ARGENTINE UPDATE – Dec 3 & 4, 2015














By Editorial Board
Dec 2, 2015

The drama never ends for Argentina, land of failed expectations and the setting for a great Broadway musical. Next week, a new leading man steps into the role of president with a chance to fix the broken economy and set a positive example for South American democracy.

Mauricio Macri is an outsider, which in Argentina means he isn’t a Peronist, the dominant political force for ages (“Evita” was the celebrated Eva Peron). If Macri turns out to be the least theatrical political figure ever, that would be perfect because Argentina needs sensible, stable leadership.

Getting to dull may take time, though, because the country needs a complete economic overhaul.

Under the current president, Cristina Fernandez, Argentina has become an international financial pariah. The country defaulted on debt last year in a long-running feud with hedge funds — remarkably, that was the eighth default in Argentina’s history.
Fernandez refused to settle. That’s left the country to squeak by in isolation, using protectionism and capital controls in a quixotic battle with globalism. The economy is stagnant, foreign currency reserves are dwindling and the inflation rate is around 30 percent. Last week, American Airlines said it stopped accepting pesos for ticket sales because it was tired of collecting revenue it couldn’t convert to dollars.

At times Argentina has embraced trade and economic openness, only to slip back into bad habits thanks to populist Peronistas like Fernandez. Macri, a conservative, wants to re-establish free market principles, but there are a lot of details he didn’t fully explain before his November victory because they will require some short-term pain, and he wanted to win the election.

Everything Macri is talking about makes sense. He says he will lift the capital controls that have wrecked the peso’s credibility. Like other backwaters it shouldn’t resemble, Argentina has a thriving black market because the government insists the peso is worth a lot more than its actual value. Freeing the currency would devalue it, a first step toward making Argentina more competitive.

The next big step would be to negotiate a settlement with the hedge funds that bought up Argentina’s debt after its previous default in 2002 and demand repayment. Fernandez got political mileage from attacking the “vultures,” but Macri seems to understand Argentina can’t get unstuck when it’s essentially shut out of international capital markets. He sounds like he wants to do a deal.

Macri’s got a tremendous balancing act to pull off: He’ll need to cut spending and reduce taxes without destroying the country’s big social safety net, while walking the country through a devaluation. He could use a good friend, and it looks like Macri is hoping to find one in Washington. Relations have been at an ebb since the 2002 default. Argentina slowly moved out of the U.S. orbit, sidling up to China, Cuba and another outlier, Venezuela — part of an embrace of leftist politics some call the “pink tide” of South American socialism.

Macri, we’re glad to report, sees no economic or political benefit in playing Argentina against the West. He wants Venezuela suspended from the continent’s Mercosur trading bloc for being undemocratic. He also plans to undo an appalling agreement with Iran to co-investigate the 1994 bombing of a Jewish cultural center in Buenos Aires that killed 85. The crime is unsolved but suspicions always focused on Hezbollah, the militant group backed by Iran. Iran has denied involvement, but its inclusion in the investigation is an insult.

Argentina has incredible potential as a vibrant, resource-rich country but too often it fails to fulfill its promise. Brazil, by the way, next door and also struggling economically, has the same problem. Macri won’t get much help from the Peronists, who are still powerful, but if he can kick down the biggest barriers to investment, that will re-establish trust internationally. Money will come rushing to Argentina. If that happens, expect much of South America to benefit from a new tide of prosperity. More openness should follow, giving Argentina and many of its neighbors the chance to sing a happier tune.

By Carolina Millan
December 2, 2015

* Pampa Energia raised $86 million by issuing additional ADRs
* Company may use funding to develop natural-gas production

Argentina’s dormant equity market may be coming to life after Pampa Energia SA issued additional American depositary receipts just days after Mauricio Macri won the presidency, according to Bank of America Corp.

The nation’s largest electricity holding company raised $86 million on Dec. 1 by issuing additional ADRs at a price of $21.50 each, said Sebastian Loketek, managing director and head of the bank’s unit in Argentina, which was the sole manager of the deal. The transaction has major implications for the country’s stock market, he said.

“The Argentine equity market has very limited depth,” said Loketek, who has led Bank of America to the top of Argentina league tables for bond sales this year. “Investors who want to enter Argentina have very few options. We needed companies to start taking a chance to go to market, and it’s finally started to happen.”

Pampa’s plan to exercise a call option was announced the day after Macri won the presidency in a second-round election. Macri, a two-time mayor of Buenos Aires, has vowed to make market-friendly reforms including removing import restrictions, lifting currency controls and letting the peso float freely on his first day in office next month. The president-elect has already tapped former JPMorgan Chase & Co. executive and ex-central bank president Alfonso Prat-Gay to become finance minister.

“Macri’s victory has no doubt put the market in a good mood,” Loketek said. “I saw a lot of optimism during meetings with investors the last few days and people are really hopeful on what’s happening while also understanding there are challenges ahead.”

South America’s second-largest economy has had a largely inert equity market over the last few years.

Given that it’s hard for foreigners to invest in the local Merval index due to currency controls, trading is much more liquid in ADRs of Argentine companies abroad. There hasn’t been an Argentine initial public offering since technology company Globant SA went public in July 2014.

The new ADRs, which represent 22.5 percent of the company’s capital, may be used to develop the company’s natural gas production business concentrated in its Petrolera Pampa unit, Loketek said.

The company is expected to release a regulatory filing to announce the results.

Even though Pampa’s ADRs tumbled the most on record after announcing it was exercising the call option on warrants, the shares have rallied 108 percent this year to $20.84.

Hedge funds were the main buyers in the deal, Loketek said. He noted that while long-term investors such as mutual funds and pensions have demonstrated interest in Argentina’s debt, they have not yet turned toward equity.
Last week, Loketek also helped manage a $200 million bond sale by Banco Hipotecario SA, a mortgage bank, in just the second Argentine corporate-debt sale this year.

“Immediately after the elections, we came out with two transactions; two types of deals that we haven’t seen in Argentina in a really long time,” he said. “The market is opening up and expecting more of these types of deals.”

By Charlie Devereux
December 2, 2015

* Central Bank president says he’ll co-operate in transition
* Vanoli calls for government to preserve some of his policies

Argentine Central Bank President Alejandro Vanoli said he would decide whether to resign in the next few days as President-elect Mauricio Macri prepares to unravel the currency controls he has administered for the past year.

Speaking at a presentation in Buenos Aires, Vanoli said he will collaborate during the transition to a new government and will make an announcement about his future soon. Macri, who assumes office on Dec. 10, has described Vanoli as unqualified and named Federico Sturzenegger as his preferred replacement.

“In a few days, I will communicate a personal decision which I’m currently deliberating,” Vanoli said.

The central bank president defended his one-year tenure and reiterated his call for the new government to preserve policies that he said have brought down the value of the black market exchange rate and slowed inflation. He had previously said he wanted to complete his term in office that ends in 2019.

“What’s most important is that these policies, above all the ones that benefit the people, and this direction the central bank has taken, beyond the legitimate measures a new government can take, are preserved,” Vanoli told reporters.

Vanoli, a former securities regulator who was appointed by President Cristina Fernandez de Kirchner in October 2014, is under investigation for alleged illegal operations in the dollar futures market.

By Richard Lough
Dec 2, 2015

Venezuelan President Nicolas Maduro must be encouraged to ensure Sunday’s parliamentary election is democratic, Argentina’s Foreign Minister-designate Susana Malcorra said on Wednesday.

Malcorra’s comments followed a call from Argentine President-elect Mauricio Macri for Venezuela to be suspended from regional trade bloc Mercosur because of rights abuse accusations, including jailing political opponents.

“We must encourage the Venezuelan government that Sunday be handled within the strictest democratic framework,” Malcorra, who was U.N. chief Ban Ki-moon’s chief adviser before taking up the ministerial post, told reporters in Buenos Aires.

Center-right Macri’s tough stance against Maduro’s socialist government has opened up divisions within Mercosur, with Brazilian President Dilma Rousseff expressing concern over the idea of sidelining Venezuela from the bloc.

“Now, to use that democratic clause, you cannot just have a hypothesis. You need to prove a fact,” Rousseff said in Paris earlier this week.

Macri is due to meet Rousseff in Brazil on Friday. His advisers call the bilateral relationship with Brazil, Argentina’s main trade partner, a top foreign policy priority.

Malcorra said discussions between Argentina and Brazil needed to include evaluating how Venezuela’s political system moves forward in the coming days.
“We need to see what the result of the election is and the reaction to the result,” Malcorra said.

Venezuela’s opposition was quick to hail Macri’s narrow win over ruling party candidate Daniel Scioli as a blow for leftists in Latin America and a good omen for their own battle with “Chavismo” in the parliamentary vote.

Malcorra’s comments risked further angering top Venezuelan officials. Last week, Venezuela’s second most powerful official rebuked Macri for offending a brother nation and told Macri to “leave the Venezuelan people alone, don’t mess with us.”
Venezuela’s opposition is trying to win control of the National Assembly on Sunday for the first time in more than 15 years, seeking to tap anger over the recession-hit economy.

By Hugh Bronstein
Dec 2, 2015

Argentine President-elect Mauricio Macri on Wednesday expressed confidence a deal could be reached next year with U.S. creditors suing the country over unpaid debt.

Asked if a settlement was possible with so-called “holdout” creditors in 2016, Macri told Reuters: “Yes, of course.”

Argentina’s decade-long legal battle with a small group of U.S. investment firms tipped the South American country back into default in July last year.

A deal would allow Argentina, a financial markets pariah since its record default on $100 billion in debt in 2002, to regain access to global credit markets and ease an acute shortage of hard currency in Latin America’s third biggest economy.

Center-right candidate Macri narrowly won Argentina’s presidential runoff election on Nov. 22 promising to dismantle protectionist controls imposed by outgoing President Cristina Fernandez and open up the stagnating economy to investors.
Macri made his comment about a possible debt deal as he greeted well-wishers after presenting his cabinet in the capital Buenos Aires’ botanical gardens. He did not say what the terms of an eventual agreement might look like.

Macri takes office on Dec. 10 and will inherit a fragile economy. Anemic growth is underpinned by unsustainable public spending, inflation is estimated at about 25 percent. Also, the peso currency ARS=RASL is overvalued and the central bank is running precariously low on dollars.
The scion of a wealthy family, Macri vows to begin unwinding capital controls immediately. His incoming finance minister, Wall Street veteran Alfonso Prat-Gay, has acknowledged the hard currency crunch means a weakening of the peso’s official exchange rate is inevitable.

An agreement with the hedge fund holdouts, led by Paul Singer’s Elliott Management, is crucial if Argentina is to get back into the international bond market and rebuild hard currency reserves.

“If they can’t tackle the holdouts situation then they will be as financially constrained as Fernandez’s government was,” said Stuart Culverhouse, head of research at Exotix, an emerging markets broker.
The U.S. judge hearing the case brought by Singer, who rejected Argentina’s 2005 and 2010 bond restructurings, wants the government to negotiate a deal. The restructurings offered about 30 cents on the dollar, while Singer and the other holdout funds sued for full repayment of defaulted debt.

“Dialogue would at least show they are not running the Cristina approach. If you accept the court case, then there’s not much really to negotiate, you’ve just got to come up with a deal. Cristina never really accepted that,” Culverhouse said.

By Walter Bianchi and Jorge Otaola
Dec 2, 2015

Dec 2 Argentina’s embattled central bank chief Alejandro Vanoli will decide over the days ahead on whether he will bow to pressure from the incoming government to resign, he said on Wednesday.

President-elect Mauricio Macri has called on Vanoli to step down to make way for currency devaluation to spur exports and halt the drain on central bank reserves that Vanoli has used to prop up the peso.

Vanoli was appointed by outgoing leftist President Cristina Fernandez, who intervened deeply in the country’s markets during her eight years in power. Macri, a proponent of free markets, takes office on Dec. 10.

“In a few days I will announce a decision to you all, maybe over the weekend,” Vanoli told reporters gathered for a presentation on the central banks achievements during 2015.

“More important than the question of what’s going to happen with me, is the country, and that these policies be preserved.”

Macri’s cabinet has been named, with Vanoli and the future leadership of the central bank hanging as a big question.

Macri has said he would like to have economist and congressman Federico Sturzenegger at the helm of the central bank.

Congress would have to ratify the appointment of the next central bank chief. A spokesperson for the central bank said Vanoli had made no coming announcement known within the bank.

The spokesperson said Vanoli “has never said that he is going to go, but for political reasons, the call could come at any moment” from Fernandez telling him to quit.

Dec 2, 2015

Dec 2 Argentina’s President-elect Mauricio Macri said on Wednesday that remaining high-level personnel decisions will be settled in a matter of hours, as pressure mounted on central bank chief Alejandro Vanoli to step down.

Vanoli, appointed by outgoing leftist President Cristina Fernandez, was set to speak to the press at 1 p.m. (1600 GMT).

He has jousted in the media with center-right Macri over his management of Argentina’s currency. The peso under current policy is supported by central bank interventions.
Most of Macri’s cabinet has been named, with Vanoli and the future leadership of the central bank hanging as a big question before Macri becomes president of Argentina on Dec. 10.

Macri has said he would like to have economist and congressman Federico Sturzenegger at the helm of the central bank.
“The positions that remain unfilled will be resolved over the hours ahead,” Macri told reporters.
Macri has called on Vanoli to step down in order to clear the way for his policy of allowing the peso to devalue.

Congress would have to ratify the appointment of the next central bank chief.

By Alejandro Chafuen
December 2, 2015

“Buenos Aires,” the name of the Argentine capital, translates into “Good Airs” or “Good Breezes.” The hot summer days that are approaching in this South American city are not particularly appealing, but the recent election of Mauricio Macri to the presidency, is making many feel that they are in a political spring. Some observers are forecasting that the election signals the end of populism. “XXIst Century Socialists,” on the other hand, argue that the election is a partial set back and a return to “neo-liberal” and crony capitalist days. The new cabinet, appointed with extreme speed, can give us a sense of what might follow.

Let’s start with the economy. The people chosen by President-elect Mauricio Macri, Alfonso Prat Gay, Pedro Lacoste, Rogelio Frigerio, and Federico Sturzenegger, to lead the ministries and agencies in charge of the Argentine economy are shrewd operators with ample experience in the public and private sectors. Their knowledge of how the Central Bank and other state-ow

ned banks and agencies operate is an essential asset to this transition. During my lifetime, (I was born in 1954), not a single elected president who was not part of the Peronist party was able to finish his mandate. That’s not to say that they were all destabilized by the Peronists alone; one of them, Raúl Alfonsín (1983-1989), did it mostly to himself. His team implemented an easy money policy, which destabilized the economy, forcing him to call for early elections.

The knowledge that Prat Gay, Lacoste, and Sturzenegger have of the web of interventionist regulations currently used to control most aspects of the Argentine economy will help the next administration to carefully assess any malfeasance conducted by the Kirchner government during these last weeks and until they take charge on December 10. Martin Lousteau, chosen to become ambassador to the U.S., belongs to the same club as the rest of the economic team. He also worked for the Kirchners and following his political instincts more than his economic understanding, greatly increased the dreaded export taxes, but was chosen due to his political clout.

Like good technocrats, the new team will be able to dazzle their audience and other policy players with numbers and figures. Yet having knowledge of data and economic statistics is not enough to avoid missing the goal of achieving financial stability and sounder monetary policies. The track record of Argentine “monetary experts” has not been good. In this case, pragmatism, of a non-dogmatic, Keynesian fashion, will be the norm. Prat Gay was head of the Central Bank in the early years of Nestor Kirchner’s administration (2002-2004), and Pedro Lacoste was his deputy. Lacoste’s consulting firm, Tilton Capital, is named after the estate of the late John Maynard Keynes. Only when compared with 21st century socialists can this team be considered “neo-liberal;” neo-Keynesian is more appropriate, but still much better than neo-Marxists like the departing Axel Kicillof.

What changes will we see first? I expect that soon most prices will be determined by the market process. There will be a gradual and uneven liberalization of the prices currently set and subsidized by the government (for instance, a train ticket costs 20 U.S. cents, which I estimate is 10 percent of its real value). I forecast that President Macri will respect his commitment to letting the price of the U.S. dollar and other foreign currencies be determined by the market, while asking his team of technocrats to try to smooth major fluctuations. But this will only be possible if the government puts its fiscal house in order and pursues a sound money policy.

To accomplish this goal, I expect that President-elect Mauricio Macri will seek major support from international financial institutions. He will show signs of responsibility by negotiating an agreement with Argentine creditors (the “holdouts”) and pushing for less politicized relations with most countries. Transparency in these first deals, divulging commissions and fees paid to financial brokers and legal advisors will indicate if there is a chance that positive change in Argentina is possible.

The new Minister of Energy, Juán José Aranguren, the recently retired head of Shell Oil Company, was one of the few in the business sector who, during this last decade, dared confront the Kirchner administration not only with words but also with lawsuits. In economics, he champions free markets moderated by social policy; his principled stances made him a darling of local free-market think tanks.

As Minister of Homeland Security, Patricia Bullrich will have a daunting task. But she does not lack the courage. As minister of labor in a previous administration under President De La Rua (1999-2001) she was the only one to really confront the Peronist labor unions. Originally from the “left,” Bullrich became a staunch defender of republican institutions both in Argentina and abroad (with Macri, she will fight for the freedom of Venezuelan political prisoners). Eugenio Burzaco is the new head of intelligence. Burzaco created the police of the city of Buenos Aires in order to counter the more politicized national (federal) police. Teamed with Bullrich, they will be a formidable team. They are committed to combatting narco-trafficking and the many criminal endeavors supported by its profits. Germán Garavano, who with Burzaco wrote “Mano Justa,” a book that received the Sir Antony Fisher Award from Atlas Network in 2005, is the new Minister of Justice. In no area does Argentina score so low as in respect for rule of law and justice. So these appointments are of immense importance.

In addition to justice and security, Argentina faces major challenges in the educational arena. Esteban Bullrich, the new Minister of Education, will bring his knowledge, innovative spirit, and integrity to the national scene. He developed and tested his skills as secretary of education in the city of Buenos Aires. He understands the theory and practice of education.

In Labor, Jorge Triaca (Jr), the son of one of the few moderate labor union leaders in Peronist history, played important roles in Fundacion Pensar. Pensar is a think tank that started as a state policy network, collaborating with think tanks across Argentina and Spain. It later became the official public policy ideas generator for the Macri-led political organization (PRO). Jorge Triaca left Pensar when elected to Congress. Due to his knowledge, big tent approach, and demeanor, he is one of the most admired politicians in Argentina today.

Argentina confronts major problems in economics, rule of law, security, and education. The team assembled by Macri is outstanding on many fronts. In my area of expertise, economics, I anticipate that interventionism will continue. This interventionism will be less political but, as it always favors some at the expense of others, it will not be less risky. In international affairs and global positioning, Argentina will show a very different face, much more civilized, respectful, and modern. All in all, a much welcome change for Argentina, the region, and the world.

By Andrew O’Reilly
December 2, 2015

Argentina’s President-elect Mauricio Macri still has over a week to go before he moves into the presidential palace and he is already dealing with a major political controversy that threatens to impugn his governance before it even begins.

And it stems from the person who currently holds office in the Casa Rosada. N.B. The general impression is that the President wants to take over the swearing in of Macri as President and seize all the attention by turning the ceremony into a farewell to her, inciting her followers, especially La Campora, to form a mob that will cheer her rather than Macri. Childish, indeed, but unless the entire ceremony turns into a Goodbye Chris riot, Macri is forced to insist on tradition and the legal rules established for the ceremony. The results of Christina’s actions are not amusing, since she seems dedicated to sabotaging the future government at any cost.

Macri claims that outgoing President Cristina Fernández de Kirchner is sabotaging his presidency before he even takes office – causing problems that include returning federal funds to provincial governors to stymying efforts to hold productive meetings about the government transition.

“I think it’s clear that the president does not want to cooperate,” Macri said, according to La Nación, one of Argentina’s largest newspapers. He added that that “it would appear she will continue to find ways to create as many problems as she can for the new government.”

While transitioning to a new administration can often be bumpy, the two on the opposite sides of the political aisle are taking their disagreements to a whole new level.

Analysts say that Fernández’s refusal to aid the presidential transition process – and seeming undermining of Macri before he even takes up office – indicates her anger over her party, Frente para la Victoria (FPV). It also shows, they say, that she will try to continue playing a major role in Argentinian politics after she leaves office.

“Cristina Fernández de Kirchner is not going to go quietly into the night,” Jason Marczak, the deputy director of the Washington D.C.-based Adrienne Arsht Latin America Center at the Atlantic Council, told Fox News Latino.

The most pressing problem facing Macri when he takes office on December 10 is Fernández’s decision to return over $10.1 million in funds to provincial governments that was previously diverted to the ANSES social security agency.

The move – one that Fernández had previously said she would not do – not only further drains the coffers of the already financially-strapped government, but also sets up a tense relationship between Macri and the governors of these provinces as his administration scrambles to find the funds to pay them.

“Withholding the funds was originally meant as a way to deal with provincial governors, but now she delegated out the funds because it will create problems for Macri,” Bruno Binetti, a research associate at the Inter-American Dialogue, told FNL. “Less money means less way for Macri.”

Traditionally the staffs of outgoing and incoming presidents hold multiple meetings that last hours to discuss issues important to the country. So far, however, Fernández and Macri have met once for 20 minutes and all that was discussed was the inauguration ceremony.

The back-and-forth bickering has become so childlike that the two are even in a bitter fight over the presidential sash.

The Argentinian constitution says the president must be sworn in to office in the congressional building and that a procession should be held from Congress to the Casa Rosada, where the outgoing president bestows a sash on the country’s new leader. Fernández, however, has taken issue with handing over the sash at the presidential palace, saying it should be done in Congress – where she will likely be joined by many of her supporters.

This fights come after a bruising election that included a primary in August, a first round in October and then a runoff in November. They also come at a time of major transition in the South American nation of 41 million.

For 12 years, Fernandez and late husband and former President Néstor Kirchner dominated the political landscape. They spent heavily on social welfare programs for the poor, passed laws such as legalizing gay marriage, raised tariffs to protect local industries and greatly increased the size of government and its role in society.

Macri, a conservative who ran on free-market ideas, promised to undo many of those policies while combating corruption and myriad economic problems, like inflation near 30 percent, near-zero growth the last several years and byzantine controls on the buying of U.S. dollars that has created a booming black market.

Fernández’s actions in the waning days of her presidency have many people speculating that she has no plans to leave a politics behind once she steps down, especially since she still enjoys around 40 percent support in the latest polls and is viewed as the leader of the FPV party.

This is good news for her allies and bad news for Macri, who will need to act swiftly upon taking office to fend of attacks from Fernández and her cronies.

“She is going to continue to be a thorn in the side of Macri,” Marczak said. “There is going to be real pressure on Macri to deliver results early in his presidency so he can fend off any more attacks.”

The Taming of the Argentine Right?

By Ernesto Semán

Early in the night on Sunday, November 22, Mauricio Macri became the first leader of a conservative coalition to win a presidential election in Argentina since 1910. A sense of hyperbolic exhilaration has been flowing through conservative movements in the region ever since. Just a few hours after the victory, one Mexican tabloid, not without reason, hailed the event occurring all the way at the other end of Latin America as “the first blow in 15 years to the chavista bloc.”

Change likely lies ahead for much of South America. In the case of Macri and Argentina, the lesson for the region is how a conservative businessman, mayor, and former president of one of Argentina’s most popular soccer clubs, made use of a period of political and economic stagnation to radically revamp right-wing politics. His election gave new and powerful steam to the idea of a “democratic right,” even if the two concepts remain, for many, in uncomfortable tension. To do this, Macri’s Cambiemos (Let’s Change) coalition incorporated liberal democratic jargon and widely shared notions of social rights into a broad-based, but notably tamed, conservative rhetoric. In that sense, then, Cambiemos’s victory can be read as a bittersweet success for departing president Cristina Kirchner and her late husband, as it proves how far their populist governments moved the political mainstream to the left over more than a decade. But against Cambiemos’s own narrative and the optimism of progressive forces about the endurance of populist legacies, what Macri will do in office starting next week could be a totally different matter.

When Sebastián Piñera became president of Chile in 2010, Argentines looked down disparagingly at their neighbors, criticizing the intrusion of a billionaire businessman into the realm of politics. In the early 1990s, Argentines laughed at the rise of Gonzalo Sánchez de Lozada, the Bolivian president who spoke Spanish with a marked English accent. Alas, what goes around comes around. Macri is the heir to one of the leading economic groups in Argentina. And like Sánchez de Lozada, his accent seems foreign to modern politics in the country. It contains little of the staccato of popular Argentine castellano. The new president’s words move fast and inward, the tongue one size larger than the mouth, the dispensable consonants buried under a free-flow of vowels that have typically characterized the accent of Argentina’s elites. It’s what Argentines, when mocking their country’s upper crust, refer to as “hablar con la papa en la boca” – literally, to talk with a potato in one’s mouth.

Yet few things are more misleading than Macri’s verbal intonation. What’s remarkable about the elections is how Macri was able to transcend the stigma associated with his social class to create a large, multi-class political movement. A prevalent theory during the 1960s posited that the Argentine elite’s inability to build popular consensus around their interests contributed to recurrent political instability and military coups. Macri’s victory appears to mark the unofficial end to that sort of thinking, showing how a conservative leader can win the majority of a socially progressive electorate in a contested election. Macri did what no other conservative predecessor was able to do: he turned right-wing thinking into an electorally competitive option.

There are many factors that explain Argentina’s apparent “right turn,” as María Esperanza Casullo, a political scientist from Universidad Nacional de Río Negro, recently explained. Beginning in 2003, when the late Néstor Kirchner came into power, kirchnerismo carried out a set of successful progressive policies: massive social programs that significantly reduced poverty, the maintenance of a low unemployment rate, and a good record on human and civil rights, including the prosecution of members of the 1976-1983 military dictatorship for human rights violations and the passage of a historic same-sex marriage law. In 2011, Cristina Fernández de Kirchner obtained reelection with 54 percent of the vote due to these achievements.

But since then, the government has been the victim of several self-inflicted blows. Starting around 2011, as the economy stalled, kirchnerismo rejected criticisms about the efficacy of many of its reforms; at the same time the government ignored new popular demands for more transparency, social inclusion, and citizen security. Decisions made out of some rigid notions about how economic agents would react made things worse. As Gerardo Aboy Carlés, a sociologist who studies populism at Universidad de San Martín in Argentina, said, “The last stage of Cristinismo does not do justice to kirchnerismo as a whole.” With a sectarianism “rarely seen in Argentina since the democratic restoration of 1983,” Peronism under Kirchner became, in Aboy Carlés’s words, something “increasingly alien from democratic Argentina,” and even “from Peronism itself.”

No scholar was more idolized by kirchnerismo than the political philosopher Ernesto Laclau, his name liberally trotted out as a source of legitimacy for populist politics in cafés and on TV programs. But kirchnerista activists disregarded one of Laclau’s most important messages about the nature of populist movements – the idea that no political identity is independent from the moment and discourse in which it is presented. Instead of responding to the changing concerns of constituents, acolytes of kirchnerismo have too often acted as if the government was intrinsically right, rather than understanding that “right” and “wrong” were the product of building a relationship of trust with their constituency, and then together establishing the movement’s priorities. Given these problems, it’s remarkable that Kirchner’s chosen successor, Daniel Scioli, still came just three percentage points shy of victory.

Macri argued that only the Argentine Right was capable of representing a broad range of demands for change, no matter the kind.

The irony of this all is that Cambiemos proved to be more observant of Laclau than his hagiographers. Macri presented Cambiemos as the only available means for political transformations in Argentina’s current climate. Bolstered by a sluggish economy and a sense of national fatigue after 12 years of Kirchner presidencies, Macri argued that only the Argentine Right was capable of representing a broad range of demands for change, no matter the kind. He embodied right-wing politics not as an ideological mandate but as a social construct, capable of representing even those interests that were not inherently conservative.

How exactly did Macri do this? Although his political ascent occurred outside the two most powerful political parties of Argentina, the liberal Unión Cívica Radical (UCR) and Peronism, he incorporated bits of each party’s political rhetoric into Cambiemos. Macri embedded Cambiemos within a broader defense of republican values – not always a comfortable lexicon for movements historically associated with military coups. As Jennifer Adair, a historian at Fairfield University who studies the post-dictatorship democratic “transition” that was led by President Raúl Alfonsín, explained, Macri’s alliance with Alfonsín’s heirs “allowed PRO [Macri’s political party and the dominant party within the Cambiemos coalition] to build off the remaining territorial base of the Alfonsín’s UCR.” This proved to be a crucial advantage for Macri on Election Day.

However, when historians look back on Macri’s victory, the day that will remain most significant will be Sunday, July 19, 2015, when Macri acknowledged that he would not roll back all kirchernista reforms. In a speech after his party won by a narrow margin local elections in the city of Buenos Aires, he said that the Universal Child Allowance, the largest and most successful social program of the Kirchner years – and a policy denigrated by one leader of Cambiemos as a subsidy for drug consumption – would continue. Macri added that the nationalization of Argentina’s national airline, one of the most contested economic actions taken during Cristina Kirchner’s presidency, would not be reversed. (Advisors to Macri had made similar comments about the country’s national oil company). In just a few words, Macri insisted, clearly and publicly, that should he be elected, the state would still have a significant presence in the economy, particularly with respect to social policies targeting the poor.

This was a game changer. Those vitriolically opposed to the Kirchners whined, yet they remained by their candidate’s side. And through Macri, social rights – the notion that social sectors like workers and the unemployed are entitled to protections, as a group, to put them on an even playing field with the rest of society – have now been incorporated into Cambiemos. A vast electorate, which over decades internalized the idea that social rights are intrinsic components of democracy, opened itself to the conservative candidate, arguably for the first time in the twentieth-century. (Less than a year ago, I mentioned to one of Macri’s advisors that the then-candidate’s only hope in winning laid in recognizing the Kirchners’ achievements, accepting comprehensive ideas of social policies and state intervention. At the time, I judged that he would not be able to do so. I was right in the first part. And clearly wrong in the second one.)

Of course, against these changes, the rhetoric of Cambiemos remains plagued with clichés originating in the modernizing theories of decades past. These include tropes about the risks of collective action, the limits of guaranteed government benefits, and the fear of strongmen squashing individual freedom. Argentina’s future Secretary of Treasury has said that every few decades a caudillo from the backwards provinces does away with progress made by advanced urban politics. Another member of Cambiemos has also suggested that women in poor neighborhoods get pregnant so they can obtain social benefits designed for mothers. But such extreme claims can be deceiving; fears about populism mask its threatening proximity and influence. Consider the fact that as recently as the late 1940s, Macri’s grandfather, an Italian immigrant, settled in a Buenos Aires housing project that Eva Perón paternalistically made available to new immigrants, the embodiment of the sort of populism that Macri’s coalition decries today.

If the experience of Chile’s Sebastián Piñera, who hailed the importance of Macri’s victory, indicates anything about what may be in store for Argentina during a conservative presidency, the future might not be as dark as many on the Left may think. Jennifer Pribble, a political scientist at the University of Richmond who studies social policies in Latin America, notes that Piñera “did not undo any of the center-left Concertación’s emblematic social reforms under Bachelet.” While Piñera “had initially criticized Bachelet’s pension reform as a new handout, he made no effort to roll it back.” But as Pribble also points out, with Chile’s economy booming at the time, Piñera had few incentives to cut social policies. Economic expansion, high international prices for copper, and social programs passed by law (with their funding secured), all prevented a radical revision of social policies there.

But Macri will have incentives to change. The Argentine economy is entering its fourth year with little to no growth. Soybean prices are at their lowest in a decade. Macri’s economic advisors have already promised to target Argentina’s large fiscal deficit. And inflation this year will be around 25 percent. What’s more, not all of the social programs in Argentina have secured funds, making them far more vulnerable to belt-tightening measures. Given this context, Macri’s new economic team has already announced some of its intended first measures. These include the reduction of export taxes on soybeans and the elimination of such taxes on Argentine beef, wheat, and corn. They also include the end of massive subsidies for domestic utilities and transportation. The gamble is to reduce the fiscal deficit and incentivize foreign investment, but the chance of generating more inflation while reducing fiscal resources looms on the horizon. If history has taught us anything, it’s that hawkish attempts at reducing the fiscal deficit tend to expand it. If that happens, the incentives for a more conservative austerity plan, and the coercive measures that would accompany it, will be greater. The hope that populist legacies will restrain Macri’s conservativism clash against a more Leninist notion of politics: that a brief moment of broad support should be taken advantage of to carry out the most radical reforms. No wonder The Economist, thrilled with Macri’s victory, predicts reforms that are “likely to be faster and more profound” than some may expect.

In the meantime, Macri will also roll back the foreign policy of the last decade. Crucial in that agenda will be Venezuela. Macri has already said he will request the removal of the country from the Mercosur trade bloc. It’s a bold proposal, but one that seems to currently have little regional support. But the region, which has been effective in keeping U.S. pressures for regime change at bay, is increasingly ineffectual in having a positive impact in what seems to be a toxic domestic dynamic in the oil-producing country. That vacuum will keep space open for Macri to make demands on Venezuela, and for the United States to back Argentina.

Yet the real signs for the rest of Latin America will not be read in Macri’s foreign policy but back at home. The new administration’s ability to appeal to the country’s popular sectors as it tries to maintain ideological commitments is likely to define the success or failure of Macri’s presidency. It is also likely to underscore the legacies of kirchnerismo. As this process unfolds, conservative movements in the region will be looking toward the flat, western shoreline of the Rio de la Plata in search of their city upon a hill.

By Mike LaSusa
Thursday, 03 December 2015

Argentina’s incoming security secretary has called for the creation of an “elite force” targeting hardcore soccer fans known as “barras bravas,” illustrating the serious threat posed by gangs that have blurred the lines between sports hooliganism and organized crime.

President-elect Mauricio Macri’s chosen security secretary, Eugenio Burzaco, recently told local media outlets that Macri has ordered him to “dismantle these mafias that are the barras.”

According to Clarin, the new administration considers the barras “illicit associations,” and plans to combat them by modeling intelligence-gathering and investigative efforts after those used by the US Federal Bureau of Investigation (FBI).

Their aim, said Burzaco, was to put an end to the Barras extortion activities, and that this should not be delegated to the soccer clubs but must be done by the state.

The move against the barras comes as part of a wider anti-crime crackdown planned by Macri’s incoming administration, who made security a central pilar of his election campaign.

InSight Crime Analysis

President-elect Macri will have had the opportunity to witness firsthand the impact of Argentina’s barras bravas as the president of the popular Boca Juniors soccer club between 1995 and 2007. Over the years, the Boca-supporting barra “La Doce” has gained a reputation as one of the most powerful and dangerous barras in Argentina. Bocas Juniors’ fans were known for being so fanatical that fans from opposing teams were sometimes barred from attending the Bocas’ home games due to safety concerns.

The propensity of Argentina’s barras for starting riots and brawls certainly generates concern among security officials. An Argentine organization called “Let’s Save Soccer” estimated that dozens of people have been killed in soccer-related violence in recent years. However, many barras have evolved beyond being mere violent thugs and it is likely that it is the barras’ involvement in ticket scalping, drug running and other criminal activities, combined with their sizeable political influence, that has drawn the attention of the new government.

However, reining in the barras will be no easy task. Many have garnered enormous influence within the power structures of the clubs themselves, and the club hierarchies have been known to use them as security, to rig club elections and intimidate opponents. Without cooperation from the clubs, the security forces will struggle to dismantle groups that evidence suggests are becoming ever more organized and powerful.

Dec 3, 2015

Buenos Aires, Argentina, Dec 3, 2015 / 12:04 am (CNA).- The Argentine bishops’ conference issued “a strong call to conversion” to those involved in drug trafficking and dealing, urging them to take advantage of the Church’s Jubilee Year of Mercy which begins Dec. 8.

“We are especially addressing those who belong to criminal groups, those who look with indifference upon the tragedy their brothers are going through, those who are collaborating by omission or commission in the spread of this scourge,” the bishops of Argentina said.

Their appeal came in their message “No to drug trafficking, yes to the fullness of life,” written during their 110th Plenary Assembly in early November.

The Argentine bishops also called for efforts to combat the plague of drug trafficking in their country. They warned that its presence and spread entails the complicity of power “in its various forms.” The prelates warned of “the gravity of the situation our country is facing on this issue” and reminded all of society of “the need for urgent conversion.”

This transformation, they explained, “can’t be understood from just one aspect” since “any response on just one level will turn out to be just as inefficient as it is useless.”

The prelates emphasized that drug trafficking is “a business of global dimensions, that extends its network into governments, businesses and multiple sectors of society.”

“The government needs to deploy an organized force to neutralize the enormous damage it causes” they pointed out. They lamented that drug trafficking is “deeply rooted in our country.”

The bishops’ conference connected drug trafficking with the “global culture of consumerism” which “creates unsatisfied desires and imposes on our countries a market with an inadequate scale of values.”
This consumerist culture, they said, “is constantly sending out the false notion that without having certain things you can’t be happy.”

The bishops connected this to the “globalization of indifference,” an often-used phrase of Pope Francis. They said this phenomenon “creates an individualistic culture based on consumption which creates a favorable framework for the expansion of drug trafficking networks.”

“Drug trafficking is conducted in the most brutal spirit of capitalism and the idolatry of money: it’s inseparable from them,” they reiterated.

Argentina is seeing a rise in the manufacture and use of a drug called “paco,” a highly addictive cocaine-based drug that is smoked like crack.

The bishops referred to “the growing number of people who make ‘paco’ or other very harmful preparations at home.” They lamented that these small-scale manufacturers then act “without any scruples to the outrageous point of sending out their own children or grandchildren to sell drugs.”

“This reality offends against the Fifth Commandment, ‘Thou shalt not kill’!” they warned. At the same time, they said drug dealers are more morally culpable than “the poor kid who’s finally used to deliver the drugs.”

One response to drugs is to have the “best possible security forces.” But the Argentine bishops emphasized the most appropriate response is “a profound cultural transformation.”

“Drug trafficking ensures the success of the person who with little effort gains a lot and who’s outside the law,” they stated. This discourages those who try to succeed through honest work.

The bishops called on governors, legislators and members of the judiciary to take responsibility for these situations. They called for strong and appropriate policies to eliminate drug trafficking and sales.

They called upon “all the People of God and so many people of good will” to fight against drug trafficking. They also called for a commitment to care for those who are suffering from drug use “directly or indirectly.”

“The Church wants to be close to families who are hurting because some of their members are addicted to drugs,” they added.

FRIDAY, 12/4












By Taos Turner
Dec. 3, 2015

In her last weeks in office, Cristina Kirchner raises public spending, fills government jobs and increases debt

BUENOS AIRES—With only a week left in office, Argentine President Cristina Kirchner is moving at a breakneck pace to increase public spending, fill government jobs and increase the debt that may have to be paid by her successor, Mauricio Macri.

Mrs. Kirchner signed a decree this week to turn over billions of dollars to provincial governors, a move that could force Mr. Macri to find fresh funding just as he tries to reduce the biggest fiscal deficit in Argentina since 1982.

In a news conference Wednesday, Mr. Macri said Mrs. Kirchner was trying to create as many “new roadblocks and problems as she can” for his incoming administration. Mr. Macri, leader of the “Let’s Change” coalition, will replace Mrs. Kirchner, of the Peronist party, on Dec. 10. His inaugural ceremony, which he and Mrs. Kirchner are now bickering over, will formally end more than 12 years of populist rule by Mrs. Kirchner and her late husband, Néstor.

“This is a sad choice that the president has made. Everything she does that she thinks will hurt our government will in reality hurt all Argentines,” Mr. Macri added.

A spokesman for Mrs. Kirchner didn’t respond to a request for comment. Earlier Thursday, her cabinet chief, Aníbal Fernández, said he didn’t think Mrs. Kirchner was trying to cause problems for Mr. Macri. A day earlier, Mr. Fernández had said the problem could make it hard for the incoming government to pay pensions.

But Mr. Macri’s advisers say there are legal ways to reverse Mrs. Kirchner’s move regarding the provinces and are confident it will not hamstring the new administration.

Throughout her tenure, Mrs. Kirchner withheld billions of dollars in tax funds that belonged to the provinces. Governors say she used the money to fund the pension system, but also to make them dependent on financing from the executive branch. That gave her political leverage, which she used to encourage governors to support her policies in Congress.

“She never would have done this if she were staying in office,” said Aldo Abram, director of Liberty and Progress, a local think tank. “Mr. Macri hasn’t even sat down in the job yet and he already has to figure out how where he’s going to find all these funds.”

If Mr. Macri is unable to overturn the decree, he could need almost $7 billion in additional funding, estimates Diego Giacomini, an economist at Economy and Regions, a research firm that specializes in provincial economic issues.

Mrs. Kirchner’s move comes after Argentina’s Supreme Court ruled last week that she was illegally withholding money from three provinces. Instead of abiding by the ruling, which would have obligated the Macri administration to distribute a much smaller sum to those provinces, she signed a decree that forces Mr. Macri to return funds that had been withheld from 23 of Argentina’s provinces and this capital city.

Even if Mr. Macri undoes the decree, Mrs. Kirchner’s actions have focused attention on the issue and could force Mr. Macri to “sit down and negotiate with provincial governors, most of whom belong to the Peronist party,” Mr. Giacomini said.

Mrs. Kirchner’s spending policies have put Argentina on track to post a fiscal deficit of more than 7% of gross domestic product this year. Along with a constantly rising money supply, that could make it harder for Mr. Macri to fulfill a pledge to cut inflation from around 25% annually to one digit within two years.

Mrs. Kirchner has also been quickly appointing new ambassadors and filling new government jobs. A recent count by The Wall Street Journal indicates she has moved to fill more than 2,500 positions in recent weeks, some of which are lifelong posts.

By Simon Romero and Elisabeth Malkin
4 December 2015

RIO DE JANEIRO — No one epitomizes the ups and downs of Brazilian soccer quite like Ricardo Teixeira.

As the leader of Brazil’s powerful soccer federation for more than 20 years, Mr. Teixeira helped land the 2014 World Cup. But as public rage erupted over spending for the tournament, demonstrators burned his effigy — replete with his signature jowls, sturdy frame and tailored suit — in street protests.

Even after his resignation in 2012 amid claims of illicit enrichment, Mr. Teixeira, 68, kept a high profile. Shuttling among luxurious homes in Monaco, Miami and Rio de Janeiro, he became a symbol for the excesses of the Brazilian sports world and the failings of Brazil’s legal system in prosecuting corruption.

But on Thursday, Mr. Teixeira came to represent something else entirely when he figured among 16 of the most powerful figures in Latin American soccer who were charged in the latest chapter of the United States’ broad investigation of corruption in international soccer.

Joining Mr. Teixeira on the list, in a region that is a pillar of world soccer, were members of the elite of several countries who led or played a role in regional soccer federations, including Rafael Callejas, a former president of Honduras; Marco Polo del Nero, the president of Brazil’s soccer federation; and Héctor Trujillo, a magistrate on Guatemala’s highest court.

Virtually every head or former head of soccer in Central America was charged, and the heads of Concacaf, the regional soccer governing body for North and Central America and the Caribbean, and Conmebol, the body that covers South America, were also charged and arrested in Zurich before a FIFA meeting.

The indictment accuses the group of routinely accepting bribes and kickbacks that sometimes reached six figures, through the sale of lucrative marketing and media rights for an array of tournaments and matches.

The charges, coupled with a round of indictments in the spring that first shook up world soccer, mean three successive presidents of both Concacaf and Conmebol have now been charged, puncturing soccer leadership’s air of invincibility in a region that has long struggled with corruption and impunity.

”There have been various attempts to investigate the business practices of the Brazilian Football Federation, but the political favoritism and cultural capital of football in Brazil have always limited these attempts,” said Christopher Gaffney, a scholar at the University of Zurich who studies the politics of soccer. ”While we may question the role of the United States as a global watchdog in many respects, this is one instance in which the extraordinary power of the Justice Department is working in ways that benefit the world at large.”

A number of analysts were stunned at the audacity of some of the officials, who made arrangements for bribes at meetings in the United States and, in some cases, even after the latest scandal first broke in May, despite worry about investigators.

”Nothing should be said over the telephone. Nothing! … Nothing! Nothing!” the indictment quotes Brayan Jiménez, the president of the Guatemala soccer federation, as saying at a meeting in Chicago in July to negotiate an alleged bribe payment.

The indictment sent shock waves through soccer heavyweights like Brazil and Argentina as well as smaller countries like Guatemala and Costa Rica. Mr. Callejas, the president of Honduras from 1990 to 1994 and the president of the Honduran football federation for 13 years until this past August, was quick to defend Alfredo Hawit, the current head of the Honduras federation and Concacaf president, after his arrest in Zurich, and early in the day Mr. Callejas seemed unaware that the investigation was closing in on him, too.

Later, when prosecutors announced that Mr. Callejas had been charged, he appeared ashen-faced as he addressed local reporters. ”I wasn’t expecting this,” he said, admitting it was ”a complex, difficult situation.”

Mr. Callejas said he was innocent and added, ”I did not take one single dollar or lempira from” the Honduran football federation.

In May, shortly after the first arrests and newly installed as the president of Concacaf, Mr. Hawit declared his innocence to the Honduran newspaper Diez and denied he was under investigation.

Mr. Hawit was named president of Concacaf in May to replace Jeffrey Webb, who was arrested when the scandal broke in May. Mr. Hawit had spent many years as the secretary of the Honduran federation and then took it over from Mr. Callejas on Aug. 1. He was on the law faculty of the National Autonomous University of Honduras, the country’s main university.

The indictment’s accusations against Mr. Callejas and Mr. Hawit were repeated in variations against the region’s federation bosses. According to prosecutors, a sports marketing company, Media World, paid a bribe of $600,000 in December 2012 for the rights to Honduran qualifier matches in advance of the 2022 World Cup. The pair was also accused of taking bribes for the rights to 2014 and 2018 World Cup qualifier matches.

In a situation similar to that of Mr. Hawit, Mr. del Nero, the president of the Brazilian football federation, had recently replaced José María Marin, the octogenarian soccer grandee who led the organization until April. Mr. Marin was arrested in May in Zurich in the first sweep and was extradited to the United States.

Mr. del Nero returned to Brazil at the time of the arrests. Last week, he resigned from FIFA’s executive committee and was replaced by Fernando Sarney, a scion of the Sarney political dynasty from northeast Brazil.

The indictment describes a meeting in Miami in April 2014 when José Hawilla, a Brazilian sports marketing executive, asked Mr. Marin if he needed to keep paying bribes to Mr. Teixeira. ”It’s about time to — to have it coming our way. True or not,” Mr. Marin replied. Mr. Hawilla, who is cooperating with the investigation, agreed that it was.

The indictment also accuses Mr. Teixeira of soliciting and receiving millions of dollars in bribes from 1990 to 2009 in connection to the media rights for the Copa do Brasil tournament.

Efforts to reach Mr. Teixeira, who recently sold two luxurious homes in South Florida, were unsuccessful. Brazil’s football federation said in a statement Thursday night that Mr. del Nero had requested a leave of absence to defend himself. It also said that he believed he would prove his innocence.

During his leave, Marcus Antônio Vicente, the federation’s vice president, will take his place.

In neighboring Argentina, there are now five defendants in the FIFA case. In addition to the sports marketing executives Alejandro Burzaco, and Hugo and Mario Jinkis, the investigation now involves former Argentine officials at Conmebol.

José Luis Meiszner has been an influential figure in Argentine soccer. He was president for three decades of Quilmes, a soccer team in Buenos Aires that named its stadium for him. After leaving the presidency in 2011, he became the secretary general of Conmebol. But Mr. Meiszner announced his resignation last week, according to local news media reports, explaining that he wished to give the new federation president freedom to fill the post.

Mr. Meiszner was being investigated this year by Argentine authorities over his personal finances. He was a close aide to Julio Grondona, a strongman of the region’s soccer politics who led the Argentine federation for three decades before his death last year.

The indictment of Mr. Meiszner and Eduardo Deluca, a former representative to Conmebol, came before the tectonic plates of Argentina’s soccer politics seemed set to shift.

As the news broke, soccer directors were preparing to vote for Mr. Grondona’s successor. Of the two candidates, Luis Segura, an interim president, has been viewed as a fusty continuity of Mr. Grondona’s rule. Marcelo Tinelli, a popular TV host, is proposing a revitalization of Argentine soccer, which is plagued by violence and corruption. Tapping into anger over the corruption scandal, Mr. Tinelli was retweeting news of the arrests Thursday.

”They are reaching people who we thought were untouchable,” Sebastián Fest, a sports columnist at La Nación newspaper, said of the indictments against Mr. Meiszner and Mr. Deluca. ”The efficiency of the investigation is striking. Its scope will undoubtedly grow.”

Mr. Fest said the investigation was now touching the heart of Argentine soccer politics, pointing to the trusted relationships that Mr. Meiszner and Mr. Deluca had with Mr. Grondona, who was continually shrouded in corruption accusations but never convicted of a crime. ”These were essential people to Grondona,” he said. ”They were his ambassadors at Conmebol.”

The investigation implicated smaller countries, too, nearly all of the ones in Central America.

Mr. Jiménez and Mr. Trujillo, general secretary of the Guatemalan football federation, as far back as 2010 accepted a six-figure bribe for the rights to Guatemala 2018 World Cup qualifier matches, according to the indictment. The money was allegedly shared with a former Guatemala federation president, Rafael Salguero, who was on the FIFA executive committee. In 2014, a similar arrangement was made for Guatemala’s 2022 qualifiers.

Mr. Trujillo, who has been executive secretary of the federation since 2009, said after the 2013 investigation into the former Concacaf president Jack Warner: ”It is really devastating what we have heard and it cannot remain like this. It’s a scandalous fraud, a theft committed against Concacaf and FIFA.”

But behind the scenes, the indictment said, Mr. Trujillo and Mr. Jiménez met with Fabio Tordin of Media World in Chicago, where Mr. Jiménez gave his exhortation about not using the telephone.

On Sept. 2, 2015, Mr. Tordin met with Mr. Salguero in Miami to discuss bribes for another scheme. Mr. Salguero said that he, along with Ariel Alvarado of the Panamanian Federation and Mr. Hawit, could all be in trouble because of the investigation.

Mr. Alvarado, who was president of the Panamanian Football Federation between 2000 and 2011 and a well-known lawyer, served on the Concacaf executive committee for several years before resigning in 2013.

Telephone calls to him were not answered Thursday.

At the Miami meeting, Mr. Salguero grew anxious.

”The three of us are in the same” mess, he said, according to the indictment, though a stronger word than mess was used.

By Vanessa Dezem
December 3, 2015

* More than 60 percent of Argentina’s energy comes from fossils
* Country approved law to target 8 percent clean energy use

Argentina is seeking financing for 7 gigawatts of renewable energy projects.

The Argentine Association of Renewable Energy, known as Cader, sent the government a proposal during the United Nations-organized climate talks in Paris to spur the renewable energy market, according to the association’s manager Julio Menendez. The package includes wind, solar, biomass and small hydroelectric projects that are developed and need financing.

“We have many projects that are ready to be built and can be finished from two to four years,” Menendez said in a telephone interview from Buenos Aires. “Our objective now is to reach out to potential investors.”

More than 60 percent of Argentina’s energy comes from fossil fuels. The congress recently changed regulation to increase renewable energy use. The country has 215 megawatts installed capacity of wind energy and almost no solar and biomass plants, according to Bloomberg New Energy Finance.

Adding 7 gigawatts could meet Argentina’s demand for energy by 2021, Menendez said. “The new regulation is key for the new capacity we are ready to start.”

New Law

Argentina’s congress approved a law in September requiring industrial consumers to get 8 percent of their power from renewable sources in 2017, a ratio that gradually increases to 20 percent by 2025. The penalty for non-compliance is equivalent to the cost of imported diesel.

The law also creates a fund to finance or buy stakes in renewable-power projects. It enables bilateral power purchase agreements directly between generators and large consumers, instead of restricting those consumers to the state-owned utility Cia Administradora del Mercado Mayorista Electrico SA, known as Cammesa.

“With the law approval, we can sign agreements both with the government and the private sector. We can do a mix,” said Vanesa Revelli, spokeswoman for ABO Wind AG.

The company is building a 50-megawatt wind complex in Pampa province. Total investments can reach $120 million. ABO Wind is seeking financing for the first phase of the project, with 30 megawatts, and expects to sign a power purchase agreement in January, Revelli said.

“Now Argentina is opening its market,” said Eduardo Tabbush, director at the Argentinian energy developer Eoliasur. “With the law, the renewable energy market will resume growth again.”

Dec 3, 2015

Gustavo Arribas, an attorney who represents soccer players and a former Boca Juniors club executive, has been named the next director of Argentina’s Federal Intelligence Agency, or AFI, by President-elect Mauricio Macri, the Cambiemos coalition said Thursday.

“Attorney Gustavo Arribas was appointed by the president-elect, Mauricio Macri, as the new head of the Federal Intelligence Agency. Arribas worked with Macri for many years, especially during his time as head of the Atletico Boca Juniors club,” the conservative political coalition said in a statement.

The 57-year-old Arribas is one of the owners of the HAZ Sport Agency, which represents soccer players, and one of Macri’s close advisers.

He assisted Macri when the president-elect was president of Boca Juniors, Cambiemos said.

Arribas will replace Oscar Parrilli, who has been Argentina’s intelligence chief for a year and previously served as President Cristina Fernandez’s secretary-general.

Argentina’s intelligence services were overhauled in March following the unsolved killing of prosecutor Alberto Nisman.

Nisman was fatally shot in his Buenos Aires apartment on Jan. 18, four days after bringing charges against Fernandez, Foreign Minister Hector Timerman and six other people for trying to conceal Iran’s alleged role in the 1994 attack on a Jewish organization in Buenos Aires that left 85 people dead.

Many in the Argentine Jewish community believe the attack on the AMIA Jewish organization was ordered by Iran and carried out by Tehran’s Hezbollah allies.

Both the Iranian government and the Lebanese militia group deny any involvement and say the accusation relies heavily on information provided by the CIA and Israel’s Mossad spy agency.

Prosecutors have yet to secure a single conviction in the bombing case.

The Fernandez administration indicated that there might be a link between Nisman’s death and some sectors of the former Intelligence Secretariat.

The president ordered a restructuring of the secretariat and its functions, and it was renamed the AFI.

3 December 2015

The following is a press release from Fitch Ratings:

Fitch Ratings-New York-03 December 2015: Mauricio Macri’s victory in the November 22nd Presidential elections has not had an immediate impact on Argentina’s creditworthiness. Once Argentina is able to resolve legal constrains preventing Argentina from servicing debt, the sovereign’s rating will likely reflect the degree to which the new administration can ease financing constraints and strengthen the consistency and credibility of the policy framework, according to a new Fitch Ratings report.

Fitch believes that the Macri administration will likely negotiate with ‘holdout’ bondholders. However, the timing of a comprehensive and final resolution to this process remains uncertain given political hurdles and the urgency of other issues, such as reducing foreign exchange distortions and correcting fiscal imbalances.

Argentina’s Long-Term Foreign Currency (LTFC) IDR has remained in Restricted Default (RD) since July 2014, and Fitch Ratings has indicated that the resumption of timely debt service on defaulted bonds would lead to the upgrade of the foreign currency IDR.

Fitch has moved 10 sovereigns out of the default category since 2003. Argentina is the only sovereign that has been lifted straight to ‘B’ from ‘RD’ (July 2010) due to higher per capita income and growth relative to peers, favorable public debt composition, consecutive years of current account surpluses and manageable financing requirements. Currently, Argentina faces weak international reserves buffer, high fiscal financing needs, growth underperformance and rising macroeconomic distortions

The task of rebalancing Argentina’s economy has become more difficult over the past year and is full of political challenges. FX and regulated price adjustments, if not accompanied by credible and broader policy measures, as well as adequate international reserves firepower, could result in greater BOP pressures, higher inflation and sharper economic slowdown. International reserves have declined by USD5bn since the beginning of 2015.

With no legislative majority and a narrow victory margin in the second round presidential election, the government faces the challenge of consolidating its popular support and creating a governing coalition to move ahead with politically sensitive measures.

A high fiscal deficit and significant financing needs await the new administration. Developing fresh financing sources and outlining a credible and politically feasible fiscal consolidation strategy will be important to boosting confidence and supporting a reduction in inflationary and FX pressures through reduced monetary financing.

Despite weaker flows to Emerging Markets (EMs), increased risk aversion and the 2014 default, investors have remained positive on Argentina due to the prospect of change after the elections. However, the risk of expectation reversal is present if policy adjustments disappoint.

By Maximiliano Rizzi
3 December 2015

BUENOS AIRES, Dec 3 (Reuters) – Argentine President-elect Mauricio Macri’s proposed tax cuts on soybean exports will also apply to shipments of soymeal and soyoil, the head of a leading grains trade group said in an interview.

Macri, who won the Nov. 22 presidential runoff election, promises to reduce the 35 percent tax on soy by 5 percentage points each year from 2016 but had not made clear if this would be the case for soy derivatives.

Alberto Rodriguez, president of CIARA-CEC, representing leading grains exporters and crushers, told Reuters late on Wednesday that Macri’s team had discussed the tax cuts with the industry group.

“In the case of soy, the same reduction in tax due for the grain will apply for soyoil and soymeal,” Rodriguez said. Exports of Argentina soyoil and soymeal are currently taxed at 32 percent.

Multinational giants like Cargill Ltd, Bunge Ltd and Louis Dreyfus Commodities BV have soy crushing plants and ports in Argentina.

An aide to incoming agriculture minister, Ricardo Buryaile, would not confirm or deny Rodriguez’s comments.

Argentina is already the world’s top exporter of soyoil and soymeal but crushing plants are only operating at about 70 percent capacity over the year, with periods of relative inactivity outside of harvest period.

Rodriguez expressed confidence Macri’s government would lift restrictions on soybean imports from neighboring producers such as Brazil, Uruguay and Paraguay.

Mill operators want to be able to import raw beans to crush during crop-growing months in Argentina, but have been prevented from doing so by protectionist policies under outgoing President Cristina Fernandez.

“The measures needed to improve the sector’s competitiveness are not that complicated,” Rodriguez said. “Policies that distort the sector have piled up, and I am confident they will be modified or lifted in a relatively short time.”

Rodriguez said the Macri government also needs to quicken the process of value added tax refunds and ease the red tape that has been a deterrent to investment.

Beyond the tax cut on soy shipments, Macri promises to eliminate taxes and lift quotas on wheat and corn exports.

Spot trading in Argentina’s leading grains markets has slowed sharply in the past month as farmers hold onto their grains until the tax reductions take effect, and in anticipation of a widely expected devaluation after Macri takes power.

Farmers in Argentina have long hoarded their harvested grains, which they use as a hedge against the country’s high inflation rate.

Farmers are holding back 16.75 million tonnes of soy, 20 million tonnes of corn and 9.5 million tonnes of wheat, worth a combined $1.35 billion, according to official data.

Rodriguez said he expected that the removal of wheat and corn export quotas, imposed by Fernandez to keep local prices suppressed, would spur exports.

“We’re going to have more transparent markets, where the domestic price is more in line with the international price. Right now there’s a big difference.”

By Agustino Fontevecchia
December 3, 2015

The election of Mauricio Macri as Argentina’s president after 12 years of the Kirchner clan in power blew new wind into the sails of South America’s second largest economy. It also led to a flurry of optimism across the country, and particularly on Wall Street. With hedge funds frothing at the mouth at the opportunity of snapping up Argentine assets at distressed values, a word of caution is in order. Not only is Macri not the free-wheeling capitalist markets suggest he is, but the challenges his administration faces—rampant inflation, a bankrupt central bank, a fractured political system, and a stagnated economy, to name a few—suggest more pain is in the cards before Argentina can spread its wings and become a fully functioning member of the world economy and the global financial system.

“Market euphoria,” read the BBC’s headline in the aftermath of Macri’s electoral victory against Peronist Daniel Scioli, Cristina Kirchner’s handpicked successor. “Argentina fever,” doubled down Bloomberg, adding that beyond an incredible rally in Argentine stocks (the main index, Merval, gained nearly 70% since January), even Argentina’s infamous defaulted bonds had broken above par value. Billionaire hedge fund managers like George Soros and Dan Loeb were hailed as visionaries for their bets on the Republic of Argentina resolving its decade-long legal battle with Paul Singer over defaulted debt.

While such optimism is not without its reason, it appears excessive and maybe even exaggerated. The current socio-political situation in Argentina, which is intimately tied to the economic situation, can be traced back to 2003, when Nestor Kirchner was elected president. But today’s woes are more closely connected to 2012, the year Nestor’s widow Cristina got reelected with 54% of the vote.

Cristina, or CFK as she’s known in Argentina, vowed to intensify the Kirchnerist model in an attempt to establish a long-lasting political legacy. From an economic standpoint, CFK sought to keep the Argentine peso undervalued to promote agricultural exports, while sustaining a dense network of subsidies and price-setting mechanisms that kept goods and services cheap to promote consumption (and win votes). This was sustainable in Nestor’s days, who counted on rising commodity prices to fuel a dual surplus that financed the populist party, while eventually taking foreign exchange reserves to a record of more than $52 billion in early 2011.

CFK presided over the period in which that system unraveled, eating into the stock of dollars her husband piled, and into her party’s political capital. The tide turned, as an economic slowdown in China led to falling commodity prices, particularly for soybean—which is Argentina’s cash crop. To support the nation’s aging transportation system, Cristina turned to even more subsidies and price caps which led to decreased investments, particularly in the energy sector, forcing a hydrocarbon rich-nation to import natural gas at exorbitant prices. As the budget deficit soared to 6% of GDP, CFK resorted to import restrictions, export taxes, currency controls and parallel exchange rates, along with the nationalization of pension funds and domestic energy company YPF to battle an ever-growing shortage of Benjamins.

Macri faces a dire financial situation and an even more daunting political challenge. With reserves having dwindled to less than $26 billion, he will be forced to devalue the currency and cut back on subsidies. Amid low productivity and falling economic output, Macri will have to inflict more pain on consumers, who’ve kept the country going, in terms of reduced purchasing power. With a central bank that’s broke, his economic team will have to fly to New York and, from a weak position, negotiate a settlement with bond holdouts who have several court judgments in their favor. And then there’s the political struggle.

Macri’s narrow second-round victory was preceded by an intensely contended presidential election that saw the electorate splinter into at least three major groups: loyal Kirchnerists backing Scioli, a broad group of dissident Peronistas behind Sergio Massa, and the President-elect’s own voters—a combination of wealthier conservatives, members of the traditional UCR, and a large contingent of Argentines of all ideological inclinations that were simply looking to oust CFK and her crew.

Thus, Macri finds himself in the uncomfortable position of having to implement tough and unpopular measures by seeking consensus. As the adrenaline of his win fades, Macri will have to deal with stubborn union leaders, mercenary lawmakers, and a hardened political apparatus in the streets—and Congress—that the Kirchnerists know how to use skillfully to make his life a nightmare. All of this in a country that has culturally adapted to political confrontation that all too easily ends up being played out in the streets of Buenos Aires.

Argentina, therefore, provides an incredible opportunity for investors. A nation swimming in natural resources with a well-educated population and a large domestic market in need of foreign direct investment. At the same time, it’s a country that has been in economic decline for decades due to an extremely complex socio-political dynamic that has eroded institutions and fostered bureaucratic inefficiency and corruption. For the sake of everyone, let’s hope Macri is up to the task.

By María Marty
December 3, 2015

Liberals May Have High Hopes, But the Other Shoe Has Yet to Drop

Some 51.4 percent of Argentineans — myself included — recently elected Mauricio Macri, Buenos Aires mayor and former businessman, as president. To be honest, however, we didn’t know what we were choosing. We even voted for him without being convinced that he was a good choice. He was just the only alternative to put an end to the Kirchners’ tyranny.

During the campaign, he distinguished himself from Daniel Scioli, the ruling party’s candidate, in form more than in substance. Unlike his opponent, Macri chose a peaceful, conciliatory, optimistic message.

The substance of Macri’s speeches, however, was not too dissimilar to that of the Kirchnerists. He vowed to keep in place welfare programs, government-owned companies, such as Aerolíneas Argentinas or oil concern YPF, and Tecnópolis, a permanent, government-run mega exhibition.

In short, Macri promised to maintain an interventionist state. In the middle of the campaign, he unveiled a monument honoring Argentina’s former President Juan Domingo Perón, a populist who became a national icon. He also bragged about not sacking a single government worker during his tenure as Buenos Aires mayor.

On the other hand, he might have realized for an instant that his big-government stance was scaring away his liberal voters. In a television interview, Macri said his supporters had no need to worry, since he planned to “remain loyal to the principles” he had always held.

But what principles was he referring to?

The answer is not clear, because Macri managed to become a mystery. Many of us wondered whether he embraced a populist discourse because he actually believed it, or if it was just a strategy to attract votes? After all, the great majority of Argentineans still adhere to ideals of a socialist tendency. Whether they do so consciously or unconsciously is another matter.

As for Macri, he now faces his moment of truth.

Two Roads, One Challenge

Robert Frost, the American poet, famously wrote:

Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.

For Macri, the choice is between the easy road and the arduous path, which also happens to be the right one.

The easy path for Macri is not to go against the grain and please the majority which, in one way or another, supports the Kirchners’ collectivism.

The right path is obviously more difficult to climb, since it implies taking a politically incorrect position. It requires adjusting the role of the government, firing people from their cozy sinecures, privatizing deficit-producing, government-owned companies, freeing the market, removing capital controls, and ending privileges for powerful interest groups.

In other words, the difficult path involves admitting openly that a country can’t grow if its policies are based on looting some people in order to give their money away to others.

If Macri takes on this challenge, he will have to say and do what many don’t want to hear, or don’t want to see done.

Progressives will whine but, in the end, only liberalization can heal the country economically and psychologically. Each individual would be able to stand on his own feet, instead of becoming a burden for others. Argentina could become a country where each of us can get ahead thanks to our own sweat. We will be able to leave behind the role of impotent victims, always dependent on government handouts.

It’s up to Macri to choose how he will be remembered, both as a person and as a politician. Will he add his name to the list of leaders that kept Argentina in an inglorious anonymity? Or will he go down in history as a new “founding father,” following the footsteps of Juan Bautista Alberdi?

Will he succeed in making Argentina one of the world’s most admirable countries? Or will he fail to stop Argentina’s descent into decadence?

We will soon find it out.

Changing the Culture Is Our Task

The task of changing the country, however, does not fall only upon Macri and his Let’s Change coalition. Politicians can do little if the prevailing culture limits their scope of action.

As Canadian-American philosopher Stephen Hicks said, adapting a quote from Stephen Drucker: “culture eats strategy for breakfast.”

Those of us who understand that the zeitgeist determines politics also have a duty to fulfill. We must strengthen the cultural change that began in Argentina on election day. If it doesn’t takes root, it will be a sudden and ephemeral change of direction that won’t affect the country’s future.

Our destiny is uncertain. We have to spread our ideas, fight in the cultural struggle, and influence public opinion in order to bring about real and necessary changes in the future. Last but not least, we have to keep an eye on our rulers, define their boundaries, and point out their mistakes. We have to demand accountability and speak out when they overstep the limits of their power.

We can make a fresh start. We can change. But we can’t afford any distractions. As Thomas Jefferson said: “Eternal vigilance is the price of liberty.”

Dec 3, 2015

As President-elect Mauricio Macri prepares to take office in Argentina, the country is at a crossroads: Will Macri’s administration mark a bright new age? Or will the current revival of optimism in Argentina be short-lived?

For the past 12 years, successive populist governments headed by the late Nestor Kirchner and his widow, outgoing President Cristina Fernandez de Kirchner, have staked the nation’s prosperity on high commodity prices and free-spending social programs, leaving Argentina mired in high inflation and a huge public-sector deficit, and isolated from access to international financial markets.

Under Macri, “important aftershocks are going to be felt across the region,” says Peter Schechter, director of the Latin America Center of the Atlantic Council, a Washington-based think-tank. The results of the Argentine presidential election will eventually have a profound effect on much more than domestic economic policy in Argentina, he adds. “It is a dramatic moment of inflection for the country.”

And yet, opinion is widely divided about Argentina’s prospects. Is the stage finally being set for Argentina to deliver on the enormous promise of its vast natural resources? Or will the nation of 43 million — the third most populous in South America after Brazil and Colombia — remain stymied by its deep-seated tradition of political divisiveness? The optimists stress that Argentina has a sizable middle class, huge energy reserves already popular with Chevron, Total and ExxonMobil, and an educated population. Those assets could offer significant additional opportunities for foreign investors and open new markets in Argentina for foreign providers of sophisticated consumer goods and value-added technologies and services — provided the Macri administration manages to make the critical economic reforms that he advocated during his campaign. Although everyone agrees that Argentina has vast potential for growth, the pessimists argue that Argentina’s long history of political instability and corruption does not bode well for Macri’s prospects to make those reforms over the next few years.

The New Reality

“Argentina is the first out of the gate for the new reality in Latin America?Twitter ,” says Kirk Sherr, president of Clearview Strategy Group, a Washington-based advisory firm for the Latin American energy sector. The November elections in Argentina were the first in the region to judge a voting population’s response to a new governing style that doesn’t rely on high commodity prices and is more adjusted to global realities, Sherr notes.

“Argentina is the first out of the gate for the new reality in Latin America.” –Kirk Sherr

It’s not just the future of Argentina that is at stake because of over-dependence on the prices of soybeans, sugar, corn, beef and other commodities. “If we look at Peru and Chile, it’s mining; in Venezuela, it’s oil and gas; in Bolivia, it’s oil and gas with a little mining; in Brazil it’s oil and gas, soybeans, sugar,” Sherr points out. Like Argentina, all of those countries managed to ride a wave of high commodity prices that allowed the state to grow, while enabling the government and state-owned companies to gain wealth and power, and corruption to thrive. Argentina is the first country in the region to have an election under the new reality of lower commodity prices. Facing even more catastrophic economic conditions, Venezuela is slated to have its own parliamentary elections on December 6.

According to the latest forecasts of the International Monetary Fund, the Argentine economy will grow by a mere 0.4% this year, compared with 0.5% in 2014. In 2016, it may well even contract, said the IMF. On the other hand, the country has been suffering an enormous fiscal deficit that could exceed 6% of its GDP this year, and a powerful outward flow of capital. Argentina’s monetary reserves are some $27.7 billion, or about 40% less than when President Cristina Fernandez de Kirchner assumed power in 2007.

Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, says that Macri has promised to completely overhaul the Argentine government’s macroeconomic policies, while arguing that Argentina’s Kirchner-era capital controls “are a mistake.” De Bolle adds that during the era of “Kirchnerism,” the central bank has lacked any independence from political leadership, and “there is no access to statistics” because INDEC, the national bureau of statistics, regularly generates figures that make the economy look a lot stronger than it really is.

Macri has criticized the outgoing administration for relying on widely discredited statistics to measure everything from inflation to poverty rates. “Argentina today doesn’t have credible information on the economy,” Macri said during his campaign. “We need to know the real condition of public accounts.”

Bright Spots and Shadows

Experts agree that Macri will have to confront the heritage of Peronism, the populist movement founded by late Juan Peron (Argentina’s president from 1946-1955 and 1973-74), and carried forward by President Nestor Kirchner and then his wife, Cristina. Although Cristina Fernandez de Kirchner’s term as president ends on December 10, she will vie to remain leader of the Peronist Party, which maintains a majority in the Senate, the largest bloc in the lower house, and governorships of 15 out of Argentina’s 24 electoral districts.

Barred from running for a third term as president, Cristina Fernandez de Kirchner’s voter-approval rate remains high. Nevertheless, Guido Sandleris, dean of the business school at Torcuato di Tella University in Buenos Aires, says that the outgoing president leaves office with Argentina’s economy in shambles. “The Argentine economy has been exhausted for four years. Along with Venezuela, it is the country that has grown the least during this period. It also has one of the highest inflation rates in the world — about 25% in 2015 — and the poverty rate has begun to grow again.”

Rafael Pampillón, an economics professor at the IE Business School in Madrid, notes that not everything about the 12 years of Kirchnerism was negative. Pampillón notes that the first Kirchnerist government enjoyed years of very strong growth as a result of high prices for raw materials, which permitted the government “to earn a great deal from its exports (above all, from shipments of soy), to raise salaries, undertake public sector spending initiatives, grant subsidies and take care of the poorest people” in the country. The data from the early years of Kirchnerist government were spectacular, says Pampillón. Under President Nestor Kirchner (2003-2007), the economy grew at an average rate of 8.7%, leading to job growth and a substantial reduction in poverty. Nevertheless, starting in 2005, notes Pampillón, the government “intervened strongly in the economy as prices for primary products began to decline, and [the government] started to take the blame for the fact that the public-sector deficit was growing.”

“Argentina today doesn’t have credible information on the economy. We need to know the real condition of public accounts.” –Mauricio Macri

Pampillón suggests that interventionism even had an impact on the agrarian sector, which was the most competitive sector in the Argentine economy. Agribusiness in Argentina had made major advances under Nestor Kirchner’s presidency, thanks to a few factors: First, “over the years, landholders had been dividing their lands among their sons; second, new players had entered the sector by purchasing lands; and finally, new technologies had been adopted” in the sector. Pampillón notes that Kirchnerism imposed tariffs on Argentine exports “in order to be able to enter the sector. As commodity prices collapsed, some landholdings were abandoned because people could not make any money from the crops that were cultivated there.” Moreover, Pampillón adds, the government showed “strong hostility to foreign investment.”

The Next Stage

Turning Argentina around will be no small task, given the fractured political dynamics of the nation. Despite Macri’s victory, Argentina remains a deeply divided country, notes Wharton management professor Mauro Guillen, director of The Lauder Institute. About one half of the population remains loyal to the uniquely Argentine-brand of populism of the Kirchners — the party defeated by Macri. The new president is expected to encounter fierce resistance in the Congress, where he doesn’t have majorities in either chamber. Congressional approval is particularly important for the long-standing debt dispute between Argentina and a group of creditors in the United States. Under Cristina Kirchner, Argentina refused to negotiate despite repeated rulings by a U.S. federal court judge against Argentina, a stance that prevented Argentina from accessing international credit markets.

Regarding Macri’s populist opponents, Guillen explains, “Many of these people are pro-labor in the wrong way – meaning, ‘let’s just work as little as possible, and let’s just use the natural resources in the country’ — while the other half of the population is much more cosmopolitan, more export-oriented, more competitive and better educated.”

These sorts of social and political tensions are not going to disappear under Macri, Guillen notes. “In Argentina, you have this pendulum depending on the circumstances,” swinging between the populist Peronists, who tend to be more inward-looking, and the other half, who are more conservative, more pro-business and also more internationalist.

“I am not very optimistic,” Guillen says. “In Argentina, history gets repeated. It’s like a Greek drama. Macri was a mayor, and is someone who clearly knows how to run a business. From now on, the Peronists are going to do whatever it takes to make the Macri presidency end in a bad way.” And if they can get rid of him earlier in his term, so much the better, Guillen adds. “That’s what happened with [President] Fernando de la Rua in 1999,” he notes. “They just made life impossible for him, and in the end he had to resign because Argentina went into default. The problem is that you have these stalemates in politics between the Peronists and [their opposition, who are] pro-export, pro-business — and they never get resolved.”

The good news, says Sherr, is that even in the darkest times in the last few years of Kirchner’s political policies, foreign oil and gas companies have been keen to get into the Vaca Muerta geological formation, containing major deposits of shale oil and shale gas, in the Neuquén Basin in Argentina. Total, Exxon, and Chevron have all gone into the region. “If they’ve been keen on the geological and developmental capacities of those shale deposits, they should be really keen to go in [now] under a better government,” he said. “What I remind them is that the Peronists are not going away. They still have considerable power. We’re just going to go through another cycle.”

Macri’s Number-one Priority

What should be Macri’s number-one priority? Guillen suggests that, “In the short run, he needs to bring inflation under control. Unless he gets inflation under control, everything else will fall apart. You cannot run an economy with 40% inflation. The other thing: Macri can be more or less lucky from now on, if demand for Argentine commodities picks up.”

Macri also needs to share power with the more moderate Peronists, Guillen says. “He cannot believe, like the Peronists do, that if you have half of Argentina behind you, you can rule the other half,” Guillen notes. “No one can rule that country by saying, ‘I am going to do what I told my half of the country that I was going to do.’ Macri will need to compromise; unless he does that, he is going to fail.”

“In Argentina, history gets repeated. It’s like a Greek drama.” –Mauro Guillen

Shortly after Macri’s victory, Science and Technology Minister Lino Barañao became the only member of President Cristina Fernández de Kirchner’s cabinet to make it onto Macri’s team, noting that he accepted the position following assurances that the budget for his portfolio would not be slashed. In a radio interview, Baranao said that his decision to accept Macri’s offer was influenced by the fact that “science is something that is not the object of partisan opinions and is rather based on the rigor of data.” He also cited the importance of continuing science programs that started as early as 2003. “That’s the right thing” for Macri to do, said Guillen. “If he ignores the Peronists or clashes with them, eventually Macri will lose because the Peronists have too much power, and power at mobilization [of the public].”

In another promising move toward power-sharing, Rogelio Frigerio, Macri’s new minister of interior, said that one of his goals will be “to recover the importance of federalism.” Guillen said, “I think that may be a good signal. That would be, at the end of the day, power-sharing with the 15 Peronist governors in the provinces. So that is a good thing.” Argentina is a federal system. Being president in a federal system — as in the U.S. — doesn’t give the president absolute power.

A Flicker of Hope

On the other hand, Macri’s other cabinet selections have been more contentious. For finance minister, Macri has appointed Alfonso Prat-Gay, who once ran the currency research unit at J.P. Morgan Chase in London. Prat-Gay said that the Macri administration will move “as soon as possible” to unravel its complex system of currency controls. Only a few days after Macri was declared the winner in the runoff election, American Airlines Group announced that it would stop accepting Argentine pesos for tickets, because currency controls were affecting its ability to repatriate earnings. Although dismantling currency controls could further fuel inflation, and stymie economic growth, Prat-Gay told a radio audience, “This is a tall task but we’re convinced that we’ve got the support of the people.” Prat-Gay has said the central bank hasn’t been independent in recent years and it is unclear how many foreign-currency reserves the bank has on hand.

Macri also announced that his president of the Central Bank would be another internationalist: Federico Sturzenegger, an economist who earned his Ph.D. at the Massachusetts Institute of Technology and has taught at the University of California.

Guillen warns that the lessons of Argentina’s troubled political history cannot be ignored. “Argentina has a highly educated population, and it has natural resources. It should rival countries like Australia and New Zealand for productivity, growth, etc., and yet it’s a mess,” he notes.

Nevertheless, Guillen adds, “Having said that, the fact that Macri is trying to establish some power-sharing formula with the Peronists gives me some hope. Without that, there is very little hope. Because the Peronists really, really hate losing power.”

By Frida Ghitis
Thursday, Dec. 3, 2015

When Venezuela’s charismatic revolutionary, the late Hugo Chavez, won the presidential election in his country for the first time in 1998, he launched a new political era in Latin America. For the next 17 years, leftist politicians—many of them emerging from humble beginnings, as Chavez had—rose to power through democratic means in a region where that path had seldom been successful for the left or the poor. Chavez’s model of modified socialist economics and modified democratic governance soon spread to a number of countries and became the dominant political phenomenon of the 21st century in Latin America.

That period of leftward momentum and the broader trend of modern Latin American socialism—a hybrid of market economics, redistributive socialism, populism and democracy with authoritarian tendencies—is now entering its final chapter.

The stunning victory of the center-right’s Mauricio Macri in Argentina’s presidential election earlier this month marked the beginning of the new rightward turn. But while the pendulum has now started swinging toward the right, it will not be a smooth transition. The region’s left is now largely on the defensive, but the months ahead will bring acrimonious battles as the two sides struggle for power.

To be sure, not all leftist governments in the region adopted the precise “21st-century socialism” model crafted by Chavez. Each country developed its own blend, with the main ingredients added in different measures. But the basic recipe included strong government intervention in the economy, sometimes with nationalization of key industries; reliance on commodity exports to fund massive social programs and tackle poverty and inequality—the region’s most serious chronic afflictions; and, in many cases, a creeping authoritarianism that eroded democratic checks and balances.

As soon as Macri won the presidency in Argentina, it became clear that his election would have regional implications. Not only is he promising to reboot the Argentine economy after 12 years of leftist rule, he is aiming to project his rightward shift beyond the country’s borders.

Just hours after the vote count was completed, he announced he would challenge Venezuela’s membership in the regional trade bloc Mercosur, invoking the grouping’s “democratic clause” to question the legitimacy of the Chavista government in Caracas. “I have a clear position,” he said. “I don’t want political prisoners, abuses of freedom of expression,” and “persecution of the political opposition” in Mercosur.

Venezuela is a case study in what went wrong with Latin America’s leftist experiment. The response by other countries was telling. Brazilian President Dilma Rousseff said there was no justification for expelling Venezuela under the clause. Other countries expressed reservations but withheld judgment, saying they wanted to wait until Venezuela’s Dec. 6 parliamentary elections to decide if the country can be deemed to have abandoned democracy.

The Venezuelan elections are the next battleground for the political forces pitted against each other in the region. To be sure, the vote will mark not the end but the beginning of a new stage of political combat in the country that launched the socialist wave.

It is fitting that Venezuela, the pioneer of the new model, has become the most extreme example of the troubles affecting its adherents. The government of President Nicolas Maduro, Chavez’s hand-picked successor, is teetering under the weight of a staggering economic collapse. Maduro’s approval ratings are plummeting, and more than 80 percent of Venezuelans now say they have a negative view of the country’s economic model. Venezuela is suffering from severe shortages of most consumer products, one of the highest inflation rates in the world, sky-high crime rates and simmering social unrest.

The country is a case study in what went wrong with Latin America’s leftist experiment.

For many years the model seemed highly promising. The democratic election of a new generation of leaders conferred necessary legitimacy, and their emphasis on poverty eradication gave much-needed attention to the region’s intolerable inequality. The new leaders achieved economic growth and slashed poverty rates. And for the most part they did it without alienating the business sector, allowing market forces to keep the economies functioning.

But the over-reliance on commodity exports had nefarious consequences, especially as political leaders became more entrenched. Corruption started setting in as governments took a larger role in the economy and party loyalists grew more powerful.

When the global commodities boom ended last year, economies started contracting and governments’ approval ratings began their collapse.

By then, in countries like Venezuela, Brazil and, to some extent, Argentina, the first wave of elected leftist leaders had been replaced by less charismatic successors who proved less able to navigate the political headwinds. Maduro is no Chavez, just as Brazil’s Rousseff doesn’t enjoy the same popularity as her mentor, former President Luis Ignacio Lula da Silva.

Rousseff is facing a massive corruption scandal and an economy that contracted by 4.5 percent over the past year. Her approval ratings stand at about 10 percent, and there is a move to impeach her.

Those headwinds may be one of the reasons that Ecuadorean President Rafael Correa just said he has no plans to run for yet another term in 2017, even after the constitution is changed to remove term limits. Ecuador, like Venezuela, also relied heavily on oil exports to fund social programs. Correa has mortgaged future oil exports in exchange for loans from China.

Better-diversified economies and stronger democratic norms have helped Uruguay avoid the fate of other leftist-governed countries.

And one Chavez disciple who is still going strong is Bolivian President Evo Morales. Morales, the indigenous leader who first won the presidency in 2006, is currently serving his third term. He has decided to try to run for a fourth time after undertaking a number of constitutional maneuvers to overcome term limits. That would potentially leave him in power until 2025. As much as Bolivians still support their president, that manipulation of democratic norms is one of many reasons that so many in Latin America are growing tired of autocratic leaders.

The arguments these leaders made when they came to power—that the elites were too entrenched and corrupt, and were gaming the system to stay in power—is the same their critics now make against them.

After Macri won in Argentina, Bolivia’s vice president, Alvaro Garcia Linera, called it “a huge blow to Latin America,” and said the election was “a call to attention.” In Nicaragua, where Daniel Ortega, another Chavez acolyte, has been elected three times as president, opposition leaders celebrated Macri’s victory in Argentina, seeing the results as a hopeful sign for their political prospects.

Macri’s election brought a rare point of agreement for Bolivia’s leftist vice president and Nicaragua’s rightist opposition. They both said this could be the start of a new trend in Latin America. Seventeen years after Chavez first came to power, they might also agree that the left had a good long run.

By Richard Stone
3 December 2015

When Argentina President-Elect Mauricio Macri and his new cabinet are sworn in on 10 December, there will be one familiar face: science minister Lino Barañao. In a move unheard of in Argentinian politics, a cabinet member is staying on in a new administration—and it’s a scientist blazing that trail.

A chemist whose team in 2002 was the first in Latin America to clone a calf, Barañao, 61, is the only science minister Argentina has ever known. He attained the post in 2007, when former President Cristina Fernández de Kirchner upgraded Argentina’s science council to a ministry. In his first 8 years on the job, Barañao oversaw a period of bumper growth: scientists’ salaries rose fivefold and the country’s science budget shot up 10-fold. He also poured money into a program to lure back expatriate Argentinian scientists. “In the past, scientists who came back had to wait up to a year to find a position.

Now we give them money for a lab and equipment and they can start working within 2 months after they return,” Barañao says. And on his watch, the government added 190,000 square meters of lab space—after going 30 years without building a single new lab, he says.

Barañao’s new boss has been highly critical of former President Kirchner, but in science Macri evidently thinks his predecessor got things right. The break with tradition to retain Barañao is “very symbolic,” says Ernesto Fernaìndez Polcuch, a science policy specialist at the UNESCO Regional Bureau for Science in Latin America and the Caribbean in Montevideo, Uruguay. “In S&T policy,” he says, “each time a new government came in, the pendulum moved to the other side. From basic to applied research—all possible dichotomies.”

ScienceInsider caught up with Barañao by telephone on the sidelines of a workshop on sustainable development and science diplomacy in Montevideo cosponsored by UNESCO and AAAS, the publisher of Science.

Q: How are your cloned cows doing?

A: Now we have cloned transgenic cows that produce human growth hormone. The drug produced this way is in the final stages of regulatory approval. The cloned calf was kind of cute. People in Argentina liked it, and that has helped create a tolerance here, compared with Europe, for genetically modified organisms.

Q: How did you react when you learned you would stay on as science minister?

A: I had already packed most of my office and arranged for a long vacation, when I met the new chief of cabinet and offered to assist the next minister. He said, “Macri wants you to the be the minister.” After recovering my breath, I told him I would need to ask President Kirchner first.

Q: Were you nervous?

A: I didn’t know how she would react. I felt strange, like I was about to confess I was having an affair. But she was supportive. She said that my responsibility is to Argentina’s scientists. Science is very close to her heart. She was proud of this request from Macri, because she felt it vindicated her science policies.

Q: What’s next for Argentina’s scientists?

A: The next step is to increase the coupling of knowledge creation and wealth creation. We’ll work harder to couple research in national labs with private companies. We also need incentives for technology-based companies, and instruments for financing. I’d like to create a stronger science presence in the whole country—right now scientific activities are concentrated in two or three big cities.

Q: Sounds like that long vacation will have to wait.

A: I still need a vacation! It’s just delayed now.

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