ARGENTINA SALVAJIZADA – Oct 8, 2015


theguardian.com
Pinochet directly ordered killing on US soil of Chilean diplomat, papers reveal

by Jonathan Franklin
Oct. 8, 2015
2 min read
original
General Augusto Pinochet was so concerned about covering up his involvement in the assassination that he considered murdering his own spy chief, Manuel Contreras.
General Augusto Pinochet was so concerned about covering up his involvement in the assassination that he considered murdering his own spy chief, Manuel Contreras. Photograph: Roberto Candia/AP

General Augusto Pinochet directly ordered the 1976 assassination of a Chilean diplomat who was killed in a car bomb in Washington DC, according top secret US intelligence documents declassified by the Obama administration.

The documents, which were handed to the Chilean president, Michelle Bachelet, on Tuesday in Santiago by the US secretary of state, John Kerry, also show that the former dictator was so concerned with covering up his role in the murder that he planned to assassinate his own head of intelligence, General Manuel Contreras.
Orlando Letelier, a former defence and foreign minister under President Salvador Allende, was tortured and incarcerated after Pinochet’s 1973 coup. He later fled to the US and worked at the Institute of Policy Studies in Washington DC.

Letelier, who had once been Chile’s ambassador to the US, was murdered on 21 September 1976 by a car bomb planted under the driver’s seat of his vehicle just a mile from the White House.

Ronni Moffitt, an American colleague, was also killed in the blast. Her husband Michael survived but was badly wounded.

Letelier’s son, Senator Juan Pablo Letelier, confirmed to the Guardian that he had received copies of the newly released documents, which are understood to include papers from the CIA.

Letelier described reading the declassified documents and discovering a memo from George Shultz, who served as secretary of state in the 1980s, to President Ronald Reagan.

“[Shultz] informs [the president] that there is a conclusive document from the CIA that shows Pinochet ordered the murder of my father. This is concrete information about how Pinochet covered up his responsibility,” he said.

According to Letelier, who is among the first to have read the newly released documents, they also included evidence that the dictator intended to have his own spy chief murdered to cover up his role in the assassination.

“In his [Pinochet’s] predisposition to defend his position he planned to eliminate Manuel Contreras to keep him from talking,” said Senator Letelier in an interview with the Mesa Central programme on Tele13 Radio. Asked to clarify, Letelier said “physically eliminate”.

Peter Kornbluh, author of The Pinochet File: A Declassified Dossier of Atrocity and Accountability, said the documents “help provide historical accountability in the killing of these two wonderful people” and called them “the missing documents” in the ongoing efforts to unravel one of the most notorious acts of international terrorism in the US capital.

Kornbluh, a senior analyst at the National Security Archives, called for the full release of all the intelligence documents on Pinochet’s role in the Letelier-Moffitt bombing.

Investigators in the US and Chile are poring through the records searching for evidence that CIA officials had forewarning but did not stop the assassination plan.

Speculation that the CIA was aware of the plot to kill Letelier is based on previously declassified records showing that Manuel Contreras was paid by the CIA before the bombing and was in regular contact with top officials at the spy agency.

The US eventually sought to extradite Contreras of the murder, but Chile’s supreme court blocked the extradition.

Pinochet removed Contreras from his post under US pressure and dismantled and replaced the Dina spy agency he had once run. After Chile returned to democracy in 1990 Contreras was indicted in the Letelier case and eventually served seven years for the assassination.

Contreras, who died in August, always denied responsibility and blamed the CIA for the bombing

“It is very important that these documents have been declassified,” said the Chilean foreign minister, Heraldo Muñoz. “It helps us to clarify a painful historical moment for our country.”
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PRESS CLIPS – THURSDAY..

1. YPF WON’T OVERPAY FOR PETROBRAS ARGENTINA ASSETS, CFO SAYS (Bloomberg News)

2. ARGENTINA SAYS FUGITIVE SPY CHIEF FLEW TO U.S. AFTER PROSECUTOR’S DEATH (Reuters News)

3. ARGENTINA SAYS OIL AND GAS EXPLORATION VENTURE IN FALKLANDS ILLEGAL (Fox News)

4. ENGINEER RAISED ON RANCH IN ARGENTINA GUIDES SPACECRAFT’S DESCENT TO MARS (Fox News)

5. ARGENTINA RISK: RISK OVERVIEW (Economist Intelligence Unit – Risk Briefing)

6. ARGENTINA RISK: ALERT – RISK SCENARIO WATCHLIST (Economist Intelligence Unit – Risk Briefing)

7. S&P AFFIRMS ‘CCC-‘ RATINGS ON PROVINCE OF CORDOBA (Dow Jones Institutional News)

8. 36 HOURS IN BUENOS AIRES (NYTimes.com Feed)

1. YPF WON’T OVERPAY FOR PETROBRAS ARGENTINA ASSETS, CFO SAYS (Bloomberg News)
By Rakteem Katakey and Daniel Cancel
October 7, 2015

*Company knows `real value’ of unit, price must meet criteria
*CFO declines to confirm or deny report that YPF dropped bid

YPF SA, Argentina’s largest company, knows the fair value of Petroleo Brasileiro SA’s local assets and will only proceed with an acquisition if the price meets its criteria, Chief Financial Officer Daniel Gonzalez said.

The executive declined to confirm or deny an article published Wednesday in La Nacion newspaper that said YPF abandoned a bid after Petrobras Argentina asked it to raise its reported $900 million offer for a 67 percent stake.

“We know what the real value is and we’re very disciplined about what price we will pay,” Gonzalez said in an interview at the Oil & Money conference in London.

Petrobras Argentina, which has a market value of $1.2 billion, is focusing mostly on unconventional exploration and production and has started drilling at the vast Vaca Muerta shale gas and oil deposit in Neuquen province, where YPF has sunk 400 wells.

YPF, which last year purchased natural-gas assets from Apache Corp. for $800 million, is concentrating on gas projects, Gonzalez said at the conference. Petrobras Argentina has pumped about 6.5 percent of the country’s total gas output this year, according to the Energy Secretariat.

Petrobras’s press department didn’t immediately reply to an e-mailed request for comment.
Petrobras sold more than 20 oil and gas fields to Argentine energy producer Cia. General de Combustibles in March for $101 million.

YPF’s American depositary receipts rose 7.5 percent to $19.03 at 3:20 p.m. in New York, boosting the company’s market value to $7.5 billion. Petrobras Argentina’s ADRs fell 1 percent to $5.45.

2. ARGENTINA SAYS FUGITIVE SPY CHIEF FLEW TO U.S. AFTER PROSECUTOR’S DEATH (Reuters News)
By Richard Lough
October 7, 2015

A fugitive former spy chief accused by the Argentine government of involvement in the murky death of a federal prosecutor in January flew from Brazil to the United States a month later, Argentina’s security ministry said on Tuesday.

The ministry said Interpol in Brazil provided the information on Antonio Stiuso, one-time operations chief of the now disbanded Intelligence Secretariat, after a “blue notice” seeking details on Stiuso’s location was issued last month.

Argentina suspects Stiuso is seeking refuge in the United States and has criticized Washington for failing to answer repeated enquiries about the spy master’s whereabouts.

“A similar report is required from Interpol in Washington,” the Security Ministry said in a statement.

Stiuso flew from Porto Alegre to Miami on Feb. 19 using an Italian passport, Argentina said, citing the report. Interpol declined to comment.

Relations between Argentina have the United States have soured under President Cristina Fernandez, who frequently rails against imperialist powers and gluttonous financial markets in the West.

Analysts say the latest rise in diplomatic tensions is a headache for the ruling party’s presidential candidate, Daniel Scioli, who is said by advisors to favor improving Argentina’s foreign relations. Argentina votes on Oct. 25

State prosecutor Alberto Nisman was found with a single bullet to the head days after accusing Fernandez of trying to cover up Iran’s alleged role in the 1994 truck-bombing of a Jewish center in Buenos Aires.

Fernandez and her ministers say Stiuso tricked Nisman into fabricating baseless allegations to destabilize the government and then needed him dead, and have previously questioned whether the spy chief was working for the United States.

The attack on the AMIA center killed 85 people, the deadliest in Argentine history. Iran has repeatedly denied any link to the bombing and an Argentine judge tossed out Nisman’s accusations.

3. ARGENTINA SAYS OIL AND GAS EXPLORATION VENTURE IN FALKLANDS ILLEGAL (Fox News)
October 7, 2015

The oil and gas exploration activities being undertaken by Noble Energy Falklands Limited in an area near the disputed Falkland Islands are “illegal” and “clandestine,” the Argentine government said.

Argentina claims sovereignty over the Falkland Islands, which Latin Americans call the Malvinas and are under British control.

The Energy Ministry said in a resolution published on Tuesday in the Official Bulletin that it notified the Foreign Ministry and prosecutors of the decision to outlaw Noble’s operations “to allow them to take the legal actions they consider necessary in their areas of jurisdiction.”

Federal Judge Lilian Herraez, who is based in the city of Rio Grande, ordered the seizure of $156.4 million worth of assets, as well as the impounding of ships and confiscation of other property, belonging to oil companies that operate illegally in Falklands waters.

Noble Energy Falklands Limited is not registered with the Energy Secretariat, which sent a strongly worded statement to the company via the Foreign Ministry in October 2014, the government said.

The oil company did not respond to the statement and the government declared its operations illegal, officials said.

In August 2013, the government barred four British oil companies carrying out exploration work in waters near the Falkland Islands from operating in Argentina.

The measure targeted Borders & Southern Petroleum, Desire Petroleum, Argos Resources and Falkland Oil and Gas.

In May 2012, Argentina’s Energy Secretariat declared the companies’ activities in waters near the disputed islands to be “illegal and clandestine.”

The South Atlantic archipelago was the object of a brief war in the early 1980s pitting Argentina against Britain.

Argentine troops invaded the Falklands on April 2, 1982, at the order of the military junta then in power in Buenos Aires.

Full-fledged fighting officially began on May 1, 1982, with the arrival of a British task force, and ended 45 days later with the surrender of the Argentines.

The conflict claimed nearly 1,000 lives – some 700 Argentines and 255 British soldiers and sailors.

Buenos Aires demands that Britain comply with a 1965 United Nations resolution describing London’s control of the Falklands – which dates from 1833 – as colonialism and calling on the parties to resolve the dispute through dialogue.

London has refused to discuss the question of sovereignty and says the Falklanders should decide their own future.

4. ENGINEER RAISED ON RANCH IN ARGENTINA GUIDES SPACECRAFT’S DESCENT TO MARS (Fox News)
October 07, 2015

Miguel San Martin developed a passion for space exploration as a child, when he heard about missions to the moon and Mars while living on a ranch in Argentina, leading him to become an engineer who now works for NASA and specializes in navigation and robot descents on the Red Planet.

“I was part of the team that developed this new method for landing a vehicle on Mars,” the MIT graduate told EFE.

The 56-year-old San Martin is chief engineer for systems to guide and control spacecraft from the U.S. space agency’s Jet Propulsion Laboratory in Pasadena, California.

“The system is comprised of a set of propulsion engines and ropes that kept the robotic vehicle Curiosity hanging as if it was a hovering crane,” the Argentine-born engineer said.

Curiosity landed on Mars in August 2012 with the mission of finding water and signs of microbial life, among other tasks.

To land the nearly one-ton rover, engineers had to innovate and “instead of having a helicopter hovering, we used propulsion rockets,” San Martin said.

When he arrived at JPL in 1985, San Martin said he felt “it was a dream come true.”

“I had been following the Viking mission, the first craft to reach Mars (in 1976),” San Martin said, adding that the Apollo 11 moon landing in July 1969 also made an impression on him as a boy.

San Martin worked on the Pathfinder mission, whose Sojourner rover landed on Mars in July 1997, cushioned by airbags “that bounced without control until they settled down and deflated.”

“Because of that experience, I was hired to work on Spirit and Opportunity,” San Martin said, referring to other robots that landed on Mars using the airbag system.

The idea for a soft landing by Curiosity using a crane, called Skycrane, and ropes emerged in casual talks around coffee with colleagues, San Martin said.

The engineer has worked on all of the robots now on Mars, and he created the algorithms to program the spacecraft’s computers, a job that he admitted was done while listening to jazz and tango music.

“Since I was a child, I liked toys with batteries and movement,” San Martin said, recalling a time when his heroes were inventors like Thomas Edison and German rocket scientist Wernher von Braun.

“My father was also my inspiration since he had plenty of patience to explain how things worked to me,” San Martin said. “He is a civil engineer and encouraged me to come study in the United States.”

The expert on Mars landings said high schools should orient academic courses toward engineering careers, since there are plenty of jobs in the fields.

“At NASA, we need more Hispanics, and here the accent in your speech doesn’t matter if you do good work,” San Martin said.

5. ARGENTINA RISK: RISK OVERVIEW (Economist Intelligence Unit – Risk Briefing)
7 October 2015

RISK RATINGS Current Current Previous Previous
Rating Score Rating Score
Overall assessment D 64 D 65
Security risk C 43 C 43
Political stability risk C 50 C 50
Government effectiveness risk D 61 D 61
Legal & regulatory risk D 72 D 75
Macroeconomic risk E 100 E 100
Foreign trade & payments risk D 75 D 75
Financial risk D 62 D 62
Tax policy risk D 69 D 69
Labour market risk D 64 D 64
Infrastructure risk C 47 C 47

Note: E=most risky; 100 = most risky. The risk ratings model is run once a quarter.

OVERALL ASSESSMENT

Argentina remains D-rated. President Cristina Fernández de Kirchner faces many challenges in the form of rampant inflation and persistent pressure for peso devaluation, which has prompted the authorities to introduce stringent controls. Policy adjustments under a new administration from December 2015 will increase the risk of social unrest, keeping political stability risk high. Legislative gridlock will impair political effectiveness. Interventionism in response to economic distortions may decline in the medium term, but legal and regulatory risk remain high. Financial risk will also remain high, reflecting high market risk, weak confidence in banks and a recent history of sovereign default. Strong unions, frequent strikes and inflexible labour rules will heighten labour market risk, while a lack of investment in utilities will weaken infrastructure.

Security risk

Security risk is less of a concern than in much of Latin America, but the perception that the security environment is deteriorating is rising. Crime rose sharply during the 2001 crisis and has not come down since. Despite recent reforms, the police are still regarded as ineffective, or occasionally complicit in some crimes. On the hard left, foreign capital and the banking system are still demonised for the part they played in the historic 2001 crisis. But the risk of direct action against representatives of these groups has faded. The illegal drugs trade generally does not pose a direct threat to businesses but is a source of violence and corruption. Argentina’s large Jewish population makes it a potential target of terrorism perpetrated by Islamic extremists.

Political stability risk

Argentina continues to grapple with a high risk of violent social unrest, and fraught relations between the government and major political and economic actors (including the opposition, businesses and the media). President Cristina Fernández de Kirchner was re-elected by a record margin in October 2011 but her popularity has fallen rapidly since then as the economy has weakened and inflation has accelerated. Even after a new administration takes office in December 2015, risks to political stability will persist, given the likelihood of difficult austerity measures intended to rein in inflation and a polarised political environment. In this climate, frequent confrontations and halting progress on the legislative agenda are likely.

Government effectiveness risk

Weak institutions are a shortcoming of the political system. One by-product of a strong presidential system, reinforced by the dominance of the Peronist party, is weak congressional oversight of the executive. There is a long history of political interference with the judiciary, although in a recent positive development, the Supreme Court ruled a controversial reform-seen as an attempt by the administration of Cristina Fernández de Kirchner to exert greater control over the court system-unconstitutional. Ample budget resources have given the government the upper hand in managing relations with the provinces, although these have the potential to be disruptive in Argentina’s federal political system. The low quality of the bureaucracy is expected to persist, assuming a long-awaited public-sector reform is delayed indefinitely, and could hinder implementation of government policies. Increases in investment spending have been poorly targeted, as political considerations take precedence.

Legal & regulatory risk

Confidence in the rules of the game remains weak after almost a decade of populist policies intended to maximise voter support at the expense of trust in contract rights. A fresh sovereign default in July 2014 complicated the government’s efforts to make amends with creditors and investors in order to attract fresh inflows of much-needed dollars. Moreover, the government has not dismantled the distortionary controls implemented over the course of recent years. Price controls in the form of compulsory price agreements persist, as do risks of expropriation of foreign assets amid ongoing financing problems, although this risk seems likely to subside gradually, assuming a more business-friendly administration takes office in December 2015. Government regulation of private businesses in “strategic” sectors will remain intensive, at least in the short term.

Macroeconomic risk

Several years of expansionary fiscal and monetary policies have taken their toll in the form of rampant inflation, which has in turn caused sustained real peso appreciation, a deterioration in the current account, devaluation speculation and a fall in foreign reserves. Following a moderate peso adjustment in January 2014, we assume further substantial depreciation from 2016. This should allow the peso to weaken in real terms, and begin to provide a boost to export competitiveness and the current account. But without a commitment to macroeconomic-policy tightening, rampant inflation would rapidly erode any competitiveness benefits brought about by the adjustment of the peso. We expect such policy measures to start when a new administration takes office in December 2015, but the process will be a difficult one and the risk of currency crisis, which would prompt a deep recession, will persist in the short term.

Foreign trade & payments risk

Unpredictable and distortionary trade measures will persist in the short term as the Fernandez government resorts to protectionism to prop up the external accounts and maximise fiscal revenue from exports. A deterioration of the balance of payments-which apart from an increasingly overvalued peso, reflects persistently low foreign direct investment, negative portfolio flows and high levels of capital flight-heightens the risk of tighter foreign-exchange and capital controls being imposed. There is likely to be some improvement in the next administration, which takes office in December 2015, resulting in some reduction in distortionary trade measures and controls. But liberalisation will take time and will be vulnerable to setbacks.

Financial risk

Access to financing remains a weakness, as an history of crisis has reduced confidence in the domestic financial system dramatically and there is little prospect of an improvement in the forecast period. Regulation and supervision have been strengthened since the 2001-02 crisis, with weaknesses, including a high level of exposure to public-sector debt and a high level of dollar-lending not backed by dollar revenue streams, having been addressed. But this has not produced a recovery in longer-term deposits that would lead to growth in longer-term finance. This is against a background of adverse policy decisions (such as the 2008 nationalisation of the private pension funds), growing political uncertainty and a deterioration of the public finances. The latter makes crowding-out by the public sector a likely problem, at least until public-sector external financing constraints are removed via a negotiated settlement with holdout creditors.

Tax policy risk

Despite moderate marginal corporate tax rates, the tax system has serious deficiencies and is unduly complex. There is also an overdependence on consumption taxes (VAT, value-added tax), which makes tax collection highly procyclical. The introduction of a levy on financial transactions and on export taxes since 2002 has worsened structural distortions in the public finances. The government is reluctant to scale back export taxes, because they are partly exempt from the requirement to share revenues with the provinces. However, were these taxes to be eliminated, the government would need to find alternative sources of finance. A wholesale reform of the public sector and the tax system, including the fiscal relationship between the central and local administrations, has been delayed for years and the government appears to have no plans to address these issues. The revenue-sharing reform, in particular, is politically sensitive.

Labour market risk

Labour market strengths include a relatively well-educated, productive and flexible workforce, but they must be set against strong unions, relatively frequent strikes and rising real wages. Falling unemployment, and close political ties between the government and trade-union leaders have led to a full recovery in real wages over the course of the past six years. The incidence of strikes and protests, which has increased in recent years, will remain high, driven by politically powerful trade-union leaders and by workers seeking to bolster real incomes amid relatively severe inflation. As unemployment levels fall, skills shortages will become more of a problem for businesses, compounded by a lack of effective training programmes in both the public and private sectors. There seems little chance of reforms to improve labour market flexibility.

Infrastructure risk

Argentina’s strengths include a well-developed telecommunications and information technology network, and relatively low property rental costs, but the gains from upgrading physical infrastructure during the 1990s are being eroded. A long-standing failure to adjust a plethora of tariffs frozen during the 2001-02 economic crisis has discouraged private investment, and although the government has taken a more active role in public works, this has been insufficient to prevent bottlenecks from emerging, especially in energy. The 2010 sovereign debt restructuring notwithstanding, external financing constraints seem unlikely to ease anytime soon. This will delay improvements until towards the end of the forecast period, raising the prospect that infrastructure bottlenecks become a constraint on growth for the next few years.

6. ARGENTINA RISK: ALERT – RISK SCENARIO WATCHLIST (Economist Intelligence Unit – Risk Briefing)
7 October 2015

Scenario Category Probability Impact Intensity

Election-related violence erupts around the general election Security High Moderate 12

Social unrest increases amid government corruption allegations Political stability Low Very high 10
The Supreme Court becomes politicised
after new appointments are made Government effectiveness Moderate High 12
Government fails to secure negotiated settlement
with holdout creditors, leading to continued concerns
over rule of law and contract rights Legal & regulatory Moderate Moderate 9
Interventionism persists in institutions controlled
by Ms Fernandez and her allies Legal & regulatory Moderate High 12

Failure to tighten macroeconomic policy pushes
the economy into crisis Macroeconomic High Very high 20

Dollars are not made available for debt-servicing
amid tight controls Foreign trade & payments Moderate Very high 15

New barriers to trade are imposed to prop up
the current account Foreign trade & payments Very hig h High 20

The peso is devalued Financial Very high Very high 25

Corporate taxes are raised to help bolster the public finances Tax policy Moderate High 12

Deterioration of provincial finances forces further ad hoc
revenue-raising measures Tax policy High Moderate 12

Strike activity in the increasingly atomised union movement increases Labour market Very high Moderate 15

Businesses are hit by skills shortages Labour market Moderate Moderate 9

Intensity colour key: 1 to 4 5 to 8 9 to 12 13 to 16 17 to 25

Note: Intensity is a product of the probability and impact ratings, where ‘Very low’ scores 1 and ‘Very high’ scores 5.

SECURITY

Election-related violence erupts around the general election
High probability; Moderate impact; Risk intensity = 12

Local elections held on August 23rd in Tucumán province were marred by several serious incidents, including the burning of ballot boxes and a violent police response to protesters who claimed that the vote was tainted by fraud. Given allegations of widespread irregularities, opposition leaders refused to acknowledge their defeat (the candidate for the ruling Frente para la Victoria, FV, Juan Manzur, won the election) and called for a protest, held on August 24th and attended by around 10,000 people. José Cano, the candidate for the Acuerdo para el Bicentenario, a coalition of the main opposition parties (Unión Cívica Radical, Propuesta Republicana and Frente Renovador), took his argument to the courts in an effort to nullify the ballots and call a repeat election. The provincial Supreme Court rejected this appeal, arguing that irregularities did not amount to fraud. However, the ongoing scandal has stirred tension over the fairness and legitimacy of Argentina’s electoral system, even if it has been propelled at least in part by an opposition strategy of seeking to invalidate a probable victory in the October 25th presidential election for Daniel Scioli, the FV’s presidential candidate. The ruling has also shone a spotlight on problematic elements of Argentina’s democracy, including the outdated electoral processes of some provinces, political pressure on judges and prosecutors, and the resorting to clientelism—chiefly by Peronists—in the poor north of the country and the Buenos Aires conurbation. It also underscored the tense political climate, highlighting the possibility of unrest surrounding the national elections in October. Events in Tucuman suggest that violent social unrest surrounding what will be a relatively close general election (closer than any during the Kirchner administrations) remains a risk.

POLITICAL STABILITY

Social unrest increases amid government corruption allegations
Low probability; Very high impact; Risk intensity = 10

The lingering effects of a scandal that shocked the political establishment earlier this year present a risk to political stability. The scandal surrounded the death in January of Alberto Nisman, a federal prosecutor, in mysterious circumstances days after formally accusing the president of conspiring with Iran to cover up the latter’s involvement in the 1994 bombing of a Jewish centre in the capital, Buenos Aires—the country’s largest ever terrorist attack. Investigations have still not established whether Mr Nisman committed suicide or was murdered, but opinion polls suggest that a majority of the public believes that the latter is the case, highlighting a clear lack of faith in government and state institutions. Ms Fernández’s opinion poll ratings have started to recover after falling sharply in the immediate aftermath of the scandal, aided by a court decision to dismiss Mr Nisman’s accusations. Nonetheless, public frustration over a lack of answers regarding Mr Nisman’s death—as well as the continued failure to bring the perpetrators of the 1994 bombing to justice—will heighten the risk of social unrest. Even before the Nisman affair, the political outlook had been clouded by the state of the economy. Devaluation pressure has persisted and wage demands have skyrocketed amid rampant inflation. In this context—and given the country’s strong tradition of protest and powerful unions—risks to political stability will be high in the run-up to the October 2015 presidential poll. Argentina does have a relatively recent history of messy political transitions (most recently during the 2001-02 economic crisis, which saw four presidents in the space of a few months), and the threat of further triggers for social unrest impeding the October 2015 presidential election cannot be discounted altogether.

GOVERNMENT EFFECTIVENESS

The Supreme Court becomes politicised after new appointments are made
Moderate probability; High impact; Risk intensity = 12

Carlos Fayt, a Supreme Court judge, announced in September 2015 that he would step down in December, leaving the next government to replace both him and another recently retired judge. The news has stoked debate about whether the court can remain free of political influence, but the backdrop to Mr Fayt’s resignation suggests that its independence is not under threat in the short to medium term. Mr Fayt, 97, has been a Supreme Court judge since Argentina’s return to democratic rule in 1983. Earlier this year, supporters of Ms Fernández sought to impeach Mr Fayt, accusing him of being mentally and physically incapable of the job. (Judges must retire when they reach 75 or seek legislative approval for a five-year extension. However, Mr Fayt’s situation represented a grey area because he was already 75 when the constitutional rule was introduced in 1994.) The attack was largely seen as a manoeuvre to oust Mr Fayt and substitute him for a government-friendly judge, particularly with Ms Fernández seeking to exert influence beyond her presidency. The government had already moved to replace Raúl Zaffaroni—a recent retiree of the Supreme Court, which comprises five judges—with Roberto Carlés. However, Mr Carlés was rejected by the opposition in Congress, which perceived him to be a political puppet of the ruling Frente para la Victoria (FV, a faction of the Partido Justicialista, or the Peronists), and the government placed his candidacy on hold. By deciding to retire on December 11th, a day after the new government takes office, Mr Fayt is widely viewed to have overcome the onslaught of Ms Fernández and her political supporters. The president has sought to protect herself and her political legacy by entrusting public institutions to her allies. However, the Supreme Court would seem to be beyond the president’s grasp. It is her successor who will now have to propose candidates to replace Mr Fayt and Mr Zaffaroni. Throughout Ms Fernández’s time in office, the Supreme Court has resisted government pressure and is viewed as largely impartial despite a broader politicisation of public institutions, including lower levels of the judiciary. Signals from the main presidential candidates suggest that upcoming Supreme Court appointments should be less politically motivated. Mr Carlés was proposed by the current administration with no cross-party consultation, but Daniel Scioli, the FV’s presidential candidate, has highlighted his preference for dialogue and consensus. Mauricio Macri, the presidential front-runner for the centre-right opposition Propuesta Republicana party, has also made institutional reforms and the separation of powers cornerstones of his election manifesto. In any case, the two-thirds majority approval of candidates required in the Senate (the upper house of Congress) is an effective check on politically motivated appointments to the Supreme Court. In this context, we do not view Mr Fayt’s resignation as capable of significantly increasing the risk of a weaker, less independent Supreme Court. However, any broader meaningful reform of the judiciary under Mr Scioli, who we expect to prevail in the upcoming presidential election, remains unlikely because of an historic tendency for executive-branch overreach among Peronists. As a consequence, the problems of corruption and inefficiency in the judicial branch as a whole will persist.

LEGAL & REGULATORY

Government fails to secure negotiated settlement with holdout creditors, leading to continued concerns over rule of law and contract rights
Moderate probability; Moderate impact; Risk intensity = 9

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