Archive for the ‘ARGENTINE UPDATE’ Category

ARGENTINE UPDATE – Dec 18, 2013

21 diciembre, 2013

El país :: La propuesta política de los banqueros

EL PAIS › DOCUMENTO DE 1978 DE LA ASOCIACION DE BANCOS DIRIGIDO A LA JUNTA MILITAR
En el texto figuran metas económicas, como las privatizaciones y la prohibición de la actividad sindical. Pero también las aspiraciones políticas, entre ellas la restricción del derecho al voto.
“¿Cuál es la imagen del país deseado?”, sentencia un documento elaborado por la Asociación de Bancos Argentinos (Adeba) para “contribuir” a la planificación política, cultural y económica de la última dictadura. El plan de acción que gestó este grupo de banqueros en 1978 hacía especial hincapié en una serie de medidas que conduzcan a la Argentina a una “auténtica economía de mercado”, pero sus consejos no se circunscribieron a esa área.
En el texto de 345 páginas se tratan distintos tópicos, entre ellos, la necesidad de denegar el acceso al voto universal y obligatorio a personas analfabetas o sin estudios básicos completos y la devolución de Las Malvinas.
En el área económica, las recetas de Adeba, muchas de las cuales aplicó la dictadura y reflotó el menemismo, incorpora privatizaciones, evitar la actividad sindical, focalizarse en la economía agropecuaria y extractiva de recursos e importar mano de obra calificada proveniente de Europa Occidental con el objetivo de evitar la “amenaza del marxismo”.
Existen distintos estudios y documentación que revelan la complicidad y colaboración de sectores de la sociedad civil con la última dictadura militar. El descubrimiento de papeles secretos de la junta militar de 1976 en el Ministerio de Defensa es un aporte incalculable a la memoria colectiva de los argentinos. Dentro del cúmulo de documentos que se hallaron en el Edificio Cóndor de la Fuerza Aérea se encuentra un documento de Adeba titulado Presentación Atinente a los Antecedentes. Fundamentos y Alcances para un Esquema de Proyecto Nacional. El voluminoso documento –que ayer comenzó a difundir la TV Pública– incluye una carta del entonces presidente de la entidad, Narciso Ocampo, que presidía también el Banco Ganadero Argentino, y es dirigida al ministro de Planeamiento, general Carlos Laidaw.
El documento esboza una serie de “propuestas políticas fundamentales para la etapa fundacional signada por un nuevo proyecto nacional”. En lo referido a cuestiones sociales, sostiene que “el voto debe ser considerado como un derecho y no como una obligación y por lo tanto debiera en lo futuro cesar en su carácter de obligatorio”. Es allí donde detalla que deben ser excluidos de este derecho a los analfabetos y a los que no hayan cumplido el ciclo primario de instrucción. También solicita prohibir expresamente “la realización de actividades políticas por parte de los sindicatos”. Pretende la desaparición de la gratuidad de la enseñanza a nivel superior y universitaria, lo que supuestamente hubiese permitido “elevar sustancialmente el coeficiente de productividad del gasto universitario”. De todos modos, el núcleo duro del trabajo se encuentra en materia económica.
El capítulo sobre políticas económicas se sustenta en dos requisitos que la entidad considera prioritarios: implantar una economía de mercado y transformar el “Estado-intervencionista en un Estado-estratega”. En esa línea, aboga una efectiva independencia institucional del Banco Central, la supresión de organismos estatales “que no cumplan una función prioritaria en las actuales circunstancias del país” y un programa de reducción obligatoria de la dotación de personal de cada ministerio, Secretaría de Estado y organismos descentralizados. Los temas de corte netamente neoliberal abarcan política de precios, atendiendo a la libertad de mercado, igual que con los temas que corresponden al sector agrícola, a la industria y los servicios públicos.
En cuanto a la privatización de servicios lo argumenta en que “el Estado es tan ineficaz que se ha tornado impotente para devolver a la sociedad en forma de servicios eficaces” lo que administra. Reivindica la Generación del ’80, elite gobernante entre 1880 y 1916, procedente de familias aristocráticas de las provincias y la Capital. Sostiene que la crisis de 1929 no había acabado con los lineamientos de esa Generación. En ese contexto, insiste en la premisa de lograr un país con autonomía en la producción de alimentos, pero también de “armamentos básicos que hacen a la seguridad nacional, tomando en consideración la creciente evolución de la tecnología militar en sus distintas manifestaciones”. En materia de política internacional, recomienda constituir una integración con Bolivia, Paraguay, Uruguay y Chile para pelearle la hegemonía a Brasil, al que aconseja “excluir de dicho seno”.
Una perlita en este anacrónico relato es la recomendación de incorporar capitales, tecnología y recursos humanos altamente calificados provenientes de los países de Europa Occidental, “aprovechando la creciente inseguridad y la amenaza de formas diluidas de marxismo que se ciernen”. La intención es reeditar el fenómeno inmigratorio, pero bajo un “plano cualitativo”. El endeudamiento, una característica distintiva del proceso de valorización financiera que se abre con el golpe del ’76, es parte fundamental también del programa económico de Adeba. Defiende entonces la “interconexión con los grandes centros financieros mundiales, a fin de permitir a la economía argentina disponer de los recursos adecuados en cuantía y modalidad indispensables para proseguir con su desarrollo económico”. En cuanto a precios, los banqueros vinculan la inflación con un “subproducto de la subordinación del Estado a la presión de los intereses sectoriales”.
Ese paquete se completa con propuestas de afianzar el sistema financiero nacional y “mejorar la eficiencia del sector público, a fin de permitir la disminución de su peso sobre el conjunto de la estructura económica”. Plantea además una política tributaria más laxa, para estimular la iniciativa privada y la “adopción de riesgos”. Resalta la necesidad de ampliar la frontera agropecuaria interna, para aprovechar los grandes recursos naturales inexplotados o mal explotados”. El documento justifica su postura en una “filosofía sobre el Hombre, el Estado y Dios”. “El documento ha tenido como principio rector el de ser una contribución de la banca nacional a la búsqueda de las grandes soluciones que el país requiere en esta hora crucial”, concluye.

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Wednesday

 
 
 
 
1. CORRUPTION SCANDAL SWIRLS AROUND ARGENTINE LEADER (The Washington Post)
December 17, 2013
BUENOS AIRES, Argentina — New corruption allegations are swirling around the Argentine president, who ordered her personal secretary to read a blistering statement Tuesday accusing the nation’s leading newspapers of lying and defaming her “in the best style of fascism.”
The scandal centers on Lazaro Baez, an old friend and business partner of President Cristina Fernandez and her late husband, President Nestor Kirchner. “Austral Construcciones” and other Baez companies have won many public works contracts during the Kirchners’ decade in office.
The couple’s declared wealth has grown more than tenfold since they began leading Argentina, gains they attributed to lucky moves in real estate and the profits from several luxury hotels they own in Patagonia.
Now a series of investigative reports by the newspaper La Nacion suggests that Baez may have funneled taxpayer money from his contracts back to the Kirchners in the form of “rent” payments for rooms at the couple’s hotels.
According to La Nacion, the official books of companies owned by Baez show they spent millions of dollars to reserve a third of the Kirchners’ hotel rooms, whether the rooms were used or not. The paper also said the money-losing state-controlled airline Aerolineas Argentinas guaranteed another third of the rooms, providing a steady flow of profits to the presidential couple’s private businesses.
The presidential secretary, Oscar Parilli, went on live television to attack the story.
“The false reports by the daily La Nacion, later repeated incessantly once again by Clarin … try to put in doubt the legitimacy, legality and honesty of the private economic acts of the Presidents Nestor Carlos Kirchner and Cristina Fernandez de Kirchner,” Parilli said.
He said the allegations involve income that was properly disclosed in the president’s sworn wealth tax declarations. The news stories seek only to defame the Kirchners “in the best style of fascism,” he said.
Separately, a federal judge has been working for months to investigate allegations of money laundering, tax evasion and illicit enrichment involving Baez and his government contracts.
When Judge Jose Maria Campagnoli ordered Baez to provide sworn testimony, the contractor called him abusive. Attorney General Alejandra Gils Carbo, a Fernandez appointee, agreed with Baez last week, removing Campagnoli from the case. Now the judge is awaiting impeachment, accused of overstepping his authority in his investigation.
On Tuesday, the judge was in court seeking to overturn his removal from the case.
“Public opinion understands that corruption corrodes the foundations of the democratic system and that allegations against high-ranking officials need to be clarified. If not, we’re facing a threat against the democratic regime,” Campagnoli wrote in a 20-page appeal of his dismissal filed in Buenos Aires.
Opposition lawmakers, judges and lawyers associations, anticorruption experts and others also spoke out Tuesday in support of the judge remaining on the case.
Baez, meanwhile, asked a judge in the Patagonian city of Rio Gallegos, his hometown and the Kirchners’ political base, to issue an injunction barring the government, websites and the news media from “releasing any information or making any opinions” about his companies’ private business. Baez accused La Nacion of illegally obtaining confidential information, either from Argentina’s tax agency or its money laundering watchdog.
Publishing this information harms the company and those who run it by insinuating, “based on information illegally obtained, that there has been some form of dirty business between my client and the presidential family,” Baez’s lawyer, Juan Pablo Gregori, wrote in the injunction request, according to the local Diarios y Noticias news agency.
The filing was denounced by the Argentine Journalism Forum, which said that “investigating the links between private businesses and the State is part of the most basic work of journalism in a democracy.”
2. ARGENTINE CAPITAL SUFFERS BLACKOUTS IN HEAT WAVE (The Washington Post)
December 17, 2013
BUENOS AIRES, Argentina — Argentina’s power grid can’t handle the heat.
Power outages are plaguing Buenos Aires as temperatures soar above 95 degrees (35 Celsius) and everyone tries to turn on their air conditioners at once.
Thousands in the capital and its suburbs are without power or water, since many buildings depend on pumps for water pressure. Complaints are spreading over social networks and neighbors are joining street protests.
Cabinet chief Jorge Capitanich says blackouts will likely continue. He puts the blame on energy companies, saying they’ve failed to invest in improvements. Government critics say years of energy subsidies and price freezes have left the industry unprofitable.
Capitanich says the government has added 10,000 megawatts to the grid in the last decade, but the country’s demand is outpacing the system’s capacity.
3. ARGENTINE COURT REVERSES SEX SLAVERY VERDICT (The Washington Post)
December 17, 2013
BUENOS AIRES, Argentina — A court in Argentina has overturned the acquittals of 10 people in a notorious sex slavery trial.
Ten of the 13 original defendants now stand convicted in the kidnapping and disappearance of a young woman who was allegedly forced into prostitution for “VIP clients” in provincial Tucuman.
Last year’s acquittals sent shock and outrage across Argentina, prompting street protests and calls by political leaders to impeach the judges involved.
Now Tucuman’s Supreme Court has reversed the verdicts and sent the case back for sentencing.
Argentine mother Susana Trimarco has spent a decade seeking justice in the case of her missing daughter, Marita Veron.
4. ARGENTINE REGULATOR ORDERS TV NEWS TO LABEL VIDEO (The Washington Post)
December 17, 2013
BUENOS AIRES, Argentina — Argentina’s broadcast media regulator has new rules for television news: From now on, subtitles must be added showing where and when video was recorded.
Audiovisual authority President Martin Sabbatella says failing to identify the place and time of events shown on TV news “is especially serious when it involves violence, protests, tragedies or problems in public spaces.” Viewers should know if trouble is happening right now where they live, or has already been taken care of somewhere else, he says.
The new rules require old news video to be clearly labeled “archive.” Live shots must identify the location, while video recorded earlier the same day must include the hour as well as the place.
Two television producers told The Associated Press on Tuesday that their stations wouldn’t comply until their lawyers reviewed the order. They said adding subtitles would be costly and time consuming, since it requires more editing work. The producers spoke on condition of anonymity to avoid their stations suffering repercussions for appearing to challenge the enforcers of a recently upheld media law that imposes many new controls over broadcast content.
Free speech advocate Claudio Paolillo has no problem with the new rules. As president of the Inter-American Press Association’s press freedom commission, the Uruguayan newspaper editor said it’s simply good journalism to clearly identify content.
“No journalist or news operation should refuse to do what good journalism practices suggest,” Paolillo told the AP. “If the event is of public interest and they’re using images for this information, they have to say where and when they’re from.”
Government officials have sought to make scapegoats of critical media companies, saying that when a weeklong series of police strikes over higher pay prompted scattered looting in many Argentine provinces, some TV stations played and replayed scenes of violence without identifying where or when it happened. Cabinet chief Jorge Capitanich and others said this fostered a sense of chaos and encouraged more crimes.
“If the government wants to use this to limit or censor the images that don’t please the government, this would be a serious attack on freedom of expression,” said Paolillo, who led a recent international delegation examining Argentina’s press freedoms. On the other hand, “it seems good to me that the images they show while they talk and talk show where and when the images took place.”
5. OPINION: IS FASCISM RETURNING TO EUROPE? (NYTimes.com Feed)
By Federico Finchelstein and Fabián Bosoer
19 December 2013
BUENOS AIRES — Authoritarian populism, long associated with Latin American regimes, is generally considered a thing of the past in Europe. But this view is misleading. While countries like Argentina and Venezuela have slowly begun to move away from the Kirchners’ brand of Peronist politics and Hugo Chávez’s cult of personality, a dangerous right-wing brand of populism is returning to Europe. Indeed, the rise of movements like Greece’s neo-fascist Golden Dawn party, and the violence and assassinations that have accompanied it, are far more worrying than the residual authoritarianism that pervades Latin American politics.
Broadly speaking, populist movements, which tend to gain traction following the implementation of austerity measures, are an attempt to redress perceived crises of representation in government. The hallmark of Latin American populism has historically been the election by wide majorities of presidents with authoritarian tendencies, who expand social rights even as they curtail political freedoms. Euro-populism, on the other hand, generally targets immigrants and demands the disintegration of the European Union.
Following the demise of European fascist parties after World War II, Argentina’s Juan and Evita Perón made populism a staple of Latin American governance throughout the mid-1940s and 1950s. The persistence of social inequality also opened the gates for paternalistic leaders like Brazil’s Getúlio Vargas and Ecuador‘s José Velasco Ibarra. They extended mass participation in politics while at the same time placing major restrictions on the opposition.
In Venezuela, Hugo Chávez brought this tradition into the 21st century; Néstor Kirchner took up the classic Peronist mantle in Argentina in 2003. For both, the goal was concentration of power in the hands of one leader, with minimal public consultation or genuine representation of voters’ wishes.
In the wake of Mr. Chávez’s death in March, Venezuela has witnessed the rise of a new cult of personality centered on the departed leader. His successor, President Nicolás Maduro, ritually invokes Mr. Chávez’s name to legitimize his own populist policies, and has spoken of several “apparitions” of Mr. Chávez’s soul in birds, shadows and other paranormal phenomena. Government propaganda frequently depicts Mr. Chávez as a God-like figure.
However, with inflation currently at 54 percent in Venezuela, magical thinking has not been enough to generate mass public support for a government characterized by serious economic mismanagement and currency controls. Mr. Maduro’s grip on power was tenuous from the beginning: He was elected in April on razor-thin margins following an unexpectedly tight race. Mr. Maduro’s so-called “economic war” on Venezuelan business interests, which he decries as traitors to the nation, has resulted in looting, general instability, and heightened internal polarization. And recent poll results suggest that Venezuelans are starting to look for other options: Mr. Maduro’s party only narrowly defeated the main opposition coalition in mayoral elections this month, and lost in major cities.
In Argentina, President Cristina Fernández de Kirchner became the face of Peronist populism following the death of her husband, former President Néstor Kirchner, in 2010. While continuing Mr. Kirchner’s efforts to prosecute the crimes of the 1976-1983 military dictatorship, her administration moved to restrict press freedom, intensified the military’s role in government, abruptly backed away from longstanding grievances against Iran, and strained relations with neighbors like Uruguay. Public disapproval with her leadership was reflected in congressional elections this October, when Mrs. Kirchner’s administration was defeated in Argentina’s most important districts. This so-called punishment vote essentially voided her supporters’ desire to reform the Constitution to enable her indefinite re-election.
To be sure, Argentina and Venezuela are very different cases. Argentina’s economy is healthier and better-diversified than Venezuela’s; it has a more-empowered citizenry and press, and a relatively nonintrusive military. However, with electoral support for populist administrations dwindling in both countries, each seems to be witnessing the exhaustion of their distinctive populist brands.
Across the Atlantic, however, populism is resurgent. Indeed, many fear that the European Parliament may be at risk of a right-wing populist takeover following elections in May 2014.
In France, Marine Le Pen’s far-right National Front has, for the first time in that country’s history, pulled ahead in polls for the European Union election. Ahead of the elections to the European Parliament, Ms. Le Pen recently announced her intention to form a “Eurosceptic” alliance with the Dutch politician Geert Wilders , whose right-wing Party for Freedom demonizes Islam and attacks immigration.
In Italy, former Prime Minister Silvio Berlusconi, who controlled politics in that country for decades, peppered his Thatcherite free-market nationalism with spectacular doses of scandal, shady dealings and corruption. In his wake, “populism from above” has given way to a staunchly anti-political populism from below. Beppe Grillo, a comedian turned activist, sent shock waves through the establishment in February when his Five Star Movement won 25 percent of the vote. Mr. Grillo, who in the run-up to the election called for a referendum on whether to keep Italy in the euro zone, stressed the need to wrest power from the oligarchic elite and return it to the people. Prime Minister Enrico Letta, who took office in April, recently warned that populism posed a threat to European Union stability.
While they may seek the breakup of the European Union, most of these new European populist movements don’t aim to eliminate democracy altogether. In Greece, however, the emergence of a strand of populism deeply rooted in the fascist past is particularly troubling. The country’s crippling financial ills, and Brussels’ insistence on austerity measures, have generated populist responses that evoke the worst of interwar European fascism. The neo-fascist Golden Dawn party, which won 7 percent of the vote in Greece’s 2012 parliamentary elections, openly uses a logo resembling a swastika. Its supporters have perpetrated violent physical attacks on immigrants and political opponents (including murder); its party line includes anti-Semitism and Holocaust denial. Similar sentiments are also on the rise in Hungary, where the nationalistic, anti-immigration, anti-Semitic Jobbik party is in line to become the second-largest in Parliament.
With their radical stance against pluralism and minority rights, Greece’s right-wing populists and their Hungarian counterparts — along with dozens of anti-European Union parties poised to win seats in next year’s parliamentary elections — make today’s burgeoning European brands of populism much more frightening than their Latin American counterparts.
Federico Finchelstein, an associate professor of history at the New School, is the author of the forthcoming book “The Ideological Origins of the Dirty War.” Fabián Bosoer is an opinion editor at the Argentine newspaper Clarín.

ARGENTINE UPDATE – Dec 9, 2013

10 diciembre, 2013
A most interesting blog post by Martin Anderson – author of Dossier Secreto – written a couple months after 9/11 …

Paul Aussaresses dies at 95; French general defended his use of torture techniques

  • by Emily Langer
  • Dec. 4, 2013
  • original
Paul Aussaresses, a French army general who in the final years of his life dispassionately revealed the torture techniques he employed during the Algerian war for independence and defended them as appropriate measures in the modern age of terrorism, has died. He was 95.
His death was announced Dec. 4 by a French veterans’ association. No details were provided.
Gen. Aussaresses spent nearly his entire career in the service of his country’s military. He was described as a hero of World War II and fought in the French Indochina War before being posted to Algeria at the outset of the anticolonial rebellion there in 1954.
The insurgency raged on until Algeria gained its independence in 1962. Five decades later, the war and its prosecution remain the subject of intense soul-searching in France, much as the Vietnam War continues to weigh on the American psyche.
 
Gen. Aussaresses was chief of French military intelligence during the Battle of Algiers, the uprising in the Algerian capital in 1956 and 1957. Working under French Gen. Jacques Massu, he helped put down the guerrillas who had been radicalized by past abuses perpetrated by their colonial rulers.
 
The rebellion continued in other regions, however, and the French victory in Algiers came to represent the folly of winning a battle but losing the war.
In 2001 — long after his retirement — Gen. Aussaresses made international headlines with the publication in France of a memoir later translated in English as “The Battle of the Casbah: Terrorism and Counter-Terrorism in Algeria 1955-1957.”
The book detailed the torture and summary executions in which he had taken part, and they provoked an uproar in France. Then-President Jacques Chirac said in a statement at the time that he was “horrified” by the book’s contents.
 
“The methods I used were always the same: beatings, electric shocks, and, in particular, water torture, which was the most dangerous technique for the prisoner,” Gen. Aussaresses wrote. “It never lasted for more than one hour and the suspects would speak in the hope of saving their own lives.”
 
He wrote that he was “indifferent” to the executions of his adversaries and that some deaths were concealed as suicides.
“If I myself went on to carry out these summary executions,” he had once told an interviewer, “it was because I wanted to assume personal responsibility. I didn’t want to make someone else do the dirty work.”
Gen. Aussaresses contended that French government officials, including then-justice minister and future president François Mitterrand, were aware of and condoned the use of torture in Algeria. Confronted by international outcry, Gen. Aussaresses insisted on the rightness of his actions.
 
“I express regrets, regrets, regrets,” he told the Associated Press. “But I cannot express remorse. That implies guilt. I consider I did my difficult duty of a soldier implicated in a difficult mission.”
Writing in the New Republic, the human rights and international affairs scholar Michael Ignatieff argued that the book was notable not for its specifics but for the author’s perception of their meaning.
“What was distinctive about Aussaresses,” Ignatieff wrote, “was his jaunty impudence about the whole issue, his insistence that he had no regrets and that he would do it again in the context of the contemporary war on terrorism.”
 
Months after the release of the book, and amid intensifying national outrage, Gen. Aussaresses was charged in a French court with “complicity in justifying war crimes.” He stood trial for having been an apologist for the torture techniques — not for having used them, as long-standing amnesty legislation protected French veterans of the Algerian conflict.
Gen. Aussaresses was convicted and fined the equivalent of about $6,000. His publishers were fined about twice that amount. He was stripped of his Legion of Honor award.
Amid the drama of the trial, Gen. Aussaresses was interviewed by “60 Minutes” newsman Mike Wallace. Wallace asked him if Zacarias Moussaoui, a conspirator in the terrorist attacks of Sept. 11, 2001, should be tortured for information.
“It seems to me,” Gen. Aussaresses replied, “it is obvious.”
Gen. Aussaresses was born on Nov. 7, 1918, in Saint Paul Cap de Joux, in southern France, and trained at the Saint-Cyr military academy. He was an officer cadet in Algeria during World War II before joining the Free French Forces and parachuting to the aid of French resistance fighters in German-occupied territory in Europe.
Gen. Aussaresses wore a patch over his left eye. At least one newspaper over the years reported that he had lost the eye during the war. At the time of his death, however, the Associated Press reported that the cause had been a failed cataract surgery.
After his assignment in Algeria, he was a military attache in Washington and lectured U.S. Army Special Forces at Fort Bragg, N.C., according to the Encyclopedia of Insurgency and Counterinsurgency. He later was an adviser to Latin American governments.
Gen. Aussaresses was reportedly married twice and had several children. A complete list of survivors could not be confirmed.
He acknowledged that many observers wanted him to display repentance but said that he could not.
“If tomorrow and every day bombs went off in Paris stadiums, cafes, or elsewhere, do you think the government and police would fight back with classic means?” he said. “When one has seen, like I have, civilians, women, children, dismembered or nailed to a door, you are marked for life.”
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monday, dec. 9th —  econmist forecast is grim..

 
 
 
1. U.S. SUPPORTS ARGENTINA OVER SUBPOENAS AGAINST BANKS (HedgeWorld News)
By Lawrence Hurley
6 December 2013
WASHINGTON (Reuters)—In the latest twist in long-running litigation over Argentina’s obligations to bond investors, the U.S. government has asked the Supreme Court to intervene over a hedge fund’s effort to gain information about the country’s non-U.S. assets.
The hedge fund, NML Capital, a holder of Argentine bonds, wants repayment in full in a fight that was prompted by Argentina’s default on $100 billion in sovereign debt in 2002. That is the subject of high-profile litigation that could be headed to the high court in a separate case.
But in the different case in which U.S. Solicitor General Donald Verrilli filed a brief this week, the question is the narrower issue of whether NML could enforce subpoenas against Bank of America and Banco de la Nacion Argentina seeking information about Argentina’s non-U.S. assets.
In August 2012, the 2nd U.S. Circuit Court of Appeals in New York rejected Argentina’s argument that the subpoenas should be quashed because it would infringe on its sovereign immunity.
Verrilli said in his brief that the appeals court “erroneously permitted blanket discovery into a foreign state’s assets located outside the United States.”
NML, a unit of billionaire hedge fund manager Paul Singer’s Elliott Management Corp., is one of several bondholders which rejected offers accepted by other investors to swap the defaulted debt for new paper at a steep discount. The other major player is Aurelius Capital Management.
Last month, in the more high-profile case, the same appeals court declined to reconsider an order requiring Argentina to pay $1.33 billion, ruling in favor of the bondholders. Argentina is now expected to seek a Supreme Court review in that case.
The case in which the U.S. government filed the brief this week is Argentina v. NML Capital Ltd, case No. 12-842, in the U.S. Supreme Court.
2. ARGENTINA: COUNTRY FORECAST SUMMARY (Economist Intelligence Unit – ViewsWire)
6 December 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 longstanding 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 imbalances remain unaddressed. Combined with continued recourse to heterodox economic policies, this will increasingly impair confidence, investment and employment.
Economic performance in 2016-18 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 improvements in education 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 (%)                           5.1    2.3     3.2    4.2    4.5    4.5
Consumer price inflation (av; %)        20.5  23.2   20.0  14.9  12.4  10.1
Budget balance (% of GDP)                -3.2   -3.0   -2.9   -2.5   -2.0  -1.9
Current-account balance (% of GDP) -0.6   -1.6   -2.9   -3.2   -3.3  -3.4
Lending rate (av; %)                          16.7   20.0   20.4  18.9  17.0  14.5
Exchange rate Ps:US$ (av)                 5.5     7.0     8.9  10.4  11.3   12.3
3. ENVIRONMENT: DEFORESTATION SPAWNS CREEPING DESERT IN CENTRAL ARGENTINA (Inter Press Service)
By Fabiana Frayssinet
6 December 2013
RÍO CEBALLOS, Argentina, Dec. 6, 2013 (IPS/GIN) – This small town in the semi-arid central Argentine province of Córdoba now has a 24-hour hotline for people to report their neighbours for sprinkling their lawns or using water to clean off the sidewalks.
The water shortage is felt throughout the province, but it is especially bad in the most populous areas – the provincial capital Córdoba, the Sierras Chicas hills to the northwest of the city, and the Punilla valley.
Córdoba has the highest level of deforestation in Argentina. All that remains is five percent of the 12 million hectares of native forest that the province had at the start of the 20th century
And fires that broke out in August and September devoured 40,000 more hectares of forests and grasslands in the hills.
“Between 1998 and 2002, the equivalent of 67 football fields was deforested every day – an appalling figure,” Raúl Montenegro, the president of the Foundation for the Defence of the Environment (FUNAM), told IPS.
In recent times, rainfall has been scarce, and some towns in the hilly region have started to ration water, including Río Ceballos, a town of 30,000 located 30 km north of the capital.
The Dique La Quebrada reservoir, the town’s source of water, reached its lowest level ever – 13.5 metres below the height of the undersluice. The city government has scheduled 12-hour water cuts twice a week.
“We could see this coming,” local resident Omar Vergara told IPS. He has a collection of buckets scattered around his patio to catch rainwater and use it to water his plants and clean the floors.
Like other locals, he washes his car “with just a couple of buckets of water” and reuses “the less dirty” water from his washing machine, leaving the potable water for drinking and cooking.
And when people dare to use a hose to clean their sidewalk, they face the risk of being reported by their neighbours on a free round-the-clock hotline for complaints about wasteful use of water.
The more water a household consumes, the higher the rate charged. But filling a pool is still frowned on in this quiet town, where many people have come from the nearby city of Córdoba to live, drawn by the clean air and overall higher quality of life.
The local water company, the Cooperativa de Obras y Servicios Río Ceballos, is working to raise awareness on the need to save water.
The company manager, Miguel Martinesi, explained to IPS that consumption per person dropped from 270 to 170 litres a day, compared to 400 litres per person in the provincial capital.
“Everyone is on the alert. Locals warn each other not to water the lawn or plants, and not to wash their car or the sidewalk,” he said.
“We’ve been living in an emergency situation since 2005,” Río Ceballos Mayor Sergio Spicogna told IPS. He said the water crisis was due to a drop in rainfall, combined with explosive growth of the population since a new freeway was built connecting his town with Córdoba.
In the past, the reservoir, located seven km from Río Ceballos, also supplied two neighbouring towns, Unquillo and Mendiolaza, that have a total combined population of 40,000, “which made the situation much more problematic,” according to the mayor.
But the Dique San Roque reservoir, which supplies the capital, now also provides water to the two towns through a 30-km aqueduct. And the plan is to extend it to Río Ceballos.
The provincial authorities are planning alternative sources of water supply for the capital, so the surplus from San Roque can go to the Sierras Chicas.
But, Spicogna explained, they are costly plans that depend on “synergy” between the municipal, provincial and national authorities.
And piping the water long distances from the reservoirs isn’t the solution, according to Ricardo Suárez, the head of the Proyecto de Conservación y Reforestación de las Sierras de Córdoba, a local environmental organisation involved in the conservation and reforestation of the mountains.
“Bringing water from the Dique San Roque is a problem, because although the reservoir is bigger than La Quebrada, it is also below its normal level and has a much bigger – and growing – population to supply,” he said.
“The infrastructure works have always come late, consumption is much higher than what the works will be able to supply, and nature has a limit,” he said.
In the province of Córdoba, the second-most populous in Argentina, average rainfall is 779 mm a year and the shrinking of the native forest has increased evaporation of rainwater due to the lack of forest mass to retain it.
Little by little “this semi-arid system has become almost arid, with a tendency to turning into a desert,” Suárez said.
According to FUNAM’s Montenegro, the fires and indiscriminate logging undermined the functioning of the main water resources. “The ‘factories of water’ collapsed,” the biologist summed up.
The “more violent acceleration” of logging came in the 1990s, coinciding with the introduction of genetically modified crops like soy, maize and cotton, which also increased consumption of water, Montenegro said.
“Producing a kilo of soybeans means 1,500 to 2,000 litres of water have to go through the plant,” he said, to illustrate the problem.
“Many believe that most of the surface area in the province can be dedicated to agriculture, livestock and the planting of exotic trees, and that the tiny parks and reserves created by the governments are sufficient to preserve our native environments,” he said.
“But that is patently untrue. There is no future, and no environmental stability, without balanced coexistence of natural and productive environments,” he argued.
The construction of gated communities, industrial areas and major tourism complexes has also driven deforestation in the province.
Suárez said the solution would be a massive reforestation plan, rather than just new water infrastructure works.
“The Dique La Quebrada is going to dry up, it’s irreversible, because the basin is [85 percent] deforested. The soil is completely exposed,” he said.
Using volunteers and very few funds, Suárez’s organisation replanted 40 hectares of native forest, over the space of 14 years. “If reforestation plans were systematic, today the sierra would be one big native forest,” he said.
Martinesi, the water company manager, suggested other solutions. “We have to define which zones we want to grow, to be able to provide them with the necessary infrastructure, and which ones we don’t want to grow,” he said. “Otherwise we’ll have a serious problem in the medium term.”
He said climate change played a role in the water shortage, as there have been lengthy droughts, aggravated by the degradation of the ecosystem.
“But we should resolve the question of infrastructure, make sure the growth is orderly, and take full advantage of our water sources, before we say that things have become complicated because of the lack of rain,” he argued.
“Expecting a region to grow while depending on rainfall is irresponsible,” he added.
4. YORBA LINDA BOY TAKING IT TO ANOTHER LEVEL; 9-YEAR-OLD HOPES TO BE YOUNGEST TO SCALE MOUNT ACONCAGUA (The Orange County Register)
By Daniel Langhorne
7 December 2013
YORBA LINDA Nine-year-old Tyler Armstrong’s Christmas present is to summit South America’s highest peak.
To open that gift, the Yorba Linda boy will have to climb for two weeks while weathering temperatures close to, or below, zero degrees Fahrenheit. He expects the cold to make this climb particularly challenging compared with last year’s summit of Mount Kilimanjaro, when at age 8 he became, as best the family can tell, the second youngest to make it to the top.
Tyler leaves today for Argentina with hopes of becoming the youngest person to summit Mount Aconcagua.
“If we’re super lucky, at the top it will be 1 degree,” he said. “At the worse, it will be negative 20.”
His father, Kevin, an emergency medical technician, and their Nepalese guide will be with him every step of the way.
A personal trainer helped strengthen Tyler’s back and abdominal muscles so he can carry a backpack of up to 12 pounds.
To learn the art of using ice axes and crampons, Tyler took winter ascent classes with REI at Mount Baldy.
At home, said his mother, Priscilla, Tyler is just like other boys his age. There are the regular fights with his younger brother, Dylan, and he enjoys blasting through his homework so he can have Nerf gun fights with his dad.
While her son and husband are gone, Priscilla Armstrong, a pediatric neuropsychologist at Children’s Hospital of Orange County, plans to have lots of dinners with friends and maybe take Dylan to Legoland.
“If something happens, I feel like I’m far away,” she said.
Kevin and Tyler Armstrong will take a 12- to 13-hour flight from Los Angeles to Santiago, Chile; Tyler intends to do homework on the plane. The two will then make their way to Mendoza, Argentina, where they will stay for about a week.
Dad and son will appear before a judge there, seeking to persuade Argentina’s national parks administrators to issue Tyler his permit to climb. Under Argentine law, Tyler is too young to climb, so the attorney his parents hired must prove that he is physically and mentally capable.
Kevin Armstrong said the attorney is optimistic, because children just older than him have been allowed to climb. He said his son doesn’t get altitude sickness, has the experience and training necessary, and understands the seriousness of the undertaking.
“I think it’s ridiculous that people put age restrictions on things,” Kevin Armstrong said. “If they can do it, let them.”
He describes his son’s demeanor on the trail as being mature but talkative.
“He knows it’s serious, so he doesn’t screw around,” Kevin Armstrong said.
The Armstrongs will start their hike at an elevation of about 6,000 feet. Pack mules, carrying their gear, will accompany them to the base camp, at 19,500 feet. They will establish two more camps before reaching the summit at 22,841 feet elevation before descending. In all, they will be on the mountain 14 to 18 days, depending on the weather.
According to Acon- caguaexpeditions.com, the youngest to summit Mount Aconcagua until now has been a 10-year-old American in 2008.
Tyler and his dad will miss a Yorba Linda Christmas, but Tyler just smiled at the thought.
“Most things kids get for Christmas, they play with it for five seconds and say, ‘I don’t need it anymore,’ ” he said.
I think it’s ridiculous that people put age restrictions on things.”

ARGENTINE UPDATE – Dec 5 & 6, 2013

6 diciembre, 2013

 

THURSDAY CLIPS
 
 
 
 
 
 
 

1. LOOTING ENDS AS ARGENTINE POLICE STRIKE RESOLVED (The Washington Post)

December 4, 2013
BUENOS AIRES, Argentina — A sit-in by police seeking pay raises in Argentina’s second-largest city prompted hours of looting, robberies, injuries and vigilante mobs trying to protect their neighborhoods before the provincial government agreed to the officers’ demands and peace returned to the streets Wednesday. Three deaths were reported amid the violence in Cordoba and a copycat effort to loot a store outside the nation’s capital.
The accord brings steep pay hikes for Cordoba police. Gov. Jose Manuel de la Sota said they will now be the best-paid in the nation. But the violence suggests how easily social conflicts can erupt in Argentina, where most cities are surrounded by slums known as “misery villages,” and street protests by activists demanding more handouts to keep up with inflation are a daily fact of life.
De la Sota, a political rival of President Cristina Fernandez who says she starves Cordoba of federal support, said her administration could have easily prevented the violence by sending national police in earlier.
“It’s like we have to burn our national identity document because there are some who don’t consider us part of the Argentine Republic,” de la Sota complained in a fiery speech Wednesday after resolving the strike.
The president’s Cabinet chief, Jorge Capitanich, denied this and accused de la Sota of trying to shift the blame for a problem that was entirely his responsibility. Capitanich also denied he had received de la Sota’s telephone calls for help.   2,000 Federal police were offfered to be dispatched to Cordoba by Wednesday afternoon to help restore order, but de la Sota responded, “Don’t bother, we have resolved the problem without your help.  There is no longer a need for the Federal police, we needed them Tuesday night, not today at noon.”
The violence began Tuesday evening after police abandoned their posts while the governor was traveling outside Argentina, and continued through the night, with storefronts shattered, mobs stealing merchandise, robbers attacking people in the streets and vigilantes arming themselves to protect their homes. Banks and schools were closed and people huddled inside Wednesday as more supermarkets and a mobile television van recording the violence were attacked, even as officers and provincial authorities negotiated the deal.
Hospital authorities reported two deaths: a young motorcyclist was shot in the chest and an 85-year-old man collapsed while his home was being robbed, according to Cordoba’s Voz del Interior newspaper. More than 100 were injured, mostly from shattered glass. At least 56 people were arrested, and both the governor and police chief said after signing the deal that anyone responsible for looting will go to jail.
The deal raises most officers’ monthly take-home pay to more than 10,000 pesos, said the governor’s Cabinet chief, Oscar Gonzalez. That amounts to $1,612 at the official exchange rate, or $1,075 at the black market rate many Argentines consider a more reliable measure. Not all officers were happy with the deal, but many were seen chanting and cheering at their success before returning to work.
De la Sota also described darker motives behind the strike: He called it a response to his decision to close 140 brothels that provide income to corrupt officers. “We know that this, which is a terrible business, horrible, is linked to drug trafficking and that it would bring us problems sooner or later,” he said.
While the streets returned to normal in Cordoba, about 50 people tried to loot a supermarket in Glew, a poor neighborhood in southern Buenos Aires province, authorities said. The owner tried to fend them off with gunfire early Wednesday and his body was found after the building was set on fire, Cesar Orlando Mateo, a volunteer firefighter who responded to the scene, told Radio La Red.
2. CALM RETURNS TO ARGENTINE CITY PARALYZED BY LOOTING; VIOLENCE LEAVES TWO DEAD, ABOUT 100 HUNDRED INJURED IN CÓRDOBA (The Wall Street Journal Online)
By Ken Parks
4 December 2013
The wave of looting and vandalism that paralyzed Argentina’s second-largest city, Córdoba, has ended, casting a spotlight on the fragile nature of civil society in the South American nation, even after years of economic growth and heavy government spending on social welfare programs.
Two people died and about 100 people were injured during the incidents, state news agency Telam reported. The looting started after thousands of provincial police went on strike Tuesday to demand higher salaries.
AFP/Getty Images Looters leave a supermarket in Córdoba, Argentina Tuesday after police demanding pay raises refused to leave their barracks.
Government offices, schools and many businesses in the city, which is the capital of the province of Córdoba, were closed after looters attacked dozens of supermarkets and shops in events that spilled over Wednesday. Calm returned to the city as police went back to work after reaching a salary agreement with the provincial government.
Córdoba province Gov. José Manuel de la Sota accused criminal gangs of organizing the violence and said his government would prosecute those responsible.
“None of them should enjoy impunity for the damage they have caused to the city,” Mr. De la Sota said. “I hope that in the next few hours peace once again reigns in our city.”
The looting poses a test for President Cristina Kirchner’s efforts to revamp her administration’s security policies. Crime consistently ranks as Argentines’ top concern in public opinion polls.
On Wednesday, Mrs. Kirchner swore in María Cecilia Rodríguez, a little-known official who recently oversaw the Defense Ministry’s disaster relief arm, as the administration’s third security minister in less than a year.
The Kirchner administration was initially cool to Mr. De la Sota’s request for federal help.
Mrs. Kirchner’s cabinet chief, Jorge Capitanich, said Wednesday morning it was the provincial government’s job to solve the police strike and control the looting.
Security Secretary Sergio Berni later said the government would send 2,000 antiriot officers to the province. Those security forces were recalled after the strike ended, Telam said.
Opposition leaders, including Buenos Aires City Mayor Mauricio Macri, legislator Sergio Massa and Santa Fe Gov. Antonio Bonfatti, had called on the Kirchner administration to step in.
The incidents in Córdoba are similar to an outbreak of looting last year that affected several cities just days before Christmas. A local dispute over holiday handouts between shantytown political bosses and the government of the resort city of Bariloche in southern Argentina degenerated into a looting spree that spawned similar incidents in cities across the country.
Those incidents, the worst acts of looting and vandalism Argentina had seen in years, prompted Mrs. Kirchner to deploy hundreds of federal police and members of Gendarmería, a militarized police force, to restore order in Bariloche and other cities.
The events in Córdoba highlight the fragility of Argentina’s social fabric, even after years of rapid economic growth and a broad expansion of social welfare programs under the governments of Mrs. Kirchner and her husband and predecessor, former president Néstor Kirchner, who died in 2010.
The Kirchner administration spends billions of dollars a year on social programs to help low income families, including free health care, pensions and monthly payments that benefit more than six million children. Mrs. Kirchner also frequently boasts that she and her husband created more than five million jobs.
Even though many people were lifted out of indigence thanks to those social programs, many remain mired in poverty, said Carlos F. De Angelis, sociologist and professor at the University of Buenos Aires.
“If the police aren’t there, the poor rush out to loot,” Mr. De Angelis said. “If Argentina doesn’t create productive jobs, social mobility will remain stalled, and that fuels dissatisfaction.”
The police strike is also the latest sign of the financial stress some provincial governments are facing from inflation that most private economists say has been running at or above 20% a year since 2010. The Kirchner administration’s economic data puts annual inflation at 10.5%, while private economists say inflation is currently around 26%.
Many provinces are heavily dependent on federal money to fund public works and to pay salaries, which have risen roughly in line with private-sector inflation estimates. Córdoba province’s relationship with the federal government is especially complicated by a feud between Mr. De la Sota and Mrs. Kirchner, who hail from opposing wings of the ruling Peronist movement.
The city of Córdoba, home to about 1.3 million inhabitants, is a major agricultural and manufacturing hub located about 435 miles northwest of the capital, Buenos Aires.
Local media reported that some terrified residents barricaded streets Tuesday night to protect their homes and businesses from bands of looters roving the city on foot and motorbikes. Television stations showed footage of gutted stores and ransacked supermarkets.
“This isn’t looting because of poverty. There hasn’t been looting of food…What we saw last night bears more signs of looting and criminality than a social movement driven by hunger,” Pedro Torres, the auxiliary bishop of Córdoba, told news channel TN.
3. ARGENTINA’​S TOURIST TAX (Financial Times)
By Benedict Mander
December 4, 2013
When the oppressive heat in Buenos Aires becomes just too much to bear at the height of the austral summer, those who can afford it prefer to jet off to cooler climes to see in the New Year.
But some may have been forced to rethink their holiday plans after the Argentine government moved to stem an alarming decline of foreign currency reserves by bumping up the price at which it sells dollars to Argentines travelling abroad, in what amounts to a stealth devaluation.
On Tuesday, the government hiked taxes on international tourist packages and purchases abroad with credit and debit cards from 20 per cent to 35 per cent, meaning that in effect Argentines must now pay about 8.3 pesos per dollar.
That compares to the official exchange rate which recently rose above 6 pesos to the dollar, as the government in parallel quickens the pace of depreciation in an increasingly desperate bid to do something about central bank reserves which are at their lowest level in almost seven years.
Jorge Capitanich, President Cristina Fernandez’s new cabinet chief , spoke of a “drainage” of reserves thanks to tourism, which has accounted for almost $6bn of outflows annually since 2012. The total level of reserves could drop below $30bn by the end of the year, having been falling at a rate of about $1bn a month in 2013.
Needless to say, the government is worried. As Siobhan Morden, an analyst at Jefferies, points out in a note to clients today:
There has been a clear priority shift to safe-guard external liquidity with a faster pace of FX depreciation, a stealth devaluation for the tourism sector via higher taxes and potential plans for debt issuance from the quasi-sovereigns . . . The latest measures also reflect more of a piecemeal approach as opposed to a comprehensive approach to rebalance the policy mix to restrict overly expansive monetary/fiscal stimulus and allow for a free-float of the FX rate.
The next measure is likely to be a law passed by the government-controlled congress soon that will raise taxes on luxury goods. The government is also trying to mend bridges with foreign investors, most recently coming to an agreement with Spain’s Repsol after expropriating its majority stake in the state energy company YPF last year.
But Argentina still has strained relations with the IMF and the Paris Club – it will take more than an agreement with Repsol to set things straight.
The big question: how much is enough? As Morden points out, there has been no sign of a reversal in the decline of foreign exchange reserves as yet – and they are already low. At their current rate of decline, there will be very little left by the end of Fernandez’s term in two years. Nail-biting times ahead.
4. ARGENTINA SAID TO SEEK $17 BILLION FROM RUSSIA TO CHINA FOR DAMS (Bloomberg News)
By Pablo Gonzalez
December  4, 2013
Argentina’s Planning Minister Julio De Vido is flying to Russia and China to seek investors for 14 infrastructure projects to be auctioned next year for a total of $17 billion, two people with knowledge of the situation said.
De Vido, accompanied by his energy staff, was expected to arrive in Moscow late yesterday and travel next week to Beijing where he could be joined by Economy Ministry Axel Kicillof, the first person said, who asked not to be named because he is not an official spokesman.
Argentina’s projects include hydro dams in Neuquen, a dam in Salta, aqueducts in the northern part of the country and a communications tower to be erected outside Buenos Aires, said the second person, who also asked not to be named because he is not an official spokesman.
Kicillof’s spokeswoman Jessica Rey wasn’t available to receive calls for comment, her assistant said. Planning Ministry spokesman Horacio Mizrahi wasn’t available to take calls as he was traveling with De Vido, his assistant said.
This is De Vido’s second trip to Russia and China in the past year seeking investors. In August, Argentina hired the joint venture of China Gezhouba Group Co. (600068) and Argentina’s Electrongenieria SA to build two dams worth $4.1 billion to produce total of 1,740 megawatts in Santa Cruz province.
5. CORDOBA ASKS ARGENTINA TO SEND POLICE AS ONE KILLED IN LOOTING (Bloomberg News)
By Pablo Gonzalez
December  4, 2013
Argentina’s Cordoba province is asking the federal government for help quelling looting that started last night and left one dead amid a local police strike.
Riots in Argentina’s second largest city began yesterday afternoon after police refused to patrol streets in demand for higher pay are still going on today. The looters smashed supermarket doors and stole goods from food and beverages to flat-screen TVs, according to images broadcast by CN23 television channel. A 20-year-old man was dead, Hospital San Roque spokesman Constantino Martinez told Radio Cordoba.
Cordoba Governor Jose Manuel De la Sota asked President Cristina Fernandez de Kirchner to send border police to Cordoba through his Twitter account. Fernandez’s Cabinet Chief Jorge Capitanich said he hadn’t received a call from De la Sota, who’s with an opposition party, adding the riots and looting were a matter for the province to resolve on its own. The federal government is monitoring the situation, Capitanich said.
“We can’t interfere in a matter of provincial jurisdiction related to a salary protest,” Capitanich told reporters in Buenos Aires. “It’s very easy to govern transferring responsibilities to others.”
De la Sota gave local police a 10 a.m. (8 a.m. New York) deadline to return to work in a Radio Cordoba interview. There are about 22,000 police in Cordoba, of whom 4,000 are in the capital, according to La Nacion newspaper. They’re demanding a minimum wage of 13,000 pesos ($2,104) monthly from about 6,000 pesos, while De la Sota is offering a 52 percent raise, La Nacion reported.
Images broadcast by TN television showed people taking products from toilet paper to baby strollers from shops, some using carts from the stores being looted.
6. ARGENTINE ENERGY SUBSIDIES TO REMAIN UNCHANGED (Business News Americas)
4 December 2013
Argentine power and natural gas subsidies will remain unchanged in the wake of President Cristina Fernández’s cabinet overhaul, although biodiesel mix requirements will rise to offset European Union sanctions.
“[Energy] subsidy policies will not change and we will continue to eliminate or reduce them for those who do not need them,” said Argentina’s federal planning and public investment (Minplan) minister Julio De Vido, adding “power prices will not be dollarized.”
During a press conference with the new economy minister Axel Kicillof among other new cabinet members, De Vido announced that mandatory biodiesel blending will be increased to 10% next year for diesel fuel used for automobiles and now also power generation.
The new 10% biodiesel blending requirement will be reached by March, after increasing one percentage point in January and one in February.
The two percentage point blending increase is aimed at offsetting the effects of anti-dumping sanctions imposed on Argentine biofuel exports by the EU, the main destination of Argentina’s soy bean-based biofuel.
Argentina has capacity to produce 4Mt/y of biodiesel while annual domestic consumption reaches only 850,000t. The rise in biodiesel mandate will increase domestic consumption by 450,000t, according to a statement by the agriculture ministry.
The new regulation will also help reduce diesel imports by US$50mn next year, according to Kicillof, which will reduce the nation’s billion dollar fuel import bill, a major use of the ever waning supply of US dollars in Argentine coffers.
As the EU reduces imports, German oil seed industry researcher Oil World expects the US market to double Argentine biodiesel imports in 4Q13, reaching some 450,000t for the quarter.
The latest data available from the US Energy Information Administration (EIA) shows an 87.6% increase in biomass-based diesel imports to 683,000b in September compared to August. Argentina, at the top of the list, was responsible for 276,000b followed by Indonesia, also subject to EU sanctions, who exported 168,000b to the US in September.
7. LATIN AMERICAN BIOFUELS INDUSTRIES DEPENDENT ON GOVERNMENT POLICIES (Platts Commodity News)
By Chris Kraul
4 December 2013
Cali, Colombia (Platts)–4Dec2013/458 pm EST/2158 GMT   Argentina is powering forward with its biofuels industry, while Mexico is having trouble getting one off the ground — a contrast that illustrates the key role government policy plays in the industry’s fortunes throughout Latin America, an industry conference highlighted Wednesday.
Speakers at the FO Licht Ethanol Latin America conference in Cali, Colombia, surveyed the region’s renewable fuels industries and explained how public policies have made all the difference in ethanol production, for better or worse. They did not address ethanol giant Brazil, however, which gets its own annual conference.
Argentina’s ethanol industry, for example, has emerged virtually overnight because the government of President Cristina Fernandez de Kirchner sees it as a way to cut foreign expenditures amid a tight supply of dollars and rising imports of gasoline and natural gas.
Martin Fraguio, executive director of the Argentine Corn and Sorghum Association, a trade group of growers, said ethanol production this year should reach an annualized rate of 600 million liters of ethanol by the end of this month, or triple the 200 million liters produced in 2011. By the end of 2014, the annual rate will be 1 billion liters of production, he said.
The rapid increase in capacity is due largely to significant investments over the last three years and the increased use of corn as an ethanol feedstock. Output of domestically produced corn-based ethanol has increased from essentially zero in 2011 to an annualized 400 million liters this month, while sugar-based ethanol has remained stable at 200 million liters per year.
“The government has pushed up the ethanol blend first to E7 (or 7% per liter of gasoline pumped) this year and will push it further to E12 or 12% ethanol by the end of next year,” Fraguio said on the sidelines of the meeting.
Argentina’s government has become more aggressive about stimulating biofuels because the country has had to import an increasing percentage of fuels due to declining domestic hydrocarbons output. The country is short of dollars partly because of those higher energy imports.
“So the government is thinking that whatever source of domestic energy we can find should be promoted,” Fraguio said.
Private investment, including by foreign companies, recently has totaled around $500 million to $700 million/year, which Fraguio acknowledged runs counter to perceptions of the country as being unfriendly to foreign capital. Currently six ethanol plants are operational, a total that could grow to 12 by 2015.
IN MEXICO, A DEARTH OF DOMESTIC ETHANOL
The situation couldn’t be more different in Mexico, where not a drop of domestically produced ethanol is blended for cars or trucks. Efforts by private producers to promote biofuels continue to be frustrated by government obstacles despite a law passed in 2008 designed to induce the birth of a biofuels industry.
Benito Lopez, director of Tamaulipas-base biofuels development company Biomex, said producers have been blocked by a combination of factors: the reluctance of the state oil monopoly Pemex to mandate ethanol blends; government sugar price controls; and the small average size of cane farms which reduce economies of scale. Producers are also forbidden by law to use corn as an ethanol base material.
The inaction persists despite a sharp decline in Mexico’s crude reserves and gasoline production over the last several years that has forced the country to import more and more of the gasoline it consumes, negatively impacting its balance of trade, Lopez said.
But Lopez is optimistic that initiatives next year by President Enrique Pena Nieto could help launch a sorghum-based biofuels industry. An ethanol bid round expected from Pemex next year could create a market by early 2016 for sorghum-based ethanol totaling 180 million liters/year. That’s about half the ethanol production of Colombia, even though Mexico has more than twice its population.
IN PERU, SUGARCANE IN THE DESERT
Peru also is getting an ethanol industry off the ground, with two ethanol plants that have opened in recent years in the northern coastal region. The two plants’ output is mostly exported now, a strategy that has been facilitated by the government’s recent signing of free trade agreements with the US and EU.
Since it opened in March 2012, Maple Energy’s ethanol plant near Piura has slowly ramped up production to 60 million liters/year, a rate that will increase to 120 million liters/year as the company accesses more sugar cane, according to Maple CEO Guillermo Ferreyros.
For feedstock, the company has its own 7,400-hectare sugar plantation in an area that formerly was mostly desert. William Lawrence-Jones, of the Booker Tate technical services consultancy in Oxford, UK, that designed the irrigation plan for Maple, said northwest Peru has some of the highest sugar yields in the world due to optimal temperature.
“You also get year-round harvesting of sugar there, which means you get very efficient use of your factory capacity,” Lawrence-Jones said. “Peru’s free trade agreements with the US and the EU also increase the potential.”
Although the $280 million Maple ethanol project and cane fields were planned with the US ethanol market in mind, about 95% of the company’s production currently is sold in the EU via a distribution agreement with Mitsui & Co. of Japan.
Maple is after a piece of a global ethanol export market that this year will total $9.5 billion, according to US Department of Agriculture economist Michael J. Dwyer.
The leading ethanol exporter is Brazil, which this year will ship slightly more than the US, the second-place exporter, Dwyer said. US ethanol exports for 2013 are estimated at $1.9 billion, he said.
8. DISTILLING ABSTRACTION FROM LANDSCAPES (The New York Times)
By Ed Stocker
5 December 2013
BUENOS AIRES — Félix looked unimpressed. As Eduardo Stupía, one of Argentina’s most renowned artists, added touches to a canvas spread on a table in front of him, Félix surveyed the scene from the top of a marble staircase, seemingly unmoved.
To be fair to Félix, he is a cat, pet-in-residence at the gently dilapidated townhouse in the Almagro neighborhood of Buenos Aires that serves as Mr. Stupía’s studio, shared with six other artists. It is a striking space dating from 1910, with high ceilings, creaking wooden floorboards and Italian-style mosaic tiles harking back to Argentina’s golden age, when the cattle industry positioned the country among the world’s richest.
Dotted around the three rooms that Mr. Stupía rents are works of various sizes — from about 20 centimeters, or eight inches, wide to a couple of meters, most of them in black and white. Each is remarkably detailed, featuring fine lines and brush strokes in materials as varied as pencil, charcoal, ink, acrylic and watercolor.
”I try to use all kinds of materials, mixed together — often very antagonistic ones that shouldn’t be combined,” Mr. Stupía, 62, said with a wry smile. ”Or at least that’s what my old art teachers used to say. But I think that when you mix materials you’re also mixing a certain type of language. Each material has its own character, its own quality, its own spirit.”
Mr. Stupía is best known for works that he describes as abstract landscapes, in which details often replicate or mirror themselves in other parts of the picture, a method exemplified in the title of a series he produced in 2010: ”Reflejos,” or ”Reflections.” Stare at one of his abstract canvases for a short while and you start to think you can recognize conventional objects or vistas.
His early work was clearly influenced by comic book culture, while many of his pieces from the 1980s and ’90s recalled traditional Oriental calligraphy and painting. But it is his more recent pieces that delve most deeply into abstract painting. ”I try to create an atmosphere, a resonance,” he said. ”My works are like images that are about to appear and then disappear as soon as you try and catch them.”
After he started his artistic life as a draftsman and then gradually incorporated painting, it is only quite recently that Mr. Stupía gained international recognition, something he attributes to a retrospective of his work at the Recoleta Cultural Center in Buenos Aires in 2006.
”Without doubt, much of Eduardo Stupía’s success stems from the retrospective,” said the curator of that exhibition, Mercedes Casanegra. ”By then he’d had a 30-year career and was recognized by many, but was still a ‘cult’ artist. This was the first time that his work had been displayed like this — an anthology of his career since the very beginning. And it went down well with the public.”
His international recognition was secured when he became a featured artist at the 2012 São Paulo Biennial, and he exhibited in London for the first time from September 2012 to January 2013, at the Rosenfeld Porcini gallery. Among his admirers is Luis Pérez-Oramas, who organized the São Paulo Biennial and is the curator of Latin American art at the Museum of Modern Art in New York, which acquired one of Mr. Stupía’s untitled works, dated 1985, for its permanent collection.
”I admire his capacity to create these dense, complex architectural landscapes that are absolutely abstract,” Mr. Pérez-Oramas said by telephone. ”It’s about galaxies and densities — there’s a cosmic visual logic to it, produced on a very masterfully reduced palate.”
Mr. Stupía, an admirer of German art and particularly of Gerhard Richter, attributes his own success to sheer hard work. While he began his artistic career in the early 1970s, it is only in the past few years that he has been able to give up a job in the film industry — as well as designing covers and brochures for several publishing houses — to dedicate himself to art full time.
Unlike neighboring Brazil, Argentina has yet to foment a large collectors’ market. ”Although wealthy people care about owning things in Argentina, this hasn’t stretched to artistic objects,” Mr. Stupía explained.
But the country remains heavily influenced by what happens beyond its borders. ”When you are successful abroad, you become immediately more visible and desirable here,” Mr. Stupía said, referring to a tendency in Argentina to look to Europe or the United States for validation.
Mr. Stupía has been working with the collector and curator Jorge Mara for nearly a decade, and together they have promoted the artist’s work overseas. Mr. Mara, who was born in Uruguay, first set up a gallery in Buenos Aires in 1984, before relocating to Madrid in the 1990s. He returned to the Argentine capital in 2001.
The two men are friends as well as colleagues and share an easygoing sense of humor that was in evidence as they met in Buenos Aires for lunch at an Italian restaurant. Over white wine and main courses, the conversation quickly turned to Art Basel in Miami Beach, the United States version of the Swiss art fair, whose 12th edition the two will attend this week.
”The fair was a godsend for the Latin American market,” Mr. Mara said. ”It was a very shrewd thing for them to do. Art Basel Miami Beach was made for the Latin and North American audience. There are so many Brazilians that have bought apartments in Miami — and they have to put something on the walls.”
Mr. Stupía, who will be exhibited at the Miami Beach fair for the third time this year — with about 10 new pieces — said his work does well there. This may have something to do with the fact that he makes himself available to chat with attendees, a rarity in the more formal environment of Old World galleries.
Mr. Mara, who estimates that about 60 percent of his sales come from overseas events, said that comparatively affordable prices also played a big part, with Mr. Stupía’s works priced between $10,000 and $30,000. ”We have very good artists in Argentina,” Mr. Mara said, ”and internationally they are still affordable.”
The artist said he shared ”a common point of view about what painting is” with Argentine artists such as Luis Felipe Noé and Marcia Schvartz, if not always a similar style.
Mr. Stupía was eager to point out that he is not a contemporary artist. Unlike the latest generation, he said, he has no desire to be a controversial character alongside the artwork. Nor does he want to dictate anything to viewers of his art — which is why the majority of his works are untitled. ”I stay in the canvas,” he said, leaning over the table. ”Everything happens in the canvas.”
 
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1. ARGENTINA SAYS EU TRADE PROPOSAL WILL BE READY BY DEC. 15 (The Wall Street Journal Online)
By Shane Romig
5 December 2013
Argentina Working With Partners in Mercosur Trade Group on Unified Proposal
BUENOS AIRES—Argentina is advancing in talks with partners of the Mercosur trade group and expects to have a unified proposal to set the stage for trade negotiations with the European Union by Dec. 15, Argentine cabinet chief Jorge Capitanich said Thursday.
The commitment from Argentina to prepare its proposal on time helped to ease worries over Argentine enthusiasm for a deal.
Mercosur and the EU broke off trade talks in 2004 amid disagreements over the terms of some agricultural and industrial trade policies, but decided to restart negotiations in 2010. In January, Mercosur and EU officials agreed to exchange initial offers by the end of the year for trade talks slated for 2014.
This time around, negotiators may face a tight window of opportunity ahead of Brazilian presidential elections and the expiration of European Commission President José Manuel Barroso’s term. Both are scheduled for October 2014.
The Mercosur group includes Argentina, Brazil, Uruguay, Paraguay and Venezuela. While there is frequent friction between the partners due to import barriers and other protectionist measures, officials say they are committed to working toward a deal with the EU. Paraguay has been named the chair of the Mercosur negotiators.
Argentina is working with the partners to develop a unified list of goods that will be covered by the trade talks, which cover over 70% of all trade “for sure,” Mr. Capitanich said at a news conference.
European officials have requested that 90% of all trade be covered under an agreement and Brazil’s proposal is expected to be close to that level, according to analysts.
Argentina’s aim in the EU-Mercosur talks is to increase access to markets and eliminate or reduce European agricultural subsidies that affect the competitiveness of the country’s farm goods, Mr. Capitanich said.
Argentina already has a “significant openness in services, government purchases and agricultural goods and has always maintained its position in defense of the country’s manufacturing,” Mr. Capitanich said.
Argentine President Cristina Kirchner has resorted to controversial trade barriers since late 2011 to help domestic industry and to reduce her country’s import bill. Last year, the U.S., the EU, Japan and a number of other countries filed WTO complaints against Argentina’s trade policies.
2. U.S. BACKS ARGENTINA AT HIGH COURT IN BANK SUBPOENA CASE (Bloomberg News)
By Greg Stohr
December  5, 2013
The Obama administration urged the U.S. Supreme Court to hear Argentina’s challenge to a court order requiring two banks to turn over information about the country’s assets.
The case is part of a multipronged fight by hedge funds to collect billions of dollars owed by the South American country on defaulted bonds. It is separate from a higher-profile lawsuit that the country says threatens to force a new default.
In the Supreme Court case, Argentina is seeking to block a court order enforcing subpoenas against Bank of America Corp. and state-owned Banco de la Nacion Argentina. NML Capital Ltd., an affiliate of billionaire Paul Singer’s Elliott Management Corp., is trying to collect on judgments it has won in U.S. court cases.
Argentina contends that it’s protected by the U.S. Foreign Sovereign Immunities Act. The country says that law limits such orders to assets that are in the U.S. and are used for a commercial activity. The New York-based 2nd U.S. Circuit Court of Appeals rejected that argument.
U.S. Solicitor General Donald Verrilli said in the new filing that the lower court order was too broad and that the sovereign-immunity law shields Argentina.
In a separate case, Argentina is fighting a court order that bars the country from making payments on restructured debt unless it pays holders of the defaulted bonds. Argentina has until February to file a Supreme Court appeal in that case.
The case already before the Supreme Court is Argentina v. NML Capital, 12-842.
3. ARGENTINA’S RETURN TO BOND MARKET SEEN IN BLEJER ROAD MAP (Bloomberg News)
By Charlie Devereux
December  5, 2013
Argentina’s attempts to repair its standing internationally show the nation wants to tap overseas bond markets for the first time since a $95 billion default in 2001, according to former central bank governor Mario Blejer.
“They’re moving in certain areas in a very discreet way,” Blejer, who ran the central bank in 2002 after the unprecedented default, said in an interview in Buenos Aires.
Regaining access to foreign financing is key to slowing a drain in central bank reserves that have plunged this year at the fastest pace in a decade, the 65-year-old vice president of Banco Hipotecario SA said. Blejer says Argentina is showing signs of trying to resolve five key issues to regain investor confidence, including fixing economic data with the International Monetary Fund, paying its Paris Club debt and reaching an agreement with holdout creditors including billionaire Paul Singer.
Some government officials are starting to realize that “it doesn’t really matter if we have a low level of reserves as long as we can recompose our relationship with the world and particularly as long as we can go back to the capital markets,” Blejer said.
Former Economy Minister Hernan Lorenzino, who now heads the Debt Restructuring Unit, met with IMF officials in October to discuss a new consumer price index to address concerns the government is underreporting inflation. Argentina was the first nation censured by the IMF in February for alleged manipulation of economic data.
Bond Rally
Yields on the government’s dollar-denominated bonds have fallen 2.64 percentage points to 11.04 percent since Sept. 6, when local media reported Argentina planned to settle claims pending at the World Bank’s arbitration tribunal. The government later settled $677 million of claims with five companies on Oct. 18.
The extra yield investors demand to hold Argentine debt over U.S. Treasuries fell below distressed levels of 10 percentage points on Oct. 7 and touched the lowest in 27 months last week. The so-called spread narrowed 0.02 percentage point to 8.03 percentage points at 11:39 a.m. in Buenos Aires, according to JPMorgan Chase & Co.
The country’s debt has returned 28.8 percent this year, versus a loss of 6.4 percent on average for developing nations, based on the Bloomberg Emerging Market Sovereign Bond Index.
Cabinet Changes
Argentina hasn’t sold bonds internationally since defaulting in 2001. Fernandez and her late husband and predecessor Nestor Kirchner blamed the IMF and overseas investors for allowing the country to become so indebted it was forced to default.
Fernandez in 2010 began tapping reserves to make debt payments. The policy has drained reserves by 30 percent this year to $30.6 billion, the lowest in seven years. The government earmarked a further $9.9 billion in the 2014 budget to pay its foreign debt.
As recently as August, Fernandez said she would continue with her policy of obtaining funding from multilateral lenders like the Inter-American Development Bank without needing to pay rates above 10 percent demanded by bond investors to refinance or roll over existing debt.
After failing to gain the two-thirds majority she needed to make constitutional changes that would allow her to run for re-election in 2015 in legislative elections last month, Fernandez shuffled her cabinet by appointing a new economy minister, cabinet chief and central bank president.
‘More Pragmatic’
Cabinet Chief Jorge Capitanich said Dec. 3 that Argentina needs to move from a closed economic model to a more open one that’s “integrated structurally with the world.”
“The president has marked out an agenda in terms of international matters,” Capitanich said in an address to business leaders at a seminar in Buenos Aires province. “We’ve promoted the resolution of ICSID cases in order to generate conditions for financing by the World Bank” for $3 billion.
Economy Minister Axel Kicillof led negotiations with Spain’s Industry Minister Jose Manuel Soria that resulted in a preliminary accord to compensate Madrid-based Repsol SA for the seizure of its 51 percent stake in YPF SA, Argentina’s biggest energy company in April 2012.
Adopting an abrupt policy change and negotiating with institutions they have demonized for years is within the government’s nature, said Michael Roche, an emerging-market strategist at Seaport Group LLC.
Legal Claims
Fernandez’s government “is a lot more pragmatic than it’s given credit for,” Roche said in an interview from New York. “They will pivot and adopt policies that in the previous months or years were seen as antithetical.”
Paying off the ICSID claims was aimed at winning support from the U.S. government to support its appeal at the Supreme Court in its legal conflict against holdout creditors from the 2001 default rather than an attempt to repair ties with the global financial community, said Siobhan Morden, head of fixed-income at Jefferies Group LLC in New York.
A U.S. Appeals Court said Aug. 23 that Argentina can’t make payments on bonds it issued in restructurings in 2005 and 2010 unless it pays a group of holdouts led by hedge fund Elliott Management Corp. in full. The effect of the ruling is being delayed until the Supreme Court decides whether to hear the case. The litigation has spurred concern the government may opt to cease payments on its overseas bonds rather than settle with holdouts that Fernandez has dubbed “vultures.”
‘Ideological Constraints’
While the cost to protect Argentine debt against non-payment over five years with credit-default swaps has tumbled 41 percent in the past three months, it’s still the highest in the world, according to CMA Ltd.
“If they want to come to capital markets, they need to resolve legal issues first,” Morden said in a phone interview from New York. “There are ideological constraints with litigant holdouts that would need to be cleared up.”
The government created the Debt Restructuring Unit to negotiate with creditors on Nov. 29, a move that shows the intention to resolve some of the issues, Blejer said in the interview from his fifth floor office in downtown Buenos Aires. To fully repair relations, the government must complete all steps of what he called the “road map” including the most difficult one of settling with holdouts.
“The initial results are quite good but this is like a bridge,” Blejer said. “If you do three-quarters of the bridge you still don’t have a bridge and you won’t get to the other side.”
4. BASS’S ARGENTINA BET REAPS 33% GAIN ON EMERGING-MARKET FAVORITE (Bloomberg News)
By Katia Porzecanski
December  5, 2013
Kyle Bass says his bet that Argentina would overcome a legal battle with holders of defaulted bonds netted him a 33 percent price gain.
Bass’s Dallas-based fund, Hayman Capital Management LP, bought Argentina’s international bonds at 55 cents on the dollar after prices dropped on concern the country would default. The bonds have since rallied to 73 cents, Bass said today in a Bloomberg Television interview with Stephanie Ruhle.
Bass is confident the U.S. Supreme Court will review an appeals court decision that prevents the nation from making payments on restructured debt unless bondholders from Argentina’s 2001 default, led by hedge fund Elliott Management Corp., are paid in full. The prospect of a review, paired with President Cristina Fernandez de Kirchner’s departure from office in 2015, make the securities attractive, he said.
“This is one of those scenarios in which you have to look out one, two, three years and start figuring out what you need to own today,” Bass said. “It was kind of a 5-to-1 bet on the upside and that’s when you need to apply a lot of capital.”
Argentine dollar bonds have handed investors an average return of 19.71 percent this year, the most in emerging markets after Belize, while developing-nation bonds lost 7.8 percent on average, according to data compiled by JPMorgan Chase & Co.
Fernandez has vowed never to repay holders of defaulted bonds in full, making offers no better than those in Argentina’s two debt restructurings, which handed investors losses of about 70 percent. The nation hasn’t sold bonds abroad since the default, and would benefit from settling with holdouts, Bass said.
Bass, who has about $2 billion under management, came to prominence for successful bets against subprime mortgages before the U.S. financial crisis. While the world’s largest banks wrote off more than $80 billion in subprime losses, Bass and others racked up billions in profit.
5. ARGENTINA, REPSOL IN TALKS REGARDING YPF COMPENSATION: ARGENTINA (Reuters News)
By Hugh Bronstein
December 5, 2013
(Reuters) – Argentina has begun talks with Repsol (REP.MC) about compensation to the Spanish oil major for last year´s nationalization of the South American country’s top oil company, YPF (YPFD.BA), a government official said on Thursday.
Argentine cabinet chief Jorge Capitanich told reporters that the long-awaited negotiations had begun but declined to elaborate on the progress or location of the talks.
“Negotiations with Repsol have begun. They are meeting,” Capitanich told a news conference.
Argentina and Repsol struck a preliminary deal last week over compensation for the 2012 seizure of the Spanish company’s majority stake in YPF. Sources have said Argentina is offering a compensation package worth $5 billion, half the sum Repsol was initially demanding.
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.
6. ARGENTINA NOT PLANNING TO CUT SOY EXPORT TAX –SOURCES (Reuters News)
By Hugh Bronstein
December 6, 2013
(Reuters) – Argentina is not on the verge of cutting the soybean export tax despite market rumors to the contrary and pressure building on the government to stimulate international sales, a well-placed source at the agriculture ministry said on Thursday.
“As far as I know, there is nothing,” said the source, who spoke on condition of anonymity.
Rumors of a cut in Argentina’s 35 percent soybean-export tax started on Wednesday when daily newspaper La Nacion published a story, citing unnamed sources, saying that a temporary cut in the levy was being studied by policymakers.
“It’s a rumor, no more,” local agriculture consultant Pablo Adreani told Reuters. “I don’t believe it because the government needs money too much to consider a tax cut.”
At a time of rising global food demand, the South American grains powerhouse is the world’s No. 3 soybean exporter as well as its top supplier of soymeal animal feed and soyoil, used to make biofuels.
But with confidence falling in Latin America’s inflation-hit No. 3 economy, central bank reserves have slumped more than 30 percent so far this year to $30.5 billion.
Desperate for greenbacks, the government said farmers are sitting on $6.5 billion worth of soybeans in a bid to avoid exposure to the wobbly Argentine peso.
“It’s more reliable to save in soybeans than in pesos, which are losing their value by the day,” said Adreani, who estimated that growers have stacked up 10 million to 12 million tonnes of soy throughout the country.
The breach between the official foreign-exchange rate and the black-market rate has spiked to 55.6 percent as the government uses central bank reserves to prop up the local currency in the face of capital flight.
Confidence has been battered by Argentina’s inflation rate – clocked by private economists at 25 percent – and the government’s unorthodox and unpredictable policymaking.
The soy hoarding has increased worries about the lack of foreign-exchange inflows. Despite the mounting pressure, no one in the government could be found on Wednesday or Thursday to substantiate market chatter about a coming export-tax decrease.
A source at the economy ministry also knocked down the rumor.
The soybeans that growers are sitting on are from last season. Argentine farmers have seeded 57.9 percent of the 20.45 million hectares planned for 2013/14 soybeans, the Buenos Aires Grains Exchange said on Thursday.
7. ARGENTINA-BRAZIL PATCH UP ON TRADE, LOOK TO EUROPE DEAL (Reuters News)
By Guido Nejamkis
5 December 2013
BUENOS AIRES, Dec 5 (Reuters) – Argentina’s recent Cabinet shuffle has smoothed trade friction between South America’s two largest economies and clears the way for a united proposal for free trade with the European Union, Brazilian Trade Minister Fernando Pimentel said on Thursday.
Cash-strapped Argentina, one of the most protectionist members of the Group of 20 countries, has been restricting Brazilian imports since last year even though both are members of the Mercosur customs union.
Argentina has agreed to let in Brazilian goods that were stopped at the border, mainly cars and shoes, Pimentel said after meeting with Argentina’s new Cabinet chief, Jorge Capitanich, and Economy Minister Axel Kicillof.
“This issue that was upsetting our exporters has been resolved,” Pimentel told reporters. “There’s been a change of team and we think that is positive.”
The appointment last month of Capitanich, a former provincial governor, has been seen as a pragmatic shift in the government of President Cristina Fernandez as it strives to restore business confidence shaken by her policies and the nationalization of Spanish oil major Repsol last year.
Shut out of financial markets since a massive default a decade ago, the Argentine government introduced import restrictions to improve its trade balance and generate needed foreign currency.
While Brazil and two smaller members of Mercosur – Uruguay and Paraguay – are ready to present their offers for the negotiation of a free-trade accord with the EU, Argentina’s involvement has been in doubt due to its policies to protect local industry.
But Pimentel said Argentina was on board and a joint Mercosur offer will be presented to Brussels on Dec. 18 or 19, after officials from the four Mercosur nations give it the final touches next week at a “decisive” meeting in Rio.
Attempts to negotiate a free-trade deal have not succeeded in a decade and a half, stumbling over Mercosur access for European manufactured goods and EU access for Mercosur’s agricultural products facing high European farm subsidies.
Mercosur’s newest member, Venezuela, will be at the meeting but will be left out of negotiations with Europe as it is not ready to compete.
“We will have our offer ready by next week” Pimentel said, with President Dilma Rousseff’s foreign affairs adviser Marco Aurelio Garcia at his side. “Argentina has an offer and will present it. That’s clear now.”
8. ARGENTINA IS IN THE MOOD FOR CHANGE ON INVESTMENT POLICY, SAY SILVER PRODUCERS (Business News Americas)
5 December 2013
Argentina’s government is reaching out to investors as it prepares for a “smoother transition” in the country’s next presidential elections, according to silver miners including Pan American Silver (TSX: PAA).
Investors have drawn hope from President Cristina Fernández’s cabinet changes after her party lost recent regional elections, Pan American CEO Geoff Burns said. New cabinet chief Jorge Capitanich is “doing all the things you’d hope Argentina needs” to attract investment, Burns said.
“We’re starting to see a glimmer of hope that we haven’t seen in two-and-a-half years,” Burns said Wednesday at the Scotiabank mining conference in Toronto. “Things are changing right now in Argentina.”
The governor of Argentina’s Chubut province, where Pan American’s Navidad deposit is located, last week requested a meeting with the company in a bid to restart the project, Burns said. Pan American, which also operates the Manantial Espejo silver-gold mine in the Santa Cruz province and has the Calcatreu gold deposit in Río Negro, took a US$100mn writedown for Navidad in the fourth quarter of 2012 after the province failed to overturn a ban on open-pit mining.
Chubut province now appears to be ready to ask the company what it needs to go ahead with Navidad, according to Burns. “I’ve been waiting for (them to ask me) that question for the past year-and-a-half,” Burns said.
The Argentine government has also eased import restrictions for mining equipment, said Silver Standard Resources (Nasdaq: SSRI) CEO John Smith. Vancouver based Silver Standard operates the Pirquitas silver-zinc mine in the Jujuy province and is exploring the Diablillas gold-silver deposit in the Salta province.
Capitanich, who may be the ruling party’s candidate in the next presidential elections, has shown himself to be more open to dialogue including holding weekly press conferences, Smith said.
“It’s been a difficult place to work, there’s no doubt about it. You never know what’s going to happen day after day,” Smith said. “But there’s definitely a mood for change as they work towards a transition to the next presidency.”
Fernández, who has nationalized industries and maintained currency and capital controls during her two consecutive terms, cannot run in the next elections under Argentine law.
9. COMMUNITY OPPOSITION THE “NEXT HURDLE” FOR MINERS IN ARGENTINA – MCEWEN  (Business News Americas)
5 December 2013
Community opposition will be the “next hurdle” to face mining companies in Argentina if the government loosens its tough currency and import controls, Rob McEwen, CEO of Toronto-based McEwen Mining (NYSE, TSX: MUX) told the Scotiabank Global Banking and Markets Mining Conference.
Miners in the country have been affected by restrictions which have delayed imports of equipment or forced companies to buy products from Argentine producers which do not have the “quality or reliability” of imports, McEwen said, while currency restrictions have made it difficult for miners to take profits out of the country.
And while there are signs the situation may be beginning to change, including an easing up of currency restrictions agreed by the government in a shale gas fields deal with energy firm Chevron (NYSE: CVN) in April, community relations will prove the “next hurdle” for miners in the country, he added.
As well as “resentment” among communities to the speed of development of mines in rural areas and mining companies’ “seemingly unlimited” money, the sector’s image is also tainted by its apparent close links to the government, which many people consider corrupt, McEwen said.
“If the government changes, it will be community relations that will be the next issue,” he added.
Silver producers including Pan American Silver (TSX: PAA) also raised the possibility of the Argentine government easing its import and currency restrictions to court investor support in the run up to the presidential elections next year at the Toronto conference.
McEwen has a 49% stake in the San José gold-silver mine and owns the Los Azules copper project in Argentina, as well as the El Gallo gold mine in Mexico and mining properties in the US.
10. ARGENTINA SIGNS $2.47 BILLION TRAIN FINANCING DEAL WITH CHINA’S CMEC (Dow Jones Institutional News)
By Shane Romig
5 December 2013
BUENOS AIRES–Argentina signed a $2.47 billion financing deal with China Machinery Engineering Corp. to revamp the decrepit Belgrano Cargas freight train line in a bid to reverse years of decline and lower transportation costs for goods coming from the interior of the country.
China Development Bank will finance the bulk of the work, with a 15-year loan carrying 7.1% interest, Interior Minister Florencio Randazzo said Thursday.
The plans call for the purchase of new railroad cars, the repair of half the existing fleet and the laying of new rails, Mr. Randazzo said.
The Belgrano Cargas line crosses much of the central and northern parts of the country.
Argentina’s rail system has suffered from decades of underinvestment and a series of deadly accidents in recent years. Argentina is a leading global grain producer and most farm goods are brought to port using an expensive trucking network.
The government nationalized a number of the country’s leading rail lines earlier this year, including Belgrano Cargas, and has pledged heavy investment.
The initial contract for China Machinery Engineering to revamp the train line was signed in 2010.
11. ARGENTINES TEACH TANGO INSIDE MENTAL HOSPITAL (The Washington Post)
December 6, 2013
BUENOS AIRES, Argentina — You can hear the “All of us are crazy for tango” program before you can see it: Just follow the orchestra’s plaintive chords through the labyrinthine passageways of the Hospital Borda.
There, in a dance hall deep inside the public hospital where mentally ill men have been treated for 150 years, both patients and visitors discover how much they have in common in dance classes open to all. The program’s name, playing off a common expression for mental illness, reflects the enthusiasm of both patients and visitors for Argentina’s national dance.
Psychiatrist Silvana Perl runs the classes held every other Wednesday, including their annual tango festival this week.
She says therapy happens when hospitalized men dance with visiting women: It makes them part of a powerful social and cultural current that runs through Buenos Aires, and gives both dancers the shared human contact that is essential to community.
“To dance, it’s necessary to include the other, which requires coming out of your little world,” Perl explains. “Then comes the hug … the whole world is now fascinated with hugging, which is a form of communication. And ‘communication’ comes from what we have in common. This is something that we have in common, this hug of the tango.”
Tango teacher Laura Segade says she and her friends joke that the only difference between the dancers is that some are “crazy on the inside” of the hospital and others are “crazy on the outside.”

ARGENTINE UPDATE – Dec 4, 2013

4 diciembre, 2013

 

 
 
3. MEXICO EYES ARGENTINA OIL DEAL, PEMEX EXPANSION (UPI)
 
4. ARGENTINA JACKS UP CURRENCY CONTROLS TO STEM RESERVES LOSS (Reuters News)
 
5. ARGENTINA RAISES TAXES ON CREDIT CARD PURCHASES ABROAD AS ECONOMY CONTINUES TO DETERIORATE (Business News Americas)
 
6. ARGENTINA MUST DEVELOP SHALE OIL, GAS TO CUT IMPORTS: YPF’S GALUCCIO (Platts Commodity News)
 
7. REPSOL’S BRUFAU CALLS FOR ‘CONVINCING SUM’ IN YPF DEAL (Reuters News)
 
8. ARGENTINE ENERGY SECTOR BUOYED BY PRO-MARKET HOPE (Business News Americas)
 
9. ARGENTINA ECONOMY: QUICK VIEW – NEW AUTOMOTIVE TAX WILL UNDERMINE LOCAL PRO  (Economist Intelligence Unit – ViewsWire)
 
10. IN WORLD CUP YEAR, EUROPE OFFERS BRAZIL LONGER-TERM GOAL (Reuters News)
 
11. FACING EXTRADITION, SIEMENS ARGENTINA DEFENDANT SETTLES WITH SEC (Fortune Blog)
 
12. LAKE SCIENCE GOES HIGH-TECH TO UNDERSTAND IMPACTS OF EXTREME WEATHER EVENTS IN ARGENTINA (National Geographic)
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.
BLACK MARKET
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
Event
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.
 
Analysis
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.
ISOLATION
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.

ARGENTINE UPDATE – Dec 2, 2013

3 diciembre, 2013

 

 
 
 
 
1. CLASHES OUTSIDE MONSANTO PLANT IN ARGENTINA (The Washington Post)
November 29, 2013
BUENOS AIRES, Argentina — Argentine union members on Thursday clashed with environmentalists protesting the construction of a plant by U.S.-based seed giant Monsanto.
Local media reported the groups came to blows outside the plant in Cordoba province. Environmentalist Vanina Barboza said that dozens of workers from the Argentine Construction Union attacked the protest camp near the plant, injuring 20 activists and stealing personal objects.
Monsanto executive Adrian Vilalba accused the environmentalists of destroying workers’ cars.
Construction of the corn-processing plant was halted in October when environmentalists began disrupting entry of supplies. Activists oppose the use of genetically modified crops, which Monsanto produces and Barboza says they’ll continue to block roads and access to the plant.
Workers say the environmentalists are cutting them off from their livelihood.
The state news agency Telam says the violence is being investigated by a local prosecutor.
2. ARGENTINA DEAL OFFERS VINDICATION FOR REPSOL’S ANTONIO BRUFAU (Financial Times)
By Miles Johnson in Madrid
November 29, 2013
There are few executives who, in their entire careers, have experienced troubles of the magnitude that Repsol’s Antonio Brufau has faced in the past two years.
This week, with a surprise offer of compensation from Argentina for nationalising Repsol’s YPF subsidiary last year, it would appear that one of his biggest headaches has finally disappeared.
Yet questions remain over the relationship between Mr Brufau and his biggest shareholders – Caixabank, the powerful Catalan lender, and Pemex, Mexico’s state oil company, which had pushed hard for a deal to be struck on their terms – and what this dysfunctional relationship will mean for the Spanish oil company’s long-term future.
At the start of last year, Repsol’s Madrid board room was a happy one. The company had fended off an insurrection by two of its largest shareholders and was basking in the discovery of one of the world’s largest shale gas formations by its Argentine YPF subsidiary, known as Vaca Muerta.
Only months later, armed guards arrived at YPF’s headquarters in Buenos Aires to renationalise the company, forcing Repsol executives to flee the country, and sending its share price into free fall.
Mr Brufau had been attempting to reposition Repsol from a sluggish former state-run operation recovering from a scandal linked to overstating oil reserves into a honed explorer focused on world-class oil discoveries, but was forced to tear up his plans.
To avoid a credit rating downgrade, Repsol, which gained a fifth of its 2011 net profits from YPF and almost half of its proven reserves, was forced to sell assets and rework its strategic plan.
To make matters worse for Mr Brufau, Caixabank and Pemex had again started agitating against him behind the scenes as he pressed ahead with suing Argentina in international courts for at least $10.5bn in compensation.
Mr Brufau, while open to striking a deal with Buenos Aires at the right price, had become persona non grata to Cristina Fernández, Argentina’s populist president, who had refused to grant him an audience when he had flown out to try to persuade her against seizing YPF.
For Caixabank, Mr Brufau – a former employee of the lender – had become an obstacle to a deal.
Isidro Fainé, Caixabank chairman and at turns one of Mr Brufau’s oldest friends and bitterest rivals, took matters into his own hands, travelling to Argentina to meet Ms Fernández in secret with the aim of striking a deal he could then present to the Repsol board.
When a deal brokered by Mr Fainé offering a $3.5bn stake in the seized assets and $1.5bn that would have to be reinvested in Argentina was finally tabled in June, it was voted down unanimously by the Repsol board as unacceptable.
This prompted Pemex, which stood to gain a stake in Vaca Muerta, to openly attack Mr Brufau for the size of his salary, saying he had mismanaged the company.
A new preliminary deal struck this week, based on $5bn of Argentine bonds and no forced reinvestment in the country, is undoubtedly an improved offer. For Mr Brufau’s supporters, it was a vindication of his aggressive legal pursuit of an intransigent Argentina. His critics say his large shareholders forced his hand against his will.
It is not clear whether Mr Brufau has been weakened by recent developments. But Repsol’s smaller investors feel that if Mr Brufau, Mr Fainé and Pemex are all going to have a future at the company, they must learn to be friends again.
3. ARGENTINA THREATENS COMPANIES OVER FALKLANDS OIL DRILLING (CNN)
By Marie-Louise Gumuchian
November 29, 2013
British residents in Falklands wave flags during a protest.(CNN) — Argentina intends to go after companies drilling for oil off the disputed Falkland Islands, triggering a fresh diplomatic row with Britain.
The Latin American country’s Congress passed a law Thursday threatening “criminal sanctions” on companies and individuals involved in “the illegal exploration” of hydrocarbons in the area, the Argentine Embassy in London said in a prepared statement.
“The law provides for prison sentences for the duration of up to 15 years; fines equivalent to the value of 1.5 million barrels of oil; the banning of individuals and companies from operating in Argentina; and the confiscation of equipment and any hydrocarbons that would have been illegally extracted,” it said.
In response, the British Foreign Office said: “The UK government unequivocally supports the right of the Falkland Islanders to develop their natural resources for their own economic benefit.
It said hydrocarbon activities by companies operating on the continental shelf of the Falkland Islands were regulated by legislation of the Falkland Islands government and in accordance with the United Nations Convention on the Law of the Sea.
The Argentine Embassy said it had already sent more than 200 letters to companies directly or indirectly involved in drilling activities, warning that they are “liable to administrative, civil and criminal actions in accordance with the laws governing such activities, including environmental protection laws.”
Argentina and Great Britain went to war over the territory in 1982 after the then-military government in Argentina landed troops on the islands, which Argentinians call Las Malvinas.
Argentina says its death toll from the conflict was around 645. Britain, then under Prime Minister Margaret Thatcher, has reported 255 civilian and military deaths.
Earlier this year, residents of the Falklands Islands voted to remain a British overseas territory.
4. BLACK IS SO LAST ELECTION (The Economist)
By H.C. |
November 28, 2013
ARGENTINES were taken aback by the gusto with which President Cristina Fernández returned to work after cranial surgery forced her to rest for six weeks. Eager to dispel any rumors of weakness, on her first day back Ms Fernández purged her cabinet, replacing lower-profile ministers with bigger personalities, whom she swore in with an impassioned speech two days later.
Ms Fernández also made another momentous, if superficial, change. In her first public appearance after the hiatus—a home video shot by her daughter—she wore a white shirt under a black blazer. The Economist is not normally one to dole out sartorial commentary (a glance around our offices explains why). But in this case Ms Fernández’s wardrobe decision carries political significance.
Since her husband and predecessor Nestor Kirchner died of a heart attack in October 2010 Ms Fernández has clad herself entirely in black. Black shirts, black trousers, black dresses, black handbags, black hats, black belts, black sunglasses. She wore all black, all the time, for over 1,000 days. Ms Fernández’s approval ratings spiked after her husband’s death, and critics have accused her of extending her widow-wear for political gain.
Since her return on November 18th the president has not only dared to wear a white shirt, but also an elegant gown with a black bodice and white tulle bottom (to the inauguration of her new ministers) and, most boldly, a gauzy white blouse over a white camisole (to meetings with ministers and business leaders).
Luis Tonelli, the head of the political science-department at the University of Buenos Aires, says that the presidential makeover fits in with the government’s overall attempt to rebrand itself, “to have a fresh start with a government that is less combative and less tragic”. Whether Ms Fernández’s cosmetic transformation translates to a true political refashioning, however, remains to be seen.

SUE LITTLETON

Para YoGASTON SAINTMARTINYo y 1 más…
Dic 2 a las 1:58 PM
Moi et les trois chats joyeux =*>:) devil=  =*>:) devil=  =*>:) devil=
 
 
 
 
1. CLASHES OUTSIDE MONSANTO PLANT IN ARGENTINA (The Washington Post)
November 29, 2013
BUENOS AIRES, Argentina — Argentine union members on Thursday clashed with environmentalists protesting the construction of a plant by U.S.-based seed giant Monsanto.
Local media reported the groups came to blows outside the plant in Cordoba province. Environmentalist Vanina Barboza said that dozens of workers from the Argentine Construction Union attacked the protest camp near the plant, injuring 20 activists and stealing personal objects.
Monsanto executive Adrian Vilalba accused the environmentalists of destroying workers’ cars.
Construction of the corn-processing plant was halted in October when environmentalists began disrupting entry of supplies. Activists oppose the use of genetically modified crops, which Monsanto produces and Barboza says they’ll continue to block roads and access to the plant.
Workers say the environmentalists are cutting them off from their livelihood.
The state news agency Telam says the violence is being investigated by a local prosecutor.
2. ARGENTINA DEAL OFFERS VINDICATION FOR REPSOL’S ANTONIO BRUFAU (Financial Times)
By Miles Johnson in Madrid
November 29, 2013
There are few executives who, in their entire careers, have experienced troubles of the magnitude that Repsol’s Antonio Brufau has faced in the past two years.
This week, with a surprise offer of compensation from Argentina for nationalising Repsol’s YPF subsidiary last year, it would appear that one of his biggest headaches has finally disappeared.
Yet questions remain over the relationship between Mr Brufau and his biggest shareholders – Caixabank, the powerful Catalan lender, and Pemex, Mexico’s state oil company, which had pushed hard for a deal to be struck on their terms – and what this dysfunctional relationship will mean for the Spanish oil company’s long-term future.
At the start of last year, Repsol’s Madrid board room was a happy one. The company had fended off an insurrection by two of its largest shareholders and was basking in the discovery of one of the world’s largest shale gas formations by its Argentine YPF subsidiary, known as Vaca Muerta.
Only months later, armed guards arrived at YPF’s headquarters in Buenos Aires to renationalise the company, forcing Repsol executives to flee the country, and sending its share price into free fall.
Mr Brufau had been attempting to reposition Repsol from a sluggish former state-run operation recovering from a scandal linked to overstating oil reserves into a honed explorer focused on world-class oil discoveries, but was forced to tear up his plans.
To avoid a credit rating downgrade, Repsol, which gained a fifth of its 2011 net profits from YPF and almost half of its proven reserves, was forced to sell assets and rework its strategic plan.
To make matters worse for Mr Brufau, Caixabank and Pemex had again started agitating against him behind the scenes as he pressed ahead with suing Argentina in international courts for at least $10.5bn in compensation.
Mr Brufau, while open to striking a deal with Buenos Aires at the right price, had become persona non grata to Cristina Fernández, Argentina’s populist president, who had refused to grant him an audience when he had flown out to try to persuade her against seizing YPF.
For Caixabank, Mr Brufau – a former employee of the lender – had become an obstacle to a deal.
Isidro Fainé, Caixabank chairman and at turns one of Mr Brufau’s oldest friends and bitterest rivals, took matters into his own hands, travelling to Argentina to meet Ms Fernández in secret with the aim of striking a deal he could then present to the Repsol board.
When a deal brokered by Mr Fainé offering a $3.5bn stake in the seized assets and $1.5bn that would have to be reinvested in Argentina was finally tabled in June, it was voted down unanimously by the Repsol board as unacceptable.
This prompted Pemex, which stood to gain a stake in Vaca Muerta, to openly attack Mr Brufau for the size of his salary, saying he had mismanaged the company.
A new preliminary deal struck this week, based on $5bn of Argentine bonds and no forced reinvestment in the country, is undoubtedly an improved offer. For Mr Brufau’s supporters, it was a vindication of his aggressive legal pursuit of an intransigent Argentina. His critics say his large shareholders forced his hand against his will.
It is not clear whether Mr Brufau has been weakened by recent developments. But Repsol’s smaller investors feel that if Mr Brufau, Mr Fainé and Pemex are all going to have a future at the company, they must learn to be friends again.
3. ARGENTINA THREATENS COMPANIES OVER FALKLANDS OIL DRILLING (CNN)
By Marie-Louise Gumuchian
November 29, 2013
British residents in Falklands wave flags during a protest.(CNN) — Argentina intends to go after companies drilling for oil off the disputed Falkland Islands, triggering a fresh diplomatic row with Britain.
The Latin American country’s Congress passed a law Thursday threatening “criminal sanctions” on companies and individuals involved in “the illegal exploration” of hydrocarbons in the area, the Argentine Embassy in London said in a prepared statement.
“The law provides for prison sentences for the duration of up to 15 years; fines equivalent to the value of 1.5 million barrels of oil; the banning of individuals and companies from operating in Argentina; and the confiscation of equipment and any hydrocarbons that would have been illegally extracted,” it said.
In response, the British Foreign Office said: “The UK government unequivocally supports the right of the Falkland Islanders to develop their natural resources for their own economic benefit.
It said hydrocarbon activities by companies operating on the continental shelf of the Falkland Islands were regulated by legislation of the Falkland Islands government and in accordance with the United Nations Convention on the Law of the Sea.
The Argentine Embassy said it had already sent more than 200 letters to companies directly or indirectly involved in drilling activities, warning that they are “liable to administrative, civil and criminal actions in accordance with the laws governing such activities, including environmental protection laws.”
Argentina and Great Britain went to war over the territory in 1982 after the then-military government in Argentina landed troops on the islands, which Argentinians call Las Malvinas.
Argentina says its death toll from the conflict was around 645. Britain, then under Prime Minister Margaret Thatcher, has reported 255 civilian and military deaths.
Earlier this year, residents of the Falklands Islands voted to remain a British overseas territory.
4. BLACK IS SO LAST ELECTION (The Economist)
By H.C. |
November 28, 2013
ARGENTINES were taken aback by the gusto with which President Cristina Fernández returned to work after cranial surgery forced her to rest for six weeks. Eager to dispel any rumors of weakness, on her first day back Ms Fernández purged her cabinet, replacing lower-profile ministers with bigger personalities, whom she swore in with an impassioned speech two days later.
Ms Fernández also made another momentous, if superficial, change. In her first public appearance after the hiatus—a home video shot by her daughter—she wore a white shirt under a black blazer. The Economist is not normally one to dole out sartorial commentary (a glance around our offices explains why). But in this case Ms Fernández’s wardrobe decision carries political significance.
Since her husband and predecessor Nestor Kirchner died of a heart attack in October 2010 Ms Fernández has clad herself entirely in black. Black shirts, black trousers, black dresses, black handbags, black hats, black belts, black sunglasses. She wore all black, all the time, for over 1,000 days. Ms Fernández’s approval ratings spiked after her husband’s death, and critics have accused her of extending her widow-wear for political gain.
Since her return on November 18th the president has not only dared to wear a white shirt, but also an elegant gown with a black bodice and white tulle bottom (to the inauguration of her new ministers) and, most boldly, a gauzy white blouse over a white camisole (to meetings with ministers and business leaders).
Luis Tonelli, the head of the political science-department at the University of Buenos Aires, says that the presidential makeover fits in with the government’s overall attempt to rebrand itself, “to have a fresh start with a government that is less combative and less tragic”. Whether Ms Fernández’s cosmetic transformation translates to a true political refashioning, however, remains to be seen.

ARGENTINE UPDATE – Nov 29, 2013

29 noviembre, 2013
================================================
 
 
 
1. REPSOL DEAL WITH ARGENTINA WAS PROPELLED BY PEMEX (The Wall Street Journal Online)
By Taos Turner
28 November 2013
The meeting began tensely, charged by one of the biggest seizures of oil assets in recent Latin American history. Thirty-three stories above Buenos Aires, executives of the leading oil companies of Mexico, Argentina and Spain had gathered around a long boardroom table with Argentine and Spanish government ministers to try to end a bitter diplomatic and legal feud.
Repsol SA, the Spanish company whose controlling stake in Argentina’s YPF SA had been expropriated 19 months earlier, had been demanding redress through international arbitration.
Argentine officials were worried that the dispute was hindering the country’s ability to develop its huge energy resources.
It was the entry of a third party, Petróleos Mexicanos SA, that brought the dispute to a head in the Argentine capital Monday, according to participants in the four-hour meeting. Pemex was pressing for a negotiated deal that would ease its access to Argentina’s riches and threatening to dump part of its 9.3% stake in Repsol if the dispute lingered.
The preliminary deal they reached, a payment of $5 billion in Argentine government bonds to Repsol, served the converging political and commercial interests of each of the companies and countries involved, the participants said.
“Everybody wins,” YPF Chairman Miguel Galuccio said Thursday, a day after Repsol’s board accepted the outline of the deal and agreed to negotiate details with the Argentine government. The 11 months of behind-the-scenes work, he said, “was a team effort” with crucial backing of all three governments.
For Argentina, an end to the dispute would remove a huge legal burden faced by state-owned YPF and potential partners interested in developing the South American country’s substantial shale oil and gas reserves.
For Repsol, it would bring compensation for the loss of a key asset. The compensation is about half the $10 billion Repsol had demanded, but some Argentine officials were opposed to paying anything—until President Cristina Kirchner overruled them.
A deal also would help Repsol keep peace with Mexico as the country prepares an industry overhaul that would open its oil and gas reserves to foreign companies for the first time in 75 years.
For Pemex, a deal would boost the value of its shares in Repsol. According to people familiar with the company’s plans, Pemex executives believed a deal also could help them gain access to the future development of Vaca Muerta, a vast formation of shale oil and gas resources in southern Argentina.
Mrs. Kirchner praised the accord in calls late Wednesday and Thursday to thank Mexican President Enrique Peña Nieto and Spanish Prime Minister Mariano Rajoy for helping bring the feuding parties together.
Mrs. Kirchner’s government has a lot at stake. In 2011, Argentina became a net energy importer for the first time in decades. Purchasing natural gas from abroad at high international prices is helping deplete the country’s currency reserves.
YPF’s discovery of Vaca Muerta that year promised a solution to the country’s energy woes. Argentina now ranks among the top five countries in potentially recoverable shale oil-and-gas reserves, according to the U.S. Energy Information Administration.
But the country lacks the capital to develop the reserves in quantities big enough to offset overall declines in domestic oil and gas production. Mr. Galuccio believed that a Repsol deal could attract more investment and expertise, including assistance from Pemex toward improving return at mature wells, and help YPF borrow in international markets.
Argentina twice had offered Repsol compensation for the expropriated holdings in the form of stakes in Vaca Muerta, people familiar with the negotiations said. Repsol rejected the offers because they would have required investing substantial sums in Argentina, the people said.
Despite opposition in her government, Mrs. Kirchner proposed paying Repsol something closer to what it was seeking, a person familiar with the talks said.
To help reach an agreement, Argentina turned to an ally in Pemex. YPF’s Mr. Galuccio and Pemex Chief Executive Emilio Lozoya became friends years ago when Mr. Galuccio worked in Mexico with U.S.-based oil-services company Schlumberger Ltd.
As part of the pressure, Pemex put up for sale half its Repsol stake and became openly critical of Repsol Chairman Antonio Brufau’s handling of the dispute.
Spain’s government insisted on compensation for Repsol but took a back seat as the company pressed its case through legal channels. Then Pemex gave Spanish officials a reason to get more active.
The Mexican company told the Spanish government that it would buy a 51% stake in struggling Spanish shipbuilder Hijos de J. Barreras only if Repsol reached an agreement with Argentina, said a senior official at the Mexican Energy Ministry. Barreras is bidding with a Pemex unit on a contract valued at hundreds of millions of euros for two Pemex floating hotels for offshore oil workers.
In mid-November Spanish Energy Minister José Manuel Soria delivered to Pemex and Mexican government officials the outlines of a tentative deal proposed by Repsol. He flew to Buenos Aires for the meeting Monday, the first face-to-face talks between Repsol and Argentine government officials since the expropriation.
YPF, Pemex and Repsol executives, Argentine government officials and Mr. Soria arrived at YPF’s headquarters for the 11 a.m. meeting on a public holiday that commemorates a 19th-century naval battle pitting Argentina against Britain and France.
On one side of the boardroom table sat Mr. Galuccio, Argentine Economy Minister Axel Kicillof, and Carlos Zannini, head of legal affairs for Argentina’s government and a confidant of Mrs. Kirchner. Mr. Zannini introduced those sitting on the other side: Mr. Soria, Pemex’s Mr. Lozoya, Repsol executives including Chief Operating Officer Nemesio Fernández-Cuesta and Argentina’s ambassador to Spain, Carlos Bettini.
The tense atmosphere became more cordial as the talks progressed. At one point, Mr. Galuccio pulled out a calculator to demonstrate the benefits of Argentina’s offer. The deal they reached was similar to the proposal that Spain’s Mr. Soria took to Mexico: Argentina would pay out a $5 billion government bond with 10-year maturity and an interest rate between 8.25% to 8.75%, people familiar with the talks said.
The bond would pay no interest during an initial several-year grace period, but Repsol could sell it at any time, likely with a discount on the face value, these people said. The company also would be able to begin recovering the face value of the bond following the grace period.
The next day came a payoff for Spain: Pemex announced it had completed an agreement to purchase the majority stake in the Spanish shipbuilder.
2. ARGENTINA’S YPF: SWALLOWED PRIDE (The Economist)
Nov 30th 2013
A deal with Repsol is a small step towards reversing an energy deficit
HAVING been an exporter of hydrocarbons not long ago, Argentina now imports natural gas from Bolivia and oil from Venezuela—even though it is sitting on what is probably one of the world’s biggest shale oil-and-gas fields, Vaca Muerta in Patagonia. When President Cristina Fernández last year ordered the expropriation of Repsol’s controlling stake in YPF, the country’s main oil company, she saw this as a way of ensuring Vaca Muerta would be developed by Argentines, not Spaniards. But the nationalisation placed YPF at the centre of an international legal dispute.
This left Miguel Galuccio, YPF’s new CEO, running a company with little chance of raising the capital it needs if it is to develop its slice of more than a third of Vaca Muerta’s acreage. And it is one of several problems making it hard for Argentina to cut an energy deficit that according to Miguel Kiguel, an economist, is heading for $7 billion this year. That deficit is a big reason behind a plunge in the Central Bank’s reserves to a seven-year low.
All this explains why the government this week offered Repsol compensation, reportedly of $5 billion, payable in government bonds. That is hardly generous: Repsol wanted $10.5 billion in cash. Nevertheless, Repsol’s board gave the offer a cautious welcome; the alternative is years of international arbitration.

For Argentina to become self-sufficient again in energy by 2030 requires investment of around $200 billion, of which $140 billion is in shale and about $60 billion in conventional oil and gas, reckons Jorge Ferioli of the local branch of the World Energy Council, a pressure group. A deal with Repsol improves Mr Galuccio’s chances of getting other investors to follow Chevron, which in July agreed to invest a modest $1.24 billion over five years in a pilot scheme in Vaca Muerta.

But only a bit. Under Mr Galuccio, an experienced oilman, YPF’s investment spending has doubled this year, but only to about $5 billion. A big obstacle to going faster is that Argentina’s dispute with holders of defaulted sovereign bonds limits YPF’s ability to tap international financing on reasonable terms.
The government has taken some steps to attract investment. It has raised the wellhead price it pays for newly developed gas, approved a new hydrocarbons law and issued a decree allowing companies to repatriate profits after investing at least $1 billion over five years. But drawing in more investment means allowing multinationals to import equipment, export production and repatriate profits freely, according to a senior industry source in Buenos Aires. It doesn’t help that the official exchange rate is 60% overvalued, which makes it unattractive to bring in dollars.
“To get money you need to be trusted,” the source says. Grudging though the deal looks, compensating Repsol is at least a first step towards restoring investors’ confidence in Argentina. But it is only one of many that are still needed.
3. ARGENTINA-SPAIN YPF ACCORD LIKELY TO BEAR FRUIT (The Oxford Analytica Daily Brief)
November 28 2013
A final accord resolving the dispute over state oil company YPF looks likely. This may pave the way for new hydrocarbons investments and will represent a key step in government efforts to resolve pending investor disputes and regain access to international credit.
The board of Spanish Repsol yesterday unanimously “valued positively” the ‘pre-agreement’ reached on Monday on compensation for the 2012 expropriation of 51% of YPF. The preliminary accord reportedly involves payment of 5 billion dollars in ten-year Argentine government bonds with a grace period of 2-4 years and an annual interest rate of some 8%; final acceptance would commit Repsol to abandoning future litigation over YPF. Repsol is reportedly insisting on closer scrutiny of the ‘fine print’ involved in the agreement, in particular the guarantees offered for the payments. Repsol’s management did not receive unanimous support from the board, with Mexico’s Pemex (owner of 9.3% of Repsol and a key player in the YPF accord) considering that it has “not offered the desired results for the company and its shareholders”, apparently after it rejected an earlier joint venture proposal to exploit part of the Vaca Muerta shale reserves in southern Argentina.
4. ARGENTINA WEIGHS PUTTING POPE FRANCIS’ FACE ON A COIN (CNN.com)
By Catherine E. Shoichet
November 27, 2013
Just a few days after Pope Francis decried capitalism, Argentine lawmakers weighed a new way to honor him: putting his face on a coin.
A proposal to create a commemorative coin as a tribute to Latin America’s first Pope passed in Argentina’s lower house on Thursday, Rep. Oscar Cachi Martinez said in a post on his official Facebook page.
Martinez first proposed the measure in April, and it garnered approval from congressional committees earlier this month. Now the bill will be sent to the South American county’s Senate for consideration.
The goal of the coins, according to the text of the proposed law, is “to commemorate an event of global dimensions, so our present and future generations remember this splendid act in the history of humanity, in which the principal actor is an Argentine.”
Meet the disfigured man the Pope kissed Pope Francis’ new vision for church Pope Francis slams market ‘tyranny’
Beneath the Pope’s face, the coins would read, “Tribute from the Argentine People to Pope Francis.”
Catholic faithful across Latin America cheered the election of Pope Francis earlier this year.
Even though about 480 million of the world’s 1.2 billion Catholics live in the region, for centuries, the church’s top job had gone to Europeans.
That changed with the announcement that then-Argentine Cardinal Jorge Mario Bergoglio, who served as archbishop of Buenos Aires, would become the new Pontiff.
Many Argentines were overjoyed. But the news was met with a more tepid response from President Cristina Fernandez de Kirchner, who sent a dry letter of congratulations that failed to mention that Francis was the first Pope from Argentina and the Western Hemisphere.
Several years before, Fernandez’s government had sparred with Bergoglio in a notorious war of words over a gay marriage law the President backed.
But since his election in March, Francis has made headlines by decrying the iniquities of modern capitalism, embracing the poor and people with disabilities and reaching out to gays and lesbians.
At the same time, the 77-year-old pontiff has sought to to awaken a spirit of joy and compassion in the church, scolding Catholic “sourpusses” who hunt down rule-breakers and calling out a “tomb psychology” that “slowly transforms Christians into mummies in a museum.”
And Martinez says there’s no doubt Pope Francis is already leaving his mark.
“To this Argentine who, for being a good pastor to his flock, especially to those who most need him, we all owe a tribute, a great tribute,” Martinez said in a post about the initiative on his official website, making the case for Argentina’s lawmakers to act.
“We believe that the way of being, the charisma and the humility of Pope Francis have managed to revive global sympathy for the Catholic Church,” he said.

ARGENTINE UPDATE – Nov 26, 2013

28 noviembre, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

16. AEROLINEAS ARGENTINAS TO RESTORE FLIGHTS TO J.F.K. (NYT Blogs)

1. ARGENTINA OFFERS REPSOL $5B COMPENSATION FOR YPF (The Washington Post)
By Almudena Calatrava
November 26, 2013
MADRID — Spanish energy company Repsol would get $5 billion in compensation from Argentina for the expropriation last year of the firm’s YPF unit and its vast holdings of unconventional oil and gas fields, a person with direct knowledge of the preliminary deal said Tuesday.
Under terms of the proposal to be considered Wednesday by Repsol’s board, the Spanish company would get the money in Argentine bonds denominated in U.S. dollars. In return, it would drop legal action against Argentina for expropriating Repsol’s controlling stake in YPF in 2012 without payment, said the person, who was not authorized to disclose details and spoke on condition of anonymity.
Investors on Tuesday cheered the news, sending Repsol shares up 4.28 percent to close at 19.24 euros ($26.03) in Madrid.
News of the deal came late Monday after Repsol executives met in Buenos Aires with government officials from Argentina and Spain and the chief executive of Mexico’s state oil company, Petroleos Mexicanos, which holds a minority stake in YPF.
The deal could pave the way for Pemex to join the exploration of the vast Vaca Muerta oil deposit in Neuquen province, where YPF says 15 teams are already extracting more than 10,000 barrels a day.
Argentina’s Economy Minister Axel Kicillof, the mastermind behind the YPF expropriation, remained coy about the compensation deal. “The agreement is somewhat confidential because you can’t just go around carelessly throwing out values,” said Kicillof, who is now leading Argentina’s negotiations. “It could affect shareholders and affect the stocks.”
Kicillof said that at the time of the takeover, Repsol was too hasty when it demanded $15 billion in compensation and later $10.5 billion.
“The Argentine state acted with a lot of prudence and sobriety,” he said. “We’re waiting to know more about the company to be able to give it a fair value, but I think Repsol acted rash by giving out just the numbers they wanted.”
The values and instruments of the deal will remain secret until Repsol’s board votes on the proposal on Wednesday, Kicillof said. He added that Argentina is satisfied with YPF’s performance after it seized control of its leading oil company from Spanish hands.
“But we’re now here to look forward,” he said. “We want to finish determining these values to close this deal once and for all.”
The seizure of YPF infuriated Spain and led to harsh criticism of Argentina by the European Union, the United States and some Latin American leaders. Argentina had claimed Repsol SA was not investing enough in the South American country’s oil industry — claims vigorously denied by Repsol.
The expropriation of Argentina’s national oil company, which was privatized in the 1990s, was hugely popular among Argentines because many blame privatizations and other free-market policies of that decade for the country’s economic crisis and debt default in 2001-2002.
Repsol had said its 51 percent stake in YPF was worth $10.5 billion in compensation and sued Argentina seeking payment.
The fight also strained ties between Spain and Argentina, and a statement released by Argentina’s economy ministry said negotiators hoped the deal would “contribute to normalize and strengthen the historic ties between the three countries and their companies.”
Argentina has the world’s third-largest deposits of shale oil and gas, but needs international help to develop them. Only Chevron has so far made a commitment to help develop the fields, and it was subsequently sued by Repsol.
2. ARGENTINA IS SAID TO BE NEAR DEAL TO COMPENSATE REPSOL (The New York Times)
By Stanley Reed
27 November 2013
LONDON — Argentina and Repsol, the Spanish energy company, appear to be nearing a deal on compensation for the government’s seizure of Repsol’s stake in an Argentine oil producer in 2012.
Representatives from the Spanish and Argentine governments and company executives said they had reached an agreement in principle on Monday in Buenos Aires on indemnifying Repsol for the 51 percent of the energy company YPF that Argentina expropriated without payment. The government of President Cristina Fernández de Kirchner had justified the action by saying that Repsol was not investing enough in Argentina.
The government now appears to want to repair relations with global investors and attract badly needed capital to the country’s oil and natural gas industry. Argentina’s Vaca Muerta field, a potentially rich trove of oil- and gas-bearing shale rock, has drawn acute interest from multinational energy companies.
”This is one of the hottest areas now, after Brazil,” said Fadel Gheit, an oil analyst at Oppenheimer in New York.
Argentina is offering about $5 billion in bonds as compensation, and Repsol is likely to accept if the payment is guaranteed, according to a person with knowledge of the matter, who asked not to be identified because the transaction had not been completed.
Repsol lost two-thirds of its global oil production capacity and half of its reserves when the majority of its stake in YPF was seized. Repsol filed a complaint with the World Bank arbitration tribunal and sought $10.5 billion in compensation.
Repsol’s board of directors was expected to examine Argentina’s proposal at its meeting on Wednesday in Madrid.
”Any deal is likely to add value to Repsol’s shares,” said Neill Morton, an analyst at Investec in London. ”The market took the view that Repsol might get nothing” or might require several years to reach a settlement, he said.
Repsol shares closed up more than 4 percent on Tuesday in Madrid. Shares in YPF, in which Repsol still holds a 12 percent stake, were up more than 10 percent in Buenos Aires.
Argentina is under pressure to reach a deal because the seizure of the YPF stake chilled foreign investment in the country. Argentina needs substantial capital to develop the Vaca Muerta, or Dead Cow, field.
Chevron has a $1.2 billion joint venture with YPF to develop a small portion of the field, but YPF would like Chevron to expand its activities and wants to bring in other partners. Repsol has sued Chevron for joining with YPF, but a compensation agreement would probably end that dispute.
Argentina’s production of oil has fallen to about 660,000 barrels a day in 2012, less than 1 percent of the world total, according to the BP Statistical Review of World Energy. The country has begun to import liquefied natural gas at high market prices, giving the government an incentive to encourage domestic production.
Its shale oil and gas resources, which are believed to be among the largest in the world, could drastically change the picture. The United States Energy Information Administration estimates that Argentina ranks behind only the United States and China in shale gas reserves, with 802 trillion cubic feet of technically recoverable gas, and is fourth behind Russia, the United States and China in shale oil, with 27 billion barrels.
”What is holding Argentina back from developing these resources,” Mr. Gheit said, is ”aboveground risk” — including the possibility of government seizure of assets.
In a presentation at an industry conference in London in October, Miguel Galuccio, YPF’s chief executive, said the characteristics of the shale deposits in the Vaca Muerta were superior to those of fields in the United States, making them likely to be prolific producers of oil and gas. He identified several other fields in Argentina that he said had shale potential.
Any agreement between Argentina and Repsol would probably include Pemex, the Mexican state oil company, which has close to a 10 percent stake in Repsol. Pemex helped broker the proposed compensation accord and hopes to help develop Argentina’s shale energy resources.
3. CORPORATE NEWS: REPSOL NEARS DEAL OVER THE SEIZURE OF STAKE IN YPF (The Wall Street Journal)
By Ilan Brat
27 November 2013
MADRID — Spanish oil company Repsol SA would receive $5 billion in Argentine government bonds as compensation for the South American country expropriating its controlling stake in YPF SA last year, according to people familiar with a proposal that Repsol has agreed to bring to a board vote.
The dollar-denominated bonds would be secured by guarantees, and the company would face no requirements to reinvest any money in Argentina and no restriction on its ability to sell the bonds, these people said Tuesday. The interest rate and other terms of the bonds were unclear.
Repsol’s board is likely to accept the basic structure of the proposed agreement at a meeting on Wednesday, because it has the implicit support of the Spanish and Mexican governments, the people said. A compensation deal would end an 18-month standoff between Spain and Argentina over the expropriation of 51% of YPF.
The Spanish oil company currently holds a 12% stake in YPF.
A settlement would be positive for Repsol as it seeks to grow outside its main production areas of Latin America and northern Africa, while for Argentina it could restore confidence as the country needs billions of dollars in investment to exploit untapped hydrocarbon reserves. It would also help to patch up relations between Spain and Argentina, which were strained by the YPF takeover.
Spanish Energy Minister Jose Manuel Soria personally delivered an outline of the proposed deal on Nov. 15 to Mexican government officials and the chief executive of Petroleos Mexicanos, or Pemex, which has a 9% stake in Repsol, said a person familiar with the talks. Mr. Soria accompanied top Repsol executives to a meeting with Argentina’s new economy minister in Buenos Aires, where the plan won tentative approval on Monday. The chairman of Catalan bank CaixaBank SA, Repsol’s largest single shareholder with 12%, also attended that meeting.
Repsol Chairman Antonio Brufau, who had led efforts to fight Argentina’s nationalization of YPF last year, was absent from Monday’s meeting. One person familiar with the matter said Mr. Brufau approved of the proposal but felt the company would make more progress toward a deal if other Repsol executives attended in his place.
An issue for Repsol, and a potential sticking point, is whether its board members trust the guarantees underlying the offer, said a person familiar with the proposed deal. It wasn’t clear on Tuesday what guarantees were offered. Repsol said its decision will be based on what the board considers best for the company and its shareholders.
If Repsol ratifies the deal, both it and Argentina would drop all lawsuits in the case, the two parties said.
Investors welcomed the preliminary accord. In Madrid, Repsol shares rose 4.3% to close at 19.24 euros ($26.01) on Tuesday, and YPF shares traded in New York increased 10% to $29.37.
Some analysts cautioned that, without knowing all the terms, it would be difficult to fully value the deal or predict how quickly Repsol may be able to sell the bonds.
The preliminary agreement “is a step in the right direction, [but] we feel Repsol could still extract better terms for its minority shareholders,” said Alejandro Demichelis, an analyst with Exane BNP Paribas.
In June, Repsol rejected a Pemex-brokered compensation offer that the Argentine government valued at $5 billion. Repsol’s board said the offer, which included a stake in a company that would hold land in YPF’s large oil and gas fields called Vaca Muerta, didn’t fairly value the assets. And Repsol would have been required to reinvest about $1.5 billion of the compensation in Argentina.
People familiar with the matter said that Repsol wouldn’t reinvest in Argentina or take part in the development of Vaca Muerta. It wasn’t clear whether Repsol would keep its remaining stake in YPF.
The government of Argentine President Cristina Kirchner, meanwhile, is seeking to mend ties with foreign creditors at a time when the country faces foreign-currency shortages and limited borrowing options. Mrs. Kirchner’s cabinet chief Jorge Capitanich told reporters on Tuesday that the proposed Repsol settlement could help Argentina attract investment for oil and gas exploration and production.
Argentina is thought to have vast deposits of unconventional oil and gas, ranking second in the world behind China in potentially recoverable shale-gas reserves with 802 trillion cubic feet, according to a recent study by the U.S. Energy Information Administration.
4. REPSOL LIKELY TO ACCEPT ARGENTINA’S $5BN YPF COMPENSATION OFFER (Financial Times)
By Miles Johnson in Madrid and Benedict Mander in Buenos Aires
November 26, 2013
The board of Repsol is poised to accept an offer of $5bn compensation from the Argentine government for the nationalisation of its YPF subsidiary in a move that will draw a line under a bitter year-long diplomatic stand-off with Madrid.
The Spanish oil company’s management, under pressure from its largest shareholders, has agreed in principle to settle the legal battle over Argentina’s seizure of its majority stake in YPF but is demanding guarantees over how the $5bn will be paid, people close to the situation said.
While the final details of a deal have not yet been decided ahead of a Repsol board meeting on Wednesday, Argentina has indicated to the company and the Spanish government that it would pay the $5bn using its own government debt.
As a consequence of Argentina’s default at the turn of the century, the country is still being pursued by a long line of international creditors and Repsol’s management is seeking legal assurances that any payment would be enforceable, people close to the talks said.
Repsol, which saw its shares jump more than 4 per cent on news of a possible deal, declined to comment.
If the deal goes ahead, it could help to unlock billions of dollars of investment that YPF is seeking to develop its Vaca Muerta shale reserves, which are among the world’s largest unconventional oil and gas deposits.
An increase in energy production would help Argentina reverse a growing energy deficit, which is putting pressure on rapidly dwindling foreign exchange reserves, jeopardising the stability of the government of President Cristina Fernández.
The populist government seized majority control of YPF, the country’s former state oil company, after accusing Repsol of failing to invest sufficiently in its assets as Buenos Aires moved to alleviate rising fuel prices.
The heads of Repsol’s two largest investors, the Catalan bank Caixabank and Pemex, Mexico’s state oil company, attended a meeting in Buenos Aires on Monday with Argentina’s economy minister Axel Kicillof, Spain’s industry minister José Manuel Soria and three Repsol executives.
The meeting marked a conciliation between Buenos Aires and Madrid after months of tension, with Mr Kicillof having led the drive to nationalise YPF last year and Mr Soria having warned Argentina of “serious consequences” before the seizure took place.
The position of Antonio Brufau, Repsol’s executive chairman, is less clear. Tense relations with its large shareholders in recent months spilled out in public, as Pemex attacked his salary.
While Mr Brufau was not present at the meeting, people close to Repsol’s management said he had personally approved the envoy being sent to Argentina and welcomed an agreement.
In June Repsol’s board voted against an earlier $5bn compensation proposal from YPF which involved the payment of $1.5bn in Argentina-backed debt, and a stake in the Vaca Muerta shale formation, valued by Buenos Aires at $3.5bn.
Relations between Mr Brufau and Isidro Fainé, chairman of Caixabank and deputy chairman of Repsol, who brokered the earlier rejected deal, have been strained by disagreement over how to settle the YPF issue.
Mr Fainé, who had previously travelled to Argentina to meet Ms Fernández, did not turn up to the Repsol board meeting when the proposal he had helped design was unanimously rejected.
5. REPSOL/YPF: MORE ARGENTINE “FINANCIAL NORMALISATION”? (Financial Times)
By John Paul Rathbone
November 26, 2013
As the saying goes, it is not over until it’s over.
Nonetheless, last night’s putative agreement between Spain, Argentina and Mexico to settle the YPF-Repsol dispute looks promising – Repsol shares spiked over 4 per cent on Tuesday morning on the news – although there are several provisos.
First, this is an agreement between governments, not companies. Repsol’s board still has to consider the offer on Wednesday.
Second, the details of the offer are not public yet, although it is thought to be around $5bn – less than half the amount that Repsol had been seeking in compensation for the nationalisation of its majority stake in YPF.
Third, most of that payment will be in bonds backed by the Argentine sovereign, and Argentine paper is not the best-regarded in the world. In the words of one New York judge, Argentina is a “uniquely recalcitrant debtor”.
Still, Buenos Aires’ formal recognition of this debt – and its offer to settle it – may help restore the government’s reputation. Indeed, it is part of a broader (and recent) Argentine effort to reach what is euphemistically called “financial normalisation” – a mending of broken fences with international financial markets.
Argentina recently settled some of its claims at the World Bank investment tribunal, ICSID. There is market chatter it wants to settle its Paris Club debt. There is talk, too, of possible deal that might resolve its problems with holdout creditors in New York – albeit thanks to the good graces and self-interest of Argentine exchange bondholders.
If – and this is still an ‘if’ – Argentina is also about to reach a deal with Repsol, that would not only remove a long-standing problem from the government’s bulging in-tray, it could also open the spigots on billions of dollars of investment in the country’s giant shale gas formation, Vaca Muerta.
Money coming in today would help alleviate Buenos Aires’ biggest immediate financial problem – the rapid depletion of its foreign reserves. At the current run rate, the country does not have enough reserves to last until 2015, when there are presidential elections.
It would also sow the seeds for resolving one of the country’s biggest medium term problems – Argentina’s growing energy deficit, which next year will cost the country an estimated $8bn, hard currency that Argentina does not have to spend.
So a lot is potentially at stake for Argentina. Still, the deal has not been signed off yet.
6. REPSOL SAID TO GET 10-YEAR BONDS AS YPF COMPENSATION (Bloomberg News)
By Will Kennedy and Charlie Devereux
November  26, 2013
Repsol SA (REP), the oil producer whose YPF unit was seized by Argentina’s government last year, will get $5 billion of 10-year bonds as compensation, a person briefed on the proposal said.
The agreement to pay the bonds, denominated in dollars and guaranteed by the government, will end the legal dispute between Madrid-based Repsol and Argentina, the person said, asking not to be identified before the company’s board meets to consider the proposal tomorrow.
While the accord is backed by Repsol’s management and its two largest shareholders — Mexico’s state oil company and CaixaBank SA (CABK) — the board will seek assurances that the bonds offer sufficient security and liquidity, the person said.
Spanish Economy Minister Luis de Guindos said any agreements that “remove uncertainties are good,” when asked by reporters to comment today at an event in Madrid.
If ratified, the deal would end a yearlong dispute over compensation for the seizure of 51 percent of Argentina’s biggest energy company. Repsol, which originally sought more than $10 billion, rejected a $5 billion offer in June because it involved reinvesting in Argentina in partnership with YPF.
Repsol rose 4.3 percent, the most in more than a year, to 19.24 euros by the close in Madrid. YPF’s American depositary receipts rose 9.5 percent to $29.20 in New York, the highest since March 2012. The Buenos Aires-based company rallied 11.2 percent to 259 pesos in the Argentine city, after reaching a record 270 pesos.
Buenos Aires
“There was little in Repsol’s share price for a deal,” Neill Morton, an analyst at Investec Bank Plc, said in London. “There are still a number of uncertainties with respect to valuing the impact of any deal, not least how ‘liquid’ any compensation will be.”
The agreement was negotiated in Buenos Aires yesterday by ministers from Argentina and Spain; the head of Petroleos Mexicanos, Emilio Lozoya; the chairman of CaixaBank and vice chairman of Repsol, Isidro Faine; and Repsol Chief Operating Officer Nemesio Fernandez-Cuesta.
Argentina is offering “fair and reasonable” compensation, Economy Minister Axel Kicillof told reporters today in Buenos Aires. He declined to provide the amount and form of payment, citing a confidentiality agreement.
YPF spokesman Alejandro Di Lazzaro and a Repsol official declined to comment.
“The heads of agreement involves setting a compensation amount to be paid with liquid assets and both parties desisting from legal processes,” Argentina’s government said in a statement yesterday, without disclosing details of the package.
Vaca Muerta
Argentine President Cristina Fernandez de Kirchner took control of YPF in April 2012 after a dispute over slumping oil output and investments. A day later, Repsol Chairman Antonio Brufau said the company sought $10.5 billion in compensation, based on the valuation methodology in YPF’s bylaws written by the government that privatized the company in the 1990s.
The Madrid-based producer rejected in June an offer that included a 47 percent stake in a project in the Vaca Muerta shale formation valued by Argentina at $3.5 billion, as well as $1.5 billion for development. Repsol was willing to reach a settlement that didn’t involve reinvesting in the country, Brufau said in a Nov. 21 interview.
State-owned Pemex, based in Mexico City, has an almost 10 percent stake in Repsol. Lozoya said Oct. 31 that Repsol should take a more “proactive and prudent approach” to resolve the YPF matter.
Shale Gas
Argentina holds the world’s second-largest shale gas reserves and the fourth-largest shale oil reserve, according to U.S. Energy Information Administration data. The company is offering tax and export incentives to energy companies that invest at least $1 billion over a five-year period.
Repsol asked a World Bank panel in July to help prevent YPF from developing the company’s seized assets. Repsol also filed a lawsuit demanding fair compensation for the seizure of its YPF stake with the Washington-based International Center for Settlement of Investment Disputes.
The accord will help “normalize and strengthen the historic ties between the three countries and its companies,” the Argentine government said in the statement.
“For us this helps construct a path that will allow us to continue to generate investment for the development of hydrocarbons,” Jorge Capitanich, Argentina’s cabinet chief, told reporters today. “We have an ambitious two-year program.”
7. FACING SPIRALING INFLATION AND ELECTORAL DEFEAT, ARGENTINA OFFERS REPSOL $5B FOR YPF COMPENSATION (Forbes)
By Agustino Fontevecchia
November 26, 2013
The shale gas wars that have pitted the government of Argentina against Spanish oil giant Repsol could be close to concluding, after an initial agreement regarding compensation for the 2012 nationalization of YPF has been signed.  Under pressure by major shareholders CaixaBank CaixaBank and Pemex, Repsol CEO Antonio Brufau appears to have been convinced of taking a $5 billion payment, half of what he was originally asking for, and to drop litigation against the Argentine oil company, which is in the process of joining forces with the likes of Chevron CVX -0.78% to ramp up production at the massive Vaca Muerta shale field.
While the specifics of the agreement haven’t been disclosed, Repsol’s board is set to vote on the agreement on Wednesday.  Brufau, who had remained steadfast in his attempt at getting international courts to rule against Argentina, had created a tense atmosphere in the board room, sparking the rage of his two largest shareholders, CaixaBank and Mexican oil company Pemex.
The administration of Cristina Kirchner is willing to pay Repsol with “liquid assets,” Argentina’s Finance Ministry said in a statement.  Back in June, the internal rifts in Repsol’s board surfaced after the rejection of a previous proposal by the Argentine government which stipulated paying $1.5 billion in government bonds and $3.5 billion in acreage in the Vaca Muerta shale field.  Under the terms of the agreement, Repsol would enter into a joint venture with YPF, with the latter maintaining operational control, and Pemex, in order to commercialize 6.4% of Vaca Muerta.  Brufau, concerned with the Argentine government’s aggressive past, rejected the proposal, sparking the Ire of Pemex CEO Emilio Lozoya who threatened to offload their 9.34% stake in the Spanish energy firm.
Brufau was forced to fold, though, after the Spanish government threw its weight behind Pemex and CaixaBank.  Indeed, while Brufau is said to have approved of the deal, he remained in Madrid, while Spain’s Industry Minister, Jose Manuel Soria, negotiated with Argentine finance minister Axel Kicillof and YPF’s CEO Miguel Galuccio.  Soria was joined by Repsol executives and the heads of both CaixaBank and Pemex.
The deal has important implications for global energy markets.  Vaca Muerta is considered the second largest shale oil reservoir in the world by Chevron, which signed an agreement with YPF to invest in ramping up production.  According to the Argentine oil company, Vaca Muerta contains 27 billion barrels of oil and 802 trillion cubic feet of natural gas.  YPF doesn’t have the technical or the financial capacity to capitalize those resources, though, and has been actively looking for external partners.  Beyond Chevron, YPF signed a deal with Dow Chemicals, but it has been partially blocked by Repsol’s threats of litigation.
The decision to negotiate with YPF marks a turn in the foreign policy of the Argentine government, which has remained intransigent in its financial problems with foreign institutions.  After a dramatic default in 2001/2, the government of Argentina has been engaged in litigation with a group of holdout bondholder led by hedge fund Elliott Management, and has threatened to disobey rulings by the Supreme Court if they aren’t favorable.  Argentina also has several cases open at the World Bank’s International Center for Settlement of Investment Disputes and debts with the Paris Club of rich nations.
Yet, spiraling inflation, which has severely eroded Argentina’s foreign reserves holdings, a difficult loss in October’s midterm elections, and a rising energy deficit seem to have forced Kirchner to change her mind.  After spending about a month out of office due to brain surgery, Cristina Kirchner reshuffled her cabinet, even designating former finance minister Hernan Lorenzino to a special unit in charge of negotiating with holders of sovereign debt, the World Bank, the IMF IMF, and the Paris Club.
It is unclear whether the move represents an ideological shift or purely a pragmatic one.  Reserves have fallen 26% since late-2012, breaching the $32 billion mark in November, and inflation remains out of control.  Argentines are forced to cope with a dual exchange rate as capital controls and the blocking of imports have been the government’s response to the drainage.  Cristina Kirchner’s approval ratings have sunk dramatically, and her party has been punished by the electorate in October.  While Cristina continues to speak of “deepening the [economic] model,” it seems reality has finally dropped in.  Yet, given what has been seen in the past, investors should wait for actions, rather than words, before making a value judgment as to what she is actually thinking.
8. ARGENTINA AIMS TO JUMP-START SHALE DRILLING WITH REPSOL DEAL (Reuters News)
By Hugh Bronstein
November 27, 2013
BUENOS AIRES (Reuters) – Argentina said on Tuesday that a pending deal with Spanish oil major Repsol is aimed at kick-starting shale drilling in the South American country, putting an end to the long stand-off between energy investors and President Cristina Fernandez.
Nineteen months after seizing control of Argentina’s main oil company YPF (YPFD.BA: Quote, Profile, Research) from Repsol (REP.MC: Quote, Profile, Research), Fernandez’s government announced a preliminary deal late on Monday to pay Repsol for its nationalized shares.
Shares of both companies soared on reports that the pact involved a proposal by Spain’s government that Repsol receive $5 billion in compensation from the Argentine state for the 51 percent stake it grabbed in YPF last year.
The deal could set the stage for a radical increase in unconventional energy exploration and help repair a relationship with global investors left in tatters after Argentina’s massive 2002 sovereign default.
Tapping its vast shale reserves would also bolster central bank reserves drained in part by expensive oil and gas imports.
The Repsol deal showed new flexibility on the part of Fernandez, whose policy model, marked by long-running feuds with private-sector investors from farmers to sovereign bondholders, was rejected by voters who shunned her candidates in the October 27 congressional midterm election.
Early on Tuesday, Argentina’s new cabinet chief Jorge Capitanich, himself a possible 2015 presidential candidate, said the government was out to attract investment in the country’s massive Vaca Muerta shale oil and gas formation.
“We are building a path that will allow for an increase in hydrocarbon exploration and exploitation,” he told a press conference, adding that Argentina has a “very ambitious” energy program scheduled for the years ahead.
Business leaders say they hope Capitanich can moderate the policies of Axel Kicillof, the leftist academic and mastermind behind the YPF expropriation, who was named economy minister last week.
Speaking to businessmen, Kicillof said Argentina had offered Repsol “a fair and reasonable price” for the majority stake in YPF. He declined to comment on the $5 billion figure that Spain is said to want for Repsol’s compensation, or on the form that the compensation might take, cash or bonds.
Already the world’s No. 3 corn and soybean exporter, Argentina stands to become a major oil and gas producer as well if the government can attract the tens of billions of dollars it needs to exploit the Vaca Muerta (Dead Cow) shale formation
The Repsol-YPF deal is set to be voted on at a Repsol board meeting scheduled for Wednesday in Madrid.
Fernandez has long railed against orthodox prescriptions for Argentina’s economy, which is ailing from one of the world’s highest inflation rates and low confidence caused by heavy trade and currency controls. Her interventionist policies have kept investment out of Latin America’s No. 3 economy.
That could change if international energy companies see enough market-friendly signals to tempt them into Vaca Muerta.
“The understanding with Repsol shows that the government, when in need, can show a remarkable degree of pragmatism. An understanding with Repsol should facilitate YPF negotiations with other oil companies interested in Vaca Muerta,” said Ignacio Labaqui, an analyst with Medley Global Advisors.
Equity markets liked the Repsol compensation deal. YPF shares zoomed 10.7 percent higher in early New York trade and 16 percent in Buenos Aires. Repsol’s stock price rose 5.6 percent in Madrid.
YPF is the biggest stake-holder in Vaca Muerta. The company estimates the field contains 661 billion barrels of oil and 1,181 trillion cubic feet of natural gas, making it one of the biggest shale reserves in the Western Hemisphere.
Despite Vaca Muerta’s vast potential, investment in the formation has come slowly so far.
Dow Chemical Co (DOW.N: Quote, Profile, Research) has signed on to invest up to $120 million in 16 Vaca Muerta gas wells, and oil giant Chevron Corp (CVX.N: Quote, Profile, Research) has agreed to invest $1.24 billion in the area.
To clinch the deals, Argentina has allowed the companies to export tax-free up to 20 percent of what they produce. Export revenue of companies that invest at least $1 billion over five years is exempt from government foreign exchange controls.
9. ARGENTINA, REPSOL SAID NEARING COMPENSATION COMPROMISE (UPI)
November 26, 2013
BUENOS AIRES, Nov. 26 (UPI) — Argentina and major Spanish oil producer Repsol are nearer a compromise over last year’s government unsettling seizure of Repsol unit YPF.
Not only did the nationalization sour relations between Buenos Aires and Madrid, it is still hampering Argentine efforts to draw international investors to the South American country.
Argentine government sources quoted in government-backed media gave scant details, and Repsol declined comment on reports it was offered $5 billion compensation, about half of what it demanded after YPF’s nationalization.
But the talks in Buenos Aires, attended by senior Repsol executives and Spanish government officials, did move forward, the reports said, if only because Argentine needs a less quarrelsome Spain to go ahead with its plans for preparing nationalized YPF for bigger things.
Energy giant Chevron pledged support to those plans, despite objections from Repsol, but the government of President Cristina Fernandez is nowhere near implementing its plan to reinvent YPF and develop the country’s newly found shale oil reserves.
Argentina spends about $15 billion a year on oil and gas imports and the shale reserves are seen as a panacea for the country’s growing energy dependence. The shale-oil and gas deposits in Neuquen province were discovered by Repsol just before it lost YPF to the government takeover.
The deposits are considered enough to eliminate Argentina’s energy import bill but industry estimates show developing them will cost more than $60 billion.
The Vaca Muerta, or Dead Cow, shale deposit is said by experts to hold 16 billion barrels of shale oil and 308 trillion cubic feet of shale gas. If properly developed, the shale bonanza potentially will make Argentina the world’s fourth-largest producer of shale oil.
The shale gas reserves in Argentina are estimated to be the world’s third-largest, after China and the United States.
Argentine compromise proposals have included offers to Repsol to return and develop the shale reserves, an offer received with little enthusiasm in Madrid.
Repsol’s 51 percent share in YPF was seized by Fernandez after charges the company didn’t invest enough of its local earnings into developing YPF’s energy potential. Repsol denied the accusation, Argentina’s main reason for nationalization, and pressed for more than $10 billion in compensation.
Repsol has made clear to Argentine it will continue to obstruct Vaca Muerta development and challenge Argentine efforts to bring in other companies unless it is adequately compensated.
Argentine Ministry of Economy officials said an “agreement in principle” for compensating Repsol had been reached but did not outline its terms.
The ministry’s statement, however, said the agreement provides that “both sides will end their respective legal actions” once an agreement is in place. Analysts said it was more important for Argentina not to have a litigant and hostile Repsol in its way as it tries to exploit Vaca Muerta potential for giving it energy independence.
The talks so far have involved, on Argentina’s side, new Economy Minister Axel Kicillof, YPF Chief Executive Officer Miguel Galuccio and Argentine Ambassador in Madrid Carlos Bettini. The Spanish side included Spanish Industry and Tourism Minister Jose Manuel Soria, and Repsol’s Exploration and Production Director Luis Cabra and operations chief Nemesio Fernandez Cuesta.
The reconciliation effort is led by Petroleos Mexicanos, or Pemex, which holds 9.5 percent of Repsol and has been outspoken in its criticism of Repsol management and less so of Argentina.
In a previous mediation bid last June, Pemex proposed a joint venture that could include Repsol, YPF as well as Pemex and exploit the Vaca Muerta shale deposits. Repsol’s board rejected the initiative
10. DEAL IN PRINCIPLE REACHED BY ARGENTINA, SPAIN TO COMPENSATE REPSOL OVER YPF EXPROPRIATION (AP Newswire (Government Feed))
By Debora Rey
25 November 2013
BUENOS AIRES, Argentina (AP) – Argentina’s government said Monday it has reached an agreement in principle to compensate Spain’s Repsol for last year’s 51 percent expropriation of the YPF energy company.
Repsol, YPF and Mexico’s Pemex state oil company, which holds a stake in Repsol, said they agreed tentatively on a process for determining a compensation amount. The parties also agreed to suspend legal actions.
Argentina expropriated the Spain-based Repsol’s controlling stake in YPF on April 16, 2012, without paying a single cent. The government claimed Repsol was not investing enough in the South American country’s oil industry.
The recovery of Argentina’s national oil company, which was privatized in the 1990s, was hugely popular among Argentines because many blame the privatizations and other free-market policies of that decade for the country’s economic crisis and debt default in 2001-2002.
But the seizure infuriated Spain and led to criticism by the European Union, the United States and even some Latin American leaders.
The Spanish energy giant has been demanding $10.5 billion in compensation and had sued Argentina seeking payment.
The preliminary deal was reached after company and government officials from Argentina, Spain and Mexico met in Buenos Aires. No other details of the agreement were released and it must be ratified during a Repsol board meeting Wednesday.
If confirmed, it could pave the way for Pemex to join the exploration of the vast Vaca Muerta (Dead Cow) oil deposit in Neuquen province, where YPF says 15 teams are already extracting more than 10,000 barrels a day.
Argentina has the world’s third-largest deposits of shale oil and gas and needs international help to develop them. But only a couple of major oil companies have made commitments since Repsol threatened to sue Chevron and any other company that worked with YPF on the fields that were discovered when Repsol had a controlling stake in YPF.
11. ARGENTINA/SPAIN ECONOMY: QUICK VIEW – AGREEMENT IN PRINCIPLE ON COMPENSATION (Economist Intelligence Unit – ViewsWire)
26 November 2013
Event
An agreement in principle on compensation by the Argentinian government for the expropriation in April 2012 of Spanish energy company Repsol’s 51% stake in Argentinian energy firm YPF has been reached. A final agreement is awaiting approval by Repsol’s board.
Analysis
A compensation deal with Repsol is vital to YPF’s chances of securing new joint ventures to develop Argentina’s huge shale oil and gas resources. In the 18 months since its nationalisation, YPF has secured a joint-venture agreement with Chevron (US), but total foreign investment (FDI) has been well below the government’s expectations-and below the levels required to reverse Argentina’s growing energy deficit. The latter is becoming a severe drain on the current account and the foreign reserves as energy imports rise to keep pace with domestic demand amid falling domestic production.
The terms of the deal have not yet been made public, and may not in fact have been finalised. In a statement the Argentinian Ministry of the Economy suggested that Repsol would receive liquid assets (possibly dollar bonds) in exchange for agreeing to give up its various legal claims that are stymieing investor interest in YPF. Repsol appears to be seeking cash. A figure of US$5bn is unconfirmed, but would represent an improvement on YPF’s previous offer of US$1.5bn plus participation in a joint-venture in Vaca Muerta (a huge shale oil and gas field first discovered by Repsol when it was operating in Argentina in 2010). It is still far less than Repsol’s original demand of US$10.5bn, but the company’s major shareholders, which include the state-owned Mexican oil company, Petróleos Mexicanos (Pemex; which is apparently interested in investing in Argentinian shale), have been pressuring Repsol’s management to reach a deal, and a final agreement could well be confirmed soon.
12. ARGENTINA SEEKS TO SETTLE YPF-REPSOL TO REBUILD INVESTOR CONFIDENCE (Market News International)
By Charles Newbery
26 November 2013
BUENOS AIRES (MNI) – Argentina expects a proposed agreement for compensating Repsol for the seizure of the Spanish energy company’s shares in Argentina’s YPF will unleash fresh investment to rebuild energy supplies after a decade of decline, a senior official said Tuesday.
Argentine Chief of Staff Jorge Capitanich said a deal brokered Monday between Argentina and Repsol will create “a path that will make it possible to continue generating investment mechanisms for the exploration and production of hydrocarbons” in Argentina.
The country has “a very ambitious program for the next few years” in developing oil and natural gas supplies, he said in a televised press conference.
Capitanich, who took over the day-to-day management of the economy after President Cristina Fernandez de Kirchner named him to the post last week, said more details of the Repsol-YPF agreement would be made known by Economy Minister Axel Kicillof as soon as Tuesday.
Capitanich declined to say how much Argentina would offer to pay Repsol for the 51% stake in lost in YPF.
Repsol has said it wants around $10 billion, but reports suggest the amount could be half of that.
The “accord in principle” was reached Monday in talks brokered by Mexico’s state energy company Pemex in Buenos Aires. Pemex has a 9.5% stake in Repsol and a seat on the board, while Repsol still owns a 6% interest in YPF.
Argentina has started to slow a decade-long decline in oil and gas production with YPF now under state control.
YPF, which produces a third of the country’s 540,000 barrels per day of oil and a quarter of its 114 million cubic meters per day of gas, is ramping up investment by reinvesting most of its profits. The aim is to increase its own production of oil by 4% and gas by 1% this year after a decade of declining at a combined 6% annual. The growth targets for 2014 are similar.
However, analysts say the asset expropriation from Repsol has discouraged investors, making it harder for YPF to reach partnership deals with the deep-pocketed companies it needs.
So far, YPF has only reached one major deal with Chevron for a $1.5 billion plan to develop shale resources in the Vaca Muerta play in the southwest. The play is thought to have among the world’s greatest production potential and could put Argentina on track to become a net energy exporter – an impact similar to the shale boom in the United States.
Analysts, however, say that up to $100 billion must be invested to put Vaca Muerta into the mass production, and that without settling differences with Repsol it would be hard to attract such an amount.
Opposition figures applauded the Repsol-YPF agreement, which still needs the approval of the Repsol board due to meet Wednesday.
Buenos Aires Mayor Mauricio Macri, a leading opposition figure, said Tuesday that the agreement was “positive.”
When Argentina seized control of YPF in April 2012, Macri said he publicly opposed what he called “a confiscation,” saying that it was an act of “robbery” that would play against the country.
He said he forecast has come true. “The energy deficit increased and we have isolated ourselves even more from the world,” he said on radio.
Congressman Alberto Roberti, who is aligned with Tigre Mayor Sergio Massa, another leading opposition figure, said that the agreement is a demonstration that “Argentina has gone from a hostile position to one that is more conciliatory.”
He added on radio: “It is impossible to think that Argentina could grow internationally without these types of agreements.”
Argentina seized control of YPF on grounds that Repsol failed to adequately invest to arrest a decade-long decline in oil and gas production that was pushing up energy imports and cutting energy exports.
Oil and gas production, which meet nearly 90% of the country’s energy needs, fell because of maturing reserves and limited exploration to make new finds. Many of the oil companies in the country reined in spending after a 2001-02 economic collapse brought a surge in state intervention in the sector, including price controls, export restrictions and threats of throwing executives behind bars for failing to adequately supplying the sector.
The dwindling production has chipped away at the trade surplus, a major source of foreign currencies for sustaining the foreign reserves to help pay the national debt given that Argentina can’t readily return to global financial markets until it fully settles a $100 billion default from 2001.
The trade surplus narrowed to $7.9 billion in the first 10 months of 2013 from $10.8 billion in the year-earlier period, led by a 26% increase in fuel imports and 22% decline in energy exports.
The government has said that the shrinking trade surplus is behind about a quarter of the drop in foreign reserves this year, which have dropped 27% this year to $31.5 billion from $43.2 billion at the start of the year.
Most of the rest of the drop in foreign reserves stems from paying the national debt, officials have said.
13. ARGENTINA TO COMPENSATE REPSOL FOR YPF STAKE: MINISTER (Platts Commodity News)
By Charles Newbery
26 November 2013
Buenos Aires (Platts)–26Nov2013/156 pm EST/1856 GMT   Argentina’s Economy Minister Axel Kicillof said Tuesday that Repsol will be compensated for the 51% stake in YPF that Argentina seized from the Spanish company last year, but he declined to say how much because of a confidentiality agreement.
“We are respecting the [Argentinian] law that says that we must pay a compensation to who was the owner of the 51% of the shares,” he said in a televised chat with reporters on the sidelines of a construction conference in Buenos Aires.
Kicillof, a big proponent of the state takeover of YPF from Repsol in April 2012, said he could not say how much will be paid because of a “confidentiality pact” that will remain in force until the Repsol board of directors approves the deal. The board is due to meet on the issue Wednesday.
“We want to pay a fair price,” Kicillof said.
He added that Repsol acted “a bit hastily” in months after the expropriation in suggesting it should be compensated from between $10.5 billion to $15 billion.
Kicillof, who was named as economy minister last week and sits on the YPF board of directors, said the negotiations with Repsol over the past 19 months have been “arduous.”
Mexico’s state energy company Pemex, a main shareholder of Repsol, on Monday brokered “an accord in principle” between Argentina and Repsol for a settlement of the legal and diplomatic dispute. Argentina took 51% of YPF, the country’s biggest energy company, under state control from Repsol in April 2012 on grounds that the Madrid-based company had failed to adequately invest.
Earlier Tuesday, Argentine Chief of Staff Jorge Capitanich said the agreement will open the door for new investment in the Argentine energy sector.
Analysts have said the expropriation scared away many investors on concerns the same could happen to them as Repsol.
Argentina needs billions of dollars in investment as well as foreign equipment, know-how and technology to arrest a decade-long decline in oil and gas production that is pushing it to greater reliance on imported diesel, fuel oil and gas. Argentina holds among the world’s largest shale resources, and analysts say the development of Vaca Muerta, its biggest shale play, will require upwards of $100 billion in investment.
YPF has arranged an investment partnership with Chevron for developing a small tract of Vaca Muerta with an initial $1.5 billion in spending. Another deal with Dow Chemical is for $188 million in spending.
Talks with other companies have yet to lead to more partnership agreements, even as YPF starts producing shale resources, with output reaching 13,000 b/d of oil equivalent in the third quarter of 2013.
14. AGREEMENT WITH REPSOL OVER ASSET NATIONALISATION MOVES FORWARD, INDICATING NEW ARGENTINE CABINET SEEKS ENGAGEMENT WITH PRIVATE SECTOR (IHS Global Insight Daily Analysis)
By Carlos Caicedo
26 November 2013
Changes in the Argentine cabinet on 19 November appear to have promoted a nuanced change of style in government dealings with the private sector, with more emphasis being put on positive engagement. This was highlighted yesterday (25 November) by sources at Argentina’s ministry of economy, who said on Monday (25 November) that they were close to reaching an agreement with Spanish oil company Repsol over the nationalisation of the latter’s majority stake in YPF in April-May 2012. According to local media sources, the agreement to compensate Repsol was possible thanks to direct negotiations between the governments of Spain and Argentina. On the Argentine side, the talks involved the new minister of economy Alex Kicillof; the influential legal presidential adviser Carlos Zannini; the president of YPF, Miguel Galuccio; and Argentina’s ambassador to Spain, Carlos Bettini.
Spain was represented by the Minister of Industry and Energy Jose Manuel Soria, the head bank Caixabank (holder of a 13% stake in Repsol), as well as senior executives of Repsol. Emilio Lozoya, the president of Mexico’s state-owned energy company Pemex, which has 9.5% stake in Repsol, also took part in the meeting. Significantly, the president of Repsol, Atonio Brufau, under whose leadership YPF-Repsol was nationalised, was not present. Last week, Pemex, in its capacity as a Repsol shareholder, has strongly criticised the excessive payments enjoyed by Brufau. The proposed deal would be put to Repsol’s board of directors on Wednesday (27 November). Although specifics on the amount of compensation were not disclosed, sources at the Argentine government, said that the offer would include payment of liquid assets and the agreement from both parties to renounce international arbitration at ICSID, the World Bank’s foreign investment court.
Significance: The deal is the culmination of a protracted negotiation process in which Pemex appears to have played a vital role. Repsol had initially put the expected compensation at USD10.5 billion to reflect among other assets the loss of Vaca Muerta, considered to be one of the world’s largest shale gas fields, but Argentina considered the valuation as excessively high. However, the recent developments suggest that Repsol has now lowered its compensation expectations. Spanish media sources said that the company has been offered USD5 billion; it is not clear whether a participation of Repsol in Vaca Muerta is part of the deal. While negotiations with Repsol have been going on since early 2013, it appears the recent Argentine cabinet reshuffle has helped to speed up the agreement. After the October mid-term election setback it experienced, and mindful of the need to contain a rapid fall in international reserves and secure the development of Vaca Muerta, the Argentine government has been trying to engage more positively with the private sector and the opposition, including seeking talks with leading opposition politicians Mauricio Macri and Antonio Bonfatti on a range of issues.
15. APACHE MAY BE SELLING SOUTH AMERICAN ASSETS (Houston Business Journal Online)
By Katy Stewart
26 November 2013
A source familiar with the matter says that Apache and state-controlled energy company YPF may be in talks to sell some or all of its Argentine assets, Reuters reports.
The Houston-based company has stakes in about 25 fields in Argentina and the Argentine assets produced about six percent of Apache’s total output last year.
Should Apache sell the assets to YPF, Argentina would be the second largest holder of shale gas reserves after China, according to Reuters.
Neither Apache nor YPF commented.
Apache (NYSE: APA) has been selling assets elsewhere this year, as well, after the company said in May it would sell $4 billion in assets to strengthen its balance sheets and reduce debt.
In October alone Apache sold $3.75 billion in Gulf of Mexico assets to fellow Houston-based company Fieldwood Energy LLC. Fieldwood is a portfolio company of New York-based private equity firm Riverstone Holdings LLC.
In September, Apache sold $112 million in Canada, and partnered with China’s Sinopec Group for $3.1 billion in exchange for a 33 percent minority stake in its Egyptian oil and gas business.
16. AEROLINEAS ARGENTINAS TO RESTORE FLIGHTS TO J.F.K. (NYT Blogs)
By Michael T. Luongo
26 November 2013
As many international airlines expanded to take advantage of Argentina’s post-peso crisis tourist boom, the country’s own national airline, Aerolineas Argentinas, seemed to go in reverse, even discontinuing its flight between New York’s Kennedy International Airport and Buenos Aires’ Ezeiza airports in 2008.
Management disarray and frequent worker strikes also meant domestically and within South America, the airline started losing market share to Chile’s LAN and Brazil’s TAM.
Aerolineas has been rectifying this recently, however, purchasing planes to replace and expand its fleet. The airline will also restore its daily Kennedy-Ezeiza flights, beginning on Dec.16. The flight numbers are AR 1300 from Buenos Aires to New York leaving at 11 p.m., and AR 1301 for the return leaving at 3:25 p.m.
Marcelo William Bottini, Aerolineas’ regional director for North and Central America, said the company’s total fleet jumped to 63 planes this year from 26 aircraft in 2006, with the average fleet age dropping from 16 to four years during that time.
Mr. Bottini said two new Airbus 330-200 planes will be used for the new New York flight and the already existing Miami connection, with configurations of 24 lie-flat seats in Club Condor and 242 seats in economy with new on-demand in-flight entertainment systems.
Mr. Bottini acknowledged that the airline has been plagued by issues over the years, but said, “Aerolineas Argentinas has taken many steps to improve our service and reputation, which were both damaged in the past. We have come a long way in a short amount of time.”
He also said that special Visit Argentina saver fares are available only for foreigners to use domestically to travel among 33 Argentine cities if they have entered the country on an Aerolineas Argentinas flight.
JFK’s WIT

President Kennedy on 29 April 1962 at a dinner party honoring Nobel Prize winners:

“I think this is the most extraordinary collection of talent that has ever been gathered together, with the possible exception of when Thomas Jefferson dined alone.”

PILOT’S TEST :- So you think that you know geography?

Just click on where you think the city is and the plane will land there, then it will show where the city actually is!!
Good luck!! This is a lot of fun and informative too.

Warning – it can become addictive!

CLICK ON LINK BELOW TO START

http://www.lufthansa-vp.com/vp1/play.html

ARGENTINE UPDATE – Nov 21, 2013

21 noviembre, 2013

ARGENTINE UPDATE – Nov 20, 2013

21 noviembre, 2013

 

 
 
 
 
 
 
 
 
 
 
 
1. ARGENTINA’S FEARED COMMERCE SECRETARY QUITS; ACCUSED OF BULLYING EXECUTIVES AND FAKING DATA (The Washington Post)
November 20, 2013
BUENOS AIRES, Argentina — Argentina’s feared commerce secretary quit Tuesday, a day after a Cabinet reshuffle gave others more power in the inner circle of President Cristina Fernandez.
Guillermo Moreno was a pit-bull for the president, trying to fine and jail economists for publishing independent inflation numbers, threatening black-market currency traders whose business gave many Argentines their only access to dollars in recent years, and breaking up board meetings of the newsprint company jointly owned by the opposition Grupo Clarin.
Farmers and ranchers blamed him for blocking their exports, while executives accused him of holding up their imports, forcing them to freeze prices and making their corporate lives miserable until they went along with the government’s policies.
Many executives, always speaking on condition of anonymity to avoid even more trouble, described how they trembled when Moreno called them into his office, where a handgun was conspicuously within reach on his desk, to personally pressure them to agree to some government demand in exchange for releasing barriers to their commerce.
Presidential spokesman Alfredo Scoccimarro said Fernandez accepted the resignation, effective Dec. 2, and designated Moreno as an economic attache at the Argentine Embassy in Italy.
Moreno, who is under formal investigation for allegedly abusing his authority, made no immediate comment.
The surprise announcement came a day after Fernandez named a seasoned politician and close friend, Chaco Gov. Jorge Capitanich, as her new Cabinet chief, while installing as economy minister the much younger Axel Kicillof, an unorthodox economist who inspired the uncompensated seizure of Argentina’s YPF oil company from Spain’s Grupo Repsol.
“It’s good news that Moreno goes. He thought that by bullying and threatening businessmen he could develop confidence in the country,” Fernando “Pino” Solanas, an opposition senator-elect, told the local Diarios y Noticias news agency. “But it’s not just Moreno; Kicillof and the whole economic team of the government have left the economic ship adrift.”
Moreno was commerce secretary under the late President Nestor Kirchner, who was Fernandez’s husband, and was closely involved in the political intervention in 2007 that forced the national statistics agency INDEC to change its consumer prices methodology. Ever since, official inflation has never budged above 10 percent a year, even as independent economists tracked inflation two to three times higher. Eventually, even close government supporters publicly discredited the official inflation data and the International Monetary Fund formally censured Argentina, refusing to use its numbers in global reports.
Former economy ministers cheered Moreno’s departure in interviews with Todo Noticias, a cable channel owned by Grupo Clarin. Miguel Peirano, now allied with the opposition Renewal Front, called Moreno “a functionary who abused his state authority for an anti-democratic government.”
Opposition deputy-elect Martin Lousteau said it remains to be seen if Moreno quit in a simple power struggle or if this means the government might change its economic policies.
“The first thing this government needs to do is recognize that it has a structural problem and that this problem is called inflation,” Lousteau said.
2. CONTROVERSIAL ARGENTINE MINISTER STEPS DOWN (The Wall Street Journal Online)
By Taos Turner
19 November 2013
BUENOS AIRES–One of Argentina’s most controversial government officials, Domestic Commerce Secretary Guillermo Moreno, resigned on Tuesday, marking the end of an era characterized by his efforts to control prices and limit imports.
Mr. Moreno will leave office in two weeks to become an economic attache at Argentina’s embassy in Rome, Alfredo Scoccimarro, a spokesman for President Cristina Kirchner, said in televised statement late Tuesday.
His plans for departure came a day after Mrs. Kirchner named a new cabinet chief, economy minister and central bank president in her biggest cabinet shake-up in years. Mrs. Kirchner made the changes on her first day back at work after having surgery to remove a blood clot near her brain almost six weeks ago.
Mr. Moreno was in charge of the government’s price control polices in an ultimately failed bid to contain rising inflation. His attempts to protect local industry as well as Argentina’s declining foreign currency reserves by limiting imports prompted several major trading partners, including the U.S., to sue Argentina at the World Trade Organization.
Over the years, he pressured executives to freeze prices or agree to stop importing or exporting certain goods, according to businessmen who have met with the commerce secretary.
Mr. Moreno’s office has consistently declined to comment on the allegations. He couldn’t be reached on Tuesday night. Nestor Kirchner, Argentina’s late president who died in 2010, once dismissed claims about Mr. Moreno’s alleged tactics, saying he was “kinder than Lassie,” the famous TV-show dog. Mr. Moreno also had the support of Mrs. Kirchner.
Though he was able to convince companies to temporarily keep prices steady on certain products, he was unable to prevent them from raising prices on others. Skirting price controls was sometimes just a matter of changing the packaging or volume of a certain item. In other cases, companies froze prices on some goods but curtailed production.
In the end, Mr. Moreno’s personalized approach to controlling prices didn’t prevent inflation from running in the double digits in recent years. Many economists say annual inflation likely totals about 25%. Official government data puts inflation at closer to 11%.
In September, a court indicted Mr. Moreno for allegedly abusing his power by fining economist Jorge Todesca for publishing his own inflation estimates. A court threw out the fine, but Mr. Todesca is still fighting criminal charges filed against him by Mr. Moreno.
In an interview Tuesday, Mr. Todesca said government persecution had cost him time, legal fees and had also scared away some clients from hiring his consulting firm, Finosport SA.
Mr. Moreno was also responsible for making broad changes at Argentina’s national statistics agency, Indec, that his critics say undermined its credibility.
The International Monetary Fund has warned Argentina to improve the quality of its data or face sanctions, including potential expulsion, from the fund.
3. KIRCHNER GIVES BIG ROLE TO NEW AIDES; ARGENTINE PRESIDENT CRISTINA KIRCHNER TOOK HER FIRST STEPS TO DELEGATE POWER TO MINISTERS WHO WILL BE CHARGED WITH KEEPING A WOBBLY ECONOMY ON TRACK. (The Wall Street Journal Online)
By Ken Parks
19 November 2013
BUENOS AIRES—Argentine President Cristina Kirchner took her first steps to delegate power to ministers who will be charged with keeping a wobbly economy on track and maintaining discipline in the notoriously fickle Peronist movement before she steps down in 2015.
Late Monday, her first day back at work after surgery Oct. 8 to remove a blood clot near her brain, Mrs. Kirchner named the influential governor of Chaco Province, Jorge Capitanich, as her chief of staff and placed heterodox economist Axel Kicillof in charge of running an economy suffering from high inflation and low growth. She also replaced the head of the central bank and her agriculture minister.
The cabinet overhaul marks a shift in political style for a president who surrounded herself with weak ministers and monopolized most decision making in the government. Observers say recent events appear to have forced a change in her highly centralized way of governing.
Mrs. Kirchner’s surgery raised questions about whether she will be able to finish her second term, while political setbacks have loosened her grip on power. Her Peronist faction retained its congressional majorities in midterm elections last month, but failed to win enough support to change the constitution so she could run again in 2015.
Now Mr. Capitanich, 48, is set to become the face of an administration that has just two years left in office.
“Up until now, Cristina’s government was a one person show. This is different. It’s like she has resigned herself to reigning, while leaving management of the government to others,” said Luis Tonelli, director of the political science department of the University of Buenos Aires.
Mr. Capitanich, an economist who was chief of staff for former President Eduardo Duhalde in 2002, is known as a moderate Peronist. Unlike previous cabinet chiefs, Mr. Capitanich has his own political power base after winning two consecutive terms as governor.
His political skills will soon be put to the test amid a struggle within Peronism to find a successor to Mrs. Kirchner. With re-election off the table, Peronist governors, mayors and lawmakers allied with Mrs. Kirchner are casting around for leadership alternatives.
Peronist moderates such as Daniel Scioli, the popular governor of Buenos Aires province, and Sergio Massa, mayor of a Buenos Aires suburb, have already signaled plans to run for president.
Mr. Capitanich’s appointment also shows that Mrs. Kirchner recognizes she has to manage the succession process to ensure governability until she steps down in December 2015, said Francisco Resnicoff, a political analyst at Cefeidas Group.
Mr. Capitanich, who is scheduled to succeed cabinet chief Juan Manuel Abal Medina on Wednesday, couldn’t be reached for comment.
The state of the economy is also a source of concern for Argentines who enjoyed years of prosperity after Mrs. Kirchner’s husband and predecessor, Néstor Kirchner, took office in 2003.
Mrs. Kirchner spent heavily on social programs and public works, but had to expropriate private pension savings and print money when tax revenue didn’t cover expenditures. Unemployment is at a multiyear low of 7.2%, but inflation remains stubbornly anchored around 25% and foreign currency shortages are limiting growth.
Mrs. Kirchner adopted currency controls and restricted imports to contain a slide in foreign currency reserves, which have fallen 25% this year to $32.3 billion as debt payments, fuel imports and capital flight exceeded inflows from exports.
Analysts expect the government to announce further currency and import restrictions in the weeks ahead to stop the drop in reserves. The Kirchner administration is also grappling with increasingly onerous subsidies on public services such as electricity and natural gas.
Mr. Kicillof will likely be in charge of implementing those measures. A student of Keynesian economics and a vocal advocate of state intervention in the economy, Mr. Kicillof helped design a plan last year to nationalize Argentina’s largest oil company YPF SA.
Mr. Kicillof has prevailed over more moderate voices in the president’s economic team-outgoing Economy Minister Hernan Lorenzino and central bank President Mercedes Marco del Pont. That likely means a continuation of the policies that have underpinned high inflation and capital flight in recent years, some observers say.
It remains to be seen how much influence Mr. Capitanich will have over the self-styled heterodox economist who is known to sport Elvis-style sideburns. The two have known each other for years and wrote a book together in 1999.
“Naming Capitanich is a signal of political moderation. If the president wanted to deepen her unconventional policies she would have appointed someone more radical,” says Fabian Perechodnik, a director at pollster Poliarquia.
4. ARGENTINA’S “LETHAL WEAPON” QUITS (Financial Times)
By Pan Kwan Yuk
November 20, 2013
Guillermo Moreno , Argentina’s combative internal trade secretary, has resigned, the government said late on Tuesday.
A controversial figure, Moreno has been instrumental in keeping the lid on Argentina’s runaway inflation by strong-arming companies into freezing prices and restricting imports.
As Jude Webber, the FT’s former Argentina correspondent, wrote in a profile of Moreno:
His methodology is intimidation – he has been rumoured in the past to carry a gun and he took boxing gloves to a meeting of shareholders of a key newsprint company in which the state has a stake in a bid to show who was boss. And he has slapped private economists with fines for estimating inflation data way above official statistics.
He has been described as Argentina’s de facto economy minister and many businessmen prefer silence to crossing with him – perhaps remembering Martín Lousteau, a former economy minister, who defied him over farm export tariffs. Moreno was seen at an event running his fingers across his throat, indicating Lousteau was playing a fatal game: the minister indeed lost his job, while Moreno has gone from strength to strength.
Concern now is that inflation – which is running at about 25 per cent over the past 12 months according to private economists – may accelerate even further after his exit.
Moreno’s resignation has been widely speculated after local media implicated him earlier in September in a corruption scandal.
The timing – coming just one day after President Cristina Fernández returned to work following a month-long absence after a head injury – raises the question of whether Moreno was forced out.
With Fernández on the backfoot following a dismal performance by her ruling coalition in last month’s midterm congressional elections, speculation has been rife that Moreno has become too compromising of a figure to keep.
UPDATE: In an updated statement, Télam, Argentina’s official news agency said that Moreno’s resignation will be effective from December 2. He will become the Economic Attaché for the Embassy of Argentina in Italy. No announcement was made who will replace Moreno.
5. ARGENTINA TRADE SECRETARY’S RESIGNATION HERALDS POLICY SHIFT (Financial Times)
By Benedict Mander in Santiago
November 20, 2013
Guillermo Moreno, Argentina’s powerful internal trade secretary, resigned on Tuesday, a day after a Marxist professor was put in charge of the economy ministry, heralding a major shift in economic policy.
The departure of the pugnacious Mr Moreno, who won notoriety for stunts such as bringing boxing gloves to shareholder meetings, marks the end of an era for businesses that have lived in fear of the controversial figure since he was appointed trade secretary in 2005.
His resignation follows the return of President Cristina Fernández to the public arena on Monday, when she posted a video on the internet thanking Argentines for their support during her six-week convalescence after brain surgery.
Economists now fear a jump in inflation, which is running at 25 per cent annually, according to private economists, as one of Mr Moreno’s principal tasks was to keep a lid on prices by strong-arming companies into keeping their prices low.
Mr Moreno, who was long considered the de facto economy minister, was more recently also charged with stemming a sharp decline in foreign exchange reserves by as much as $1bn a month by denying companies dollars to import goods.
With Mr Moreno out of the way, the promotion of Axel Kicillof to economy minister on Monday makes him the undisputed captain of economic policy, already having amassed considerable power since he was made deputy minister last year and placed in charge of the nationalisation of YPF, the state energy company.
“Instead of interventionism in the form of bullying, threats and phone calls, we will have interventionism with rules, regulations and controls. Not much to celebrate,” said Federico Thomsen, an economist in Buenos Aires.
Even so, analysts predicted a rally in Argentine bonds and the local stock market, where prices fell following the promotion of Mr Kicillof, an expert in Keynesian economics who sports Elvis-style sideburns.
Markets would have further reason to cheer if a new and more credible inflation index is implemented. Mr Kicillof himself has publicly criticised Indec, the state statistics agency, as well as the International Monetary Fund.
Mr Moreno has even slapped fines on private economists for estimating inflation data well above official statistics. He is now being prosecuted for “abuse of authority”.
Alfredo Scoccimarro, government spokesperson, said on Tuesday that the president had accepted Mr Moreno’s resignation, which will take effect on December 2, and had appointed him economic attaché for Argentina’s embassy in Italy.
“There was just no more room for him to keep on wreaking havoc,” tweeted Ricardo López Murphy, a former economy minister, who nevertheless finds it “hard to believe” that Mr Moreno’s departure will do much to relieve Argentina’s barrage of economic woes.
6. DEBT HOLDOUTS PUT ARGENTINA ON SPOT (Financial Times)
By Benedict Mander
November 18, 2013
For the last two centuries or more, creditors have often resorted to desperate measures when countries refused to pay up, from diplomatic pressure to sending gunboats. But with what has been dubbed “the sovereign debt trial of the century” coming ever closer to its conclusion, creditors’ fortunes may be looking up.
The long legal battle between Argentina and a group of hard-nosed hedge funds, led by Elliott Associates, that rejected the terms of restructurings after the country defaulted on almost $100bn of debt in 2001, could have far-reaching implications.
“It has dramatically changed the universe of sovereign debt,” says Mitu Gulati, a law professor at Duke University and former lawyer at Cleary Gottlieb, Argentina’s counsel.
Thanks to the persistence of the “holdout” creditors, Mr Gulati says that the case has effectively created a new mechanism for the enforcement of sovereign debt.
“It’s just like the mafia,” he explains. “We can’t force you to pay, but we can impose pain on your friends and family – and, if you don’t want us to do that, you’ll have to pay us back. That is the strategy at the heart of the case.”
Not only did the hedge funds win their case against Argentina last year, with a US court ruling that the country must pay the $1.3bn it owes the hedge funds, but also district court judge Thomas Griesa prohibited third ­parties from “aiding and abetting” any violation of his order.
That effectively means that Bank of New York Mellon, which processes Argentina’s payments to the holders of its restructured debts, cannot continue to pay them without also paying the holdouts once the trial is over.
If Argentina stays true to its pledge not to pay “vulture funds” a cent more than it has already offered, then it would be forced to default on its debt for the second time in little more than a decade – which would not only be bad news for the creditors that did accept the restructured debt, but also for Argentines and their economy.
Although the trial has yet to conclude, since the US Supreme Court may agree to review the case and Argentina could yet reach a negotiated solution to avoid a default, the court ruling remains. This raises fears that vulture funds will sue more sovereign states in the future.
“It could make it quite a bit more profitable to hold out and, more importantly, much more risky to participate in a restructuring,” says Anna Gelpern, a law professor at Georgetown University in Washington and previously of the US Treasury.
“The bigger implications are for countries that cannot afford a prolonged period of being shut out of the capital markets and litigating,” she added, as Argentina has been able to do. But the threat of legal battles makes defaults less attractive for countries, which will be encouraged to treat creditors better when they restructure defaulted debt.
Others believe that the trial is not quite so important as some commentators may have imagined. Asked what he thought the impact on future debt restructurings will be, Joshua Rosner, managing director at research firm Graham Fisher, says “absolutely nothing”. He adds: “The judge made it quite clear that the case is very specific to Argentina.”
The “pari passu” clause around which the trial revolves, interpreted to mean that creditors must be treated “on equal footing”, is no longer in common use, he says.
Most New York law bonds issued since 2005 include collective action clauses that allow a specified majority of bondholders to force holdouts to agree to settle. One big exception is Jamaica, one of the most indebted countries in the world – many consider its debt to be unsustainable.
“Unless another country embarks on the same type of behaviour as Argentina there is no impact for future debt restructurings,” reiterated Mr Rosner. “It’s really a non-issue.”
Nevertheless, it remains a major issue for Argentina, which has not been able to borrow on the international capital markets since the 2001 default. This has placed heavy strain on dwindling foreign exchange reserves, which many believe will trigger a balance of payments crisis.
The spectre of another default is of serious concern for owners of Argentina debt, since the prices of their bonds would plunge. That explains the emergence of proposals for intercreditor solutions.
Gramercy Funds Management, one of the largest holders of restructured Argentine bonds, has floated a plan that would activate collective action clauses to force Argentina’s exchange bondholders to pay holdout creditors with a portion of their coupon payments, if they agree to drop their demands for Argentina to pay in full.
Many are sceptical that the plan will work and some are optimistic that a default can be avoided.
“It would be in everyone’s interest to sit down and negotiate a settlement,” says Mr Rosner.
7. ARGENTINE TRADE SECRETARY MORENO OUSTED AS KICILLOF POWER RISES (Bloomberg News)
By Pablo Gonzalez
November  20, 2013
Argentina’s Interior Commerce Secretary Guillermo Moreno resigned after eight years of controlling prices and imports using strong-arm tactics that earned him a reputation as a bully.
Moreno will now be economic attache at the Argentine Embassy in Italy, presidential spokesman Alfredo Scoccimarro said late yesterday in a televised broadcast from the government house. He didn’t say who will replace the most feared government official who once brought boxing gloves to a shareholders meeting to force Argentina’s demands.
Argentine President Cristina Fernandez de Kirchner reshuffled her cabinet Nov. 18, appointing Axel Kicillof as economy minister and Carlos Fabrega as central bank president on the first day that she resumed duties after a five-week medical leave. Fernandez also ousted her cabinet chief, replacing Juan Manuel Abal Medina with Chaco province governor Jorge Capitanich and appointed a new agriculture minister.
“The government is acknowledging that there is a problem in the macro-economy and that Moreno’s policies have failed to fix it,” said Eduardo Hecker, a former market regulator that now runs consulting firm DEL in a telephone interview from Buenos Aires. “It also shows that there was a political fight inside the inner circle that was won by Kicillof who will became the most powerful economy minister from both Kirchner’s administrations as he has been the only one able to oust Moreno.”
Moreno didn’t reply to after-hours call placed to his office.
Like Lassie
Moreno, 58, was appointed in 2005 by Fernandez’s predecessor and late husband Nestor Kirchner who liked to say tongue in cheek that Moreno was as gentle and relaxed as Lassie, the famed collie of movie and television.
Moreno has recently met with industry groups from electronics to miners in an attempt to convince companies to bring dollars into the economy to invest in government bonds, whose proceeds will go toward energy projects.
Moreno was in charge of controlling imports to ensure the nation maintains a trade surplus and reportedly called currency trading houses personally to attempt to lower the black market currency rate.
Newcomers to the cabinet will sworn in today at the presidential house. During her absence, Fernandez’s party lost the mid-term election in the critical Buenos Aires province, the largest electoral district in Argentina.
8. ARGENTINA LOSES BID FOR FULL REHEARING OF BONDS APPEAL (Bloomberg News)
By Bob Van Voris
November  19, 2013
Argentina lost its bid for a rehearing of a federal appeals court ruling against it in litigation over $1.5 billion in the nation’s defaulted bonds.
The U.S Court of Appeals for the Second Circuit in Manhattan yesterday rejected Argentina’s request that a larger panel of circuit judges reconsider a decision that a three-judge panel reached in August.
The three judges upheld a lower-court injunction barring Argentina from paying holders of its restructured debt if it fails to pay a group of investors that hold defaulted bonds, led by Elliott Management Corp.’s NML Capital and Aurelius Capital Management LP.
The ruling leaves a possible appeal to the U.S. Supreme Court as Argentina’s last chance at reversing a decision it said threatens the country with a new default. The appeals court delayed enforcement of the August ruling, allowing Argentina to continue paying holders of its restructured debt while it seeks Supreme Court review.
Argentina in 2001 defaulted on a record $95 billion of foreign debt. Holders of more than 90 percent of the bonds agreed to take new exchange bonds in 2005 and 2010, at a deep discount.
The court yesterday also denied requests by groups holding restructured bonds to reconsider the case.
Won’t Comply
A lawyer for Argentina told the three-judge panel in February that the country “won’t voluntarily comply” with a ruling forcing it to pay in full the holders of defaulted bonds.
Yesterday’s decision “further demonstrates that Argentina’s arguments that it cannot keep its promises to U.S. investors and obey lawful orders of U.S. courts are based on nothing more than unfounded speculation and hyperbole,” Theodore Olson, a lawyer for NML, said in a statement. The ruling “only reinforces that Argentina’s self-serving pleas do not warrant the Supreme Court’s attention.”
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).
9. CABINET SWITCH BUTTRESSES ARGENTINA’S LEFT-LEANING ECONOMIC MODEL (Reuters News)
By Caroline Stauffer and Guido Nejamkis
November 19, 2013
BUENOS AIRES, Nov 19 (Reuters) – President Cristina Fernandez’s new Cabinet picks this week confirmed a deepening of Argentina’s left-leaning economic model rather than a policy switch needed to confront escalating inflation and dwindling foreign currency reserves.
After the president’s first public appearance since an Oct. 8 operation to remove blood that pooled on her brain, her office late on Monday announced the promotion of leftist economist Axel Kicillof to economy minister and the replacement of the central bank director and agriculture minister. Kicillof has served as deputy economy minister.
Argentine debt prices were little moved on Tuesday by the news, though the Global 2017 bond was down 1 percent. The Merval stock index fell 3 percent.
Analysts said the 42-year-old Kicillof already had more influence on Fernandez than the man he replaced, Hernan Lorenzino, who was given the job of ambassador to the European Union.
Kicillof has advocated more interventionist policies and, as an academic, gave classes and wrote about the theories of economists including John Maynard Keynes and Karl Marx.
“For private investors, Kicillof is a concern, and for Argentines he is the ratification of the current economic course – nothing will change,” said Alberto Fernandez, who was Cabinet chief under former President Nestor Kirchner, Fernandez’s late husband.
Carlos Casamiquela will take over from Norberto Yauhar as agriculture minister in the world’s No. 3 soybean and corn supplier. A 65-year-old agronomist, Casamiquela is known as a serious farm technician who understands the issues facing growers.
His appointment may improve dialogue between the government and the agriculture sector, but no big changes were expected in the interventionist policies that farmers say wreck their profits.
In addition, Carlos Fabrega was named central bank chief, replacing Mercedes Marcó del Pont.
MORENO RESIGNS
Domestic Trade Secretary Guillermo Moreno, Fernandez’s right-hand man in negotiating with the private sector and a lightning rod for criticism of her most contentious economic issues, resigned on Tuesday.
He is known for his tough stance with foreign firms, particularly grains trading companies, and has sent companies like Brazilian miner Vale running for the door.
Moreno’s resignation takes effect on Dec. 2; there is no word on who will replace him.
In a video shown Monday before the Cabinet changes were announced, Fernandez looked healthy and rested, holding a small white dog she said was sent to her by one of the brothers of the late leftist leader of Venezuela, Hugo Chavez.
Argentina, Latin America’s No. 3 economy, faces inflation that private economists estimate at 25 percent and a currency, the peso, that is 65 percent weaker on the informal market than at the government’s official rate.
The government is also in the midst of a decade-long legal battle with holdout creditors and is blowing through foreign currency reserves to import energy and fund popular subsidies.
Kicillof steered the Argentine government’s expropriation of a controlling stake in energy company YPF from its former parent company, Spain’s Repsol. Argentina, once a net energy exporter, needs foreign capital to develop its vast Vaca Muerta shale reserves.
Amid concerns over the economy’s health, Fernandez’s supporters suffered heavy losses in congressional elections on Oct. 27 that ended her chances of securing a change to the constitution that would have enabled her to run for a third term in 2015.
“Since there’s no chance of Fernandez holding on to power, she might just throw caution to the wind and really double down on some of these ideological reforms pre-2015,” said Michael Henderson, a Latin American economist at Capital Economics.
Most observers expect Fernandez’s government to maintain or intensify measures to keep the economy growing even as foreign investment abandons Argentina. She increased public spending to keep voters happy before the mid-term vote, causing prices to rise and reserves to melt away.
“The bottom line is that if the government fails to tackle the underlying inflation problem – which the new economy minister doesn’t even recognize – there will be a strong risk of some sort of currency crisis in the rest of Ms. Fernandez’s term,” said Fiona Mackie, an Argentina analyst for the Economist Intelligence Unit.
Mackie said bondholders who refused to participate in two debt restructurings dating to the country’s 2002 default had more confidence in Lorenzino as a dealmaker than in the abilities of Kicillof, who previously focused on domestic policy.
“This could dash hopes that were only recently raised that some sort of negotiated settlement to the holdout problem could finally, and against the odds really, be found,” Mackie said.
10. ARGENTINA’S BONDS SLIDE AFTER GOVERNMENT CABINET SHUFFLE (Dow Jones Institutional News)
By Erin McCarthy
19 November 2013
Argentina’s dollar bonds slid Tuesday in response to President Cristina Kirchner’s cabinet shuffle.
Argentina’s 2017 dollar bond fell in price to 90 cents on the dollar, from 92 cents the previous session, according to data provider Markit. The bond’s yield rose to 12.33%.
Mrs. Kirchner announced her biggest cabinet shuffle since the start of her second term on Monday, her first day back in over a month after surgery. She appointed as economy minister Axel Kicillof, who had been deputy economy minister and seen as one of the leading forces in her administration’s effort to intervene in the Argentine economy. Mrs. Kirchner also named a new central bank president and cabinet chief.
Analysts said the reorganization of her cabinet raised the possibility of future government intervention in the economy, something that has made some investors wary of investing in the country.
“We’re seeing a more drastic change in terms of the people and the ideology” in the Argentine government, said Robert Abad, an emerging-markets fixed-income portfolio manager at Western Asset Management Co.
Such concerns broadly pushed down Argentine assets. Argentina’s 2015 dollar bond dropped to 95 cents on the dollar, from 96.29 cents late Monday. The bond’s yield rose to 10.59% from 9.193% the previous session, according to Markit.
The dollar-denominated GDP warrants, which pay out based on economic growth during the previous year, slid 2.5% to ARS86 ($14.33) while the euro warrants lost 1.9%, selling at ARS104.95 in early trade.
The cost to insure Argentine debt against default also rose Tuesday. It currently costs $1.85 million annually to protect $10 million of Argentine debt from default for five years, from $1.78 million the previous session, according to Markit.
Also on Monday the U.S. Second Circuit Court of Appeals rejected Argentina’s request that it reconsider an earlier decision blocking it from paying bondholders unless it also pays hedge funds that are trying to collect on debt that dates back to the country’s 2001 default.
While the ruling was widely expected by analysts, it likely means that Argentina will ask the U.S. Supreme Court to take up the closely watched case for a second time as it seeks to avoid defaulting on its bonds.
–Ken Parks and Shane Romig contributed to this article.
11. ARGENTINA RISK: ALERT – RISK SCENARIO WATCHLIST (Economist Intelligence Unit – Risk Briefing)
19 November 2013
Scenario                                       Category      Probability    Impact Intensity
Security                                              High             Low                     8
Security                                              High            Moderate          12
Political stability                               Low             Very high           10
Political stability                               Moderate           High            12
Government effectiveness              Moderate          High            12
Government effectiveness           Very high        Moderate         15
Government effectiveness           Moderate         Moderate        9
Legal & regulatory                         High                    High            16
Legal & regulatory                         High                   Very high      20
Macroeconomic                             High                   Very high      20
Macroeconomic                             Moderate           Very high      15
Foreign trade & payments           Moderate           Very high      15
Foreign trade & payments           Very high              High           20
Financial                                           Low                   Very high      10
Financial                                         Very high V          Very high      25
Tax policy                                       Moderate               High            12
Tax policy                                          High                Moderate        12
Labour market                                Very high         Moderate       15
Labour market                               Moderate          Moderate        9
Infrastructure                                 Very high            Moderate       15
: 1 to 4    5 to 8    9 to 12    13 to 16    17 to 25
: Intensity is a product of the probability and impact ratings, where ‘Very low’ scores 1 and ‘Very high’ scores 5.
SECURITY
High probability; Low impact; Risk intensity = 8
There has been a rise in crime since the 2008-09 downturn. In response the government has established a Ministry of Security, which is in charge of all armed forces (including the Federal Police, the Gendarmería Nacional and the Prefectura Nacional). The decision to create the security ministry seemed to indicate a more proactive approach to security from a government that had previously persistently denied the severity of the problem, pointing to the low murder rate in relation to the rest of South America (3.4 per 100,000 population in 2009, compared with 21.7 in Brazil, according to the UN), while criticising media coverage and opposition criticism as sensationalist. But huge challenges remain in increasing the presence and effectiveness of the security forces and in improving transparency within the federal police, which is widely viewed as corrupt.
There has been little concrete success and the president, Cristina Fernández de Kirchner, was recently forced to reshuffle her cabinet, with the appointment of the defence minister, Arturo Puricelli, as security minister, and the promotion of Agustín Rossi to replace Mr Puricelli as the minister of defence. The cabinet reshuffle was largely cosmetic, however, and we do not expect it to have a dramatic impact on the security situation. Although the chances of a foreigner falling victim to violent crime are small, business travellers should nonetheless avoid carrying valuables, particularly at night and in urban areas. It is useful to have some cash available to yield if attacked. Victims must not resist, as their attacker could be armed. Withdrawals from automated teller machines should be avoided in deserted areas or late at night. Kidnappings are relatively rare, but precautions are advisable to reduce the risk of robbery. Firms should insist that their employees use radio cabs, which are generally a safer option than hailing a cab on the street, given instances of robberies in false taxis.
SECURITY
High probability; Moderate impact; Risk intensity = 12
Public demonstrations are a frequent occurrence in Argentina’s capital, Buenos Aires. There has, however, been a notable pick-up in anti-government demonstrations in the past year, as the government has grappled with discontent over rampant inflation and the imposition of foreign-exchange controls. Although often disruptive to transport, demonstrations are rarely violent. Demonstrations could well grow in scale and frequency in coming months, and with anti-government sentiment rising, there is a growing risk of violence that could impact on business activity. There was, for example, a spate of looting in cities throughout the country at the start of the year. Although security forces quickly clamped down on looters, there is a risk of new outbreaks in coming months.
POLITICAL STABILITY
Low probability; Very high impact; Risk intensity = 10
Ms Fernández suffered a subdural haematoma in early October and, following surgery, has spent more than a month recovering out of public sight. This latest health scare adds to a history of concerns. The president has during her time in office centralised power in her hands and relied on a small inner circle of advisers. Given this centralisation of power, any serious deterioration of Ms Fernández’s health in her remaining two years of office would risk creating a power vacuum and serious instability. This would be particularly difficult because the vice-president, Amado Boudou, is currently being formally investigated on charges of corruption (although the charges seem likely to be dismissed).
POLITICAL STABILITY
Moderate probability; High impact; Risk intensity = 12
On February 1st the Fund issued a declaration of censure against Argentina for failing to provide accurate statistics necessary for the Fund to do its work, one of its key commitments under the Fund articles of agreement. This was the first time since its creation in 1944 that the Fund has issued such a declaration against one of its members. The Fund’s Board has called on Argentina to adopt measures to address the inaccuracy of inflation and GDP statistics no later than September 29th 2013. Since 2007, when staffing and methodological changes were made at the official statistics bureau, the consumer price index is believed to have underestimated real inflation substantially. The government appears unrepentant, and has a strong incentive to underreport the inflation statistics, which have produced huge savings on coupon payments on inflation-linked government bonds. There is some time before the Fund takes any further moves against Argentina. In the first instance, the country could have its voter rights revoked when the Fund next meets to discuss Argentina in November.
Ultimately, however, Argentina could be expelled from the Fund. The Fund is still widely blamed for the 2001-02 crisis and widely discredited among the political class inArgentina, and many government members would probably be in favour of a formal break with the Fund. Moreover, the government has had no borrowing relationship with the Fund since 2006 and therefore would face few immediate consequences from any further Fund action. However, it would cement already dismal perceptions of Argentina’s creditworthiness and further complicate access to investment guarantees and to much-needed multilateral lending. Ultimately, this would drag Argentina’s already weak medium-term growth and investment outlook down even further. Another risk is that official Fund censure will trigger new legal claims from holders of inflation-indexed bonds, on the basis that they have been underpaid.
GOVERNMENT EFFECTIVENESS
Moderate probability; High impact; Risk intensity = 12
The Supreme Court recently ruled a controversial media law constitutional. The media law is presented by the government as an attempt to break up media monopolies;Argentina’s media companies, like Clarìn, assert that it is an attempt by the government to silence criticism that puts press freedoms at risk. The Supreme Court ruling prompted claims by the opposition that the court is open to government influence. That said, the Supreme Court had previously ruled against the government on several occasions this year. It had for example, declared a reform to the Magistrates’ Council that had been pushed through by the government amid controversy and public protest in May unconstitutional.
That ruling was a major setback for the government and its attempts to exercise greater control over the judiciary. The reform of the Magistrates’ Council was the key element of the judicial reform project led by the president, Cristina Fernández de Kirchner. It proposed the selection of members (who are tasked with appointing judges) by popular vote, in a move that was widely criticised both domestically and internationally (among others by the UN Special Rapporteur on the independence of judges and lawyers) as putting the independence of the judiciary at risk. The ruling will force the cancellation of Magistrates’ Council elections that the government had been pushing ahead with. It also nullifies the government’s attempts to increase the number of council members from 13 to 19 and to allow the removal of judges by a simple rather than a two-thirds majority. These efforts had been widely seen as an attempt to pack the council with pro-government members and allow the government to remove judges as it saw fit. The government’s options are now extremely limited, but we do not expect it to back down from its confrontational stance. It may attempt to force the resignation of individual Supreme Court members (such as Carlos Fayt, who, at 75, is above the age limit set out in the constitution). As in the past, government investigations into judges and their close associates could also escalate in an effort to secure favourable rulings. Judges therefore seem likely to come under ever continuing pressure from the government in the rest of the Fernandez administration.
GOVERNMENT EFFECTIVENESS
Very high probability; Moderate impact; Risk intensity = 15
Ms Fernandez’s Frente para la Victoria (FV, a faction of Argentina’s dominant Peronist party) just managed to retain a congressional majority in October. But she clearly lacks the two-thirds majority in Congress required to change the constitution and run for a third term, and has no obvious successor to groom. This has increased perceptions that her star is on the wane, and opposition politicians have rushed to jockey for position ahead of the October 2015 presidential election. In Argentina’s clientelist political system, where loyalties are extremely weak, her supporters in Congress and in the provinces (provincial governors are powerful in Argentina) have already started to desert her, and she seems likely to lose her congressional majority via defections at some point in coming months. Although power is centralised in the executive inArgentina, the loss of its congressional majority would complicate the policy agenda of the government somewhat, and raise the risk of legislative gridlock.
GOVERNMENT EFFECTIVENESS
Moderate probability; Moderate impact; Risk intensity = 9
There have been several accusations of corruption against members of the government. In 2010, for example, it was confirmed that in October 2008 (as the global financial crisis began to deepen and just before the nationalisation of the private pension system) Néstor Kirchner, the former president, purchased a hotel worth US$2m in Calafate (where the presidential couple own several properties). This follows closely on the heels of an investigation into illegal enrichment by the Kirchners surrounding an unexplained rise in their personal wealth. In December 2009 a federal judge acquitted the Kirchners of corruption, but members of the opposition claim the court was subject to political influence.
The president is not the only government member to face accusations of corruption. The vice-president, Amado Boudou, is currently under investigation for influence-peddling in a case surrounding his dealings with a printing company that was awarded government contracts when he was economy minister. Going forward, the government’s ambitious public works plans and the lack of transparency in the planning ministry heighten the risk that corruption scandals may hit the government. If this occurs, it could undermine the government’s political support among left-wing parties.
LEGAL & REGULATORY
High probability; High impact; Risk intensity = 16
An increasingly prominent role for Axel Kicillof, the architect of the nationalisation of Spanish-controlled oil company Yacimientos Petrolíferos Fiscales (YPF), suggests a deepening of interventionist tendencies in the government. Two government decrees this year have given more power to Mr Kicillof—a left-wing economist and a close advisor to the president—in a move interpreted as an attempt to take greater control of private-sector operations in key sectors under his watch. The first decree creates a Strategic Planning and Co-ordination Committee, headed by Mr Kicillof, which will oversee a national investment plan for the energy sector. The second makes Mr Kicillof formally responsible for state participation on corporate boards where it holds a minority stake through the social security agency, Anses. The new energy sector regulations allow Mr Kicillof to determine reference prices for the sale of energy products. They also force private energy companies operating in Argentina to present annual investment plans to his committee, additionally giving Mr Kicillof the power to amend company plans to bring them in line with national goals and to impose sanctions including fines and the withdrawal of concessions for failure to meet targets.
At the same time, under his guidance, the government seems increasingly determined to use its presence on the boards of private companies (mostly as a legacy of the nationalisation of Argentina’s private pension funds in 2008, the state has a presence on the board of 41 private companies in the country) to influence investment decisions in the private sector. The government first lifted a 5% cap on the voting rights of government representatives in companies where Anses holds stakes in early 2011. It has now formally transferred responsibility for co-ordinating and directing state representatives to Mr Kicillof. As occurred with YPF before its nationalisation earlier this year, state representatives now seem likely to push harder for companies to focus on reinvestment and to limit the distribution of dividends.
LEGAL & REGULATORY
High probability; Very high impact; Risk intensity = 20
The nationalisation of YPF in 2012 raises concerns that the government will seek to increase state control in other sectors. The government nationalised private pension funds amid the global financial crisis in 2008, and in 2010 threatened to nationaliseTelecom Argentina amid a dispute with its joint owner, Telecom Italia. This was widely viewed at the time as sabre-rattling by the government in an effort to secure its objectives, and investments in that sector have grown rapidly since then amid a consumer spending boom. Despite some shift to the left among the president’s key economic policy advisers, we do not currently believe that a wave of nationalisations is planned as part of a shift towards state-led development (unlike Venezuela, where a series of nationalisations has taken place over recent years as part of an explicit shift to a socialist development model). But the risk is that, with access to finance becoming ever more restricted, and with speculation over a peso devaluation rife (amid high inflation and net capital outflows), asset grabs in sectors such as telecoms, banking and electricity—and in the remainder of the privately-owned oil and gas industry (YPFaccounts for only around one-third of Argentina’s oil output, with the rest made up by a large number of other domestic and international players)—will become an increasingly attractive option for a government that has proved unmoved by international criticism and amenable to heavy-handed interventionism. In this environment the threat of expropriation may also be used as a bargaining tool to extract concessions from companies concerned, so that contract rights will remain weak even if outright expropriation is avoided.
MACROECONOMIC
High probability; Very high impact; Risk intensity = 20
Growth is projected to weaken in 2014-15 as underlying competitiveness problems go unaddressed. Combined with continued recourse to heterodox and interventionist economic policies, which will sustain uncertainty over tariffs; import, foreign-exchange and capital controls; and the legal and regulatory environment, this will increasingly affect confidence, investment, employment and consumer purchasing power. Moreover, we still consider that there are significant downside risks to our forecasts, withArgentina among the most vulnerable countries in the region to a deterioration in global conditions. In particular, a renewed weakening of Argentina’s key trade partners, Brazil and China, or a sharp drop in commodity prices would set the stage for further forecast downgrades and a sustained period of volatility. This is in a context of severe economic distortions, with double-digit inflation having eroded peso competitiveness and shifted the current account into deficit. With net capital flows persistently negative ever since the 2001 default, this has increased speculation of some sort of peso adjustment to improve the balance-of-payments dynamics, increasing capital flight and prompting the government to instate a series of foreign-exchange and capital controls to support the peso. With reserves cover falling and the global environment becoming much less supportive, the potential for confidence shocks will remain strong.
MACROECONOMIC
Moderate probability; Very high impact; Risk intensity = 15
Restricted access to credit will sustain uncertainty over the government’s ability to finance its deficit. A restructuring of US$30bn in outstanding defaulted debt concluded in June 2010 was considered successful. However, a return to international capital markets remains off the agenda while the question of the ‘holdouts’ (creditors who did not participate in the 2005 or 2010 restructurings) remains unresolved, and the government will continue to rely on domestic sources of finance, particularly intra-government transfers. The outcome of a US court case, which is now awaiting appeal, may soon leave Argentina with the unpalatable choice of repaying holdout creditors in full (something that it has sworn never to do) or falling into technical default to avoid repaying current creditors in a US jurisdiction. Technical default would not have a direct impact on the sovereign—which already has no access to international finance—but it would complicate trade financing, with damaging knock-on effects for the economy. The risk of technical default may actually help spur some sort of negotiated agreement between the government and holdouts. Bondholders that took part in the sovereign-debt restructurings of 2005 and 2010 have waded into the stand-off 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. Obstacles remain, however, and we have not changed our forecasts to include any sort of international bond issuance by Argentina in the short term.
FOREIGN TRADE & PAYMENTS
Moderate probability; Very high impact; Risk intensity = 15
Chaco province was forced in late 2012 to pay a US dollar-denominated bond issued locally (worth US$260,000) in pesos after the Banco Central de la República Argentina(BCRA, the Central Bank) refused to sell the province the dollars required for the transaction. The ‘pesification’ of Chaco province’s US dollar-denominated debt came amid increasingly harsh foreign-exchange controls. Nonetheless, the announcement was surprising, given that the sum involved was so small and the governor of Chaco, Jorge Capitanich, is very close to the president, Cristina Fernández de Kirchner. The result was major market jitters over the risk of future pesification of public- and private-sector dollar-denominated debt. The BCRA later asserted that funds would be made available to the sovereign and sub-sovereign issuers for dollar-denominated debt issued under foreign legislation. Bonds issued by the central government—which are being repaid out of the foreign reserves—and financial trusts for infrastructure works will also be repaid in dollars. This leaves open the question of whether debt issued in the local market under national legislation, like Chaco’s dollar bond, will be repaid in pesos or dollars. Foreign exposure to local dollar-denominated debt is low, and the BCRA says that funds will be made available for external payments, but events in Chaco highlight the fact that the risks to currency convertibility have grown.
FOREIGN TRADE & PAYMENTS
Very high probability; High impact; Risk intensity = 20
The government tightened import controls in 2012. In certain sectors import controls had already been in place for a year, in the form of requirements that imports be matched by an equal amount, in dollar terms, of exports. Under the newer measures, all imports need to be authorised by the secretariat of interior commerce (headed byGuillermo Moreno, a close ally of the president), in order to establish the potential impact on the domestic market. A host of objections to the move have been raised. There are fears over the operational efficiency of the regime (bearing in mind that an import licensing regime has led to substantial delays in recent years for affected products). Perhaps more significantly, the criteria for the approval of import operations have not been clearly defined, opening the door to further discretionality in foreign trade operations. There is also a strong possibility that a cumbersome import regime will backfire (in its aim of propping up the trade surplus), by driving shortages and bottlenecks and negatively affecting the output of exported goods in complex industries with high levels of imported inputs. Intermediate goods, fuels and capital goods represent around 60% of total imports. The share of imported inputs in the production process differs according to each industry, but is particularly high in sectors such as the car industry, which is a major driver of manufacturing production and also an important exporter (cars account for 12% of total exports).
FINANCIAL
Low probability; Very high impact; Risk intensity = 10
The imposition of foreign-exchange controls in late 2011 produced a spike in interest rates and large dollar deposit withdrawals, and there have been periodic bouts of volatility ever since, as controls have failed to reduce speculation of an eventual peso devaluation. Ultimately there is a risk that renewed volatility would produce a freeze in lending, a deterioration in asset quality and widespread bank runs (in a country with very weak confidence in banks). Fears of further foreign-exchange controls and the memories of the “corralito” (the freezing of bank withdrawals) imposed during the 2001-02 financial crisis resulted in the steady withdrawal of dollar-denominated deposits since late 2011 and a subsequent rise in interest rates. There is a risk that despite recent events, steps will be taken to encourage (or force) banks to lend that will harm financial soundness indicators and ultimately raise the risk of bank runs.
FINANCIAL
Very high probability; Very high impact; Risk intensity = 25
Amid falling reserves, we have revised our currency forecasts and now expect a nominal depreciation next year of close to 25%, and still-substantial depreciation of close to 20% in 2015 and around 10% per year in 2016-18. This will, however, do little to reverse the accumulated real trade-weighted appreciation of 45% in the past five years. In these circumstances, strong soybean output will remain crucial to staving off pressures for a much larger devaluation. Even under our benign baseline forecast, inflation will come under control only very gradually, and so devaluation pressures will persist—despite controls—in the medium term. In this context, there are substantial risks of a peso devaluation. Currency volatility will be a persistent risk, particularly if soft commodities prices were unexpectedly to fall substantially. Ultimately, the risk that macroeconomic policy mismanagement leads to spiralling inflation, renewed recession, and devaluation at some point in the medium term cannot be discounted. There has also been some local speculation about a shift to a dual exchange-rate system, a possibility that cannot be discounted, despite the distortions that such a system would create.
TAX POLICY
Moderate probability; High impact; Risk intensity = 12
The government has limited access to external sources of finance, and is being forced to seek greater recourse to funding from the social security agency, public-sector banks and the Central Bank to meet its financing gap. In this context the possibility of further tax increases cannot be discounted. An increase in consumption taxes would increase already strong inflationary pressures. Increases in agricultural export taxes would also face strong political opposition, and potentially spur renewed rural protests of the kind that brought activity to a halt in 2008, suggesting the government would be most likely to increase corporate tax rates if financing needs were to rise further.
TAX POLICY
High probability; Moderate impact; Risk intensity = 12
Reforms to the system of revenue-sharing with the provinces are badly needed to secure the stability of the tax system, but continued delays on a comprehensive reform are in prospect. The opposition tried in 2010 to increase the percentage of revenue from the financial transactions tax that is transferred automatically to the provinces from 15% to 54% of total, but the bill failed to prosper in a divided Congress. The executive has instead announced a series of rollovers of provincial debt. In mid-2010 the government had announced a roll-over of provincial debt worth Ps65bn (US$16.7bn at 2010 average exchange rate; out of a total Ps100bn), for a 30-year period and with a two-year grace period, which ended in December 2011. At this point the government announced an extension of the grace period for another two years, to December 2013. This reduced provincial debt service by Ps6.9bn (out of a total Ps23bn) in 2012 and will reduce debt service by another Ps6.7bn in 2013, providing some relief to the provincial finances. However, there are growing concerns that further measures will need to be taken to assist the provinces. Without a more comprehensive reform, weaknesses in the provincial finances will sustain the need for further central government bailouts and thus raise the risk of periodic ad hoc measures at the national revenue to increase tax revenue.
LABOUR MARKET
Very high probability; Moderate impact; Risk intensity = 15
Hugo Moyano—who has recently become a harsh critic of the president, Cristina Fernández de Kirchner—has been re-elected as head of the trade union federation. However, a major split in the Confederación General del Trabajo, the main trade unions confederation, has seen a number of groups (some anti-government and some pro-government) break away from the main union leadership. On the face of it, this would appear to be good news for the government, as it will help keep Mr Moyano in check. However, the atomisation of a union movement that has until now been under the close control of successive Peronist administrations has the potential to create even more union disputes, raising the risk of labour unrest in coming months.
LABOUR MARKET
Moderate probability; Moderate impact; Risk intensity = 9
Strong rates of growth in the past decade mean that skills shortages have become more of a problem for business, compounded by a lack of effective training programmes in both the public and private sectors. Secondary and tertiary enrolments are very high by regional standards, but educational outcomes are not as good as would therefore be expected and vary widely by region, while access to job training tends to be unequal and informal. Where possible, in-house training programmes are advised.
INFRASTRUCTURE
Very high probability; Moderate impact; Risk intensity = 15
The risk of periodic electricity shortages, particularly during peak winter and summer periods, will persist. Reflecting the freezing of tariffs since the 2001 crisis, the finances of most electricity companies operating in the country are now so precarious that in August 2012 the government was forced to intervene in the sector. As part of the intervention a new regulatory commission, headed by influential deputy economy minister Axel Kicillof and incorporating representatives of the Ministry of Energy and the Ministry of the Interior on its board, has been created. This commission will be in charge of analysing electricity companies’ costs, investment projects and efficiency as part of a new regulatory framework, full details of which have yet to emerge. Although details provided by the government remain vague, it seems likely that the electricity sector will move towards a system where the government will set companies’ tariffs, earnings and ‘reasonable’ profit rates, according to their cost structure, efficiency and investment projects. Under this regime, companies will mainly play an operating role, in line with decisions taken by government authorities. Since private companies had all but given up hope of moving to a more market-oriented system (through a liberalisation of tariffs) under the current government—and feared outright nationalisation after Yacimientos Petrolíferos Fiscales’s nationalisation—they will probably welcome the government’s willingness to re-establish better profitability levels. However, there are serious doubts that this will prompt major long-term investments in increasing capacity. Under these conditions, the risks of shortages will remain high at least in the short term.
INFRASTRUCTURE
Moderate probability; Moderate impact; Risk intensity = 9
Comparatively large investments in the 1990s expanded and modernised Argentina’s physical infrastructure. The new model of public utility concessions that the government has been implementing since October 2003 consists of leaving repairs and maintenance in the hands of the private sector, while assuming control of strategic decisions on where new investment should be directed. Over the medium term the success of the new regime will require a clear delimitation of responsibilities between the private and public sectors in order to prevent the kind of disputes that plagued concessions during the 1990s. In cases where the government takes over a concession from the private sector, as appears possible in a few cases where foreign investors are negotiating new contracts with the government, investment is likely to fall. At the end of 2008 the government unveiled a Ps110bn (US$31.9bn) plan for public works The plan, named Plan Obras para Todos los Argentinos (Plan of Public Works for all Argentinians), aims to improve infrastructure, mainly in energy, transport and housing. However, implementation has proved problematic, not least because of pressure on the government finances. Companies should make provision for deterioration in the quality of the physical infrastructure if investment fails to rise in the medium term.
12. ARGENTINA POLITICS: CABINET RESHUFFLE SEES MODERATES LOSE INFLUENCE (Economist Intelligence Unit – ViewsWire)
19 November 2013
On November 18th on her first day back to work after more than a month spent recovering from surgery, the president, Cristina Fernández de Kirchner, announced a major cabinet reshuffle that cements the influence of hardliners, and raises risks to the inflation and balance-of-payments outlook.
The reshuffle suggests that hardliners have won out against moderates such as the vice-president, Amado Boudou, and the economy minister, Hernán Lorenzino. The latter has lost his job, and will be relegated to a special commission to negotiate debt restructuring (Mr Lorenzino’s specialty). He will also become ambassador to the EU, where he is set to attempt to negotiate a deal on outstanding Paris Club debts. However, it is unclear whether Mr Lorenzino can make fresh progress on either front if he does not have the clear backing of Ms Fernández or the new economy minister, Axel Kicillof.
Mr Kicillof takes charge
Mr Kicillof is a left-wing academic whose star has risen rapidly in government over the past two years. He was until now deputy economy minister, but had already been seen as the real power in the Ministry of the Economy. He was the driving force behind recent key policy decisions, such as the nationalisation of an energy company, YPF, in 2012 and the tightening of foreign-exchange controls. His appointment to the top spot in the economy ministry makes heterodox measures such as a shift to a dual exchange-rate system more likely. It also produces substantial risks to our assumption that fiscal and monetary policy will be tightened moderately in the next year to help to rein in inflation. Despite the clear deterioration of the balance of payments and consequent fall in the foreign reserves stemming from growing external competitiveness problems, Mr Kicillof has consistently denied that Argentina has an inflation problem.
This is in contrast with the president of the Banco Central de la República Argentina (BCRA, the Central Bank), Mercedes Marcó del Pont, who recently admitted publicly that inflation (currently running at close to 20%) must be reined in, and who had presided over a gradual rise in interest rates in recent months. For her efforts, Ms Marcó del Pont has been replaced by Juan Carlos Fábrega. Mr Fábrega was previously president of Argentina’s largest bank, the state-owned Banco de la Nación. He is seen as a capable banker, but the chances are that under his watch inflation control will take a backseat to deficit financing.
Capitanich looks to 2015
Mr Kicillof will not have complete carte blanche. Ms Fernández has added another political heavyweight to her cabinet in the form of her new cabinet chief, the governor of Chaco province, Jorge Capitanich. Mr Capitanich is a powerful politician in his own right, and his new appointment could place him as the ruling party’s successor to Ms Fernández in 2015. Mr Capitanich has a long history in government-he was cabinet chief in 2002 under the administration of a former president, Eduardo Duhalde (2002-03). He will view the post as a jumping-off point for the 2015 race, and may clash with Mr Kicillof if the latter attempts to impose policies that put political or economic stability at risk.
A riskier outlook
Our assumption that controls and interventionism will feature heavily in the remainder of the Fernández administration is unchanged. However, there are now strong risks to our forecast that the government will gradually rein in inflation and help to stem the outlflow of reserves via a modest tightening of fiscal and monetary policy. Ultimately, this heightens the already-substantial risk of a currency crisis occurring within the forecast period.tedly responsible for the 2012 expropriation of oil company YPF. Lorenzino will remain in charge of negotiating with holdout creditors; a US court of appeal yesterday rejected a petition for a holdout lawsuit to be reheard, leaving the Supreme Court as the only remaining option.
=======================================================

foreignpolicy.com Read Later
Confidence Man   John Kerry has the skill, toughness, and ego to be a great secretary of state. But will the world let him?
* by AARON DAVID MILLER
* Nov. 18, 2013
* original

I’ve met John Kerry only once. Earlier this year, I was invited to a dinner at the State Department with the secretary and a few others to talk about U.S. options on Syria.
The secretary asked more questions than he answered and didn’t reveal much about the specifics of where he stood. But it was stunningly clear from the direction of the conversation that he believed Washington needed to find a way to do more — much more. I didn’t. And Kerry for sure wasn’t convinced by my Dr. No point of view. I give him credit for including me. But rarely have I encountered anyone — let alone a secretary of state — who seemed more self-confident about his own point of view and not all that interested in somebody else’s.
This sense of self-confidence is the hallmark of the Kerry style of diplomacy. No problem is too big that it can’t be made better. Trying and failing isn’t ideal; but it’s better than not trying at all. And if given enough time and focus — will and skill, too — there’s always a way forward.
Only someone with this kind of can-do attitude would venture into Israeli-Palestinian diplomacy against such extremely long odds; keep pushing for a Geneva conference to end Syria’s civil war with the faintest of hopes of success; and (not or) be bullish on a deal with Iran that has alienated key U.S. allies and much of Congress, too.
Having watched Kerry operate for almost a year now, I’m less interested in an interim report card on his record. It is way too soon for that. What intrigues me more are the trend lines, and specifically what will be required at the end of the day for him to be judged a truly consequential secretary of state, let alone one of America’s best. Perhaps this isn’t his goal. But watching John Kerry — the Energizer Bunny of U.S. diplomacy — I’d be stunned if it wasn’t.
Having worked for and watched a number of his predecessors, I’ve identified at least five elements that need to be present for success. In Kerry’s case, they’re all there, at least on paper. Each has a fairly large asterisk, to be sure. And much will have to break his way to admit  him into the secretary of state hall of fame.
Is there real opportunity?
I don’t care how smart, brilliant, or passionate a secretary of state may be, unless the world cooperates, significant success — let alone real breakthroughs — aren’t possible. It’s the interaction between human agency and circumstance that usually defines what happens and doesn’t in international politics.
The notion that secretaries of state — or presidents, for that matter — make their own breaks and luck is true enough, provided there’s enough raw material out of which to fashion success. For all of Henry Kissinger’s brilliance and negotiating skills, had there not been an October 1973 War, there would have been zero chance to for him to produce three Arab-Israeli agreements in 18 months. Had the Soviet Union not been in its last gasps, neither George Shultz nor Ronald Reagan would have been able to pursue successful arms control agreements and end of empire diplomacy. Had Saddam Hussein not invaded Kuwait, James Baker could never have gotten the Arabs and Israelis to the Madrid Conference.
So are there real chances for transformative change in Kerry world? The Middle East is certainly in flux; and that’s where the secretary is spending most of his time. But a lot of motion doesn’t necessarily mean movement that can be channeled into agreements. And one success — an interim agreement on Iran, for example — could actually create other complications, such as alienating key U.S. allies (if my read on Benjamin Netanyahu is accurate), making much more difficult progress with the Palestinians. Indeed, the U.S.-Russian framework accord to dismantle Syria’s chemical weapons — seen by most (now that it’s being implemented) as something of an achievement — resulted in bucking up Assad and will likely have negative consequences for the other Geneva accord on Syria the secretary would like to broker. And let’s be clear: even a temporary deal with Iran would be no guarantee that a final agreement will be reached, or that U.S.-Iranian relations are going to be transformed.
Still, Kerry has the kind of running room both abroad and at home that his predecessor never did. Hillary Clinton was constrained by President Barack Obama’s controlling nature, her own risk aversion, and a lack of real opportunities. Kerry’s world may not offer up the kind of opportunities for transformative change along the lines of a dramatic opening to China, Anwar Sadat’s visit to Jerusalem; or the collapse of the former Soviet Union. But it may well be a world marked by potential transactions and smaller deals of consequence.
I think Kerry gets this, though it’s hardly surprising that he aspires to much more. That’s fine so long as he doesn’t get carried away and allow rhetoric to outstrip action or to obscure a realistic assessment of what can actually be accomplished. These are traps that Kerry needs to be careful to avoid. His supreme confidence in public leads him too frequently to overdramatize: for example, comparing Assad’s use of chemical weapons to Munich or warning of last chances for Middle East peace and a third intifada should no agreement be reached.
Are you in the middle of the mix?
The Hippocratic Oath also apples to diplomacy: above all, do no harm. But while prudence is critically important in diplomacy, giving yourself a chance to succeed is too. And you can’t do that by just sitting on the sidelines. I hate turning U.S. foreign policy into a breakfast analogy, but it’s true that omelets can’t be made without breaking eggs.
The evidence to date that Kerry wants to cook is pretty clear: negotiating a U.S.-Afghan security agreement; putting together a U.S.-Russian framework agreement to destroy Assad’s chemical weapons; working toward a political solution to the Syrian civil war; gunning for an interim deal with Iran on the nuclear issue; and relaunching Israeli-Palestinian negotiations. Granted there’s a lot more process still in these enterprises than real sustainable accomplishment, but Kerry’s in the game. His situation reminds me of the joke about the guy who jumps off the top of a 10-story building. As he’s passing the 5th floor, somebody yells out, “How you doing?” “So far, so good!” he replies.

So are there downsides to being diplomacy’s Energizer Bunny? Sure. You take a lot of heat for being naïve, overextended, too eager for the deal. And there’s always the risk of being taken for granted. A secretary must maintain a certain amount of detachment, creating the mystique of being unavailable and inaccessible. It creates authority. Too many phone calls, meetings, trips and you become part of the political furniture. It took us almost two years to persuade Baker to take up the Arab-Israeli issue. We kept telling him he had to engage; and he kept telling us, “no.” And he was right to wait and engage at the right moment. Kerry could borrow a page out of Baker’s book.

In Italy, visiting the UN FAO headquarters there, located in downtown Rome, in what was the old Italian Colonial Ministry, Critchfield, looking out at the classical Roman ruins nearby, writes:

“One was reminded by the ruined splendor how one of the Romans’ failures was their disinterest in the world around them.  They failed to learn anything about the ordinary people of India, China Persia, Scythia, the Huns, the Africans, the Scandinavians, or Buddha or Zoroaster, or the mysteries of the Western seas.   It was a social atmosphere that made such indifference possible, an attitude one writer called the ‘mindless conservatism of the affluent.’  She was Barbara Ward and she was writing about us.” p. 308

And Critchfield goes on to write that after more than 20 years of visiting villages in the developing world, he is not worried about them and their future.  He is largely optimistic that the green revolution and rural development will yield a great improvement in the villagers’ lives.  But on p. 332 he writes:

“Is our cultural future at stake too?  I’ve been going and coming to and from the Third World for 22 years now and growing steadily less concerned about them and more about us.  Americans still possess the most vital society on earth, but wealth and technology keep taking us farther away from natural things (all those farmers leaving the land).”

Villages by Richard Critchfield (March 1983)

ARGENTINE UPDATE – Nov 19, 2013

19 noviembre, 2013

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