1. ARGENTINA GRAPPLES WITH ITS MOST POLLUTED RIVER (The Washington Post)
December 4, 2013
BUENOS AIRES, Argentina — The picturesque La Boca district draws hordes of tourists to stroll its narrow streets lined with colorful buildings and eat at outdoor restaurants. Now it has a new, unwanted claim to fame: The Riachuelo river that flows through the neighborhood has been named one of the planet’s 10 dirtiest places.
Thousands of people live along the river, and environmentalists say a court-ordered cleanup of decades of industrial pollution and sewage has made little progress in five years. Many residents still need to be relocated under the court ruling, and toxic substances are still emptying into the Riachuelo.
On a recent day, tourists ambled along the Caminito walkway full of souvenir shops and cafes amid the funk emanating from the river about 700 feet away. Although the odor of the brown-gray river can be overpowering some days, the historic district, which is known as a tango hotspot and home of the popular soccer team Boca Juniors, remains one of Buenos Aires’ top tourist draws.
“I smell it from my home, just a few blocks away, and I often have to keep the windows closed,” said Edgardo Gomez. “When are they going to finish this cleanup plan?”
Many are asking the same question. About 3.5 million people live in the southern districts of Buenos Aires and the 14 nearby municipalities as the river flows some 40 miles (60 kilometers) from Buenos Aires province to just south of the capital.
A report by the environmental activist groups Blacksmith Institute and Green Cross of Switzerland stirred up Argentines by ranking the river as the eighth most polluted place in the world.
The study says makers of chemical products are responsible for more than a third of the contamination, and says tests indicate 80 percent of water taken from wells near the river is not safe.
The study does say several cleanup programs are making some “progress” with support from the World Bank. About 20,000 people live near the river basin, while 15,000 industries discharge effluent into the river, the report says.
Environment Secretary Juan Jose Mussi last week accused the media and the report of exaggerating the river’s condition. But he also concedes the pollution problem is “not solved.”
Can the Riachuelo be saved? Experts say yes, although much needs to be done.
“There’s a long-term, high-cost solution that could take decades,” said Raul Estrada Oyuela, a member of Argentina’s Environmental Sciences Academy.
“This requires political will and thorough measures,” Estrada Oyuela said. One of the measures would be a strict restriction on dumping pollutants and raw sewage.
Today, muddy bubbles can be seen across the river’s surface. “These are gases produced by heavy metals on the bottom,” said Alfredo Alberti, president of the La Boca Neighbors Association.
High levels of arsenic, chromium, copper, zinc and lead have been measured in the river.
The pollution began in the 16th century, when people began throwing animal parts and fat into the water. That continued into the 19th century, when businessmen came to its banks to set up “saladeros,” shops that produce salted meat. Over time, factories moved in and began dumping heavy metals and acid.
The spur for the current cleanup came five years ago, when Argentina’s Supreme Court ordered the national government and Buenos Aires city and provincial officials to work with the Authority of the Matanza-Riachuelo Basin to make the river sparkling clean.
Environmentalists warn there’s a long way to go before the river is even somewhat clean.
While they agree progress has been made, including the recent removal of sunken ships from the river and garbage from its surface, they are pushing for a more extensive cleanup and want a petrochemical hub moved far away from the river.
Green Cross Argentina’s president, Marisa Arienza, said the most urgent problem is lead contamination, which can stunt growth in children and causes bleeding of the gums and dermatitis.
A full cleanup could take 30 years, said Lorena Pujo, a Greenpeace coordinator, because factories need to come up with ways to dispose of waste other than dumping it in the river. Then, crews will have to clear out tons of contaminated mud on the river bottom.
“What’s most important is that we reach a consensus that there can be no industrial pollutants coming into the water,” Pujo said.
The river agency says 891 businesses “are working in an industrial conversion plan to stop contaminating” and 411 have already changed their production processes. So far, $225 million has been spent on cleaning the river, making water supplies safer and treating sewage, it says.
Some experts, including Arienza of Green Cross Argentina, contend the report on most-polluted places understates improvements in the Riachuelo and fault the authors for basing the rankings on old data and not doing their own tests.
But ultimately, Arienza said, the problem is clear.
“There’s no doubt that it’s one of the most contaminated places in the world,” she said, “although by now it’s pretty irrelevant whether it’s No. 8 or 20.”
2. ARGENTINA EXTENDS CURRENCY CONTROLS ON TOURISM TO SHORE UP RESERVES (The Wall Street Journal)
By Ken Parks
December 3, 2013
Government Increases Tax Argentines Pay to Travel and Shop Abroad to 35%.
BUENOS AIRES–Argentina’s government has increased the tax Argentines pay to travel and shop abroad to 35% as it tries to stem the slide in the country’s foreign-currency reserves.
“We believe there is a drainage of foreign currency through tourism…We have to be very careful in the management of reserves to guarantee the flow of basic, intermediary and industrial materials,” Jorge Capitanich, President Cristina Kirchner’s cabinet chief, said Tuesday.
Mrs. Kirchner has imposed strict limits on foreign-currency transactions to keep foreigners and Argentines from pulling money out of an economy suffering from 25% inflation. Businesses that want to buy imported equipment or people planning an overseas trip have to obtain government approval to legally purchase the foreign currency they need.
Even so, the reserves that Argentina uses to pay its creditors and purchase imported goods ranging from Land Rovers to industrial machinery are under pressure from debt payments, fuel imports and capital flight. Reserves have fallen 29% so far this year, settling at $30.9 billion Monday.
The Kirchner administration has stepped up efforts in recent weeks to keep foreign currency from leaving the country as reserves approach a seven-year low. In addition to the tourism tax, the Kirchner- controlled Congress is expected to approve this week higher taxes on luxury goods like high end cars.
At the same time, the government has sought to rebuild ties with foreign investors in the hopes of attracting outside investment to replenish its reserves. The administration is negotiating a $5 billion settlement with Spain’s Repsol SA REP.MC
-0.29%for the expropriation of its Argentine unit last year, and in October paid about $500 million to investors who had won international arbitration claims.
“The government is switching from inaction to proactive policies that look to reduce the drain on reserves, which is our main concern at this point about the economy,” Barclays BARC.LN -1.16%economist Sebastian Vargas said.
On Tuesday, the government raised to 35% from 20% the tax on international tourist packages and the purchase of goods and services abroad with credit and debit cards. For the first time, the tax also applies to the foreign currency the government allows people to buy for overseas vacations.
Mrs. Kirchner’s exchange-rate policies have actually fueled demand for luxury goods and foreign vacations. While the authorities doll out limited quantities of dollars at about 6.17 pesos to the U.S. currency, on the black market the dollar now fetches about 9.30 pesos. That has spurred some dollar-rich Argentines to buy black-market pesos to pay for vacations and expensive imported cars whose prices are set at the official exchange rate.
Tourism, once a contributor to reserves, now consumes billions of dollars as Argentines shop and travel abroad with their credit cards. The difference between the inflows and outflows of dollars from tourism was a $4.5 billion deficit in the first half of the year, according to government data.
The previous 20% tax did little to discourage international tourism and shopping because the hefty gap between the official and black-market exchange rates made it worthwhile. But with the tax now at 35% and a narrower exchange rate gap the economics of gaming the system aren’t what they used to be.
Based on the peso’s closing level of 6.16 on the regulated exchange market Monday, the 35% tourism tax implies an exchange rate of about 8.32 pesos to the dollar.
After reaching almost 10 pesos to the dollar a month ago, the black-market peso was trading around 9.31 Tuesday.
On the official currency market, the peso has weakened 25% so far this year and 4% in November as the central bank steps up its controlled depreciation of the peso. The gap between exchange rates is now just 50%, a far cry from early May when the black-market rate briefly traded at almost double the official rate.
3. MEXICO EYES ARGENTINA OIL DEAL, PEMEX EXPANSION (UPI)
December 3, 2013
MEXICO CITY, Dec. 3 (UPI) — Mexico is hoping a reconciliation between Argentina and Spanish oil major Repsol will lead to a Mexican entry in Argentina’s lucrative energy sector and improve chances of its own development, analysts said.
Mexico’s state-owned Petroleos Mexicanos, or Pemex, brokered a deal in November that’s seen as likely to have eased an 18-month deadlock over Repsol’s demand for $10 billion compensation over the Argentine government’s seizure of YPF, the Argentine oil and gas company majority owned by Repsol.
The talks led to a deal seen as likely to halve the compensation claim and settle the issue with $5 billion in Argentine bonds. Repsol isn’t keen on the compromise and is seeking professional help to work out details of the compensation package.
Argentina has hired international experts to help resolve the dispute, which soured Buenos Aires’ ties with Madrid and upset European Union leaders enough to put the Latin American country’s EU trade at risk.
As a compensation deal takes shape, Pemex is moving to forge its own partnership with YPF that will give the Mexican energy major a say in YPF’s future exploration and investment plans, Tiempo Argentino financial newspaper reported.
Pemex wants a role in developing Argentina’s Vaca Muerta shale oil deposits in Patagonian Neuquen and has already sent a team of experts to Argentina to explore prospects.
The Pemex move is significant, analysts said, because the Mexican state oil industry is looking into developing Mexico’s own shale oil as well as deepsea hydrocarbon resources in the Gulf of Mexico.
Both areas are underexploited by Pemex, mainly because of lack of cash resources, but a partnership in Vaca Muerta may open up new prospects for cash investment and other international partnerships, analysts said.
Mexico is debating how to go about attracting foreign investors into its own state-run energy sector, which has tough rules restricting foreign participation. Analysts said constitutional changes would be required to change rules prohibiting foreign participation in Mexican oil industry.
Pemex board member Fluvio Ruiz Alarcon told Tiempo Argentino the company was “on track for a formal agreement” with YPF on a future partnership. Pemex is a minority shareholder in Repsol and has emphasized its neutrality in the Repsol-YPF talks by criticizing Repsol’s management style and its position on the compensation deal with Argentina.
Pemex executives have said Mexico’s oil industry can only develop through foreign investment, prohibited since it nationalized its own oil industry in 1938. Experts in the industry say Mexico needs to more than double its spending on exploration for new oil, both deep sea deposits in the Gulf of Mexico and onshore shale oil reserves.
4. ARGENTINA JACKS UP CURRENCY CONTROLS TO STEM RESERVES LOSS (Reuters News)
By Anthony Boadle
3 December 2013
BUENOS AIRES, Dec 3 (Reuters) – Argentina toughened its currency controls on Tuesday to stem a dramatic depletion of its international reserves by making it more costly for Argentines to travel abroad and buy foreign goods with their credit cards.
Shut out of financial markets since a massive default a decade ago, the Argentine government for three years now has had to burn up reserves generated mainly by grain exports to finance its imports and pay debts.
A measure published in the official gazette by the tax collection agency AFIP raised the tax on credit card purchases outside the country, tourist holiday packages and plane tickets to 35 percent from 20 percent.
The same 35 percent tax will now be levied on the limited amounts of dollars that Argentines can buy from the government to travel, known as the tourist dollar.
“We believe there is a drain on foreign currency through tourism,” Cabinet chief Jorge Capitanich told reporters. “We have to manage our reserves very carefully to guarantee the flow of industrial inputs needed to boost economic growth.”
Argentina’s international reserves have fallen almost 30 percent this year due to a scarcity of export dollars and investment by foreigners who distrust President Cristina Fernandez’s heavy-handed interventionist policies.
In April, central bank reserves fell beneath $40 billion for the first time since May 2007 and have since fallen further to below $31 billion, down from $43.3 billion at the end of 2012.
If the government cannot stop the drain, it may find itself without enough foreign currency to honor its debts or pay for the country’s energy imports, eventually leading to economic collapse in the world’s No. 3 corn and soybean exporter.
The government also uses dollar reserves to intervene in the currency market to prop up the official value of the peso.
Reserves are further depleted by Argentines buying goods overseas on trips and on-line. Strict currency controls introduced in 2011 have led locals to shop more overseas with credit cards, which have to be paid in U.S. dollars.
Argentines buy dollars to shield their savings against rampant inflation – which private economists say is running at around 25 percent – and the currency restrictions have fueled a flourishing black market where the dollar trades at more than 50 percent higher than the official rate.
The peso closed Monday at 6.1565 to the dollar and traded at 9.22 pesos on the unofficial market. With the 35 percent tax, the tourist dollar for travel will cost about 8.31 pesos.
Economists estimate tourism depletes the central bank’s reserves by between $600 million and $800 million a month.
But some say currency controls just create more distrust of the government and will not solve its dollar crunch.
“This is a ridiculous step that again hurts the private sector,” said economist Jose Luis Espert, who said the root of the problem is the third-largest fiscal deficit this decade.
“The government is financing it by printing pesos, but Argentines don’t want pesos and spend them on travel or convert them into dollars,” Espert said.
Expectations that the foreign currency drain will force the government to devalue has led grain exporters to retain stocks to hold out for a better rate, further depriving the central bank of dollars.
After a decade maintaining an overvalued peso to keep the lid on inflation, the central bank has accelerated its gradual devaluation of the peso on the interbank market in recent weeks, fueling further speculation that an official devaluation is on the cards.
According to government estimates, farmers are holding back as much as $6.3 billion worth in soybean exports.
5. ARGENTINA RAISES TAXES ON CREDIT CARD PURCHASES ABROAD AS ECONOMY CONTINUES TO DETERIORATE (Business News Americas)
3 December 2013
A leopard does not change its spots and as the Argentine economy ministry and the central bank welcomed in their new heads, the government announced a rise in tax on credit card purchases made abroad, making it clear that a change in political and economic direction for the better will not be forthcoming.
Having increased the tax from 15% to 20% on purchases and cash withdrawals made abroad in March of this year, the Argentine government has today (Dec 3) moved to increase the rate to 35% in resolution 3550 in the official gazette.
The move by the country’s tax, customs and social security agency (AFIP) marks the first act by the new cabinet of President Cristina Fernández since the recent cabinet reshuffle and comes as the country continues to hemorrhage foreign currency reserves and sees inflation running at over 25%.
It also continues the pattern of misguided economic policies and currency controls which have plagued the country under the administration of Fernández.
CONTINUED ECONOMIC DETERIORATION
In an interview last week with BNamericas, Goldman Sachs’ head of LatAm economics, Alberto Ramos, described the significant macro imbalances faced by the Argentine economy that are set to lead to a continued deterioration in its performance.
“We expect the economy to continue to exhibit significant macro imbalances (e.g., high inflation, deteriorating fiscal and current account, misaligned currency, etc.) and relative price distortions. The policy approach is also expected to remain interventionist and heterodox. Therefore, we expect real GDP growth to decelerate visibly in 2014 (to under 2%) and inflation to accelerate towards 28%-30%.”
Fears that the country will move to instigate a multi-tier exchange regime have built up throughout the year and Ramos indicated that the risk is real.
“The authorities are under pressure to shore up the dwindling stock of central bank reserves and they may be tempted to experiment with a multi-tier exchange regime but this is really not solution for the underlying pressures that are driving up the demand for dollars in the economy and also limiting the supply of hard currency.”
Some may argue that it is too early to tell the direction the new cabinet will take, but the new economy minister Axel Kicillof’s misguided economic philosophy does not bode well.
Multi-tier exchange rate regimes have been tried and have failed before, proving ineffective and distortionary with Ramos describing them as a “foreign exchange rate market aberration.”
6. ARGENTINA MUST DEVELOP SHALE OIL, GAS TO CUT IMPORTS: YPF’S GALUCCIO (Platts Commodity News)
By Charles Newbery
3 December 2013
Buenos Aires (Platts)–3Dec2013/304 pm EST/2004 GMT Argentina must develop its wealth of shale oil and natural gas resources to reduce energy imports and become energy independent, YPF CEO Miguel Galuccio said Tuesday.
“We are standing before a resource with a higher production cost, but it is better than importing,” the head of the country’s state-run energy company said at an industrial conference in Los Cardales, Argentina.
“We must find a way to develop these resources rapidly,” he told business leaders, according to a statement released by the national government.
Galuccio said Argentina could put these resources into production to recover the energy independence of the late 1990s and early 2000s in “five to 10 years” if there is sufficient support from local and international companies.
Argentina’s shale oil and gas resources are thought to be among the largest in the world, a potential that is attracting initial investments from Chevron, ExxonMobil, Shell and other companies. So far YPF is the only company to put the resources into production, with output reaching 13,000 b/d of oil equivalent from the Vaca Muerta play in the third quarter of this year.
Authorities are betting on the development of these resources to arrest a decade-long decline in oil and gas production that has pushed up imports of diesel, fuel oil, natural gas and gasoline. This is chipping away at the country’s trade surplus and foreign currency reserves. Gasoline imports, for example, shot up 42% in the first 10 months of this year compared with all of 2012, according to Energy Secretariat data.
To develop the shale and other unconventional resources, Galuccio said the country must employ fracking methods and seek out the investment of companies like Chevron.
“It is necessary for us to accept this,” he said. “We cannot do it alone.”
YPF entered into partnership agreements with Chevron and Dow Chemical earlier this year and has held talks with other potential partners as it seeks expertise, technology and financing.
Analysts suggest it will cost upwards of $100 billion to develop Vaca Muerta alone, far more than YPF’s $37.2 billion investment program for 2012-2017.
“We have such a big opportunity that there is room for international and national companies, large and small,” Galuccio said.
To help secure more financing, the government plans to normalize its relations with multilateral entities such as the Inter-American Development Bank, World Bank and Paris Club of creditor nations, Chief of Staff Jorge Capitanich said at the same conference.
Argentina lost easy access to the global credit markets after a $100 billion debt default, with about $10 billion still in arrears with bondholders and another $10 billion with the Paris Club. This has pushed up borrowing costs for the country and also for companies doing business in Argentina, including YPF.
By resolving these debt issues, Capitanich said the country would create “a platform” for borrowing for investment in production, including infrastructure and energy development.
7. REPSOL’S BRUFAU CALLS FOR ‘CONVINCING SUM’ IN YPF DEAL (Reuters News)
3 December 2013
MADRID, Dec 3 (Reuters) – Repsol Chairman Antonio Brufau asked on Tuesday for a “a convincing sum” from Argentina to compensate the Spanish company for the expropriation of its majority stake in energy firm YPF.
Argentina and Repsol struck a preliminary deal last week over compensation for the 2012 seizure of the oil firm’s YPF stake that sources have said is worth $5 billion, half the sum Repsol was initially demanding.
“We’ve never mentioned $5 billion. What we’ve said is that the sum received should be, in some way, convincing and justify the withdrawal of lawsuits,” Brufau said at a business event in Barcelona, his first public appearance since last week’s deal.
As part of a preliminary agreement for compensation in the form of liquid assets, Repsol would withdraw a series of lawsuits filed against Argentina over the YPF seizure.
Details of the settlement, which is likely to be paid in 10-year U.S. dollar denominated Argentine bonds, are expected to be ironed out in the coming weeks.
Repsol rejected a YPF compensation offer in June that included a stake, and investments, in Argentina’s vast Vaca Muerta shale oil and gas field.
Earlier, Spanish commerce secretary Jaime Garcia-Legaz said any deal between Argentina and Repsol is preferable to a lawsuit.
“A deal, whether good, bad or average is always better than a lawsuit,” Garcia-Legaz said in an interview with newspaper Expansion published on Tuesday.
8. ARGENTINE ENERGY SECTOR BUOYED BY PRO-MARKET HOPE (Business News Americas)
3 December 2013
Signs of waning support for Argentine President Cristina Fernández point to a change in fortunes for the country’s beleaguered energy sector, according the latest BNamericas Electric Power Intelligence Series report.
October’s congressional elections failed to deliver Fernández the support needed for a constitutional change that would allow a third term in power.
Opposition candidate Sergio Massa, from the Frente Renovador party, emerged as one of the election’s winners on a pro-market platform.
“In the energy sector, a change in direction will come as welcome news,” the report said.
“Ever since the 2001-02 crisis, Argentina’s energy infrastructure has been in gradual decline… Yet all is not lost. Argentina is blessed with abundant energy sources of the future – wind, biomass, crops for fuel, geothermal, solar radiation, natural gas, thousands of kilometers of coastline and rushing rivers.
“With the right shift in policy, energy security could be secured. Perhaps as important, the wealth of its energy resources, particularly in wind and natural gas, could reinvigorate the economy.”
The easing of price controls on gas from wells and higher tariffs offered at the Genren renewable tender have added to investors’ optimism.
But the report warns that “no great change” will occur until price controls introduced at the peak of Argentina’s 2002 currency crisis are abolished.
“Beyond scaring away investment, the price distortion has another unintended effect: it artificially drives up demand, putting further stain on a frail system and on the state’s finances,” the report added.
9. ARGENTINA ECONOMY: QUICK VIEW – NEW AUTOMOTIVE TAX WILL UNDERMINE LOCAL PRO (Economist Intelligence Unit – ViewsWire)
3 December 2013
The lower house of Congress has passed a bill raising taxes on a number of luxury goods, including luxury cars, boats and aeroplanes for personal use.
The tax is largely intended to close a loophole in the system of foreign-exchange controls. This has allowed consumers to buy luxury cars at a huge discount by selling US dollars in the black market and then buying vehicles priced in dollars but purchasable in pesos at the official exchange rate. Combined with high inflation and liquidity trapped by controls, which has led to the purchase of consumer durables as a store against inflation, the result has been rapid growth in sales, of almost 20% year on year in January-October.
The tax will amount to 30% for cars whose price before taxes is in the range of Ps170,000-210,000 (around US$28,000-35,000), and 50% for those priced above Ps210,000. There is also a sliding scale for motorcycles, boats and aeroplanes.
Initially, the 50% tax on cars was planned to kick in at a price above Ps170,000. However, taking into account other taxes, this would have caused effective prices to rise by 80-90%, and the government backed down. With the 30% tax rise, final prices in this segment are projected to rise by 43%. According to estimates from the local automotive sales association, around almost three-quarters of car sales will be affected by the tax rise. Nationally, produced cars represent 40% of that total, so the measure is expected to undermine local automotive production, which has already slowed sharply in the second half of this year after the expiry of a bilateral treaty with Brazil, which exposed Argentina to the more competitive Brazilian industry.
10. IN WORLD CUP YEAR, EUROPE OFFERS BRAZIL LONGER-TERM GOAL (Reuters News)
By Robin Emmott and Alonso Soto
4 December 2013
* Mercosur-EU trade pact would encompass 750 mln people
* Argentina and EU embroiled in trade row over biodiesel
* Failure could leave Brazil out of global trade deals
BRUSSELS/BRASILIA Dec 4 (Reuters) – While much of Brazil is focused on hosting next year’s soccer World Cup and the Olympic Games in 2016, an event of far longer-lasting economic significance is bubbling below the surface.
If all goes to plan, Brazil will sign its first major free-trade agreement next year, 15 years after talks were first launched with Europe on an ambitious deal. Such pacts can bring sustainable wealth while sporting events tend to engender only short-term and sometimes money-losing prestige.
But success or failure for Brazil relies on dealing with an unpredictable partner, Argentina.
The European Union and the South American trade bloc Mercosur have set themselves a deadline of Dec. 31 to swap offers for opening markets in a pact that would encompass 750 million people and $130 billion in annual trade.
A final accord could be struck early next year. But negotiators also know that over more than a decade, talks have collapsed and been relaunched only to stall again, while in between, Argentina suffered the world’s largest debt default.
“We still hope we can agree a deal,” said Adrianus Koetsenruijter, a senior EU official who deals with Mercosur, which comprises Brazil, Argentina, Paraguay, Venezuela and Uruguay.
For the European bloc, the deal would let it tap into Latin America’s promising economies and boost its global trade role.
But the question is whether Argentina, one of the most protectionist members of the Group of 20 countries, will join in opening its economy to greater EU imports, or go the way of Venezuela’s leftist government, which is out of the talks.
Brazil, one of the world’s largest and most dynamic emerging economies, is ready to do a deal. It is backed by Uruguay and Paraguay, but they are relatively small players.
It wants Argentina on board, although it would most likely go ahead with a rump Mercosur if necessary.
“Brazil knows that it needs to sign up to the sophisticated trade deals that are emerging,” said Jean-Pierre Audy, a member of the European Parliament who led a delegation of lawmakers to Brazil in October. “It doesn’t want to be isolated.”
Europe, meanwhile, is also frustrated by Argentina’s policies to protect local industry. Relations have been soured by a row over biodiesel exports and Argentina’s nationalisation of energy company YPF from Spain’s Repsol last year.
EU and South American diplomats see the year-end deadline as Argentina’s last chance to stick with the pack, or release Brazil to pursue its own agenda as the world’s seventh largest economy in a rapidly evolving international trade system.
But Brazilian President Dilma Rousseff appears unwilling to force her fellow leftist ally, Argentina’s Cristina Fernandez, to make a decision. “There is no decision to break Mercosur. It is a strategic project,” said Brazil’s new ambassador to the European Union, Vera Barrouin Machado.
Privately, however, a faction of the Brazilian government backed by Brazilian business wants to leave Argentina behind.
Mercosur, once seen as South America’s answer to European integration, is a forum for Brazil’s diplomatic role as Latin America’s largest economy and most populous nation, while Argentina is an important market for Brazilian companies.
Brazil, which exports goods from cars to coffee, is the fifth largest foreign investor in Europe and wants access to EU markets for its agricultural exports, especially beef.
Its development and foreign ministers were set to go to Brussels last month to deliver the Brazilian proposal to liberalise almost 90 percent of trade with Europe.
But the trip was scrapped at the last minute, according to a person close to the talks. Argentina countered by leading a delegation to Brasilia to draw up a single proposal to present to the Europeans on behalf of all of Mercosur.
Brazilian and Argentinian trade officials met again on Tuesday in Buenos Aires. “Brasilia and Buenos Aires want to send a signal to Europe that Mercosur is united,” said a South American diplomat close to the talks.
Brazil’s neighbourly policy carries risks, however.
If a Mercosur-EU free-trade deal fails, Brazil could be one of the few Latin American countries without a free-trade agreement with both the United States and the European Union, unlike for example, Mexico, Peru, Chile and Colombia.
Meanwhile, the European Union is in ambitious trade talks with almost 80 countries, including the United States. For its part, Washington is negotiating a free-trade bloc that would stretch from Vietnam to Chile to Japan, or about 40 percent of the global economy, the Trans-Pacific Partnership (TPP).
11. FACING EXTRADITION, SIEMENS ARGENTINA DEFENDANT SETTLES WITH SEC (Fortune Blog)
By Douglas Gillison
December 3, 2013
Andres Truppel, former CFO of Siemens Argentina, was one of nine individuals charged in 2011 for their alleged roles in a scheme to bribe top officials.
FORTUNE — Two years after being charged with participating in a massive bribery scheme, the former chief financial officer in Argentina for the German engineering giant Siemens AG has reached settlement terms with the U.S. Securities and Exchange Commission, according to court papers.
Andres R. Truppel, who served as Chief Financial Officer at Siemens Argentina from 1996 to 2002, was one of a total of nine individuals charged by the SEC and Justice Department in 2011 for their alleged roles in a scheme to bribe top officials in that country to win a $1 billion contract for the sale of national identity cards.
After failing to respond to both the Justice Department and SEC, Truppel has retained attorneys and reached settlement terms in principle with SEC attorneys, the commission said in a Nov. 16 court filing.
Over the life of the scheme, which spanned two Argentine governments, more than $100 million in bribes were paid to Argentine officials “up to and including the President of Argentina and Cabinet ministers,” according to the SEC. Former president Carlos S. Menem has reportedly denied the allegations. His successor, Fernando de la Rúa, stood trial in an unrelated corruption matter this year.
U.S. authorities say Truppel played a key role in relaying Argentine officials’ demands for bribery and in negotiating illicit payments in meetings held in Miami and New York.
The 2011 charges stem from the joint U.S.-German prosecution of Siemens (SI) in 2008 in which the company pleaded guilty to paying bribes in more than 20 countries around the world and paid $1.6 billion in disgorgement and fines to authorities in Munich and Washington — the largest such settlement to date.
The Foreign Corrupt Practices Act provides both criminal and civil penalties for the payment of bribes to foreign officials to win business.
The 2011 charges represented an effort by the U.S. government to hold individuals to account following criticism that corporate prosecutions had primarily resulted in negotiated settlements with companies.
However the individual prosecutions have achieved mixed results. The SEC appears likely to reach three settlements, including Truppel’s, and to win default judgment against two others. A federal judge in February dismissed charges against another defendant on jurisdictional grounds and the SEC withdrew its complaint against a seventh in October.
Truppel, a dual German and Argentine citizen, is so far the only Siemens defendant to retain attorneys in response to the separate criminal charges brought by the Justice Department.
Germany in most cases does not extradite its own citizens but Truppel faces extradition from Argentina, where media reports say he is appealing against a court order for his transfer to the United States.
Truppel has retained former New York prosecutors Arthur D. Middlemiss and David G. Liston, currently in private practice, to represent him in both the SEC and Justice Department matters.
Middlemiss entered private practice earlier this year after serving as the head of anti-corruption compliance at JP Morgan Chase & Co., a company now at the center of a widening U.S. probe of bribery allegations in East Asia. Middlemiss declined to comment on Tuesday.
Since reaching its landmark 2008 settlement with U.S. and German authorities, Siemens has continued to face allegations of corruption.
The company voluntarily notified Brazilian authorities this year that it may have paid bribes to win contracts related for the construction and upkeep of the São Paolo subway system.
Siemens is also facing legal action from Liu Meng-lin, a purported whistleblower in China who alleges that he was fired after internally complaining that the company had knowingly undermined anti-corruption policies — created as a result of the 2008 settlement — to bribe officials in China and North Korea.
The new allegations arose as Siemens touted its new internal compliance controls. As part of the settlement, the company agreed to hire former German Finance Minister Theo Waigel as an independent compliance monitor for four years to evaluate the company’s anti-corruption efforts.
The Justice Department said in December last year that Siemens had satisfied its obligations to cooperate with Waigel, who reviewed the company’s operations 39 countries, including some on-site inspections.
The terms of Truppel’s settlement, which have not yet been disclosed, remain subject to approval by the SEC’s five-member commission and by a federal judge in New York.
12. LAKE SCIENCE GOES HIGH-TECH TO UNDERSTAND IMPACTS OF EXTREME WEATHER EVENTS IN ARGENTINA (National Geographic)
By Lisa Borre
December 3, 2013
As I walked along the shore of the serene Laguna La Salada at the northern fringe of the Patagonia region of Argentina, I struggled to imagine the severity of the storm that wrecked havoc on this small lake and the rest of Buenos Aires province just six months before.
The Southern Hemisphere spring was in full bloom on that early November day. I desperately sought shade from the bright mid-day sun, but there was little to be found in the park-like setting. The bright blue sky and glass-calm water made it feel like this is what every day is like here in the Pampas grasslands south of Bahia Blanca.
I was attending my third “all hands” meeting of the Global Lake Ecological Observatory Network (GLEON). We were enjoying a traditional asado, an Argentinian barbeque, at the shallow, saline lake – a real treat at the end of a busy week.
While beef and sausages cooked over an open fire, some of us watched a demonstration of a miniature, unmanned boat map the bottom of the lake. Alejandro Vitale, the engineer who created the automated vessel from a remotely operated toy boat rigged with a depth sounder, showed how he could steer the boat using pre-programmed GPS coordinates on his laptop. A real boat towing a water skier steered carefully around the automated vessel, and a kayaker paddled by nonchalantly, more concerned about getting in a workout than participating in science.
A yellow buoy in the distance silently measured parameters such as water temperature, salinity, dissolved oxygen, suspended sediments, and wind speed and direction, sending the information in near real-time to a computer onshore. We were getting a glimpse at the cutting edge of lake science, where researchers use sensors and other automated tools to collect high frequency data, in addition to more traditional field observations and measurements.
Another Meeting, Another Extreme Weather Event
For the third year in a row, an extreme weather event was a hot topic of discussion among locals hosting the international meeting of lake scientists.
The first instance was at the GLEON 13 meeting on Lake Sunapee, in the foothills of the White Mountains of New Hampshire in the U.S. The October 2011 meeting was held at a time when the entire New England region was recovering from the lashing of tropical storms Irene and Lee. Scientists studying nine lakes affected by the storms later compared their high frequency data. Their published findings were the topic of a post I wrote about the impacts of extreme weather events on lakes a year ago.
The second extreme weather event was discussed at the GLEON 14 meeting in Mulranny, County Mayo, Ireland, in 2012. During a field trip to Lough Feeagh and the Burrishoole Catchment, near Newport, we heard about an intense storm in 2009. This well-documented storm will be the topic of a future post about the ecological effects of these episodic weather events.
I learned about the third extreme event while talking with undergraduate students from the Universidad Nacional del Sur at the GLEON 15 meeting. They explained that over a five-day period in late March and early April, an intense low pressure system formed over northwestern Argentina, and when it combined with a cold front to the south, the system created strong winds and heavy rains that lasted for more than five days. It was an extreme version of a typical weather event known as sudestada in Argentina.
“It rained 392 millimeters (over 15 inches) in a 24-hour period on April 2nd, with most of the rain falling in just four hours,” said Ana Calissano during a poster session at the Instituto Argentino de Oceanografia (IADO) in Bahia Blanca. It was the highest rainfall ever measured by the Astronomic Observatory of La Plata University and double the historical average for the month.
Along with classmates, Alan Bahnmüeller, Azul Gilabert, Noelia Nieva, and Maxi Arena, Calissano pointed to pictures of the destruction in La Plata, the provincial capital, and added, “78 people died and 70,000 homes were destroyed with flooding.” Economic losses exceeded $1.7 billion.
Bahnmüeller told me a story about a friend of his who was about 1 kilometer (a half-mile) from his home when the worst of the storm hit. Water was ankle deep when he started running for home and chest high by the time he reached his house, where he discovered that all was lost.
By my count, that’s three record-breaking extreme weather events on three different continents in three different years.
And it’s just a small sample of the extreme weather events – both extended droughts and severe storms – that are sadly becoming more frequent, including most recently the super typhoon that struck the Philippines and the late-season tornadoes that tore through the Midwestern U.S. earlier this month.
Study of Lakes in Argentina
For their class project, the young Argentinian scientists worked as a team to study the response of four small lakes to the storm in Buenos Aires Province, including Laguna La Salada.
Like the other studies of extreme weather events in North America and Europe, they were able to examine high frequency data collected from sensors mounted on buoys in all four lakes. The “smart” buoys collected data every five minutes, and all but one – torn from its mooring due to high winds – survived the storm.
On all four lakes, the water level was raised about 10 centimeters (4 inches), salinity decreased, and lake temperature decreased 2 degrees Celsius (3.5 degrees Fahrenheit) during the storm. “Even though the lakes were more than 700 kilometers (about 450 miles) apart, they exhibited similar responses to the storm,” said Calissano.
The implications of their study are much larger than even these enthusiastic students might appreciate. Not only is their research relevant for understanding the response of lakes, but by studying lakes, scientists can gain insights about the effects of storms on the surrounding landscape as well.
Only a small portion of the world’s lakes are being monitored with automated sensors. The fact that they captured data from the storm and presented their study at a meeting of scientists who are already collaborating as part of a global network is the key. It creates opportunities for comparative studies – to connect the dots among research on lakes around the world – with a group that is already doing just that.
With intense storms becoming more frequent in a changing global climate, understanding the impacts of these extreme events is critical for climate change preparedness and adaptation.
The student team’s professor, M. Cintia Piccolo, is a member of the GLEON steering committee and organized the meeting that brought me to learn about Laguna La Salada and the April 2nd storm. She is very pleased with what her students were able to learn by piecing together data from the buoys with other available information from the Argentine National Meteorological Service.
Students make up about 30 percent of the membership of the global network. In addition to using high-tech devices to study lakes, training early career scientists to use an interdisciplinary, team-based approach to research is a high priority within the network. “We are transforming the way lake science is conducted,” said Piccolo. “Having these students using high frequency data to collaborate globally is a great learning experience.” It’s also great for the future of lake science.
Lisa Borre is a lake conservationist, freelance writer, and avid sailor. With her husband, she co-founded LakeNet, a world lakes network, and co-wrote a sailing guide called “The Black Sea” based on their voyage around the sea in 2010. A native of the Great Lakes region, she served as coordinator of the Lake Champlain Basin Program in the 1990s. She is now an active member of the Global Lake Ecological Observatory Network.