic of Argentina resulting from the company’s ownership structure as well as recent government interventions. The Republic of Argentina controls the company through its 51 percent participation after it nationalized the company on April 2013 by expropriating the controlling ownership previously owned by Repsol S.A. Since the expropriation, the company’s strategy and business decisions are governed by the Republic of Argentina and at times may go against profit maximization.
Low Hydrocarbon Reserve Life
The ratings consider the company’s relatively weak operating metrics characterized by low reserve life and historically declining production levels. As of year-end 2012, YPF reported proven reserves of 979 million barrels of oil equivalent (boe) and average production of 485,000 boe per day. During the first half of 2013, the company reported production of 480,000 boe per day. Production has been stable during the past three quarters. This translates into a reserve life of approximately 5.5 years, which is significantly below optimal levels and has the potential to create significant operational challenges in the medium to long term. During 2012, the company’s reserve replacement ratio was approximately 85 percent.
Strong Business Position
YPF benefits from a strong business position supported by its vertically integrated operations and dominant market presence in the Argentine hydrocarbons’ market. Fitch anticipates that YPF will continue exercising an active role in domestic fuel and gas supply.
Adequate Credit Protection Metrics
The ratings reflect YPF’s relatively solid credit protection metrics, characterized by moderate leverage and a manageable debt amortization schedule. As of the last 12 months (LTM) ended June 30, total financial leverage, as measured by total debt-to-EBITDA, reached 1.3x, which is considered low for the assigned rating. As of year-end 2012, leverage (as measured by total debt-to-total proven reserves) was average at USD3.5 per boe. Total debt as of June 30, amounted to approximately USD4.466 million, of which approximately USD970 million was short-term. Total cash and equivalents amounted to approximately USD954 million as of June 30. EBITDA for the LTM ended June 2013 was approximately USD3.364 million. During recent years, the company’s leverage has been increasing, mostly as a result of increases in debt. The company’s stated strategy is to maintain its net leverage below 1.5x.
The ‘RR4′ Recovery Rating reflects an average expected recovery given default and is in line with the RR soft cap established for Argentina. The structure put in place by the company for the proposed issuance supports access to foreign currency for debt service given that the Argentine central bank has allowed the company to create a collateral account to hold foreign currency funds abroad. The company will maintain funds equal to 125 percent of the next two quarterly amortization payments. YPF will fund the collateral account using proceeds from grain exports to four trading companies, which have signed letters of notice and acknowledgment to deposit their payment in the collateral account.
Rating Sensitivities
YPF’s ratings could be negatively affected by a combination of the following: a downgrade of the Republic of Argentina’s ratings; a significant deterioration of credit metrics; and/or the adoption of adverse public policies that can affect the company’s business performance in any of its business segments.
A positive rating action in the short-to-medium term is considered unlikely given the linkage with sovereign credit quality and the Negative Rating Outlook for all foreign and local currency IDRs.


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