ARGENTINE UPDATE – Oct 23, 2015


1. ARGENTINA EXPECTED TO END DEBT STANDOFF AFTER VOTE (The New York Times)

2. A CANDIDATE TOO GOOD TO BE TRUE DRAWS ATTENTION, AND CRITICISM, IN ARGENTINA (The New York Times)

3. DRUG ALLEGATIONS CLOUD ARGENTINE POLL (Financial Times)

4. ARGENTINA’S ELECTIONS : THE END OF KIRCHNERISMO (The Economist)

5. ARGENTINA’S ELECTION : CLEANING UP AFTER CRISTINA (The Economist)

6. ARGENTINA’S PRESIDENTIAL RACE : A CHAT WITH DANIEL SCIOLI (The Economist)

7. ARGENTINA’S ELECTION WILL END THE POLITICS OF FANTASY (Bloomberg News)

8. ARGENTINA INVESTORS CONSIDER ELECTION OUTCOMES FOR PATH FORWARD (Bloomberg News)

9. WAS THIS HEDGE FUND BILLIONAIRE’S EPIC ARGENTINA CLASH WORTH IT? (Bloomberg News)

10. ARGENTINA’S EURO DEBT HOLDERS TELL BOND TRUSTEE TO STEP DOWN (Bloomberg News)

11. ARGENTINE LEADER’S WELFARE PROGRAMS HELP HER PARTY IN ELECTION (Reuters News)

12. U.S. JUDGE RULES FOR MORE ARGENTINE CREDITORS SUING FOR PAYMENT (Reuters News)

13. ARGENTINE EXPORTS DECLINE AS SALES ABROAD OF MANUFACTURES PLUMMET IN SEPTEMBER (IHS Global Insight Daily Analysis)

14. IT’S ALL (STILL) COMING UP CRISTINA (Foreign Policy)

15. LITTLE NEAR-TERM HOPE FOR ARGENTINA’S ECONOMY DESPITE ELECTIONS: PAVILLION (Barron’s Blog)

16. UTILITIES, BANKS LOOK ATTRACTIVE AHEAD OF ARGENTINA’S ELECTIONS: RAYMOND JAMES (Barron’s Blog)

17. 70 YEARS LATER, PERON’S POLITICS STILL REIGN IN ARGENTINA (Forbes)

18. SOCIAL PROGRAMS HERE TO STAY IN ARGENTINA (Truth -Out org)

19. ARGENTINA VOTES, PART 1: WHAT’S GOING ON? (America Blog)

20. AS AN ERA ENDS IN ARGENTINA, MORE HATE THAN LOVE BETWEEN POPE FRANCIS AND THE KIRCHNERS (VICE News Online)

21. ARGENTINA’S NEXT PRESIDENT WILL INHERIT ECONOMIC TROUBLES (Stratfor online)

1. ARGENTINA EXPECTED TO END DEBT STANDOFF AFTER VOTE (The New York Times)
By Jonathan Gilbert
23 October 2015

BUENOS AIRES — As Argentina prepares for a new president, a glimmer of hope has emerged that a ferocious standoff with American hedge funds may be resolved within months.

On Sunday, Argentines will vote on who will succeed President Cristina Fernández de Kirchner. The front-runner, Daniel Scioli, has at times shared her taste for fiery populist oratory.

Nonetheless, if elected president, he is expected to quietly seek a compromise with the hedge funds over nearly $100 billion of bonds that Argentina defaulted on in 2001.

”It’s very important to close out the holdouts issue,” said Gustavo Marangoni, an economic adviser to Mr. Scioli. ”It’s like a pebble blocking a funnel of investment.”

The standoff has kept the country locked out of global lending markets. Mrs. Kirchner has maneuvered to reach the end of her presidency without the need to return to those markets, but a new leader would need access to help rectify Argentina’s economy, analysts said.

”Whoever wants to govern Argentina needs a country with access to capital markets,” said Federico Thomsen, an economist based in Buenos Aires.

That will mean ending the feud with the hedge funds, often referred to as holdout creditors — or ”vultures,” in the words of Mrs. Kirchner’s government — led by a unit of the billionaire Paul E. Singer’s firm, Elliott Management.

The impasse dates to 2012, when Judge Thomas P. Griesa of the Federal District Court in Manhattan ruled that Argentina could not service the debt it restructured in the years after its 2001 default if it did not pay the litigating holdout creditors, in full, at the same time.

Argentina refused to accept the ruling, earning rebukes from Judge Griesa. Even facing the judgment of a United States federal court, Argentina issued dollar-denominated bonds this year under local law, but it had to pay premium interest rates of 8 to 9 percent. This angered the holdouts, who claim the new debt was marketed internationally and therefore subject to Judge Griesa’s ruling.

Mrs. Kirchner, 62, who is not permitted to run for a third consecutive term, has led a crusade against the hedge funds, accusing them of extorting her government.

Polls here suggest that Mr. Scioli could win on Sunday without the need for a runoff. His closest challenger is Mauricio Macri, a former businessman and soccer club president who has traditionally been viewed more favorably by investors. Mr. Macri has said that he would negotiate with the holdouts.

Yet politics colors these positions. Mr. Macri’s statements appear to have been intended as just criticisms of the government. In interviews, Mr. Macri’s economic advisers said they would let the issue languish and straighten out the economy by addressing other problems.

”I don’t think it’s life or death for Argentina,” said an adviser, referring to resolving debt dispute.

And on the campaign trail, Mr. Scioli, having been endorsed by Mrs. Kirchner, has been nearly as aggressive as the president in calling for a ”world without vultures.”

Mr. Scioli, a former powerboat racer turned state governor, indicated that he would not improve on the terms agreed to by a majority of bondholders in debt swaps in 2005 and 2010. They received about a 65 percent ”haircut” with some deals enhanced by payments pegged to Argentina’s growth rate. That is an offer that the hedge funds have already rejected.

”Argentina’s proposal is clear,” Mr. Scioli, 58, told reporters recently, smoking a cigarillo on the sidelines of a boxing match at a sports club he built next to his home in the Paraná River delta. ”We have to see now if they have the willingness to adapt to what Argentina has been offering.”

Mr. Scioli’s reliance on Mrs. Kirchner ”means he cannot address these issues publicly,” Nicholas Watson, who analyzes Argentina for Teneo Intelligence, a global advisory firm based in New York, wrote in a note to clients.

But if Mr. Scioli wins the presidency, he is expected to forge his own path, independent of the ideological constraints of Mrs. Kirchner’s leftist political movement, known as Kirchnerismo.

”Kirchnerismo is over,” said an adviser to Mr. Scioli who spoke on the condition of anonymity. ”Soon enough, they’ll realize.”

Mr. Marangoni and Mario Blejer, another adviser, said that Mr. Scioli’s government would reinitiate talks that have long been at an impasse.

”I’m in favor of opening negotiations with a very firm stance,” Mr. Blejer said in an interview.

A third adviser, Miguel Bein, who could not be reached for comment, said at a conference in May that Argentina might pay up to 70 percent of the roughly $1.7 billion owed to the holdouts, a sum that includes interest.

That may not be enough to satisfy the holdouts, who have asked for nothing less than the full $1.7 billion.

Mr. Scioli is expected to make other changes in economic policy, including reducing monetization of the fiscal deficit to calm inflation, which is estimated at more than 25 percent, and a gradual devaluation of the peso that could help lure foreign investment and boost competitiveness.

These will require tapping global bond markets to bring in dollars, said Jimena Blanco, who monitors Argentina for Verisk Maplecroft, a risk analysis firm in London.

In the short term, the country may also need those dollars to bolster the central bank’s reserves, which dropped far below $30 billion this month after the government paid off $5.9 billion of maturing bonds.

Although many economists agree that Argentina should end the dispute with the hedge funds so it can bring in dollars by issuing debt abroad, others offer another argument: that the country can talk but delay a deal until the hedge funds cede ground and, in the meantime, attract big foreign investment or even issue debt.

Another presidential candidate, Sergio Massa, 43, an energetic lawmaker who bolted from Mrs. Kirchner’s party in 2013, supports this approach.

Mr. Massa said he would seek to strengthen his negotiating position with the holdouts by first returning to debt markets, using risk mitigation instruments offered by regional development banks to issue bonds at around half the rate investors currently demand.

”Argentina cannot go to Griesa’s bench and surrender,” Mr. Massa said at a lunch with reporters.

If the government reaches a settlement in the coming months, it could still have trouble raising money if it does not also make repairs to its economy, said Siobhan Morden, head of Latin America strategy at Jefferies in New York. She cited Argentina’s fiscal deficit, which is estimated at about 7 percent of gross domestic product, and the precariousness of the central bank’s reserves.

”Does legal access to the markets mean market demand?” Ms. Morden said. ”No. The markets aren’t lenders of last resort.”

2. A CANDIDATE TOO GOOD TO BE TRUE DRAWS ATTENTION, AND CRITICISM, IN ARGENTINA (The New York Times)
By Frederick Bernas and Diane Ghogomu
23 October 2015

BUENOS AIRES — Election season in Argentina is heralded by images of smiling candidates, gazing down from billboards and up from fliers distributed by zealous volunteers. Many names strike a familiar chord with voters, but this year an unfamiliar face suddenly materialized, drawing millions of eyes: Omar Obaca.

”Who knows, he might turn out to be another Obama,” said Laura Buccafusca, 67, a well-coiffured retiree who was walking her dog in the Congreso area, reflecting on the American president’s relatively high popularity here.

But Omar Obaca has no chance of winning. Indeed, he is not even running. He is a fictitious African-Argentine candidate, dreamed up by an advertising company to satirize Argentine, and perhaps American, politics, and setting off a whirlwind in the process.

The comedy campaign has exploded into an Internet sensation, channeling a desire for change after more than a decade of one-family rule — and igniting a fierce debate here over the ways in which black people are portrayed in a society that has long prioritized its ties to Europe.

The billboards advertise an online video series that has drawn more than seven million views. Some of the episodes showcase farcical policies like ”Everyone Dressed as Police” to reduce street crime; paying Argentina’s national debt to China with caramel candy; or rigging the weak Argentine peso to a fantastically strong exchange rate of four American dollars.

”Obaca is the politician that all politicians want to be, but they can’t — because they don’t have ideas and they’re not black,” said Sebastián Rodas, a director at NAH! Contenidos, the advertising company behind the project. ”We’re making fun of the idea that someone can use their color to market themselves in a political campaign. He has proposals, but the first thing is: ‘I’m black, I look like Obama. Maybe that’s good. Vote for me!”’

Some Argentines of African origin have expressed excitement at seeing one of their own in the limelight.

”It gives me hope to see an Afro-descendent as protagonist — this is the first time an Afro actor has had a mass audience,” said Paulo da Silva, 27, an African-Argentine actor whose family left Brazil for Buenos Aires when he was 3. ”For every 10 roles that exist for a white person, there is one for a black person.”

But some leading activists counter that Obaca revives old stereotypes. The newspaper Pagina 12 recently published a scathing op-ed that accused the campaign of ”resorting to one of the oldest traditions of aristocratic families of yesteryear: the black buffoon.”

Its author, Federico Pita, president of the African Diaspora of Argentina, wrote that ”naturalization of racism and white supremacy” had allowed a character who ”ridicules, stereotypes, stigmatizes” to gain huge popularity.

Carlos Álvarez, president of a group called Agrupación Xangô, said that community members had filed a complaint with the National Institute Against Discrimination, Xenophobia and Racism. He called Obaca a ”vulgar” stereotype of a ”happy black guy to liven up the party,” exemplifying ”structural racism.”

The advertisers at NAH, who are generally dismissive of criticism of the campaign, said they were fascinated by the campaign that swept Mr. Obama to victory in 2008, including its groundbreaking social media strategy.

”Political marketing is totally fake, but the first Obama campaign was very genuine,” Mr. Rodas said. ”They didn’t fear doing things differently.”

The actor who plays Mr. Obaca, Marcos Moreno Martínez, grins and radiates an easy charisma, talking in local slang with emphatic hand gestures that evoke his theatrical background.

He got the call for what he described as ”just another casting” in 2010 and was instantly selected for a pilot episode, filmed on the spot. NAH had intended to produce the Obaca series for elections in 2011, but no buyers emerged until the online channel FWTV came forward last year.

Months later, Mr. Martínez, 38, said he felt like a ”star” every time he stepped onto the streets of Buenos Aires, as steady streams of fans request selfies by his side.

”It never ceases to surprise me,” the actor said. ”Kids in other provinces see me, even when I’m not dressed as Obaca, and say, ‘What a genius, I’ll vote for you!”’

He was previously known for playing an inmate in ”Tumberos,” a successful TV drama about corruption and prison life during tough times after Argentina’s 2001 financial crisis.

That led to film and theater roles, but Mr. Martínez needed more income. Like some other struggling actors, he worked as a taxi driver for several years, before selling his car to invest in materials to build a small house that he now rents out. He lives in the provincial city of Luján, about 42 miles from Buenos Aires.

”Nobody ever gave me anything,” he said, recalling the years of crushing three-hour commutes from his home into the capital, where he attended theater classes as a university student. As well as acting, he plays percussion in a Latin dance band and runs music workshops at a school in his neighborhood.

”Obaca arrived at a moment with a lot of political violence,” Mr. Martínez said, describing a polarized atmosphere that breeds social tension.

”People needed to laugh at a fictional politician who promises an Argentina that will not happen,” he added. ”That’s why they get on board with the Obaca dream.”

On Sunday, national elections will bring an official end to 12 years of ”Kirchnerism,” the political movement named for the late president, Néstor Kirchner, who was married to — and succeeded by — the incumbent, Cristina Fernández de Kirchner.

After winning four-year terms in 2007 and 2011, she is constitutionally barred from seeking a third consecutive term.

Although some in Argentina say the country is ready for a political shift, continuity is expected. The front-runner, Daniel Scioli, is a former vice president who has been governor of Buenos Aires Province since 2007 and was endorsed by Mrs. Kirchner.

”None of the candidates has been able to generate a perception of something new,” said Philip Kitzberger, a professor of political science at Torcuato Di Tella University.

But critics contend the Obaca campaign comes at the expense of Argentina’s small black population. Argentina’s 2010 census reported that about 150,000 (or just 0.4 percent) of its 40 million people considered themselves ”Afro-descendent” — an ethnic category that was reinstated after more than 130 years of not appearing on the survey.

Erika Edwards, an assistant professor of Latin American history at the University of North Carolina in Charlotte, said that such a tiny number was probably an underestimate. Argentina’s first census showed that blacks made up about a third of the population in the late 18th century, with most arriving as African slaves. But a huge European immigration, specifically called for by the first Argentine laws, shifted the country’s demographics.

”Miscegenation and racial mixing were actually encouraged under the guise of ‘blanqueamiento’ — the concerted whitening of the nation,” Dr. Edwards said.

In the mid-19th century, Domingo Faustino Sarmiento, revered as the father of education in modern Argentina, announced the ”extinction” of African-Argentines at a time when the black community still published its own newspapers in Buenos Aires.

Despite such assessments, African-Argentines like José Agustín Ferreyra, a prolific filmmaker, and Oscar Alemán, a versatile musician who played jazz with Louis Armstrong, gained recognition in their fields. But African-Argentines still say such accomplishments are neglected.

Mr. Martínez defended his character in the Obaca campaign, contending that there were ”much worse things” than a black politician in a suit who is broadly admired. ”I was asked to play delinquents, thieves or drug dealers so many times that one day I decided to never accept that again,” he said.

3. DRUG ALLEGATIONS CLOUD ARGENTINE POLL (Financial Times)
By Benedict Mander in Buenos Aires
October 23, 2015

Sensational allegations of drug trafficking have done little to dent Aníbal Fernández’s chances of becoming the governor of Buenos Aires, the second-most powerful political office in Argentina.

But they may have a knock-on effect on the presidential poll also taking place on Sunday, dragging down his Peronist ally, the presidential candidate and current governor of Buenos Aires province Daniel Scioli.

In order to secure a comfortable nationwide victory, the centrist Mr Scioli needs a candidate in the populous province who can win by a much wider margin than Mr Fernández.

Shocking accusations that Mr Fernández masterminded a series of grisly murders in order to take control of an ephedrine trafficking ring — his alleged alias was “the Walrus” on account of his bushy moustache — have contributed to him becoming a “lead life jacket” for Mr Scioli’s electoral performance, says Carlos Germano, a political analyst.

“In the 32 years since Argentina regained democracy, I have never seen an election this close,” says Mr Germano.

The allegations, widely reported in Argentina, have been made by a convicted gangster from prison and have been dismissed by Mr Fernández as a political smear driven by opponents and elements of the media.

The presidential contest is hugely important for Argentina, as it determines the pace and scope of reform needed to turn around one of Latin America’s largest economies.

It will also determine whether Peronism — the political movement that has controlled the country for most of the last 70 years — remains in power after 12 years of populist rule by president Cristina Fernández de Kirchner and her late husband and predecessor, Néstor Kirchner.

Daniel Scioli
Buenos Aires governor and presidential candidate for the ruling Frente para la Victoria (Front for Victory) party, Daniel Scioli, waves during a rally in Quilmes, Buenos Aires Province, on October 20, 2015. Argentine will hold general elections on October 25, in which for an outright winner the candidate needs 40 percent of votes and a 10-point lead ahead of the runner-up. Otherwise, it will head to a runoff on November 22. AFP PHOTO / EITAN ABRAMOVICHEITAN ABRAMOVICH/AFP/Getty Images
Born into a middle-class family, Daniel Scioli first distinguished himself when he negotiated his kidnapped brother’s ransom and release from leftwing guerrillas when he was just 18. But it was his sporting career that brought him fame. After losing his right arm in a powerboat racing accident in 1989, he went on to win several world championships over the next decade. After being elected to congress in 1997, Néstor Kirchner chose him as his vice-president in the 2003 elections.

Mr Scioli’s main rival is the centre-right Mauricio Macri, the market-friendly mayor of the city of Buenos Aires campaigning for change.

Most polls show Mr Scioli within a hair’s breadth of winning 40 per cent of the vote, with Mr Macri polling at close to 30 per cent, making the election too close to call due to polls’ statistical margin of error. Although no pollster disputes that Mr Scioli will win the most votes on Sunday, there is little consensus over whether he will gain enough to avoid a more unpredictable run-off vote on November 22. In order to win outright, contestants must gain 45 per cent of the vote or 40 per cent with a ten-point lead over the runner-up.

Although Mr Scioli is the would-be successor of a president leaving a deeply toxic economic legacy — including a fiscal deficit of about 7 per cent, net foreign exchange reserves of less than $10bn and one of the highest inflation rates in the world — paradoxically most voters see him as the candidate best placed to fix these problems. “Corruption is always an issue, but it won’t define the elections — a bit like education. The fundamental issue here is the economy,” says Mr Germano.

Many Argentines are still suspicious of the “neoliberal” economic policies characterising the 1990s that they fear Mr Macri would resort to in order to kick-start the economy.

And such is the huge sway of Peronism — a political philosophy whose tenets vary according to who fronts it — that Mr Macri attempted to woo undecided Peronist voters by unveiling a statue of the working class hero, Juan Perón, in a square in the city of Buenos Aires.

Mauricio Macri
Presidential candidate Mauricio Macri speaks during a rally in Lanus, on the outskirts of Buenos Aires, October 21, 2015. The Argentinian ruling party’s candidate Daniel Scioli is primed to win the presidential election outright on October 25, with a commanding lead over his nearest rivals, two polls published in local papers on Sunday showed. His closest rival, Macri, the center-right mayor of Buenos Aires city, is seen getting 28 percent of the vote in the election, according to the poll. REUTERS/Marcos Brindicci
The son of a powerful Italian business magnate says it was a 12-day kidnapping ordeal at the hands of corrupt police officers in 1991 that convinced him to go into politics. First, though, he spent a decade running popular football club Boca Juniors. He turned to politics in 2003 and later became a congressman before being elected in 2007 as mayor of Buenos Aires.

Meanwhile, Sergio Massa, the dissident Peronist candidate in third place with around 20 per cent of support, is further complicating Mr Macri’s presidential bid by attempting to persuade voters that he has a better chance of defeating Mr Scioli in a second round vote.

Indeed, it is Argentina’s divided opposition that cleared the way for the Kirchner couple’s self-styled “victorious decade”, which saw the economy’s revival after a devastating crash in 2001. Since then, the Radical party in power at the time, which has traditionally been Argentina’s other main political group, has never recovered the population’s confidence.

Nowhere is the outcome more unpredictable than in the province of Buenos Aires, whose 17m population represent 38 per cent of voters.

Traditionally a Peronist heartland due to its largely working class population, Mr Fernández’s rival from Mr Macri’s “Let’s Change” coalition, María Eugenia Vidal, has soared in polls amid the drug allegations. Mr Fernandez still, however, looks likely to win.

“In a normal country, Vidal, a fresh-faced, experienced politician with no corruption smudges and a reputation as a skilled administrator, would be a shoe-in in an election where she is competing with an old-style Peronist who has been battered by purported links to drug trafficking,” says one jaded observer.

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“It’s a very volatile situation,” says José Octavio Bordón, a former presidential candidate and provincial governor.

He argues that although voters are discontent, the absence of a crisis situation like in 2001 means that some 15-20 per cent of voters remain undecided, with “none of the presidential candidates inspiring either great enthusiasm or great fear”.

“The coin has been tossed, but it’s still in the air,” he says.

4. ARGENTINA’S ELECTIONS : THE END OF KIRCHNERISMO (The Economist)
October 24, 2015

And the beginning of saner economic policies, perhaps.

FIRST, she thrust her finger skyward. Then came a right-left combo, punctuated with an eruption of hip swaying. Beside her with a rigid smile stood Daniel Scioli, the governor of Buenos Aires province and presidential candidate, looking like a child mortified by the antics of his mother. The campaign rally, held earlier this month, was meant to be for him, but the outgoing Argentine president, Cristina Fernández de Kirchner, stole the spotlight.

For the last time, Mr Scioli hopes. On October 25th Argentina will hold the first round of elections to choose a new president, along with half the lower house of Congress and a third of the Senate. They will bring to an end 12 years of government under Ms Fernández and her husband, Néstor Kirchner, who died in 2010. The main question to be settled is how much continuity there will be with the Kirchners’ populist and divisive rule. Mr Scioli is running as Ms Fernández’s heir, under her Peronist party, the Front for Victory (FPV), yet hopes to be his own man. His main rival, Mauricio Macri, the mayor of the city of Buenos Aires, leads an electoral coalition called Cambiemos, “Let’s Change”.

Argentina needs change. As Ms Fernández slips out of office the economy is starting to crumble. Currency controls and trade restrictions, which she imposed in 2011, are choking productivity; inflation hovers at around 25%. The budget deficit is swelling and foreign-exchange reserves are dwindling. Argentina cannot seek external financing until it ends its standoff with creditors who rejected a debt-restructuring plan. Unless the new president quickly reverses Ms Fernández’s populist policies, a crisis is inevitable.

Few Argentines know that yet. Many credit the Kirchners with rescuing the economy from a slump in the early 2000s and for the growth that ensued (which owed a lot to high prices for soy beans, the biggest export). They were open-handed leaders: 40% of the population receives a pension, salary or welfare from the government, a share that has doubled since Ms Fernández took office in 2007. Among recent presidents, only her husband left office with higher approval ratings.

That is why Mr Scioli subjects himself to awkward appearances with her. Recent polls suggest that he is close to the threshold needed for victory in the first round: 40% of the vote with a lead of ten percentage points over his nearest competitor. Mr Macri’s lacklustre campaign has been hurt by corruption allegations against a congressional candidate from his coalition. He splits the anti-Fernández vote with Sergio Massa, a feisty Peronist who left FPV and is third in the polls. If Mr Macri can force a second round, to be held on November 22nd, he might beat Mr Scioli by picking up Mr Massa’s votes. Poliarquía, a polling group, puts support for Mr Scioli in a run-off at 49%, with Mr Macri at 45%.

Whoever wins will have to disappoint voters. To restore competitiveness and open production bottlenecks the next president will have to allow the peso to depreciate and lift restrictions on exports and imports. The gap between the official value of the peso and the “blue-dollar” (ie, free-market) rate has widened to around 70%. Subsidies will have to be cut to narrow the budget deficit, expected to be about 6% of GDP this year (see chart). The central bank is likely to raise interest rates to force down inflation. That may trigger a recession. To have any hope of attracting international capital Argentina will have to strike a deal with its hated creditors.

Mr Scioli hopes that both kirchneristas and their foes will see in him what they want to see. The country can solve its economic problems with “no [fiscal] adjustment, no mega-devaluation and no [economic] shrinkage,” he told The Economist. Any measures will be “gradual”. An inflow of dollars will keep the peso strong. “There will be joy,” he promises.

Mr Macri is more market-minded than Mr Scioli and does admit that the peso will have to devalue. But he also downplays the hardship to come. That said, the front-runners have more in common with each other than they do with Ms Fernández. They are less confrontational and have gathered impressive teams of advisers to whom they listen and delegate. Each is eager to repair Argentina’s strained relations with the United States. Both want to attract investment, relax trade controls and resolve the debt standoff.

What distinguishes Mr Macri most is his determination to break with the Peronist practice of aggrandising presidential power at the expense of other institutions. Ms Fernández enfeebled Congress, the central bank and the official statistics agency, which she stopped from reporting bad news. She undermined the independence of the press and had a go at the judiciary. Mr Macri’s advisers say he would build up institutions with the power to check the presidency. He “will do a real shock to recover the institutional credibility of the country very fast,” promises Federico Sturzenegger, a pro-Macri congressman.

The risk, though, is that Mr Macri might not be able to do much of anything. If elected he will lack a majority in both houses of Congress. At most, two of Argentina’s 24 governors will be his allies. His campaign manager, Marcos Peña, insists that he overcame similar hurdles as mayor of Buenos Aires. But managing a rich city is far different from governing a fractious country of 40m. The two non-Peronist presidents since the military dictatorship ended in 1983 were both forced out of office early.

Mr Scioli has a different worry: that Ms Fernández will continue to upstage him after she leaves the presidency in December, especially if the economy runs into trouble. Many congressmen are loyal to her, as is his likely successor as governor of Buenos Aires province, the country’s most populous. Ms Fernández has said little about her plans, but the song that set her dancing may provide a clue: “A thousand years can pass, you will see a lot fall down. But if we stick together, they won’t hold us back.” It did not sound like a farewell.

5. ARGENTINA’S ELECTION : CLEANING UP AFTER CRISTINA (The Economist)
October 24, 2015

The front-runner promises continuity. The country needs change

FOR eight years Cristina Fernández de Kirchner has beguiled, enraged, entertained and divided Argentines. She is one of Latin America’s most popular presidents, but her combative style has alienated some of her citizens and much of the outside world. Constitutionally unable to run again in Argentina’s general elections, the first round of which takes place on October 25th, she will be succeeded by a duller figure. The two leading candidates to replace her, Daniel Scioli of her Peronist Front for Victory and Mauricio Macri, Buenos Aires’s mayor, have none of her pizzazz. But either would be a great improvement.


True to her Peronist pedigree, Ms Fernández has hoarded power and suppressed dissent. She has bent the central bank to her will, muzzled the government’s statistics institute and bullied the media. She has tried, less successfully, to suborn the independence of the judiciary.

She leaves an economy in even worse shape than it looks. Like other commodity producers, Argentina is suffering from falling prices for its exports. To this, Ms Fernández has added woes of her own making. The government keeps the peso overvalued. It taxes soybeans and other exports, thereby punishing the country’s most competitive producers. It has repelled foreign capital by defaulting on debt and refusing to settle with its creditors. To husband foreign exchange, it restricts imports. Ms Fernández distracted Argentines with lavish spending on welfare and energy subsidies. That trick will not work for much longer. The country is in danger of running out of reserves; the budget deficit this year is likely to be 6% of GDP; inflation is estimated at 25%; and growth is absent.

The next president will need to escape disaster. That will mean letting the peso fall, reducing subsidies and ending the stand-off with creditors. In the short run, the volte face will hurt. Spending cuts, plus higher interest rates to contain inflation, are likely to push the economy into recession. Only as exports pick up and capital flows back will confidence, and growth, gradually return.

All the main presidential candidates would change the economy’s course, though it is hard to tell from their campaigns just how they would go about it. Running as Ms Fernández’s heir, Mr Scioli suggests that he does not need to make abrupt changes. Despite being a speedboat racer in his youth, he wants to change the economy’s course only gradually. Sergio Massa, a Peronist who has fallen out with Ms Fernández and is running third in the polls, is somewhat more forthright about the need for adjustment. But it is Mr Macri, an economic liberal, who comes closest to admitting the scale of the problem. He acknowledges the need for a big devaluation and seems readier than his rivals to remove capital controls.

Choose Macri-economics
That is one reason to prefer Mr Macri to his two Peronist rivals. The other is the prospect that he would undo the damage Ms Fernández has inflicted on Argentina’s politics. His team promises an “institutional shock”, a change of practice that would make the presidency more accountable and strengthen other bodies, including the central bank and the judiciary. That is the sort of change that Argentina needs if its democracy and economy are to mature.

It will not happen under Mr Scioli. His defenders say that he will be better at dealing with Congress, which will be dominated by his allies. The others, they say, will get nothing done. That is a risk. But the risk of obstruction is a bad reason to pick a second-best president. Argentines should choose Mr Macri.

6. ARGENTINA’S PRESIDENTIAL RACE : A CHAT WITH DANIEL SCIOLI (The Economist)
Oct 22, 2015

The Economist meets the front-runner in Argentina’s elections

ON OCTOBER 19th, Daniel Scioli, the governor of Buenos Aires province, who is the front-runner in Argentina’s presidential election, granted an interview to The Economist. The first round of the election is to be held on October 25th.

As he ate pastries, called supporters and smoked a mini-cigar, here’s how he answered The Economist’s questions. The interview is edited and translated from Spanish.

THE ECONOMIST: Before we start, we wanted to thank you for having us here and giving us this interview.
DANIEL SCIOLI: International relations and the international media will always have room in my agenda.

TE: What would the first 100 days of your presidency look like?
DS: Our agenda is one of the development of the country, which includes accelerating everything that has to do with investment, the energy sector, incentivising the repatriation of capital, gradually addressing inflation, competitiveness of regional economies, subsidies. Always prioritising having a strong internal market.

TE: Could you be a bit more specific?
DS: The country is already stable. No shock or comprehensive economic package is needed. What people see in me is a calm, trustworthy person who can successfully carry out an agenda of integration and foment production. We want to produce more in the energy sector and agricultural sector, and do more in science, technology, tourism and sustainable mining. We want normality. Not to mention, the new president will assume office right when the vacation season begins.

TE: So you’re saying things will be tranquil? Historically, December has been quite rife with conflict and wage strikes.
DS: There will be joy about the fact that all is good—peaceful holidays. With a lot of optimism.

TE: You have said that you want to keep the exchange rate regulated. How do you plan to do that?
DS: A responsible administration of the Central Bank. The peso won’t weaken because, as more dollars enter the country, which will happen, there won’t be any problem. Both exchange rates [the official rate and the free-market “blue dollar” rate] will converge.

TE: And where will the dollars come from?
DS: Exports, repatriation of capital, swaps, for example the one with China, accords with Brazil, international credits from the Inter-American Development Bank, World Bank, Latin American Development Bank.

TE: Recently you called the holdout creditors [who refused a debt restructuring plan put forward by Argentina] “vultures”. Does this mean we can expect you to follow the same hard line with them that Cristina Fernández de Kirchner [the current president] has?

DS: Everyone calls distressed investment funds that. Argentina has the will and the capacity to pay. But we want to do it in just and equitable conditions. And conditions that are sustainable for the country. We are not closed, but we also aren’t going to pay what they’re looking for because it’s disproportionate with respect to what we agreed to with the rest of our creditors. The idea is to look for a settlement with the terms that the rest of the creditors agreed to. That is the position that Argentina currently is taking. The problem is there’s another candidate going around saying he wants to pay the holdouts everything they are asking and so they’re waiting eagerly to see who wins the elections. The truth is that it is a speculation that won’t come to fruition. But beyond the holdout issue, Argentina is going to continue growing, continue developing, and it won’t have any problems–either in attracting investments, or dollars—no problems.

TE: What measures do you plan to implement to increase confidence?
DS: I will make decisions that will generate growing interest in Argentina. They will all be reasonable, gradual, inspire investment and create a very good business environment. That’s how I work.

Jorge Telerman, Mr Scioli’s campaign chief: The Economist knows about the conference you participated in with investors the other week. There must have been $15 billion at those tables. And what was the mood?

DS: You mean, did people like me?
JT: Yes, they loved you.

DS: I was the candidate to make the best impression and I went in jeans and sneakers.
TE: What do you plan to do to reduce the fiscal deficit, which is expected to reach 6% of GDP this year?
DS: Seek economic efficiency. Streamline state companies, make sure subsidies are only being granted to those who need them and seek investment. Even Cuba is saying it’s time for economic sustainability. Even Raúl Castro is saying that. We’ll have an efficient environment. There will be no [fiscal] adjustment, no mega-devaluation and no [economic] shrinkage, because that generates social consequences.

TE: Your advisors say you want to lower inflation, which is now 25% and is predicted to rise next year, to a single-digit level in four years.
DS: We’re going to do it before that.

TE: How?
DS: Investment and increasing productivity in the fields of science, technology and logistics.

TE: The other day Ms Fernández said that the “project” must continue…
DS: The project has certain core elements: industrialisation of the country, decreasing the country’s debt burden, recovering YPF [the state owned oil company] and the railroads and implementing social programs.

TE: So you will not continue with all elements of Ms Fernández’s model?
DS: The demands of a society are always evolving.

TE: And Ms Fernández? It is the first time in recent history that an Argentine president is leaving office with such high popularity ratings. What role will she have after her term ends on December 10th?
DS: It’s great that she’s so popular—great for the country and for her. Her political experience should not be underappreciated. I like to consult everyone.

TE: And will she retain power? A lot of people are very loyal to her.
DS: But she’s part of the project. She’s part of our political team. It’s not us and them. We’re all part of the same political project. There have been
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