ARGENTINE UPDATE – Dec 22, 2015


1. MEDIATOR: ARGENTINA DEBT TALKS SET FOR 2016 (The Washington Post)

2. ARGENTINA’S MACRI: FREE VENEZUELA’S POLITICAL PRISONERS (The Washington Post)

3. ARGENTINA’S MACRI: VENEZUELA MUST FREE POLITICAL PRISONERS (Miami Herald)

4. ARGENTINA’S MACRI SPARS WITH VENEZUELA IN FIRST TRIP ABROAD (Bloomberg News)

5. ARGENTINA TO BEGIN ‘SUBSTANTIVE’ HOLDOUT TALKS IN EARLY JANUARY (Bloomberg News)

6. ARGENTINE PESO GAINS AS EXPORTERS BRING DOLLARS AFTER FREE FLOAT (Bloomberg News)

7. ARGENTINA AND BONDHOLDERS TO HOLD JANUARY DEBT TALKS –MEDIATOR (Reuters News)

8. NEW LEADER PLAYS SANTA CLAUS TO POOR ARGENTINES HIT BY INFLATION (Reuters News)

9. ARGENTINA AND ELLIOTT GIVE PEACE A CHANCE IN 2016 (Reuters News Blog)

10. ARGENTINA’S MACRI ASKS FOR VENEZUELA OPPOSITION LEADERS’ FREEDOM (Thomson Reuters Foundation)

11. VENEZUELA ACCUSES ARGENTINA OF MEDDLING IN INTERNAL ISSUES (Fox News)

12. ARGENTINA ROLLS THE DICE WITH BIG BANG ECONOMIC REFORMS; MACRI PUTS PRICE LIBERALIZATION
AHEAD OF MACROECONOMIC STABILITY (MarketWatch)

13. ARGENTINA TO SIT DOWN WITH CREDITORS IN NEW YEAR — MARKET TALK (Dow Jones Institutional News)

14. STATEMENT OF DANIEL A. POLLACK, SPECIAL MASTER IN ARGENTINA DEBT LITIGATION, DECEMBER 21, 2015 (PR Newswire (U.S.))

15. USFWS ISSUES PROPOSED RULE TO APPROVE SUSTAINABLE-USE MANAGEMENT PLAN DEVELOPED BY MANAGEMENT AUTHORITY OF ARGENTINA FOR BLUE-FRONTED AMAZON PARROTS (US Fed News)

16. WILD BIRD CONSERVATION ACT; BLUE-FRONTED AMAZON PARROTS FROM ARGENTINA’S SUSTAINABLE-USE MANAGEMENT PLAN (Department of the Interior Documents)

1. MEDIATOR: ARGENTINA DEBT TALKS SET FOR 2016 (The Washington Post)
December 21, 2015

NEW YORK — Argentina has agreed to negotiate in January 2016 with bondholders seeking $10 billion, a court-appointed mediator said on Monday.

The long-running legal dispute has isolated the South American country and its ailing economy from global credit markets. But Daniel Pollack, who was appointed mediator last year, said in a statement that the settlement talks will begin in the second week of January in New York City.

The announcement came after Pollack met with Argentina’s finance chief Luis Caputo and Mario Quintana, the country’s deputy Cabinet chief. The mediator also has had meetings with bondholders, who include representatives of U.S. hedge funds.

The dispute over Argentina’s debt emerged after the South American nation had its worst economic crisis and defaulted on $100 billion in debt in 2001. Most creditors accepted lower-valued bond swaps in 2005 and 2010. But U.S. hedge funds led by billionaire hedge fund investor Paul Singer’s NML Capital Ltd. refused took Argentina to court and won.

Former Argentine President Cristina Fernandez had long refused to negotiate with the hedge fund creditors, often calling them “vultures.”

The holdouts spent more than a decade litigating for payment in full rather than agreeing to provide Argentina with debt relief. They also sent lawyers around the globe trying to force Argentina to pay its defaulted debts and were able to get a court in Ghana to temporarily seize an Argentine naval training ship. The threat of seizures even forced Fernandez to stop using her presidential plane and instead fly on private jets.

Argentina is facing one of the world’s highest inflation rates and dangerously low foreign reserves. Newly-elected President Mauricio Macri has promised to implement a series of free-market measures to jumpstart the weak economy. He has also vowed to solve the dispute with creditors, which has scared off many would-be investors and return Argentina to international credit markets.

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2. ARGENTINA’S MACRI: FREE VENEZUELA’S POLITICAL PRISONERS (The Washington Post)
By Pedro Servin
December 21, 2015

ASUNCION, Paraguay — Argentine President Mauricio Macri asked Venezuela’s government on Monday to free prisoners being held for political reasons.

Macri made his appeal during a meeting of the Mercosur trade bloc in the Paraguayan capital. He recently said he would seek to suspend Venezuela from the South American block over its government’s jailing of opposition leaders. But that’s no longer likely because President Nicolas Maduro’s government respected the results of Venezuela’s Dec. 6 congressional elections.

Mercosur members say that the suspension would only have been in order if Venezuela had not accepted the vote results and broken the group’s so-called “democratic clause,” which says a member country can be sanctioned if it has “broken the democratic order.”

“Venezuela’s government must work toward achieving a true culture of democracy for our region,” Macri said during the meeting in Asuncion. “There’s no room for persecution based on ideological reasons or for thinking differently.”

To emphasize his commitment to the cause, Macri took a picture on the night he was elected president on Nov. 22 with Lilian Tintori, the wife of Leopoldo Lopez, an opposition leader in Venezuela jailed early last year.

Venezuela became a full member of the South American bloc in 2012 in an effort to link the region’s most powerful agricultural and energy markets.

Maduro is absent from the group’s meeting, but Venezuela’s Foreign Minister Delcy Rodriguez defended her country’s socialist government and accused Macri of interfering in Venezuela’s internal affairs.

“Macri is defending the political violence of 2014, when (opposition demonstrators) used bazookas, set the public ministry on fire,” Rodriguez said of protests last year in Venezuela, in which several dozen people died.

In a heated retort, Rodriguez also said Macri had freed criminals who were responsible for torture and murders during Argentina’s 1976-1983 military dictatorship. Argentina’s Foreign Minister Susana Malcorria later said the information provided by her Venezuelan counterpart was wrong. She said Macri has not proposed an amnesty of dictatorship-era human rights abusers or agreed to their release.

During the Mercosur meeting, Paraguay proposed reviving a protocol that would oversee that human rights are respected by its member states. The bloc’s final statement after the meeting encouraged Venezuela to join the other countries that have already signed the agreement.

The economies of the Mercosur members have been badly hit by a slowdown in China which has decreased the Asian giant’s demand for the region’s commodities. The International Monetary Fund expects that Brazil, Latin America’s largest economy, will shrink 3 percent in 2015. The IMF forecasts that Argentina will grow just 0.4 percent this year and contract 0.7 percent in 2016.

“To defend ourselves from the global economic crisis we have to strengthen our internal markets. We can guarantee the region’s economic growth through greater integration,” said Bolivian President Evo Morales.

Argentina has been criticized by Brazil and others for its protectionist policies. But Argentina’s foreign minister said Mercosur members praised her country’s recent decision to lift distortive policies such as heavy foreign exchange controls enacted by the previous administration.

Macri’s government put an end on the unpopular restrictions on buying U.S. dollars last week that made it difficult for businesses to operate and spawned a booming black market for greenbacks.

The decision, combined with the recent lifting of export taxes on many agricultural products, will expose Latin America’s third-largest economy to international market forces in ways not seen in over a decade.

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3. ARGENTINA’S MACRI: VENEZUELA MUST FREE POLITICAL PRISONERS (Miami Herald)
By Jim Wyss
December 21, 2015

BOGOTA, COLOMBIA -Argentine President Mauricio Macri used his first appearance abroad since winning election to take Venezuela to task over the quality of its democracy and human rights record.

On Monday, during a Mercosur conference in Asunción, Paraguay, Macri asked for the “swift liberation of all the political prisoners in Venezuela.”

“Within the Mercosur countries there is no room for political persecution for ideological reasons or the illegal detention of those who think differently,” he added.

Venezuelan Foreign Minister Delcy Rodríguez shot back, saying Argentina shouldn’t meddle in sovereign affairs and that the people that Macri considers political prisoners had been detained for inciting violence during national protests in 2014.

She also defended Venezuela’s human rights record.

“There’s not a country in the world that has social programs like Venezuela, despite the media, financial, commercial and economic attacks our people are facing,” she said.

Macri won Argentina’s presidency last month, putting an end to more than a decade of Kirchnerismo, which had allied the nation with Venezuela. Shortly after his election he’d threatened to expel Venezuela from the Mercosur, but softened his position after that nation’s opposition won a landslide congressional victory early this month.

The leaders of Mercosur — Argentina, Bolivia, Brazil, Paraguay, Uruguay and Venezuela — were expected to talk about jump-starting a languishing trade deal with the European Union and increasing ties with the Pacific Alliance countries, which include Chile, Peru, Colombia and Mexico.

But the potential Venezuela-Argentina showdown was generating most of the buzz around the meeting.

Venezuela’s opposition claims more than 70 people are under arrest for political reasons. The government blames many of them (including former presidential candidate Leopoldo López) for inciting violence during national protests over the economy and crime.

The opposition has said that freeing those detainees will be one of its top priorities when the new legislative session begins Jan. 5.

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4. ARGENTINA’S MACRI SPARS WITH VENEZUELA IN FIRST TRIP ABROAD (Bloomberg News)
By Charlie Devereux
December 21, 2015

* Mercosur shouldn’t tolerate political persecutions, Macri says
* Venezuelan minister says new president is defending violence

Argentine President Mauricio Macri, in his first trip abroad since assuming office, inserted himself into an international dispute by calling for the release of prisoners in Venezuela that human rights groups say are being held for political reasons.

Speaking at the Mercosur summit in Asuncion, Paraguay, Macri called on Venezuela to respect its citizens’ democratic rights. The move came 11 days after Macri took office and two weeks after Venezuela’s opposition won control of congress for the first time since 1999. Opposition lawmakers have said one of their priorities is freeing prisoners including Leopoldo Lopez, the former mayor of a district of Caracas who they say was unjustly imprisoned.

“I want to expressly call on all the presidents of the members states of Mercosur for the swift liberation of political prisoners in Venezuela,” Macri said. “In Mercosur, we can’t allow political persecution for ideological reasons or illegitimate imprisonment for thinking differently.”

Venezuelan Foreign Minister Delcy Rodriguez, standing in for President Nicolas Maduro, accused Macri of double standards and said he was defending the violent perpetrators of protests last year that left at least 43 people dead.

Venezuela Reaction

“You are meddling in Venezuela’s affairs. You are defending this political violence,” Rodriguez said, holding up a photo of a man wielding a bazooka that she said was an opposition protester.

While the governments of Brazil and Argentina insisted after a meeting between Macri and President Dilma Rousseff in Brasilia on Dec. 4 that their positions on Venezuela are similar, Rousseff on Monday was more cautious than Macri. She didn’t mention political prisoners and, instead, congratulated Maduro for the democratic nature of the legislative elections carried out Dec. 6.

In a closing statement, Mercosur called on all its member states to adhere to a 2005 protocol on human rights. Venezuela is the only member of the bloc that hasn’t yet signed up.

On the economic front, Macri urged Mercosur, whose founding members were Argentina, Brazil, Paraguay and Uruguay, to modernize and accelerate a long-delayed effort to sign a trade deal with the European Union. He also thanked members of the trade bloc for their support in backing Argentina’s claim to the Falkland Islands.

Mercosur’s closing statement made no specific mention of the EU accord, though it did call for a meeting to discuss improving relations with the Pacific Alliance, a trade bloc comprised of Chile, Peru, Colombia and Mexico.

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5. ARGENTINA TO BEGIN ‘SUBSTANTIVE’ HOLDOUT TALKS IN EARLY JANUARY (Bloomberg News)
By Carolina Millan
December 21, 2015

* Caputo and Quintana met with mediator in New York on Monday
* Macri has said he intends to reach settlement with creditors

Argentina’s new government is planning to begin “substantive” talks with disgruntled creditors left over from the country’s decade-old debt dispute in early January, according to court-appointed mediator Daniel Pollack.

Pollack said that he met Argentine Finance Secretary Luis Caputo and cabinet-vice chief Mario Quintana for an hour Monday, according to an e-mailed statement.

“The meeting was constructive, covering a range of issues, and it was agreed that they will return to New York City in the second week of January to commence substantive negotiations with the bondholders,” Pollack said in the statement.

Mauricio Macri’s presidency is expected to mark a turning point in the debt saga that has kept Argentina ostracized from international capital markets since 2001 as he seeks a settlement. Macri named former JPMorgan Chase & Co. banker Alfonso Prat-Gay as his finance minister, who in turn tapped the 50-year-old Caputo, a former head of Deutsche Bank AG in Buenos Aires, to oversee the holdout debt issue and review financing options.

“We want the negotiations that are coming to be as quick as possible but also as tough as possible,” Prat-Gay said at his swearing-in ceremony on Dec. 11.

Argentina defaulted for a second time last year after then-President Cristina Fernandez de Kirchner refused to abide by a U.S. court order to repay the creditors.

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6. ARGENTINE PESO GAINS AS EXPORTERS BRING DOLLARS AFTER FREE FLOAT (Bloomberg News)
By Carolina Millan
December 21, 2015

* Currency rebounds after plunging as much as 30% on Thursday
* Importers holding off on purchases as they await new rules

Argentina’s peso climbed for a second day after Thursday’s devaluation as grain exporters bring dollars to the country while importers held off on purchases of greenbacks as they awaited the implementation of new rules for accessing the market.

The peso rallied 3.8 percent to 12.76 pesos per dollar at 2:22 p.m. on the MAE electronic platform in Buenos Aires, rebounding from a tumble of as much as 30 percent Thursday after newly elected President Mauricio Macri lifted currency controls as part of a pledge to kick start economic growth by implementing free-market policies.

The peso is gaining because farmers, who had withheld crops in stored bags as they waited for a better exchange rate, have sold their goods while importers aren’t using the market, according to Alejo Costa, the head of research at brokerage Puento Hnos Sociedad de Bolsa SA. This is leading to an oversupply of dollars among traders.

“The flows are limited on the demand side,” Costa said from Buenos Aires. “There isn’t an idea on where the exchange would be if everything was operating freely.”

A new system of automatic approval for imports announced by Macri isn’t yet “well-oiled,” Costa said. In addition, several large importers aren’t participating in the currency markets because they plan to purchase a bond announced by the Finance Ministry late Friday, he said. The sale would give importers a way to access dollars to send overseas.

A lack of dollar demand from individuals who are spending their free cash on Christmas gifts is also skewing the exchange rate, Costa said. Cristina Fernandez de Kirchner’s government had installed monthly limits to how many greenbacks individuals could buy for savings or tourism, leading to the emergence of a black-market for dollars to cope with the pent-up demand.

“The risk now is that this is generating an undershooting of the peso,” Costa said.

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7. ARGENTINA AND BONDHOLDERS TO HOLD JANUARY DEBT TALKS –MEDIATOR (Reuters News)
By Tariro Mzezewa, Nate Raymond and Nicolás Misculin
Dec 21, 2015

Dec 21 Argentina’s new government and holdout bondholders are to meet in the second week of January to start “substantive” talks toward settling a more than decade-old sovereign debt dispute, the U.S. court-appointed mediator said on Monday.

The talks would mark a major breakthrough in the dispute, which has caused Argentina to be shut out of the international capital markets and encouraged the prior governments of both Cristina Fernandez and Nestor Kirchner to adopt unorthodox economic policies.

Mauricio Macri, the first non-Peronist president in more than a decade, was sworn into office on Dec. 10. He has moved to start reversing some of the populist policies of the prior governments and said it was a priority to settle the debt issue.

Daniel Pollack, a New York lawyer who is the mediator, said in a statement that he met for about one hour on Monday in his office with Argentina’s newly installed finance secretary, Luis Caputo, and the vice chief of the cabinet, Mario Quintana.

“The meeting was constructive, covering a range of issues, and it was agreed that they will return to New York City in the second week of January to commence substantive negotiations with the Bondholders,” Pollack said in a statement released through his law firm, McCarter & English.
U.S. District Judge Thomas Griesa, who has long overseen the litigation, urged in a hearing last Thursday that Argentina and its creditors resolve the dispute stemming from the $100 billion default on sovereign bonds in early 2002. The case is being heard in the United States because the bonds were issued under U.S. law.

“The government will start negotiating now and once they have the blueprint of a deal it will be brought to Congress. It should all be settled by the middle of the year,” said Senate leader Federico Pinedo, who is a close ally of Macri.

Pinedo said there a chance that Congress will be presented with the outline of a deal as soon as next month.

“It may happen that the president decides to raise it in a special in January or February. That would be doable,” Pinedo said.
Holdout investors led by Elliott Management’s NML Capital Ltd and Aurelius Capital Management have a judgment in their favor of $1.33 billion, plus interest, which has brought their total closer to $2 billion, sources with direct knowledge of the situation say.

A spokesman for Elliott declined to comment on Monday’s statement. A representative for Aurelius was not immediately available.

Monday’s meeting between Caputo and Pollack was the second since the new Argentine government took office.
Caputo, shaking his head, did not answer any questions upon entering Pollack’s office building via a side entrance on Monday. He and Quintana were not seen leaving by a small handful of reporters and photographers who were waiting outside Pollack’s office.

Solving the sovereign debt dispute between Argentina and investors, who rejected two prior restructurings in 2005 and 2010, is seen as critical to getting the Latin American nation’s economy on a more stable growth path.

Pollack has said the total amount of debt held by bondholders with judgments against Argentina is approximately $10 billion. These judgments are based upon the principal of equal treatment, referred to in the bond agreement document as the pari passu clause.

In addition to NML and Aurelius, bondholders who did not participate in prior restructurings filed “me too” claims before Griesa on the same pari passu principle and were recognized by the court in October.

Over the course of the two restructurings, 92 percent of bondholders accepted the terms offered by Argentina, which left them on the whole being paid less than 30 cents on the dollar.

Argentina defaulted again in July 2014 after it refused to honor Griesa’s order to pay NML and Aurelius at the same time it paid these bondholders their principal and interest.

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8. NEW LEADER PLAYS SANTA CLAUS TO POOR ARGENTINES HIT BY INFLATION (Reuters News)
By Sarah Marsh and Jorge Otaola
Dec 21, 2015

Argentina’s new President Mauricio Macri said on Monday that the country’s poorest families would receive a cash handout over the Christmas holiday to compensate for an increase in prices after a near 30 percent devaluation of the peso last week.

Since taking office 10 days ago, the free markets advocate has already fulfilled many of his campaign pledges to cut export taxes, lift capital controls and float the peso in a bid to improve Argentina’s competitiveness.

Critics have said Macri is helping big business at the expense of the poor as the measures will immediately benefit exporters operating in the grains powerhouse while fuelling inflation, thereby hurting consumers, especially those with low incomes.

“We have noted some prices of basic goods creeping up, which is why …. we have decided on this contribution of 400 pesos while we work with businesses and unions so that this transition is as orderly possible” Macri said at a news conference.
Around 8 million people will receive the aid by the end of next week. It will cost public coffers around 3.300 billion pesos (US$257 million).

Economists have said Macri’s measures will likely cause Latin America’s third largest economy to contract at the start of next year, as the devaluation fuels inflation already running at around 25 percent and affects private consumption.

But if the government manages to put a lid on price increases, the economy should return to growth by the end of 2016 as exports increase and investment starts flooding in, and expand strongly in 2017.
Alejo Puente, chief strategist at local investment bank Puente, said he expected inflation to accelerate to around 4 percent over the coming months from 1.9 percent monthly now, reaching an annual rate of around 34 percent in February.

The big challenge will be getting Argentina’s mighty unions to agree on hikes more in line with projected full-year inflation than the inflation at the start of the year. Wage talks are scheduled for March. Macri looks set to use a possible reduction in the number of workers paying income tax as a bargaining chip in negotiations.
Macri said the finance ministry was also working on issuing a new bill worth more than 100 pesos, which is the highest denomination note in Argentina and worth 7.8 U.S. dollars.

The peso closed on Monday at 12.85 per dollar. It is now 23.5 percent weaker than before Macri floated it last Thursday, after initially losing nearly 30 percent in value.

Macri’s predecessor Cristina Fernandez used to prop up the peso with central bank reserves.

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9. ARGENTINA AND ELLIOTT GIVE PEACE A CHANCE IN 2016 (Reuters News Blog)
By Reynolds Holding and Martin Langfield
December 21, 2015

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Argentina and Elliott Management will finally give peace a chance in 2016. There may never be a better time for Latin America’s third-largest economy and Paul Singer’s hedge fund to end a 14-year standoff over defaulted bonds. New President Mauricio Macri needs access to global credit markets to implement his economic plan, and another defiant Peronist like predecessor Cristina Fernandez could take over if he fails.

An Elliott affiliate has sought repayment of the bonds since Argentina’s 2001 default. It and other investors refused to swap them for discounted debt in 2005 and 2010, and in 2012 won a court order saying creditors that accepted the exchange could not be paid first. Argentina protested mightily, even appealing to the U.S. Supreme Court, but to no avail.

Obstinance has come at a high price. The nation faces double-digit inflation, dwindling foreign reserves and a gaping fiscal deficit. The economy will grow just 0.4 percent this year and shrink 0.7 percent in 2016, the International Monetary Fund forecast in October. A settlement with the holdouts, owed up to $15 billion, could reopen sources of foreign capital and help reboot growth.

A resolution is far less urgent for Elliott, considering its total sovereign debt holdings are less than 2 percent of its more than $27 billion of assets under management. Yet the expense of battling for repayment is mounting, and the firm is eager for a return on its investment.

Fernandez called the holdout bondholders “vultures.” But just before his Dec. 10 inauguration, Macri sent an emissary to meet the court-appointed mediator in the dispute. Though the shape of any deal is unclear, it would surely exceed the less than 30 cents on the dollar offered in the 2010 exchange.

The trick for Macri will be getting any deal through a left-leaning Congress, where he might be able to bargain, among others, with pragmatic Peronists not loyal to Fernandez. If the new president can’t fix the economy, his administration could quickly founder. A far less amenable counterparty might then succeed him – maybe even Fernandez herself, who could try to return in 2019. That alone should persuade Elliott and Argentina that further stalemate is pointless.

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10. ARGENTINA’S MACRI ASKS FOR VENEZUELA OPPOSITION LEADERS’ FREEDOM (Thomson Reuters Foundation)
By Daniela Desantis
Dec 21, 2015

ASUNCION, Dec 21 (Reuters) – Argentine President Mauricio Macri started his second week in office by asking regional trade bloc Mercosur to back his appeal for the freedom of jailed opposition leaders in Venezuela.

The center-right Macri won the presidency last month promising free-market solutions to Argentina’s long list of economic problems. He spoke during his election campaign about suspending Venezuela from Mercosur until the jailed politicians are freed.

“I ask for the prompt liberation of political prisoners in Venezuela,” Macri said in addressing a Mercosur meeting on Monday in the outskirts of the Paraguayan capital of Asuncion.

Venezuelan President Nicolas Maduro did not attend the meeting. But Venezuela’s representative in Asuncion, Foreign Minister Delcy Rodriguez, told Macri to back off.

“You are meddling in Venezuela’s affairs,” she said.

This month Venezuela’s opposition took two-thirds of the legislature’s 167 seats in a landslide victory driven by anger over the country’s prolonged economic crisis. It will hold a congressional majority for the first time since Maduro’s mentor, the late socialist leader Hugo Chavez, rose to power in 1999.

The opposition has said the first priority for the new Congress will be an amnesty for the release of jailed opposition leaders, many of whom were jailed for their involvement in anti-government protests in 2014.

The United States, the United Nations, the European Union and others have increasingly pressured Maduro over jailed opposition leaders, particularly hard-liner Leopoldo Lopez who was convicted of fomenting 2014 protests that led to 43 deaths.

During the campaign Macri said Venezuela should be suspended from Mercosur, citing a clause in the bloc’s charter that seeks to punish anti-democratic governments with isolation from the group. He backtracked for the comments after Maduro recognized the opposition’s win in the legislative election.

Macri, meanwhile, faces tough economic challenges at home, including low central bank reserves, double-digit inflation and a sovereign bond default left by Argentina’s previous leader, Cristina Fernandez.

Macri let the Argentine peso float for the first time in years last week. It was the first test of his market-friendly policies after eight years of Fernandez, who believed in strong state control of the economy.

The Argentine currency strengthened 4.08 percent to 12.73 per U.S. dollar on Monday, after the lifting of capital controls on Thursday sparked a devaluation of more than 26.5 percent.

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11. VENEZUELA ACCUSES ARGENTINA OF MEDDLING IN INTERNAL ISSUES (Fox News)
December 21, 2015

Argentine President Mauricio Macri’s call here Monday at the start of a Mercosur summit for the release of political prisoners in Venezuela provoked an angry response from the Venezuelan foreign minister

“You are interfering in Venezuelan matters,” said Delci Rodriguez, who is representing President Nicolas Maduro at the Mercosur summit of heads of state.

She also accused Madro of defending “this political violence,” as she showed photos of armed people, including a man with a bazooka, which she said had been taken during the “peaceful demonstrations” in Venezuela in 2014.

“These are the peaceful protests of 2014, for those who have not seen … They burned the Attorney General’s Office, they burned essential public services, they attacked Venezuelans’ access to food, education, 19 universities were burned,” Rodriguez said.

“I want to expressly ask here before the Mercosur member heads of state for the quick release of political prisoners in Venezuela, because in the states that are party (to Mercosur) there can be no place for political persecution for ideological reasons or for different thinking,” Macri said in his opening remarks at the summit.

The leading political prisoner is Leopoldo Lopez, an opposition leader sentenced to 14 years behind bars on charges he instigated the violence that marred the anti-government protests in 2014.

“If we’re going to talk about human rights, we’re going to talk sincerely, we’re on the front rank for this debate,” said the Venezuelan foreign minister in her address.

“I understand that Macri wants to ask for the release of these violent people. I know it because one of his first announcements was to release those responsible for torture in the (1976-1983 Argentine military) dictatorship,” she said.

Macri, the conservative scion of a prominent family of industrialists, took office in Argentina Dec. 10.

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12. ARGENTINA ROLLS THE DICE WITH BIG BANG ECONOMIC REFORMS; MACRI PUTS PRICE LIBERALIZATION AHEAD OF MACROECONOMIC STABILITY (MarketWatch)
By Mohamed A. El-Erian
21 December 2015

Last week, the government of newly elected Argentine President Mauricio Macri launched a bold plan to revitalize a bruised and beleaguered economy plagued by high inflation. At a time of daunting crisis conditions, one should not underestimate the importance of this move not just for Argentina, but also for other countries, where leaders are watching closely for clues about how to deal with their own economic woes.

Thanks to years of economic mismanagement, Argentina’s economy has been badly underperforming for decades. Previous governments sought to avoid difficult policy choices and obfuscate fundamental issues by implementing inefficient controls that grossly misallocated resources and undermined Argentina’s ability to generate the foreign-exchange earnings needed to cover its import bill, resulting in domestic shortages.

The recent drop in commodity prices has exacerbated the situation, depleting what little growth dynamism the economy had left, while fueling inflation, deepening poverty, and spreading economic insecurity and financial instability.

In theory, governments in such a situation have five basic options to contain crisis conditions, pending the effects of measures to reinvigorate growth and employment engines.

• Run down the financial reserves and wealth that were accumulated when the economy was doing better.

• Borrow from foreign and domestic lenders.

• Cut public-sector spending directly, while creating incentives to induce lower private-sector expenditure.

• Generate revenues through higher taxes and fees, and earn more from abroad.

• Use the price mechanism to accelerate adjustments throughout the economy, as well as in trade and financial interactions with other countries.

Through careful design and sequencing, these five measures can help not only to deal with immediate economic and financial problems, but also to create the conditions for higher growth, job creation, and financial stability in the longer term. In this manner, they can contain the spread of economic hardship among the population, protect the most vulnerable segments, and put future generations on a better footing.

In practice, however, governments often face complications that undermine effective implementation of these measures. If policy makers are not careful, two problems, in particular, can reinforce each other, potentially pushing the economy over the precipice.

The first problem arises when specific factors, real or perceived, block some options from the adjustment menu. Some measures may already have been exhausted: the country may not have any wealth or reserves left to tap, and there may be a shortage of willing lenders. Other measures, such as fiscal adjustment, must be implemented very carefully, in order to avoid torpedoing the growth objective.

The second problem is timing, with governments struggling to ensure that the measures take effect in the right sequence. Effective implementation requires understanding key features of economic and financial interactions, including not just feedback effects, but also the behavioral aspects of private-sector responses. And all of this must be closely coordinated with the pursuit of supply-side reforms that promote robust, durable, and inclusive growth.

Here is where the Macri government’s approach is an historical exception.

Macri took over the presidency with a bang, launching an audacious — and highly risky — strategy that places aggressive price liberalization and the removal of quantitative controls front and center, ahead of the five measures relating to demand management and financial assistance.

Already, most export taxes and currency controls have been scrapped, income taxes have been cut, and the exchange rate has been freed up, allowing for an immediate 30% depreciation of the peso.

Historically, few governments have pursued this type of sequencing, much less with such fervor; indeed, most governments have hesitated, especially when it comes to full currency liberalization. When governments have taken similar steps, they usually have done so after — or at least alongside — the provision of financial injections and efforts to restrain demand.

The reason is clear: by taking time to set the stage for liberalization, governments hoped to limit the initial spike in price inflation, thereby avoiding a wage-price spiral and curbing capital flight. They worried that, if these problems emerged, they would derail reform measures and erode the public support needed to press on.

To revive the Argentine economy in a durable and inclusive manner, Macri’s government needs to act fast to mobilize sizeable external financial assistance, generate additional domestic resources, and implement deeper structural reforms. If it does, Argentina’s bold economic strategy will become a model for other countries, both now and in the future.

But if the approach falters — whether because of incorrect sequencing or a surge of popular dissatisfaction — other countries will become even more hesitant to lift controls and fully liberalize their currencies. The resulting policy confusion would be bad for everyone.

Project Syndicate; Mohamed A. El-Erian, chief economic adviser at Allianz and a member of its international executive committee, is chairman of President Barack Obama’s Global Development Council. He previously served as CEO and co-chief investment officer of PIMCO.

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13. ARGENTINA TO SIT DOWN WITH CREDITORS IN NEW YEAR — MARKET TALK (Dow Jones Institutional News)
21 December 2015

Argentina and its creditors will begin “substantive” negotiations in the second week of January, says Daniel Pollack, the US district court appointee charged with overseeing negotiations with creditors owed $10B in judgments against the country. Bond markets have been expecting an end to the long-standing feud now that a new president is in place in Argentina. Mauricio Macri has been quick to begin unwinding the economic policies of his predecessor, beginning last week with the lifting of capital controls on the peso.


Partnering with Civil Society in the Pursuit of Human Rights !
State Dept Human Rights Officer – Wesley Reisser deservedly awarded
the UNA-NCA Tex Harris Diplomacy Award for 2015

https://shar.es/1G5QOm

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