2. AFTER 21 YEARS OF IMPUNITY, TRIAL ON TERRORIST ATTACK COVER-UP IN ARGENTINA BEGINS (Huffington Post)9. END OF ARGENTINA’S PETROLEUM PLUS WILL HAVE LIMITED IMPACT ON UPSTREAM INVESTORS (IHS Global Insight Daily Analysis)By Jonathan Gilbert7 August 2015BUENOS AIRES — Argentina’s labyrinthine investigation into the suicide bombing of a Jewish community center here two decades ago began a new chapter on Thursday with the start of a trial in which Carlos Menem, a former president, is accused of trying to derail the case.Mr. Menem, 85, is one of 13 defendants, mostly former officials, suspected of conspiring to conceal what prosecutors have said was Syrian involvement in the 1994 bomb attack, which killed 85 people. The trial points to the struggles of Argentina’s judiciary, which has failed to convict anyone of the bombing but has pushed ahead with separate cover-up allegations.For some in Argentina, the long-awaited trial arouses hopes of one day solving the bombing, a case scarred by setbacks and controversy, including the mysterious death this year of Alberto Nisman, the prosecutor who was leading the investigation. Before Mr. Nisman took the helm a decade ago, the investigation had been tainted by scandal.Mr. Menem was not in the federal trial court on Thursday because of poor health, his lawyer said. But in their opening statements, prosecutors and lawyers for private plaintiffs, who have joined the case as allowed by Argentine law, told judges that one of the defendants — Juan José Galeano, who was the judge first assigned to the investigation — paid a witness, Carlos Telleldín, $400,000 to falsely incriminate four police officers in the bombing, as part of a state-directed scheme to distort the evidence.Separately, prosecutors and plaintiffs’ lawyers claim that Mr. Menem, who is of Syrian descent, ordered Mr. Galeano to deflect suspicion away from a Syrian-Argentine textile merchant by using the former president’s brother, Munir Menem, as an intermediary. In the days after the attack, the investigation of the textile merchant, Alberto Jacinto Kanoore Edul, ”was prematurely discontinued following an order by Carlos Menem, obeyed without objection by Galeano,” the court was told, ”paralyzing one of the leads that, without doubt, had serious probabilities of deepening knowledge” of the bombing.Munir Menem, who was a presidential secretary for his brother, has since died.In an interview before the trial began, Mr. Galeano, 57, claimed that the payment to Mr. Telleldín, 54, who sold the van used by the suicide bomber, was not a bribe to induce false testimony but a legitimate use of state funds to foster cooperation by witnesses. (A fund is available to pay reluctant witnesses who have information about the Jewish center bombing and another terrorist attack here two years earlier, according to a 1994 presidential decree.)”It was totally legal,” he said. ”What I needed was information to move the case forward.” Mr. Galeano denied ever speaking to Munir Menem and allegations that he maneuvered to clear Mr. Kanoore Edul of suspicion.President Cristina Fernández de Kirchner, whom Mr. Nisman also accused of conspiring to derail the investigation, has supported the trial of Mr. Menem, now a senator who has been convicted of arms smuggling.In a new line of inquiry, Mr. Nisman had claimed that Iranian officials were behind the bombing. Days before his death in January, he accused Mrs. Kirchner of conspiring to shield them from prosecution in return for trade benefits. But a prosecutor who inherited the Kirchner conspiracy case dropped it.One theory about the bombing is that it was an act of revenge: Syrian leaders may have been angered that Mr. Menem, who had forged ties with Syria before he became president, terminated an arms deal after he was elected, historians say. Likewise, Mr. Nisman said in 2006 that he agitated Iran by ending nuclear energy cooperation.Some victims’ relatives say that the trial could provide new leads. ”The hope is not illusory,” said Alejandro Rúa, a lawyer for Active Memory, a group representing some victims’ relatives that is a plaintiff in the trial. ”The very state authorities that were supposed to investigate the case covered it up. Now, we will try to verify their motives.” Others said the trial, which may involve about 140 witnesses, according to local news media reports, and is expected last at least a year, would yield few results.”There is nothing to be discovered after so many years,” Carlos Escudé, an Argentine political scientist who has written on the case, said in an email. ”Leads have faded.”2. AFTER 21 YEARS OF IMPUNITY, TRIAL ON TERRORIST ATTACK COVER-UP IN ARGENTINA BEGINS (Huffington Post)By Gastón ChillierAugust 6, 2015On July 18, 1994, a bombing at the AMIA, Buenos Aires’ largest Jewish community center, killed 85 people and injured hundreds. No one was convicted of this crime and the original judicial probe was riddled with irregularities. This January, the AMIA grabbed headlines again when Alberto Nisman, Argentina’s special prosecutor on the case, was found dead in his apartment. His apparent suicide–yet to be confirmed as such–is the latest episode in 21 years of impunity in which the global War on Terror meets the local legacies of state-sponsored crimes against humanity.The AMIA blast came two years after an attack on the Israeli embassy in Buenos Aires that killed 29 people, and was never punished. In 2004, judges declared a mistrial in the AMIA bombing, and evidence gathered over the years points to a conspiracy between politicians, judicial officials and intelligence agents to bury the truth. After years of delays, a whole new trial began on Thursday in which officials from former Argentine President Carlos Menem on down will finally be tried for orchestrating a cover-up in the bombing investigation. Much is at stake for the victims, for Argentine society, and for its democratic institutions.The evidence that will be presented should elucidate the domestic and international forces that contributed to two decades of impunity, starting with the geopolitical interests at play in the judicial probe of the attack. At the time, the United States and Israel insistently singled out Iran as the lone sponsor of global terrorism. And in the 1990s, the Argentine government sought to strengthen ties with the United States, describing the bilateral links as “carnal relations.”The AMIA investigation, influenced by Washington and Tel Aviv through the collaboration of their intelligence agencies, focused on Iran’s possible involvement and systematically disregarded any clues pointing toward Syria. According to Memoria Activa, one group of AMIA victims and their relatives, the investigation of an initial suspect of Syrian descent whose family was friendly with President Menem’s own was quickly dropped. After that, only members of the Lebanese guerrilla group Hezbollah and Iranian citizens were accused of involvement on a global scale.The trial should also expose the shady relations between Argentine spies, politicians, prosecutors and judges. The judge leading the original probe, Juan José Galeano, used $400,000 from an intelligence slush fund to pay a key suspect, allegedly so that he would provide false testimony to implicate provincial police officers in the attack. By all appearances, this so-called “local connection” was invented as a scapegoat; all of the police officers facing trial were acquitted in 2004.Part of the problem lies with Argentina’s intelligence apparatus, which helped torture, kidnap and kill thousands of dissidents during the 1976-1983 dictatorship. This military regime had backing from the United States, which supported several dictatorships in the region. Until recently, Argentina’s intelligence agency had barely been reformed and feeble political oversight ensured that agents operated with great autonomy.At the same time, the federal justice system has come to rely on the intelligence agency’s wiretaps to gather evidence, producing an unhealthy interdependence between some intelligence agents, prosecutors and judges. Plus, politicians often use these same wiretaps against their opponents and critics. The delays in the AMIA cover-up trial and the behavior of several suspiciously sluggish state prosecutors may be explained by these extortive measures, corrupt collusion, or just plain indolence.Nisman’s prosecution also depended on the intelligence agency’s wiretaps and other spy-fed information, as well as Israeli and U.S. intelligence. Just days before he died, Nisman relied almost exclusively on those sources to accuse Argentina’s current president and foreign minister of plotting to ensure that Iran would no longer be implicated in the AMIA bombing. His accusation was dismissed by many legal experts and eventually thrown out by the courts.In 2005, after our organization helped Memoria Activa take its case to the Inter-American Commission on Human Rights, the Argentine government recognized the state’s responsibility for failing to prevent the AMIA attack and botching the investigation. Amid the fallout from Nisman’s death ten years later, promised reforms including overhaul of the intelligence law were finally approved. The Intelligence Secretariat was recently disbanded, wiretapping is now overseen by the Attorney General’s Office, and greater administrative and congressional oversight of spies is expected. This reform is a crucial first step, but deeper changes are needed.After years of frustration and disappointment, AMIA victims and their families, will finally get to see Menem, a former intelligence chief, ex-judge Galeano, two former federal prosecutors, a high-ranking federal police chief, and seven others stand trial. The courtroom revelations could drive more needed changes in Argentina’s institutions and public policies–but that is no substitute for truth and justice. We have waited far too long.By Richard LoughAugust 6, 2015Daniel Scioli, the presidential candidate for Argentina’s ruling party, on Thursday urged undecided voters to back him in this weekend’s party primaries in a speech designed to reassure the party’s socialist faithful while wooing swing voters.Sunday’s primaries, in which Argentines can vote for any candidate from any party or alliance, are widely seen as a dummy run for the Oct. 25 poll. They will help show whether Scioli, who is ahead in polls, could win outright in the first round.“I will maintain the policies that need maintaining, deepen those that need deepening and change those that need changing,” Scioli told thousands of banner-waving supporters as he closed the first stage of campaigning ahead of the primaries.Scioli is seen as a moderate within Argentina’s broad Peronist movement and more investor-friendly than outgoing President Cristina Fernandez. But his running mate is a close Fernandez ally and in past weeks Scioli has defended the president’s heavy subsidies and controls on the economy.Scioli saluted Argentina’s workers and trade unions and promised more roads, schools, hospitals and housing. He also rebuffed critics’ comments that Fernandez would retain a strong influence in Argentine politics if he won.“You know what, I’m going to do it my way,” he said, promising to attract investment inflows that would lower Argentina’s runaway inflation.For that to happen, economists say Argentina would need to strike a deal with the U.S. hedge funds whose legal battle with Fernandez over unpaid debt tipped Argentina back into default a year ago.Both Scioli, 58, and his conservative rival, Mauricio Macri, have avoided the politically toxic subject of what an eventual deal with the so-called “holdout creditors” might look like.Most opinion polls show Scioli, the governor of Argentina’s biggest province, with 35-38 percent of voter support while Macri, who is mayor of Buenos Aires, trails in the early 30s.Macri promises change from Fernandez’ leftist policies, vowing to unwind Argentina’s web of trade and currency controls, lift hefty taxes on grains exports and restore relations with creditors.In his closing rally ahead of Sunday’s primaries, Macri said pensions had been eroded by inflation under Fernandez and that rising crime stalked Argentines.“We know we want a better public education system, more jobs and we will achieve this so that there is a better future for all Argentines,” Macri told supporters.By Hugh Bronstein and Eliana RaszewskiAugust 6, 2015Aug 6- Argentina needs $200 billion in investment to develop its vast but barely tapped shale fields, but no joint ventures were expected soon because of low oil prices and uncertainty ahead of a presidential election, state oil company YPF said on Thursday.YPF, nationalized in 2013, is improving drilling efficiency and developing its Vaca Muerta shale formation in Patagonia so that international companies will invest once prices recover, Chief Financial Officer Daniel Gonzalez said in a conference call with investors.“I would not expect any significant joint ventures to be announced soon,” Gonzalez said.He cited the drop in global oil prices and uncertainty ahead of October’s presidential election in Argentina among the reasons.The biggest joint venture so far was a 2013 pact with Chevron, under which the two companies have put about $3 billion in the Belgium-sized Vaca Muerta formation.Brent crude was at just above $49 a barrel on Thursday, down from $115.71 intraday on June 19, 2014.YPF nonetheless posted a second quarter net income of $252.8 million on Wednesday, a 50.5 percent increase on the same period last year.“During the second quarter we connected a total of 46 wells, including 38 verticals and eight horizontal wells, taking the total to 360 shale wells already in production,” Gonzalez said.Shale gas production reached 43,300 barrels of oil equivalent per day primarily from the Loma Campana field, where YPF has a 50 percent stake with Chevron Corp..“We have extended the length of the horizontal sections from 1,200 meters to 1,500 meters, and are now in the process of further extending them up to 2,000 meters,” Gonzalez said.He said YPF has also added three fracture stages, taking them to 15 to 18 per well.“Another important improvement regarding horizontal wells is that the costs have been consistently below $14 million a well, including those with 18 fracking stages.”YPF had previously said its horizontal wells cost about $14 million per well.“During the second quarter we drilled and completed two slim-hole wells and have two more pending completion. This can prove to be a cost efficient way to develop less productive areas of Vaca Muerta,” Gonzalez said.YPF will continue improving efficiency in order to be ready to enter joint ventures when conditions improve, Gonzalez said.“For the time being we have a lot on our plate with Loma Campana and El Orejano,” he addedBy Dimitra DeFotisAugust 6, 2015Argentina’s state-run oil-and-gas exploration company YPF (YPF) reported a 50% increase in second quarter net income that was below forecasts.Getty ImagesYPF’s total hydrocarbon production increased by 2.6% year over year. Natural gas production was 2.3% higher than the second quarter of 2014, while crude oil production increased by 3.7%, the company said. The company has been somewhat immune to the drop in oil prices because the government-controlled Argentina price is near $78 per barrel, Reuters reports. The international Brent price has dropped below $50 per barrel.From the Reuters story and the press release on consolidated second-quarter results available on the YPF investor relations page online:YPF second-quarter earnings were 2.297 billion pesos ($252.8 million), a 50.5 percent increase on the same period last year, on revenue of 39.6 billion pesos. YPF’s second quarter figure came in slightly below the median forecast in a Reuters poll for a net income of 2.326 billion pesos. YPF said earnings before interest, taxes, depreciation and amortization, or EBITDA, climbed 13.3 percent on the year to 12.40 billion pesos.From Raymond James analysts Santiago Wesenack and Federico Rey Marino:“YPF reported EPADS [earnings per average diluted share] of US $0.65 in 2Q15 (in-line with our US$0.64 estimate), up 36% y/y, and 5% q/q. EBITDA followed a similar trend, coming in at US$1,359 million (ahead of Raymond James’ estimate of US$1,253 million), up 5% y/y and 17% q/q, respectively. Analysis: YPF posted constructive figures in 2Q15, with EBITDA and net income improving y/y, while the topline was flat. Actual data was in-line with our estimates at both the top and bottom lines … All in all, the consolidated operating margin declined 274bp y/y to 14%, although ahead of our 10% estimate … we will pay close attention to consolidated production trends, cost growth rates, and price changes in the local market. “YPF stock rose 2.3% Wednesday and was flat after hours. The stock is down 13% this year, while the Global X MSCI Argentina exchange-traded fund (ARGT) is down 2.9% year to date. The Argentina-focused fund has outperformed the iShares Latin America 40 ETF (ILF), which is down nearly 17% this year, and broader measures of emerging markets: the iShares MSCI Emerging Markets exchange-traded fund (EEM) is down 6.7% and the iShares MSCI BRIC ETF (BKF) is down 3.1%.By Ed AdamczykAugust 6, 2015The attack killed 85 people, and Iran was suspected of involvement.BUENOS AIRES , Aug. 6 (UPI) — The trial of former Argentine President Carlos Menem and 12 others, accused of obstructing justice in a 1994 attack on a Buenos Aires Jewish center, began Thursday.The blast, in which a bomb-packed van killed 85 people and destroyed the six-story Argentine Israelite Mutual Association, remains unsolved and no one has been arrested, but former President Menem, 85, and 12 associates, including a former intelligence chief and a former federal judge are charged with obstruction of justice and destruction of evidence, among other charges.Prosecutors allege Menem, who is of Syrian descent, steered investigators away from linking the incident to a suspected participant, Syrian-born Alberto Kanoore Edul.Current Argentinian President Christina Fernandez is supportive of the case, although she was accused by prosecutor Alberto Nisman of attempting to cover it up; although it has been suspected Iran was behind the attack on the Jewish center.Nisman claimed Fernandez sought to have the case remain unsolved as she arranged an economic deal between Iran and cash-strapped Argentina, and exchange of Iranian oil for Argentinian meat and grain.Nisman, a descendant of Holocaust survivors, was found dead in January with a gunshot wound to his head, the day before she was scheduled to testify before Congress about Kirchner’s alleged attempt to sabotage his investigation by hiding Iran’s involvement.“The ability to obtain evidence needed to uncover the Syrian connection was stifled for five years, frustrating the search for truth,” the indictment against Menem reads in part.August 6, 2015Former Argentine President Carlos Menem and 12 other people are going on trial Thursday for allegedly conspiring to derail the investigation into the deadly 1994 bombing of a Jewish community center.Prosecutors allege that Menem and his co-defendants, including his former intelligence chief and a former federal judge, tried to steer prosecutors from linking the bombing of the Argentine Israeli Mutual Association building to a Syrian-born man, Alberto Kanoore Edul, who was suspected of taking part in the attack.The 85-year-old Menem, who became Argentine president in 1989 and served a decade, is of Syrian descent. Currently serving as a senator in the Argentine legislature, Menem has denied the charges.No one has ever been arrested or tried for the July 18, 1994 attack in the capital, Buenos Aires, which left 85 people dead when a truck filled with explosives detonated and caused the AIMA building to collapse.The case is supported by President Cristina Fernandez, who was accused by prosecutor Alberto Nisman of trying to sabotage his investigation of the bombing in order to cover up allegations linking Iran to the crime. Nisman alleged that Fernandez’s government helped orchestrate a bargain with Tehran: cash-strapped Argentina would get Iranian oil, Iran would get Argentine grain and meat and the bombing would remain unsolved.Nisman was found dead in his apartment in January with a gunshot wound to his head, one day before he was scheduled to testify before Argentine lawmakers about his accusations against Fernandez.By Charles Newbery6 August 2015Buenos Aires (Platts)–6Aug2015/533 pm EDT/2133 GMT Argentina’s YPF said Thursday it plans to sustain drilling activity and explore for new opportunities so the state-run energy company can attract more partners for shale projects when investment conditions improve in the global oil market.“We are not in a joint venture mode at this point,” Chief Financial Officer Daniel Gonzalez said in a conference call with investors. “It’s probably not a good time to go out and look for partners and for trying to farm out properties.”He cited three reasons:* Low and volatile international oil prices are discouraging investmentin frontier plays like Vaca Muerta, the country’s biggest shaleformation and one of the world’s largest.* The October 25 presidential election is slowing decisions untilcompaniesget a better idea of the economic proposals of the next administration.* YPF already has large acreage in Vaca Muerta, with 40% of the 30,000 sqkm (7.4 million acres) total.“We have a lot food on our plate,” Gonzalez said.YPF was the first to put Vaca Muerta into commercial production, working in a partnership with Chevron. Production there rose to 43,300 b/d of oil equivalent in the second quarter from 41,700 boe/d in Q1.YPF has since entered a shale oil venture with Malaysia’s Petronas on La Amarga Chica, where a first well was recently drilled, and into shale and tight gas ventures with Dow Chemical and Argentina’s Petrolera Pampa.While no new partnerships are planned in the near term, Gonzalez said the company is working to expand its horizons in Vaca Muerta by exploring and delineating other blocks like Bandurria and La Ribera. He said a first gas well was drilled on La Ribera and a first horizontal well is poised for completion on Bandurria.The effort will create more projects so YPF can “eventually team up with someone when conditions both globally and locally allow us to do so,” Gonzalez said.HORIZONTAL PUSHTo ramp up shale production and reduce drilling and completion costs, YPF shifted strategies in Q2 by stepping up the drilling of horizontal wells. It moved more rigs to sweet spots on the east side of Loma Campana for horizontal drilling, Gonzalez said.The company drilled 46 wells in Q2, of which 38 were verticals and eight horizontals. That took to 360 the number of shale wells in production, he said. YPF has drilled 20 horizontal wells in total, with five done in Q1 and seven drilled previously.YPF has sustained its rig count this year to continue its drilling, with 19 in operation on its Loma Campana block and El Orejano with Dow Chemical, he added.DRILLING COSTSGonzalez said drilling and completion costs for vertical shale wells have remained flat this year in dollar terms, averaging $7 million/well.That’s down from $11 million/well in 2011 but higher than the US average of $4 million-5 million/well.With horizontals, costs are running below $14 million/well, including those with longer laterals and 18 frack stages, Gonzalez said. That is down from $15 million/well in Q1 for horizontals with 15 frack stages, according to company data.While horizontals are more expensive, they are more than twice as productive than verticals, he said.“The economics of the horizontals look very promising,” he said.YPF has extended the laterals on its horizontals to 1,500 meters (4,921 feet) from 1,200 meters, increasing the number of frack stages to 18 from 15, Gonzalez said. The next step is to extend the laterals to as much as 2,000 meters, he said.In another effort to cut costs, the company drilled and completed its first two slim-hole wells in Q2 and has two more pending completion.Slim-hole wells “can prove to be a cost-efficient way to develop less-productive areas of Vaca Muerta,” he said.“We are clearly progressing in our learning curve, but not without missteps,” Gonzalez said. “We continue to see this as a long-term project and the issues that we have faced will undoubtedly result in better results in the developments to come.”TIGHT GASGonzalez said tight gas is a driver for production growth, now accounting for 12% of total gas output.The company produced 5.5 million cu m/d of tight gas in Q2, of which 4.4 million cu m/d came from the Lajas formation and the rest from Mulichinco.YPF recently drilled four wells targeting Lajas on its 100% owned Loma La Lata block and 12 wells targeting Mulichinco on Rincon de Mangrullo, a 50:50 joint venture with Petrolera Pampa.While most of its rig fleet is focused on shale oil drilling, more spending is going into gas, driven by steadier domestic prices. Gas prices rose 9.6% to 4.58/MMBtu in Q2 from $4.18/MMBtu in the year-earlier period, while domestic oil prices fell 8.5% to $69.10/barrel from $75.50/b over the same period.“The economics of gas are very promising,” Gonzalez said.INVESTMENTLooking forward, Gonzalez said investment is on track to total $6 billion this year and slightly less in 2016.The company doesn’t plan to buy unconventional assets, but possibly conventional assets, Gonzalez said.“We own plenty of unconventional acreage already so we would rather develop what we have and eventually find partners to help develop what we have as opposed to going after other unconventional acreage in Argentina,” he said.Instead, YPF will look at possibly buying conventional oil and gas assets in Argentina that have production and reserves and potential for growth with the aim of increasing its 40% share of hydrocarbon production while assets are priced low, Gonzalez said.“We believe that the assets are going to be worth much more in the future,” he said.YPF’s total crude production rose 3.7% to 249,800 b/d in Q2 from 240,900 b/d a year earlier, while gas output rose 2.3% to 44.6 million cu m/d from 43.6 million cu m/d.9. END OF ARGENTINA’S PETROLEUM PLUS WILL HAVE LIMITED IMPACT ON UPSTREAM INVESTORS (IHS Global Insight Daily Analysis)By Juliette Kerr6 August 2015Argentina’s Planning Ministry on 6 July published Decree 1330/2015, revoking the Petroleum Plus incentive programme that was aimed at stimulating production. The programme, which was created in 2008, offered companies that increased oil reserves and production transferable fiscal credit certificates that could be used to pay export taxes on crude oil or refined products. Following the same approach the government used to compensate Repsol for the expropriation of its stake in YPF, the government will use bonds to pay the over USD784 million owed to companies under Petroleum Plus: companies will be able to convert fiscal credit certificates issued since 2008 and not yet liquidated into dollar denominated Argentine bonds (Bonar 2024 bonds at 8.75% interest and Bonad 2018 at 2.4%) with the same nominal value.Significance: The ending of Petroleum Plus will have little material impact on oil companies or production volumes. Companies currently benefit from higher domestic crude oil prices, compared to international prices (the reverse was the case when Petroleum Plus was created). Moreover, other incentives introduced via the “Crude Oil Production Stimulus Programme” published on 3 February 2015 (Resolution 14/2015) will remain in effect for at least 12 months (see Argentina: 11 March 2015: Argentine government takes steps to shield producers from lower oil prices). The government pointed to the reduced benefits of Petroleum Plus to companies, given the context of lower international oil prices and crude export taxes, in its rationale for the programme’s cancellation. However, it is also likely to have been motivated by pressure to curb energy subsidy spending in order to narrow the fiscal deficit, which IHS predicts could reach -4.4% of GDP this year.The government’s willingness to settle its outstanding liabilities under Petroleum Plus will be regarded positively by investors. The conversion of the tax credits into bonds may, however, not be an attractive proposition for all producers. Due to the ongoing dispute between the government and holdout creditors that forced Argentina into a new sovereign debt default last year and has resulted in court-imposed restrictions on transfers of Argentine sovereign debt into the international clearing systems, demand for the bonds in the local market is likely to be limited in the short term. Oil companies that are able to hold onto their bonds and receive interest payments until the dispute is resolved may be able to recoup the full face value of the bonds at a future date. However any companies with cash flow constraints seeking to sell the bonds in short order would likely be forced to sell at a discount, given that demand would be limited to foreign buyers who are willing to hold bonds in Argentina or local buyers with dollar cash holdings.The government’s revoking of Petroleum Plus follows earlier policy flip-flops on oil production incentives and export tax rates, providing a reminder to investors that despite recent improvements to the regulatory framework, some policy instability remains. Companies that currently benefit from the temporary incentives announced this year similarly have no assurances of their continuity under the next government. Other incentives introduced under the 2014 hydrocarbons reform for investments over USD250 million are more likely to remain in place as they were approved by Congress and do not entail the payment of direct subsidies.OGRS risk impact: The current government’s propensity for short term and ad-hoc rule changes, rather than a more coordinated approach that tackles the sector’s structural imbalances, makes hydrocarbon policy less predictable, reinforcing our Ministerial/Policy Volatility score of “C”(6). That said, it has taken some steps to improve the investment climate over the past two years and these efforts are likely to be continued under the next government, albeit in a gradual fashion.By Adam DuboveAugust 6, 2015No New Ideas Leave Crony Nation Doomed“Argentinean Airlines and [the oil company] YPF will remain under state control.” These were the words of a certain candidate who will vie for the Argentinean presidency next December.The statement could have easily come from Daniel Scioli, the man President Cristina Kirchner has chosen to succeed her. It would be a logical guess.Die-hard government supporters have always been suspicious of the governor of the massive province of Buenos Aires, home to 37 percent of the country’s voters. While his loyalty to Kirchner has been questioned, his vice presidential running mate Carlos Zannini — a former Maoist-guerrilla, who local media have described as secretly working for Kirchner — will attempt to keep him in check.No, the words were actually spoken by Mauricio Macri, the mayor of Buenos Aires and the favorite to emerge victorious from the opposition primaries. Macri has made a radical about-face in rhetoric recently, praising and even pledging to continue many of Kirchner’s most emblematic policies.Leaving behind his promise to end foreign-exchange controls his first day in office, the word “change,” which previously dominated his speeches during the first half of the year, has vanished from his discourse.While some may be surprised, why should we expect anything different?This metamorphosis in rhetoric occurred after the Pyrrhic victory Macri secured in mid-July in the local elections in Buenos Aires, the district where he has ruled for the last eight years and developed as a stronghold for his PRO party. The narrow margin of victory was a shock, a humbling experience. It revealed something many wanted to ignore: Macri does not embody change; he’s just another politico.Maybe it’s his origins as a businessman (even though it was the sort who receives privileges from the corporatist state), or his past as the head of one of the most popular soccer teams in the country, that explains why Macri has managed to dazzle a large chunk of the population that considers itself “anti-Kirchner.”But behind the tailored words by political marketing experts, Macri is no different. If one were to build a concept map of Macrista ideology, many similarities with the current government would emerge.They will deny it. “Mauricio Macri does not come with an ideology,” said Marcos Peña, general secretary of the Buenos Aires government and Macri’s right-hand man. But the lack of ideology is itself ideological, and Macri is no different than the other candidates.Like the ruling party, opposition candidates see themselves as the masters of other people’s will. Every candidate in this election represents the same vision of citizens as serfs — vassals of the crown.According to this view, the individual is merely a cog in the machine that is constructed to achieve the goals of those in power. In fact, Macri’s slogan for Buenos Aires should leave little doubt: “You are in everything,” reads every official propaganda piece from his campaign.Cliches such as the defense of “national industry,” the common good, or the well-being of “the Argentineans,” are chimeras that politicians love to talk about. Macri is no stranger to them. A document disseminated among Macri’s PRO officials only reinforces this idea. “He has always believed in a very active role for the state, and his eight years in office proves it,” notes the memorandum.His supporters are instructed to defend welfare-state programs, such as the Universal Child Benefit (a sort of Universal Basic Income), nationalized companies, the nonviable social-security system, and other initiatives that have defined the Kirchner era.What the Argentinean opposition is promising is more of the same, only “better managed.” They plan to continue all the same big-government programs, and claim they are up to the task of running them more efficiently. For these politicos, seizing pension funds, restricting foreign trade, or plundering the income of citizens are value-free policies, and their success depends on the qualities of the individual at the helm.Unfortunately, the political future of our country is bleak. No contender for the presidency has even hinted at dismantling the destructive policies that have been in place for decades. In a country where the personal aspirations have been reduced to buying a new television or an air-conditioning unit, the field is wide open for populism to continue its reign.