By Robert J. Shapiro
28 May 2015
A proposed law would encourage strategic defaults and let countries like Argentina run roughshod over bond investors.
Argentina’s 2001 sovereign default has sparked controversy and debate in many parts of the world for nearly 14 years. Even so, it’s surprising that the latest battle related to that event should play out in Belgium. Belgian lawmakers are debating a proposed law that, if adopted there and elsewhere, could cripple the market for sovereign bonds issued by developing countries.
The proposal, which could come up for a vote in the finance committee of the Belgian Parliament next week, would limit the amount a so-called vulture creditor could recover on sovereign bonds following a default. The bill would establish a vague definition of “vulture,” including whether there is an “obvious disproportion” between the purchase price paid for the bonds in the marketplace and the face value claimed in default proceedings—meaning whether the investor has bought bonds “too cheaply” relative to what she ultimately tries to recover. Other factors in the vulture designation would include whether the investor has a history of using courts to pursue claims or is “obstructing” a state’s attempt to repay its other debts.
The bill’s main provision declares that in any future sovereign default by a developing country, no vulture lender can collect more than it paid for its bonds. Any existing court judgments from outside Belgium in relation to the lenders’ collection of the debt would not be recognized in Belgium, undermining the international legal principle of comity.
This law would have limited, if any, effect outside of Belgium. But the proposal is inspired by a global backlash against investors who have tried to assert their legal rights in Argentina’s and other sovereign defaults, and the law’s Belgian sponsors say they hope it will “serve as a model for broader national and international legislative initiatives.” The danger is that they may right about that.
The central complaint of the bill’s proponents is that when a developing country defaults and offers a restructuring deal that a majority of creditors accept, a minority of lenders can hold up the deal by demanding a bigger payout. The case they cite is Argentina. Following its record-setting $81 billion default in 2001, the Argentine government offered a restructuring deal to its creditors in 2005 worth 27 cents on the dollar—dramatically less than the norm for such restructurings by countries much poorer than Argentina—and repeated the offer in 2010. By 2011, 93% of creditors had accepted. Argentina then attempted, unsuccessfully, to repudiate the defaulted bonds held by its remaining creditors. Despite losing repeatedly in courts, Argentina has refused to make any further effort to restructure the remaining bonds.
In addition to Argentina, Belgian lawmakers sometimes cite a case involving the Republic of Congo. But in the Congo case, Global Witness and other transparency groups cited the constructive role that Congo’s creditors played in exposing massive corruption by entrenched political elites. In Congo, creditors were simply enforcing contracts—and the case was settled. There’s no evidence that predatory postdefault negotiating by creditors is a problem for developing countries.
The Belgian proposal, if enacted in Belgium and more widely, would harm scores of developing countries. If governments are free to unilaterally ignore the terms of their debt contracts once they default, one likely consequence will be an increase in the number of strategic sovereign defaults. If these countries are further empowered to follow the example of rogue sovereigns such as Argentina in refusing to negotiate with creditors, investors will be less willing to buy any developing-economy sovereign debt, and will demand higher interest rates for any bonds they do buy.
Worse, tying the amount a creditor can be repaid to what he himself paid for a bond would freeze the secondary market for the debt of any developing country investors think might default. The high yields that result from falling prices relative to face values are necessary to compensate investors for the risk of buying bonds issued by stressed sovereigns. Without the possibility of achieving such a yield, the price for distressed bonds will effectively fall to zero in the absence of any demand. This only increases the interest rate that ordinary investors will demand to compensate for the higher risk they will have to bear, risk they could have otherwise offloaded to specialized investors in the event a country does come close to default.
Long-standing contract principles and rule-of-law are the solution for developing countries, not a problem to be legislated away. Belgian lawmakers and others need to think twice before upending the rules that have worked so well for so many.
Mr. Shapiro, a former U.S. under secretary of commerce for economic affairs (1998-2001), is co-chairman of American Task Force Argentina, a group whose members include bondholders contesting Argentina’s restructuring offer, and chairman of the economic advisory firm Sonecon.
By Daniele Lepido
May 28, 2015
Telecom Italia SpA’s largest investor won approval from Argentina’s competition regulator to unravel an eight-year holding pact, clearing the way for Vivendi SA to take a stake in the Italian carrier.
Telco, which owns 22.4 percent of Telecom Italia, was set up in 2007 as the carrier sought to fend off a takeover bid from AT&T Inc. and Carlos Slim’s America Movil SAB. The green light from Argentine regulator CNDC is the final step that allows its investors, including Telefonica SA, to exercise their rights to sell.
“The demerger will materialize through the transfer to four new companies, each owned by Telco’s actual shareholders,” CNDC said in a document dated May 22.
Argentina’s regulator had a say in the ownership structure of Telco because of concerns about the domestic competition between Telefonica and Telecom Italia.
Telco shareholders Assicurazioni Generali SpA, Intesa Sanpaolo SpA and Mediobanca SpA may now sell their shares. Telefonica, the leading investor in the vehicle, will be replaced by Vivendi as part of deal last year when the Spanish carrier agreed to buy the French company’s Brazilian broadband unit GVT.
A Rome-based spokesman for Telecom Italia declined to comment on the Argentine decision. A Milan-based spokeswoman for Mediobanca also declined to comment.
By Camila Russo
May 28, 2015
Argentina’s Soc. Comercial del Plata SA plans to have its shares listed in New York after the holding company surged the most on the South America country’s benchmark stock index during the past year.
Buenos Aires-based SCP rallied as much as 14 percent to 3.3 pesos Thursday on speculation the company is planning to issue American depositary receipts in August. A company official who declined to be identified because the matter isn’t public confirmed plans to start trading shares in New York but said there was no set date.
The shares more than doubled in price during the past 12 months, the best performance on the Merval, the nation’s benchmark index. The company, which owns 30 percent of oil producer Cia. General de Combustibles, is also the cheapest on the index in terms of price-to-earnings ratio. Its revenue jumped 98 percent in the first quarter from a year earlier.
Energy assets account for 74 percent of its investments. Other holdings are in telecommunications and entertainment, according to its website. SCP President Ignacio Noel is scheduled to give a presentation at the Buenos Aires Stock Exchange at 6 p.m. local time.
SCP restructured 1.1 billion pesos ($119 million) of debt in January 2013 by offering to swap every 10 pesos of debt for one share with the same nominal value. The deal cut liabilities by 40 percent. The company defaulted on its bonds in 1999 and filed for protection in 2000.
Revenue jumped to 458.2 million pesos in the first quarter. Its price-to-earnings ratio of 1.53 compares with an average of 19.31 for companies on the Merval.
By Costas Pitas
May 28, 2015
Three oil companies said on Thursday they had discovered oil north of the Falklands, setting up potential further confrontation with Argentina which disputes British sovereignty over the islands.
Falkland Oil and Gas (FOGL), Premier Oil and Rockhopper said they had discovered oil in the Isobel Deep exploration well, in the North Falkland Basin, with more work due to be carried out.
“Further operations on the well will be performed,” said the FOGL Chief Executive Tim Bushell.
“These could include either a side-track from the existing well or a re-drill of the well near to the current location, depending on what is deemed appropriate once the drilling results have been further evaluated,” he said.
In April, Premier Oil and FOGL said they had made an oil and gas discovery at a well in the Falkland Islands, the first after nine months of drilling.
Later that month Argentina launched a lawsuit against the pair, Rockhopper and two further operators in a move which was denounced by Britain as bullying.
FOGL and Rockhopper resumed drilling at the Isobel Deep well this month following the repair of a blow-out prevent control system.
By Juliana Castilla and Gianluca Semeraro
May 28, 2015
May 28 (Reuters) – Argentina has given a green light to the break-up of the Telco investor group owning 22.4 percent of Telecom Italia, paving the way for France’s Vivendi to become the biggest shareholder in the Italian phone group.
In a document dated May 22, which was seen by Reuters, the Argentinian antitrust watchdog CNDC cleared the break-up saying the move did not infringe competition law.
The four Telco investors, led by Spain’s Telefonica , decided to break up the vehicle last year but were waiting for regulatory clearance to press ahead.
French media group Vivendi obtained a 8.3 percent stake in Telecom Italia after agreeing to sell its Brazilian unit GVT to Telefonica in a deal which is expected to close this month.
Other investors in Telco are Italian financial companies Generali, Intesa and Mediobanca, which are now free to sell their stakes.
The Argentinian approval to the break up of Telco follows similar clearance in Brazil. Both were needed because Telecom Italia and Telefonica are competitors in the two Latin American markets.
28 May 2015
BUENOS AIRES, May 28 (Reuters) – The Argentine government said on Thursday a judge was examining U.S. extradition requests for three businessman named in a corruption scandal engulfing world soccer, adding it would recover taxes on any illegal income earned by the trio.
The U.S. Justice Department alleges Alejandro Burzaco, Hugo Jinkis and his son Mariano Jinkis, all Argentine citizens, conspired to win and keep hold of lucrative media rights contracts from regional soccer federations in exchange for $110 million in bribes.
At least $40 million had been paid to date, the U.S. Justice Department’s indictment showed.
Burzaco is president of Argentine sports marketing firm Torneos y Competencias, while Hugo and Mariano Jinkis are controlling principals of Full Play, another sports media and marketing business headquartered in Argentina.
Cabinet Chief Anibal Fernandez said the extradition petitions had been received from the United States on Wednesday and handed straight to the Argentine law courts.
“An investigation is underway,” Fernandez told reporters at a daily briefing.
There were no immediate reports of arrests in the country.
On Wednesday Torneos strongly denied any involvement in corrupt schemes to win contracts.
“Torneos denies any involvement of the company and its president in the allegations,” Torneos said in a statement late on Wednesday. “It reaffirms its willingness to cooperate with the judicial authorities in order to shed light on the .”
Full Play did not immediately respond to an e-mailed request for comment on the U.S. allegations. Attempts to reach the three indicted men through the companies were unsuccessful.
Worldwide, nine football officials and five sports media and promotion executives faced corruption charges, U.S. authorities said.
Pressure grew on FIFA President Sepp Blatter as the graft scandal rocking world soccer’s governing body deepened, with warnings from major sponsors and mounting criticism from Western leaders.
Torneos y Competencias, known better as Torneos, has long been a powerful force in sports media in the South American country.
Fernandez said Argentina’s tax authority would pursue any money owed to it.
“Illegal acts also pay taxes and in this case if it is proven that kickbacks were paid then they will have to pay an income tax of 35 percent,” Fernandez said.
May 28, 2015
State-controlled energy company YPF said it has expanded its cooperation agreement with another Argentine crude and gas producer, Petrolera Pampa, with a view to developing the Rincon del Mangrullo shale-gas block in the southwestern province of Neuquen.
The accord, signed Wednesday, ensures the two companies will continue to develop the “tight-gas” project they launched in early 2014.
A total of 49 wells had been drilled in that area through the end of the first quarter of this year, yielding average daily gas production of 1.4 million cubic meters (49 million cubic feet), YPF said in a statement.
This new agreement calls for additional investment totaling $150 million for surface infrastructure development, with each company accounting for a 50 percent share.
These projects, highlighted by the planned construction of a new treatment plant and pipelines, will double gas-treatment capacity and enable the companies to boost daily production to 4 million cubic meters (140 million cubic feet).
Petrolera Pampa also pledged to invest $22.5 million to launch the third phase of new well drilling, a project aimed at increasing tight-gas production at the block.
“Once that phase is completed, both companies will be able to continue” developing the block and dividing up the investment cost equally, the statement read.
Tight gas is developed using a controversial method known as fracking, which involves pumping a pressurized fluid – usually composed of water, sand and chemicals – into a shale formation to create a fracture in the rock layer.
The agreement also encompasses an up to $40 million exploratory program in the nearby Lajas Formation for the 2015-2016 period, with Pampa Energia, the parent company of Petrolera Pampa, accounting for 85 percent of the total investment outlay.
The expanded cooperation accord calls for YPF and Petrolera Pampa to invest $350 million this year, the state-controlled energy company, Argentina’s largest hydrocarbons producer, said.
By Rogerio Jelmayer and Luciana Magalhaes
May 28, 2015
Two of the world’s major soccer powers began probes against local executives in tandem with the U.S.-led bribery case.
SÃO PAULO—Brazil and Argentina, two of the world’s major soccer powers, initiated probes against local executives in tandem with the U.S.-led bribery case that has targeted international soccer organizations and shaken the sports world.
In Brazil, police and prosecutors raided the offices of a sports-marketing firm owned by a prominent local businessman, as officials said they were cooperating with their U.S. counterparts in the sweeping probe.
The U.S. investigation, in cooperation with Switzerland, led to the arrests on Wednesday of 13 current and former officials from FIFA, world soccer’s governing body, and others connected with Latin American and Caribbean soccer organizations, as well as one from the U.S.
In Argentina, the country’s tax agency filed a criminal complaint against three Argentine businessmen indicted by the Justice Department, accusing them of tax evasion, money laundering and conspiracy to commit a crime. The men weren’t available to comment but a lawyer for two of them said he would defend them against any extradition request.
Argentina’s tax agency also said it tried to get FIFA’s help to investigate allegations that foreign clubs have used tax havens to avoid paying taxes on the sale and transfer of Argentine players. The agency said that it told FIFA President Sepp Blatter in an April letter that the organization wasn’t helpful and that it was delaying efforts to make the sport more transparent.
“FIFA never collaborated with fiscal transparency in soccer,” the tax agency said on Thursday.
FIFA didn’t respond to the allegations.
The Brazilian company, Klefer Marketing Esportivo, which was raided in Rio de Janeiro on Wednesday night, is owned by Kleber Leite, the former president of popular Rio-based soccer club Clube de Regatas do Flamengo.
Mr. Leite, who wasn’t named in the U.S. indictment, said he was under investigation in connection with a past agreement between him and José Hawilla, a Brazilian national who was listed as a co-conspirator in the U.S. indictment.
Mr. Leite denied any wrongdoing and said he was cooperating with investigators. He didn’t provide details of his company’s work with Mr. Hawilla’s company, Traffic Group.
Mr. Hawilla is cooperating with the FBI in its investigation, his lawyer said on Wednesday. Under an accord with U.S. authorities, Mr. Hawilla has admitted to crimes including money laundering, fraud, extortion, and agreed to return $151 million.
U.S. prosecutors indicted the 14 people on charges ranging from racketeering to money-laundering and wire fraud. U.S. prosecutors allege that senior officials of organizations including FIFA and the Brazilian Confederation of Football received more than $150 million in bribes and kickbacks over years in connection with the sale of TV and marketing rights to soccer games and regional tournaments.
U.S. prosecutors, in their indictment, allege that Traffic Group executives bribed officials at FIFA and Concacaf, the soccer federation for North and Central America and the Caribbean region, to win contracts to sell marketing rights.
The political fallout from the indictment was swift in Brazil.
A group of Brazilian politicians, including former soccer star and current Sen. Romario Faria, approved an investigation into the country’s soccer industry, which he said would “shake Brazilian soccer.” Another Brazilian legislator, Sen. Alvaro Dias, called for Brazilian sporting federations to be audited by the country’s fiscal watchdog, the Federal Court of Accounts.
Justice Minister José Eduardo Cardozo said Brazil’s Federal Police were opening an investigation into allegations contained in the U.S. indictment.
“We can only investigate actions that are crimes under Brazilian legislation,” Mr. Cardozo said. “If there were any, and there probably were, Brazil’s Federal Police will investigate vigorously.”
The Brazilian Confederation of Football’s former president, José Maria Marin, was among the officials arrested Wednesday. Mr. Marin stepped down last month but was still a vice president of the organization until Wednesday, when the confederation stripped him of that title.
The confederation’s headquarters in Rio de Janeiro were named after Mr. Marin, but the group had his name removed from the facade early Thursday.
—Taos Turner in Buenos Aires contributed to this article.
By Ian Mount
May 28, 2015
The late Julio Grondona exerted direct control over the television rights at the center of Wednesday’s indictments.
In Wednesday’s blockbuster indictment of FIFA officials and sports marketing executives, there was one name glaringly unmentioned.
No, it was not Sepp Blatter. It was Julio Grondona.
As the longtime head of Argentina’s soccer federation, the AFA, Grondona served as FIFA’s senior vice president—Blatter’s No. 2– until his death in July 2014 at the age of 82. A member of FIFA’s executive committee from 1988 to his death and a former chair of the organization’s finance committee, Grondona was a long-time confidant of Blatter.
He also exerted direct control over the television rights at the center of Wednesday’s indictments. “He’s the great missing man because, basically, he was the one who managed all the television contracts at FIFA while he was alive,” said Hernán Castillo, an Argentine sports journalist and the author of Todo Pasa, an unauthorized biography of Grondona’s life at the nexus of soccer, business, and politics.
Known as “Don Julio,” Grondona cut a fearsome figure in the Argentine political landscape. Appointed to head the AFA in 1979 by Vice Admiral Carlos Lacoste, one of the leaders of the military junta that ruled Argentina during the Dirty War (1976 to 1983) that left up to 30,000 people disappeared or dead, he was the last major figure from that period still in power.
Grondona was known as a survivor, someone who could get along with military rulers as well as civilian governments of both the right and the left. He also controlled the Argentine league’s finances and TV contracts with an iron fist. That put him in close contact with three of those indicted on Wednesday for allegedly having “systematically paid and agreed to pay well over $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.”
Those three were Alejandro Burzaco, the head of Torneos y Competencias, an Argentine sports marketing business that had the rights to many Argentine league and national team games; and Hugo and Mariano Jinkis, who ran Full Play Group, an Argentine sports marketing business that holds the TV rights for several South American national teams and tournaments.
“All TV business with whatever businessperson passed through Grondona’s hands,” said Castillo.
Grondona’s relationship with Burzaco had a rocky start. In 2009, the Argentine government took the local pay-TV rights for the Argentine league away from Torneos y Competencias and gave them to Grondona and the AFA to start a government-subsidized free TV broadcast scheme called Fútbol Para Todos (Soccer for Everyone).
But soon the two built a working relationship, and Burzaco’s company provided production services to Fútbol Para Todos and held the international rights for the games. As of the beginning of this year, the company also held the production rights to friendly games for the Argentine national team.
Grondona’s funeral services were attended by Sepp Blatter, Argentine President Cristina Fernández de Kirchner, and Argentine soccer star Lionel Messi. Also present was Eugenio Figueredo, a current FIFA vice president and executive committee member and former CONMEBOL president, who was indicted on Wednesday.
Presumably in jest, the Venezuela-based television network TeleSUR briefly illustrated a story about Grondona’s sendoff with a funeral scene image from The Godfather.
Grondona managed to avoid lasting corruption indictments during his lifetime, but he may very well have known that something untoward was going on in the selection of Russia and Qatar as hosts of the 2018 and 2022 World Cups. Commenting from New Zealand on Wednesday, where he is coaching Argentina’s under-20 soccer World Cup, Grondona’s son, Humberto, said of the indictments, “I’m not surprised. From what I spoke about at the time with my father, we knew of certain irregularities that had happened with the elections in the cities for the World Cup.”
It’s impossible to know how Grondona would have reacted to Wednesday’s news. He was known to wear a pinkie ring with the words “todo pasa” inscribed. The translation: “everything passes.”
By Martha Schwendener
29 May 2015
Divided into alternating his-and-hers rooms and zigzagging across the Western Hemisphere, it’s hard to tell at first if ”From Bauhaus to Buenos Aires: Grete Stern and Horacio Coppola” at the Museum of Modern Art is about an artistic couple, 20th-century migration or European modernism and its diaspora. In many ways, it’s about all of these. But despite more than 300 somber, high-contrast vintage black-and-white photographs, films and display cases of ephemera organized in neat rows, the exhibition is a bit of a hot mess.
It starts with photographs of Buenos Aires by the Argentine artist and filmmaker Horacio Coppola (1906-2012) and then turns to advertising work and portraits made in Germany by Grete Stern (1904-99), a photographer who became Coppola’s wife. But wait: Doesn’t the show’s title suggest a trajectory moving from the Bauhaus to Buenos Aires?
What becomes clear — as much as possible, since the information is buried deep in a handful of wall labels and mostly in the catalog — is that these were fellow travelers and photographers, rarely collaborators. Stern was clearly more of a visual arts innovator, but Coppola provided the connections and the place to land during the turbulent ’30s and ’40s. The catalog provides enough evidence to draw your own conclusions: Stern is featured in an essay and reproductions up front; Coppola, in a separate essay at the back of the book.
Stern was born in 1904 in Elberfeld, Germany, and studied drawing and graphic design in Stuttgart before moving in 1927 to Berlin, which was undergoing a photographic revolution. Under the advice of her brother, Stern took private photography lessons with Walter Peterhans, who later became the director of photography at the Bauhaus. Her most significant output in Germany was with Ringl & Pit, the advertising agency she founded with Ellen Auerbach in 1930. The Ringl & Pit work here combines art and advertising in the best Bauhaus tradition: innovative typography and layouts and photographs of products that look like modernist still lifes. After the rise of the Nazis, however, Stern and Auerbach were forced to sell their business, three years after its opening.
In Buenos Aires, Coppola started taking photographs around 1927 and going for long walks (starting in 1929) with none other than Jorge Luis Borges, later Argentina’s best-known writer, who included two of Coppola’s photographs in a 1930 book. Much of Coppola’s work in this show consists of cityscapes and street views, either of Buenos Aires or European cities, which resemble at different moments the work of Eugène Atget or American modernists like Walker Evans or Paul Strand.
Coppola went to Europe for the first time in 1930; in 1932, he returned and studied at the Bauhaus in Berlin — and met Stern. His photographs changed. He became more technically proficient and started incorporating oblique angles and aerial views, like the Russian Constructivists or Laszlo Moholy-Nagy. His Bauhaus studies depicting eggs, feathers or twine are interesting, if not revolutionary.
In 1935, the couple married and moved to Buenos Aires, where they entered (or for Coppola, re-entered) a world of artists and intelligentsia. Stern made portraits of their friends and acquaintances, including Borges and the poet Pablo Neruda, when he visited town in 1945. Very little information about Stern’s sitters is included in the exhibition, which is disappointing since some of them were involved in the international anti-Fascist movement or early versions of feminism, like the playwright Amparo Alvajar and the abstract painter Manuel Ángeles Ortiz, whom Stern photographed in 1943 after his internment in a concentration camp during the Spanish Civil War.
She also photographed members of Madí (from the first two letters of the words ”materialismo dialéctico”), who were committed to abstraction as an antidote to the propaganda disseminated by Juan Perón. One of Ms. Stern’s best-known works, on view here, is the ”Photomontage for Madí, Ramos Mejia, Argentina” (1946-47), which she made for the second issue of their journal. For the images, she used the ”M” from a neon sign advertising Movado watches and superimposed ”Madí” over the obelisk designed by Alberto Prebisch to celebrate the 400th anniversary of Buenos Aires. The obelisk symbolized, for her milieu, abstract geometry.
Stern and Coppola divorced in 1943, and the exhibition ends with work from the late ’40s and early ’50s. One of the best rooms in the show features ”Dreams (Sueños),” the surrealist photomontages that Stern published in a women’s magazine from 1948 to 1951 to illustrate a column on psychoanalysis. Campy, vivid and weird, the montaged images often featured the couple’s daughter, Silvia Coppola, and demonstrated the popular fascination with psychoanalysis in Argentina during that period, but also the fears surrounding repression by the Perón dictatorship. Others are vaguely feminist, like ”Dream No. 1: Electrical Appliances for the Home” (1949), in which a woman serves as the base of a lamp, with a man’s hand reaching around to switch her on — or off.
The catalog contends that Grete Stern and Horacio Coppola created a stunning body of work, but the show argues, in many ways, for two discrete bodies of work. What might have been accomplished instead of trying to insert two lesser known figures into the canon is to highlight what’s really interesting about their lives and careers: that they — and particularly Stern — were migratory and interdisciplinary, harbingers of the kinds of artistic practice we see today in which commerce, parenthood and politics can no longer be elided, and so they become part of the work. The museum could have showcased their work along with that of their friends and compatriots, from Bauhaus to Buenos Aires, from the literary world to the poets, writers, activists and psychoanalysts with whom they interacted and not just as mute players in this narrative. Now that would have been an extraordinary show.
By Michael Schachner
Michael Schachner explores why supply and demand for Argentina’s signature grape rages on, despite that sales may be declining.
There’s a high-end wine shop in my Manhattan neighborhood called Burgundy Wine Company. As the name implies, this store traffics almost exclusively fine French cuvées—Burgundies, Rhône wines, Beaujolais, etc.
So imagine my surprise the last time I popped in to buy a couple of bottles of Gigondas and Chiroubles: Alone in the corner, but conspicuous as a flying pig, was a floor-stacked display of Enrique Foster Malbec from Argentina, the country most closely associated with this Bordeaux variety.
“What is that?” I asked my sales guy. “Why are you selling Malbec from Argentina in a place like this?”
“That’s for all the people who come in off the street, not knowing who we are or what we specialize in, and want Argentinean Malbec,” he answered. “Happens all the time; probably three or four times a day. If that many people want something, we’d be stupid not to offer it.”
And I thought Malbec’s popularity, which began blowing through the roof in this country starting about 10 years ago, was waning. At least that’s what the numbers say.
According to Wines of Argentina, a trade association that represents the country’s wine industry, from 2005 through 2010, shipments of Malbec to the U.S. increased by no less than 31% in any given year, with some years showing jumps of more than 40%, and 2008 seeing a leap of 61% over 2007.
But in recent years, the Malbec machine has slowed. In 2012, the increase in Malbec shipments from Argentina to the States was 2.8% over the prior year; in 2013 it was 4.1%. And last year, the quantity of Malbec that Argentina sent us actually fell by about 4%.
Meanwhile, a New York retailer of French wines is stocking Malbec in order to meet everyday demand, and rarely have I attended a party or event lately where Malbec wasn’t being poured.
The point I’m making is that numbers can be misleading. Yes, the Malbec movement may be losing some of its steam as the thrill of discovery gives way to widespread acceptance. But Malbec still ranks as one of the most popular varietal red wines out there. As Mark Twain once said about rumors of his own premature demise: Any assertions that Malbec is headed for the same grim fate as Merlot appear to be “greatly exaggerated.”
Following are five recommended Malbecs tasted and reviewed this year. Three are from Argentina, while the others hail from Chile and Cahors, France’s Malbec hotbed. For full tasting notes on each wine, including tips for when to drink them, check the Wine Enthusiast Buying Guide.
3. ARGENTINA ECONOMY: QUICK VIEW – TRAIN NETWORK NATIONALISED (Economist Intelligence Unit – ViewsWire)By Charlie DevereuxMay 26, 2015Daniel Scioli’s grip on the candidacy for Argentina’s ruling party in October’s presidential elections may be weakening, according to an opinion poll, leading him to make concessions to President Cristina Fernandez de Kirchner.Interior Minister Florencio Randazzo, a Fernandez loyalist, would win 42.5 percent of votes in the August primary if he is backed by the president, according to an OPSM poll published Monday. Scioli, the governor of Buenos Aires province and a former vice president, is backed by 51.5 percent.The day before the poll was released, Scioli told Pagina 12 that Economy Minister Axel Kicillof, who Fernandez described last week as her right hand and closest adviser, would be a part of his government. The concession may have been triggered by Randazzo’s rising popularity, said Jorge Piedrahita, chief executive officer at Torino Capital LLC in New York.“Scioli in his speeches is talking to Cristina,” Piedrahita said by phone from New York. “His aim is to win Cristina’s support as soon as possible. Without her support he can’t win the elections.”Scioli’s spokesman Jorge Telerman didn’t immediately respond to a request for comment from Bloomberg News.‘One-Armed’Randazzo has criticized Scioli for hiding his true intentions and for his ties to corporations. The primary campaign has proved antagonistic at times. Last week, Randazzo had to issue a public apology after saying he chose to compete for the nomination because he feared Fernandez’s political project would be left “one-armed.” That was interpreted by many Argentines as a reference to Scioli, a former speedboat world champion, who lost his right arm when his boat flipped during a race in 1989.Scioli has been conspicuous by his absence at victory celebrations that Randazzo attended in provincial elections in Salta and Chaco, Piedrahita said.OPSM’s nationwide poll of 1,200 people interviewed between May 8-22 had a margin of error of plus or minus 2.5 percentage points. The same poll gave Scioli 32.2 percent of intended votes against 29.9 percent for Buenos Aires Mayor Mauricio Macri of the opposition Pro party in an eventual first-round election on Oct. 25.By Charlie DevereuxMay 26, 2015The baroque opera that is Argentine presidential politics is about to open a new act with two main characters — a one-time kidnap hostage calling for economic shock therapy and a one-armed speedboat champion who says to take it slowly.For the past dozen years, the inhabitant of the pink presidential palace has been named Kirchner, first Nestor, who died in 2010 from a heart attack, and then his widow Cristina Fernandez de Kirchner, both in the Peronist protectionist tradition.In October, voters will weigh in and polls show a tight race for a job not everyone would relish — leading a country mired in default, hemmed in by litigating hedge funds and ravaged by economic stagnation.Mauricio Macri, 56, the former hostage and current mayor of Buenos Aires, has cast himself as the change agent. He pledges to end currency controls, import restrictions and export tariffs to bring in investment and offset outflows forecast at half the central bank’s reserves.Markets would react to a Macri victory with euphoria, according to Siobhan Morden, head of Latin American fixed income strategy at Jefferies Group LLC in New York, but that may underestimate how difficult the controls are to dismantle.Polls show Macri about even with his main competitor, Daniel Scioli, the governor of Buenos Aires province and former world speedboat champion who belongs to the ruling Victory Front alliance.Boom, BustWhile agreeing that change is needed, Scioli says it should come only gradually.Whoever wins, the next government will need to ween Argentines off costly subsidies and price controls without putting hundreds of thousands out of work and slashing living standards.It has been a wild ride in recent years with benchmark bond prices swinging from 50 to 103 cents on the dollar and analysts are divided on the best path to stability. The economy went from collapse and default in 2001 to a boom that tripled income per capita in the nine years to 2012 and then back to stagnation and default.A U.S. judge is blocking payments on some foreign debt until the government settles with a group of hedge funds suing for better terms. Macri has said the ruling should be respected while the government vilifies the judge as a “vulture.”“Change through shock policies could result in an abrupt and perhaps counterproductive normalization,” Mauro Roca, senior economist at Goldman Sachs & Co., said by phone from New York. “On the other hand, if you go very gradually you’ll reach a point where other issues take priority and you don’t see the fruits of any changes.”Statistical TieA poll by OPSM showed Scioli and Macri about even — 32.2 percent for Scioli and 29.9 percent for Macri with a margin of error of 2.5 percentage points. Sergio Massa, who also vows to eliminate currency controls and lower taxes on grain exports, got 13.6 percent. The nationwide house-to-house poll canvassed 1,200 intended voters between May 8 and May 22.Scioli and Macri — both of whom declined to be interviewed for this article — came to politics indirectly. Macri, a civil engineer, worked for his father’s construction company and briefly as a credit analyst at the local unit of Citibank.Boca JuniorsHe got his first real taste of the spotlight when as president of Boca Juniors Football Club for 12 years, he modernized Argentina’s biggest soccer club. He refurbished the ‘Bombonera’ stadium and signed stars such as Diego Maradona, Juan Roman Riquelme and Carlos Tevez, paving the way for a golden age for the club which won 16 trophies.Macri said his interest in politics dates from his 1991 kidnapping. Ambushed outside his home, he was forced into a coffin in a Volkswagen van, La Nacion reported in 2001, citing court documents. For 12 days, he was chained to a basement floor blocks from his current city hall office before his father paid $6 million for his release. Macri rarely talks publicly about what happened.After two years as a lawmaker, Macri was elected mayor of Buenos Aires in 2007, winning re-election in 2011.Scioli’s family owned an electrical appliance business and he made his name as an offshore powerboat racer. Early in his racing career, in 1989 on Argentina’s Parana river, his boat hit a wave and flipped. He lost his right arm. Fitted with a prosthetic arm, he was back in a speedboat a year later and went on to win several world championships before retiring in 1997.Less DramaticAt the same time he won the concession to be distributor for Electrolux, the Swedish household appliance maker. Scioli, 58, was vice president under Nestor Kirchner for four years.Married, divorced, then back together with the same woman, Karina Rabolini, a former model with her own underwear and cosmetics line, Scioli is often seen campaigning alongside her.Scioli’s economic plans are less dramatic than Macri’s. In contrast to the mayor, he’s been supportive of the decision to default on the nation’s debt rather than comply with a court ruling and pay the litigating holdouts. He says he wouldn’t devalue the peso.Mocked for speeches that are often bland and substance-free, Scioli may actually be closer in outlook to Macri than at first appears, according to Jose Octavio Bordon, a former diplomat and presidential candidate. “At root his ideas aren’t all that different,” he said.‘Two Sciolis’While Macri may be the market favorite, Scioli’s track record in the province, which accounts for half of the country’s gross domestic product and where he changed the tax code, has impressed economists. In 2014, the province posted a budget surplus for the second straight year.It’s difficult to predict whether Scioli will be able to step out from Fernandez’s shadow to be able to implement changes, said Javier Kulesz, an analyst at Nomura Securities International Inc.“There are potentially two Sciolis the market should contemplate, one advocating policy continuity and another one policy change,” Kulesz said. “Instead of having three presidential candidates with a shot at becoming president, we practically have four.”3. ARGENTINA ECONOMY: QUICK VIEW – TRAIN NETWORK NATIONALISED (Economist Intelligence Unit – ViewsWire)26 May 2015EventThe president, Cristina Fernández de Kirchner, has enacted a law nationalising Argentina’s entire train network, the latest in a series of nationalisations by her political movement in the past decade.AnalysisThe bill nationalising Argentina’s entire passenger and cargo train network had been approved by Congress last month. The government had already been sporadically nationalising some services; updating lines and stations; and purchasing new Chinese carriages after several high-profile accidents, including one involving a commuter train in Buenos Aires, the capital, in 2012 that killed 51 people. This crash brought under scrutiny, even from some of its supporters, the government’s long-standing policy of heavily subsidising private companies who invested little in the lines.A new state train company, Ferrocarriles Argentinos Sociedad del Estado, will now oversee all of the country’s train lines. Even as the fiscal deficit widens, Ms Fernández said in her speech that state investment in lines and trains would cost a total of US$3bn. The government has already spent more than US$1bn on the new Chinese carriages. As it seeks to define a clear legacy of infrastructure improvements before the presidential election in October, the government has placed these purchases from China in the spotlight, drawing attention to them in Ms Fernández’s national broadcasts.The nationalisation plays to Ms Fernández’s supporters, and the tenor of her comments has been true to her populist style, recalling, for instance, the nationalisation of Argentina’s trains in the 1940s by a former president, Juan Domingo Perón. But the timing of the move points to a wider trend of her government stepping in only when the situation becomes dire. This was perceived to be the case, for example, with the nationalisation of Aerolíneas Argentinas (the state-run airline) in 2008.By Sarah Marsh26 May 2015BUENOS AIRES, May 26 (Reuters) – Argentina said economic activity grew a stronger-than-expected 2.0 percent in March, which private economists put down to a pickup in consumption and a bumper soy harvest, although they cautioned the data may be overly optimistic.Analysts polled by Reuters had expected a 0.8 percent rise in the monthly EMAE economic activity index, which is a close proxy for gross domestic product, in part due to a weak performance in the same month last year.Official data, especially for inflation that is running in double digits, has lost much credibility since President Cristina Fernandez took office in 2007.The government does not publish a breakdown of its economic activity index or any explanation. Analysts say it is likely skewed because it uses official inflation data.Still, strategist Alejo Costa at local investment bank Puente said early economic indicators for sectors like construction and retail suggested there was a slight uptick in Latin America’s third largest economy.Supermarket sales were up 7.2 percent on the month in March after falling in the previous two months, while the construction sector grew 1.6 percent in seasonally adjusted terms.“The economy seems to be picking up slightly but we don’t believe this will be enough for it to have sizeable growth this year,” said Costa. “It’s hard to know what is behind this figure.”Puente forecasts Argentina’s economy will contract 0.4 percent this year, returning to growth in 2016 with a 2.6 percent expansion on the back of government policy changes following presidential elections in October. Fernandez is constitutionally barred from a third consecutive term.Fausto Spotorno, an economist at local consultancy Orlando Ferreres and Associates said a record soybean crop likely also boosted economic activity figures in the grains powerhouse.Still, his consultancy estimated economic activity shrank 1 percent in March and forecasts a 1.6 percent contraction for the year.Separately, official data on Tuesday showed Argentina’s industrial output contracting 1.5 percent in the twelve months to April, marking the 21st consecutive monthly decline on the previous year.The figure was better than the median forecast in a Reuters poll of six analysts for a 1.9 percent fall.A steep economic downturn in key trading partner Brazil has hurt demand for Argentine automobiles while import restrictions introduced to protect Argentina’s low foreign reserves are also hurting manufacturers reliant on parts from abroad.26 May 2015BUENOS AIRES, May 26 (Reuters) – A group of crushers on strike for the past three weeks in Argentina’s main grains export hub said on Tuesday that the government had rebuffed a pay increase deal with employers.Soy trading in Rosario, which handles about 80 percent of Argentina’s grains exports, was virtually paralyzed for a sixth consecutive session as most exporters refrained from purchases to pressure the government to resolve the labor dispute.“We’ve reached a deal, the thing is the government won’t accept it,” Daniel Yofra, secretary general of the opposition-allied Industrial Oilseed Complex Workers Federation, said in an interview.Yofra said employers had agreed to a 36 percent salary increase to counter one of the world’s highest rates of inflation, significantly above the 27 percent raise ministers agreed to with two powerful pro-government unions last week. The crushers initially sought 42 percent.Argentina’s “paritaria” talks are negotiated between trade unions and private employers, with the government acting as a mediator with significant leverage over the outcome of discussions.“The problem is the government won’t allow that we close this deal here in the Labor Ministry. And the companies aren’t prepared to sign outside of the ministry,” said Yofra.Yofra’s union represents about 20 percent of crushers nationwide, and who mostly work in Rosario’s southern districts, where the dispute has slowed the loading of vessels.They have taken their protests to Rosario’s northern San Lorenzo district, blocking access to milling plants owned by companies such as Cargill and Louis Dreyfus Commodities BV.Even so, ports operated by the agribusiness companies have continued operating and the crushers’ industrial action has so far only had a marginal impact on international prices.Argentina is the world’s leading exporter of soyoil and soymeal and the fourth biggest corn exporter.By Fabiana Frayssinet26 May 2015BUENOS AIRES, May 23, 2015 (IPS/GIN) – In Argentina, where millions of families have unmet dietary needs despite the country’s vast expanse of fertile land, the Huerta Niño project promotes organic gardens in rural primary schools, to teach children healthy eating habits and show them that they can grow their own food to fight hunger.Of the 105 students who board Monday through Friday at the La Divina Pastora rural school in Mar del Sur in the municipality of General Alvarado, 80 percent come from poor families.“Ten percent have nutritional deficiencies, from their first year of life, even from the period of breastfeeding or even the pregnancy itself. We see calcium deficiency, which can lead to cavities and affects growth,” the school principal, Rita Darrechon, told Tierramérica.The privately run public school, located 500 km southwest of the capital, serves children between the ages of six and 14, and a few older children who have repeated grades.The children live in rural or semi-urban areas in the eastern province of Buenos Aires. But most of them were raised without any farming culture or knowledge about or tools for agriculture.“In places that were historically farming areas, kids do not know what to do with the land,” the general coordinator of the Huerta Niño Foundation, Bárbara Kuss, told Tierramérica. “They don’t know that if they’re hungry, the seeds in their hand can feed them.”The aim of the non-profit institution founded in 1999 by businessman Federico Lobert is to help reduce hunger among students in rural schools.The initiative first began to take shape when Lobert, during a trip as a young man, heard a rural schoolteacher say “the kids couldn’t study because they hadn’t eaten anything except orange tree leaves to calm their stomachaches.”He described this as a “sad paradox” in a country “that produces so much food for millions of people around the world.”The gardens benefit 20,000 children in 270 rural schools in low-income areas, like La Divina Pastora. The vegetables and fruit they grow are eaten by the students in the school lunchroom.“It seems like a really good opportunity to promote, together, a healthy diet, using natural resources that are within their reach,” said Darrechon.According to the National Survey on Nutrition and Health, 35 percent of children in Argentina live in households with “unmet basic needs”. Of that proportion, only 53 percent receive food assistance from different social programmes.The regions with the highest percentages of children living below the poverty line are the northeast (77 percent) and the northwest (75.7 percent).Children with serious malnutrition are more vulnerable to falling ill, and they suffer from stunted growth, with lifelong consequences, Kuss said.Huerta Niño seeks to address these nutritional deficiencies, under the slogan “it’s not about giving people food, but about teaching them to produce their own.”The foundation’s involvement in each school lasts approximately a year, but the impact, Kuss said, “lasts a lifetime.”The first step is putting up a fence around a half-hectare plot of land.“We teach them why they have to keep the fence in good repair, why it can be bad for our health if dogs or other animals get into the garden; they are taught that manure is a fertiliser but that dog feces aren’t,” she added.Meetings are held with the students, parents and teachers to determine what is needed, depending on the climate, the quality of the soil, and the access to water.The next step is to prepare the soil, and the students are taught how to plant and harvest, and they learn the complete cycle in both planting seasons – autumn-winter and spring-summer.“We explain what to do step by step, because it’s really nice when the tomatoes turn red and the lettuce sprouts, but what do you do later with the lettuce? Do you just pick the leaves? Or do you pull it up by the roots? Do you plant again or do you wait till the next season?” Kuss said.Huerta Niño has backing from the Education Ministry and receives technical support and seeds from Pro Huerta, an agroecological community programme run by the government’s National Agricultural Technology Institute.With donations from individuals, companies and organisations, it spends some 4,500 dollars on each school garden, providing tools adapted to children, agricultural supplies and inputs, and special expenses for windmills or specific irrigation systems.According to Kuss, community participation is essential for the project to be sustainable.“A garden needs attention. If you don’t control the pests, you don’t irrigate, you don’t weed, you don’t rotate the crops, it dies,” she said.“That would be a failure for the kids, which is the last thing they need, with the problems they already have,” she stressed.The initiative promotes agroecological practices that use organic fertilisers and pesticides. For example, aromatic flowers are planted to ward off insects.Chemical pesticides are not used, although surrounding fields are often sprayed.“We teach them that the tomato that grows in their garden might not be as big as the ones in the supermarket, but it will be red and tasty,” Kuss said.The garden forms part of the educational curriculum: from math (measuring the borders of the garden) to natural sciences and reading and writing (using instructional booklets).“It’s like an open-air laboratory. Learning through hands-on experience is much easier than learning by reading a book,” Darrechon said.Sometimes the students make their own gardens in their homes or communities, and some former students of La Divina Pastora have gone on to secondary school studies in agriculture.The initiative also teaches healthy eating habits – but not without running into certain difficulties.“The radishes were so nice and red, but when the kids bit into them they would throw them away,” Darrechon said. “We had to disguise them or process other vegetables like chard in tarts or pies, mixed with ground beef to hide the taste, because they come from a culture of junk food or meat and potatoes.”In schools in poor outlying semi-urban areas in Buenos Aires, some gardens have also helped combat violence and school dropout “by keeping kids in school with something interesting that keeps them off the streets,” said Kuss.The representative in Argentina of the United Nations Food and Agriculture Organisation (FAO), Valdir Welte, told Tierramérica that school gardens are playing an “extremely important” role in improving diets and eating habits and fighting hunger.He also said they are “an educational tool that strengthens the learning process and foments values such as solidarity, cooperation and collective work.”“Children don’t only need to eat well; they must also learn about a healthy diet and learn how to grow their own food in case they need to,” said Welte.He also said gardens “can be educational and training spaces for the entire community, where heads of households acquire the necessary skills for producing their own foods.”Kuss said these benefits from the gardens are as tangible as the fruit and vegetables produced.“We don’t only give them food,” she said. “We’re offering them different values they can touch with their hands. Helping them, and telling them: you can do it.”This story was originally published by Latin American newspapers that are part of the Tierramérica network.May 26, 2015Statement of Food & Water Watch Executive Director Wenonah HauterWashington, D.C.—“As has become a common practice by the Obama administration, the USDA’s Animal and Plant Health Inspection Service (APHIS) transmitted to the White House Office of Management and Budget over a federal holiday weekend two major final rules that would open up imports of fresh beef products from Brazil and Argentina, hoping that no one was paying attention.These final rules were sent to OMB on Friday, May 22 but not posted on its website until Saturday, May 23.“What is significant about these two final rules is that they would relax a longstanding ban by APHIS from allowing fresh beef imports from countries that have a history of foot and mouth disease (FMD) in their animal herds. The U.S. has not had a case of FMD in cattle since 1929. Food & Water Watch and number of livestock groups have already expressed their opposition to this relaxation of the FMD policy.“In addition, Brazil and Argentina have a checkered food safety history with the meat products that they are already eligible to export to the U.S. USDA has been forced to suspend imports from these two countries over the past decade for food safety violations and for violating inspection standards.“These new final rules come on the heels of the World Trade Organization ruling that found USDA‘s country of origin labeling regulations to be impediments to free trade. Consequently, consumers may not know at the meat counter whether the products they buy come from countries that have had a history of animal health and, or food safety problems.“Food & Water Watch will continue to express its opposition to these final rules at OMB.”By Erol Ersoy and Charles NewberyMay 27, 2015– Exporters losing $25,000 per boat for every day of delay, according to one estimateBUENOS AIRES, Argentina – More than 80 boats are delayed on the Parana River in Argentina, snarling agriculture exports Tuesday as vegetable oil workers strike for higher wages and navigation channels run shallow.The Federation of Oilseed Workers is demanding 36 percent increases in salaries this year to keep ahead of inflation running at 30 percent annual. They have been on strike since May 4.The government, however, wants to limit the hikes, warning that increases of more than 25 percent could stir faster inflation, slowing the economy even further.“The pressure is very heavy for the increase to not surpass 27 percent,” Adrian Davalos, secretary general of the union, told Radio 2 in Rosario, a port city on the Parana River.Inflation has come down from 40 percent in 2014, in part because a contracting economy is cooling consumer demand. But economists say it will probably continue to run at 30 percent for the rest of the year.The boats unable to load are in ports in Rosario, located up river from Buenos Aires and where much of the country’s soybean and products are shipped for export. Argentina is a major exporter of corn, soy and related products like soy oil.The delayed vessels are due to ship soybean and flour as well as fertilizers, wheat and iron to Algeria, Brazil, China, Vietnam and elsewhere, according to the Chamber of Port and Maritime Activities.The chamber said 33 boats have been affected by the strike, while another 54 have been detained because of shallow waters in navigation channels on the river that has led to a series of groundings in the past few weeks, it said.Exporters are losing about $25,000 per boat for every day of delay, according to the chamber.This is the latest strike to hit Argentina this year, with bankers conducting a two-day strike beginning Tuesday.On June 9, a faction of the General Labor Confederation, the biggest union umbrella group in the country, will join transport workers in a national strike.