ARGENTINE UPDATE – Mar 14, 2016


Minister floats policy shift

Sunday, March 13, 2016
House arrest for dictatorship criminals stirs controversy

By Luciana Bertoia
Herald Staff
Rights groups, prosecutors blast suggestion made by Avruj, say may imply impunity
The national government yesterday opened the door to granting house arrest to those convicted for dictatorship-era crimes who are over 70 years old, sparking a fresh controversy with human rights organizations.
“The decision has to be made by the courts considering every particular case,” said prosecutor Jorge Auat in response to the suggestion made by President Mauricio Macri’s Human Rights Secretary Claudio Avruj.
Avruj yesterday told daily La Nación that he believed those over 70 who are in jail for crimes against humanity should be granted house arrest if the courts believed so. Asked whether if it was his opinion or the government’s, Avruj said he believed it was the administration’s stance on the issue.
Avruj’s words were not welcomed by human rights activists who expressed fears that it would be a message of impunity on the eve of the 40th anniversary of the coup that marked the start of the last dictatorship.
Justice and Concord, the association that groups together lawyers representing dictatorship-era officials, celebrated Avruj’s words.
“Secretary Avruj said that those accused of ‘crimes against humanity’ who are over 70 should be granted house arrest. He agrees with the law. It is not to be dismissed,” Justice and Concord tweeted yesterday afternoon.
Avruj, for his part, repeatedly said that the government did not want to meddle with the courts but his words were seen as a message sent to the judges.
“Avruj’s statement should be considered as a whole. The government is giving the courts the green light to grant house arrest to repressors, which is what they have been demanding,” human rights lawyer Guadalupe Godoy told the Herald yesterday.
“Avruj does not object to the two demons theory and the government has been getting rid of human rights areas that could help to open new investigations into dictatorship-era crimes. Several relatives of those who have been in the dock have also been appointed by the government and the nominees to the Supreme Court have questioned the borrowing of rulings issued by international courts in human rights cases,” she added.
Days ago, human rights groups were also annoyed by the national government’s decision to allow convicted repressors to go back to military hospitals for treatment, backpedalling on a prior decision made by former president Cristina Fernández de Kirchner. In 2013, the Justice and Defence Ministries decided to ban repressors from being treated in military hospitals as a result of the escape of two former military officers from the Central Military Hospital in Buenos Aires City.
A dangerous stance
Auat, who heads the Attorney General’s Unit for Investigations into Crimes Against Humanity, made it clear that they do not object to house arrest as it is legally permissible. However, he expressed his concerns.
“House arrest cannot be used as a message of impunity,” Auat said. “This should be considered in times when trials seem to have slowed down,” he added.
“Granting house arrest does not mean that they are being released. It just means that a person should continue serving a sentence at home due to health reasons, for example,” he explained.
According to the prosecutor, the main problem is to guarantee that repressors do not break the restriction of not leaving their homes. However, several cases have been reported thus far.
In 2013, HIJOS — the association that groups together children of state terror victims — reported that Jorge Luis Magnacco — one of the medical doctors who operated at the infamous Navy Mechanics School (ESMA) and was linked to several baby-snatching cases — was shopping in Patio Bullrich commercial centre when he was expected to attend the trial that was being held at the Comodoro Py courthouse.
“In that case, we objected that Magnacco be granted house arrest, but we believe that every particular case should be analyzed,” Alan Iud, the head of the Grandmothers of Plaza de Mayo legal team told the Herald yesterday.
Legal considerations
Iud also explained that the law does not automatically authorize those above 70 to be granted house arrest.
“Age is one of the elements to be considered but not the only one,” the lawyer said.
“If a person is remanded in custody, the judge should consider whether there is a risk of escape or if he or she could interfere with an ongoing investigation,” Iud explained. “In case the person had already been convicted by a ruling confirmed by a higher tribunal, the judge should consider whether there is a risk of not serving the sentence,” he added.
“In La Plata, most judges took a more careful stance after Jorge Julio López was forcibly disappeared,” Godoy also explained. She was one of the lawyers who represent the survivor who acted as a witness and a plaintiff in the trial against former Buenos Aires provincial police deputy chief Miguel Osvaldo Etchecolatz, the first proceeding that took place after the reopening of the dictatorship-era investigations in 2006.
López was abducted on September 18, 2006, a day before Etchecolatz was convicted to life in jail by a federal oral court in La Plata. Plaintiffs have argued that Etchecolatz and sectors of the Buenos Aires provincial police had been behind López’s forced disappearance.
Still pending
In 2014, sources told the Herald that the Supreme Court was considering issuing a ruling with guidelines for judges on how to handle cases in which repressors file requests to be granted house arrest. The new political context may trigger that debate.
MONDAY
1. BEEF-MAD ARGENTINA PREPARING FOR UNTHINKABLE AS MEAT COSTS SOAR (Chicago Tribune)
2. BARRICK SAYS ARGENTINA COURT TO CHARGE EMPLOYEES FOR SPILL (Bloomberg News)
3. U.S. APPEALS COURT DELAYS LIFTING ARGENTINA DEBT INJUNCTIONS (Reuters News)
4. MARKETS BRACED FOR US$30BN ARGENTINA SURGE (Reuters News)
5. THE POLITICAL ECONOMY OF ARGENTINA’S SETTLEMENT WITH THE VULTURE FUNDS (The Hill)
6. THE HONEYMOON IS OVER FOR ARGENTINA’S MACRI (National Interest.org)
7. THE VULTURE: HOW BILLIONAIRE RUBIO BACKER PAUL SINGER MADE BILLIONS OFF ARGENTINA DEBT CRISIS (Democracy Now)

1. BEEF-MAD ARGENTINA PREPARING FOR UNTHINKABLE AS MEAT COSTS SOAR (Chicago Tribune)
By Pablo Gonzalez
March 13, 2016

Beef is now so expensive in Argentina, which once was the third-largest exporter, that slaughtering plants are about to start importing cattle from neighboring countries for the first time in almost two decades.

It’s a big switch for a population that eats more beef per person than any other and where the meat has become as much a part of their national identity as the tango or World Cup soccer. Rising costs have encouraged what was almost unthinkable a decade ago: beef demand is dropping, and consumers are substituting with cheaper chicken and pork.

Argentina’s cattle industry was upended by the end of price controls and a devaluation of the peso under newly elected President Mauricio Macri, who altered the policies of his predecessors to revive an economy hobbled by a government debt default.

In December, the start of the South American summer, the price of beef used for barbecues known as asados surged 28 percent. To ease the strain, Macri authorized imports of beef and cattle from neighbors like Uruguay.

“This is a shame — an unexpected event that is the result of 12 years of wrong government policies,” said Ulises Forte, who has 500 head of cattle at a ranch in La Pampa province and is president of the Institute for the Promotion of Beef Argentina (IPCVA). “Fortunately, these imports won’t be that high.”

Before Macri arrived, the governments of former presidents Nestor Carlos Kirchner and, later, his wife, Cristina Fernandez de Kirchner discouraged beef exports with rules intended to keep domestic supplies ample and prices low. Instead, ranchers lost the incentive to expand herds, which shrank to 52 million head last year from 60 million in 2003. Raising cattle was more costly than using the land to grow soybeans, so many switched.

Argentina’s beef exports, which surpassed all but Brazil and Australia in 2005, tumbled 69 percent over the next decade and ranked 11th in the world last year, according to U.S. Department of Agriculture data. Shipments were the lowest in 11 years, government data show.

To revive the incentives for ranchers, the government lifted export restrictions and devalued the peso. The Argentine currency has plunged about 40 percent against the dollar since Dec. 1, which makes it more profitable for farmers and ranchers to ship their products overseas to buyers who pay in U.S. currency.

But that won’t solve the cattle problem right away. It can take two years to expand the herd because more cows are being withheld from slaughter for breeding. After a nine-month gestation period, it takes another six months or more to raise calves to slaughter weight. Beef output fell by 6 percent to 215,000 metric tons in January from December as ranchers brought fewer animals to market.

“During the Kirchner administrations, breeders dismantled their herds as beef wasn’t profitable,” said Miguel Schiariti, the president of CICCRA, an industry group. “With these new rules, the business will again be profitable, but rebuilding a herd takes time, and consumers will have to pay more for a product that was subsidized before.”

When the currency plunged, the cost of meat for domestic consumers surged. Barbecue beef jumped to 112.09 pesos ($7.29) per kilogram (2.2 pounds) in December, up from 87.68 pesos in November, industry data show. That’s discouraged buying in a country where people eat 1.1 kilograms of beef a week on average. Demand for the meat tumbled 7 percent in January from the same month in 2015.

To ease the pain, Macri lifted import restrictions. The last time Argentina allowed ranchers to bring in cattle from outside the country was 1998, and it rarely permits non-domestic meat. In 2013, the government authorized 1.5 tons of rib imports, and in the 1990s allowed 10 tons of sweet breads from the United States.

“We can import because our beef prices are higher than our neighbors,” said Maria Antonelli, an analyst at the Bahia Blanca Exchange. The export price of Argentina’s novillo is $330 a metric ton, compared with $320 for the same cut from Uruguay, $235 from Brazil, and $245 from Paraguay.

While Uruguay consumes 30 percent of its output and exports the rest, Argentina has been eating a larger share of its domestic supply. The country now eats 93 percent of production, exporting only 7 percent, compared with the average of past years when it consumed 70 percent and shipped 30 percent, government data show.

Uruguay, which is 15 times smaller than Argentina by land area, exported 360,000 tons last year, while Argentina shipped just 230,000 tons. Paraguay exported 400,000 tons, and Brazil shipped 1.6 million tons.

“The U.S. model of importing cheap beef for ground beef and exporting expensive cuts to Asia would be a good model to be followed by Argentina,” said Raul Milano, executive director at Rosario-based Mercado Ganadero SA, the country’s largest broadcast auction market. “We should also export most of the tenderloin we can and import ribs.”

For the next year or so, Argentina’s ranchers will focus on increasing cattle weights to generate more beef for export, even as they withhold more cows for breeding.

“Breeders will have the chance to fatten their herds and get higher export prices in two years,” Leonardo Sarquis, the agriculture minister of Buenos Aires province, said in an interview in Ramallo, 214 kilometers (133 miles) north of Buenos Aires.

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2. BARRICK SAYS ARGENTINA COURT TO CHARGE EMPLOYEES FOR SPILL (Bloomberg News)
By Danielle Bochove
March 11, 2016
* San Juan province to impose a fine of about $9 million
* Leak detected on Sept. 13 from a faulty valve at Veladero

Barrick Gold Corp. confirmed on Friday that an Argentine court will proceed with criminal charges against nine current and former Barrick employees in connection with a cyanide solution spill last year.

Separately, the San Juan provincial government announced it intends to impose a fine of about $9 million against Barrick, the company said in a statement.

Confirmation of the charges comes after Diario de Cuyo reported Thursday that the nine had been “processed” more than a week ago by Judge Pablo Oritja over the September incident at the Veladero mine, citing judicial sources it didn’t identify.

“Barrick is not a party to any criminal cases,” Andy Lloyd, a spokesman for Barrick, said by e-mail. “The individuals are being represented by their own lawyers. As with any criminal case, there is a presumption of innocence until proven otherwise and as such we are providing support to the individuals affected.”

The company couldn’t comment on whether the individuals could face prison terms, Lloyd said. It will decide whether to challenge the government fine once it has had a chance to fully analyze it.

Cyanide solution is used in the leaching process at the gold mine. The leak, which was detected on Sept. 13 from a faulty valve, resulted in 1.1 cubic meters of solution escaping and led to a court order to temporarily suspend leaching.

Earlier this month, a statement posted on the presidential palace website said that a police report showed five rivers in San Juan province were affected by the spill. Water samples taken immediately following the incident, and in the months following, showed there was no risk to the health of people or the environment downstream from the mine, Toronto-based Barrick said in the statement.

Barrick, the world’s largest gold producer, said it has strengthened controls and safeguards at the mine since the leak occurred.

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3. U.S. APPEALS COURT DELAYS LIFTING ARGENTINA DEBT INJUNCTIONS (Reuters News)
11 March 2016

NEW YORK, March 11 (Reuters) – A U.S. appeals court on Friday put on hold a judge’s ruling lifting injunctions that have restricted Argentina from paying off some debts in light of the country’s $6.5 billion offer to settle litigation over bonds in default since 2002.

The 2nd U.S. Circuit Court of Appeals in New York stayed the March 2 ruling by U.S. District Judge Thomas Griesa until it could hear an appeal by creditors opposed to the lifting of the injunctions.

According to court documents, Argentina did not oppose the creditors’ request to stay the order. It had earlier secured an expedited appeal, arguing that “without prompt resolution, settlement of the largest claims in this long-running litigation may be in jeopardy.”

Lawyers for Argentina and representatives for various creditors did not immediately respond to request for comment.

The 2nd Circuit, in an order earlier on Friday, set a briefing schedule that would run through March 25. It said the date of any arguments would be determined “at a later time.”

Griesa’s ruling vacating the injunctions was conditioned on Argentina repealing two laws concerning its debts and paying creditors who by Feb. 29 reached settlements with the country.

Argentina made the request to lift the injunctions after offering on Feb. 5 to pay $6.5 billion to settle lawsuits by various bondholders stemming from its record $100 billion default in 2002.

The injunctions at issue prevented Argentina from servicing its restructured debt until it paid the investors, who spurned its 2005 and 2010 debt restructurings.

Those restructurings resulted in 92 percent of its defaulted debt being swapped and investors being paid less than 30 cents on the dollar.

Argentina has reached agreements in principle to pay more than $6.4 billion to creditors, including $4.65 billion to four of the biggest creditors in the dispute, including Elliott Management’s NML Capital Ltd and Aurelius Capital Management.

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4. MARKETS BRACED FOR US$30BN ARGENTINA SURGE (Reuters News)
11 March 2016

BUENOS AIRES, March 11 (IFR) – Argentina’s progress in settling a 15-year old battle with creditors could unlock more than US$30bn of new bond sales out of the South American country this year, as local governments and corporates join the sovereign in a rush to the capital markets.

The federal government alone is expected to tap foreign bond investors this year for anywhere between US$20bn and US$25bn as it seeks to make good on payments with litigant creditors, pay past due interest stemming from its 2014 default and cover a gaping fiscal deficit.

Provinces are likely to follow closely behind with bankers estimating another US$3bn-$5bn in new supply from local governments as they try to fund their own fiscal holes, refinance outstanding debt and garner funds for much-needed investments in infrastructure.

“The message from the federal governments is go out there and tap the market,” a Buenos Aires-based banker told IFR. “Don’t depend on the government.”

The cash-starved Province of Buenos Aires jumped ahead of the crowd on Wednesday, taking advantage of positive sentiment to raise US$1.25bn through a new seven-year bond that priced at a yield of 9.375%.

The western province of Mendoza, which boasts rich mining and oil resources in addition to its Malbec vines, is also thought to be close to coming to market with a bond sale of up to US$500m after it recently met investors in New York, said market participants.

Provincial governments in Cordoba, Chubut, Santa Fe, Neuquen and Salta are also on bankers’ maps as potential candidates for new bond issues.

Cordoba, which has some US$600m in US dollar bonds falling due in 2017, could come with an issue of up to US$1bn, said one analyst.

The city of Buenos Aires, meanwhile, already has authorisation to issue up to US$890m this year to refinance bonds maturing in 2017 and fund new infrastructure projects, the city’s director of public credit told IFR.

Other potential borrowers, some of which spoke directly with IFR, are watching the market closely and are debating whether to come before or after Argentina launches its first international debt placement in close to 15 years.

SUPPLY PRESSURES

Argentine debt curves have come under pressure in anticipation of the sovereign’s multi-tranche deal, which could be US$11bn in size or more and is expected to be launched before mid-April.

New sovereign debt under New York law will serve as a fresh pricing benchmark for corporates and provinces alike.

Argentina’s new bond sale could pay yields of 7.25% on a five-year, 8.4% on a 10-year and 9.7% on a 30-year, Citigroup’s head of emerging markets Guillermo Mondino wrote in a report on Thursday.

But Buenos-Aires-based bankers reckon that the Republic might replace the 30-year tranche with a shorter-dated 15-year to save on costs.

Still, supply concerns and uncertainty over the new government’s ability to turn the economy around are giving some corporates pause and playing into their financing strategies.

Corporates have largely relied on short-term financing in the local bond markets, where nominal rates have soared to north of 30% as the central bank puts the brakes on a falling peso in an effort to contain inflation.

Yet while CFOs remain reticent about issuing debt in an economy that could see negative growth this year, corporates may want to refinance expensive short-term peso debt, which impacts on cashflows, with cheaper long-term US dollar funding.

“There is a line forming,” said Walter Stoeppelwerth, head of research at brokerage Balanz Capital, a Buenos Aires-based brokerage and asset manager. “Everybody wants a lower cost of capital.”

He mentioned Clarin’s Cablevision subsidiary, dairy producer Mastellone Hermanos, power producer Pampa Energia and gas distributor Metrogas as some of the companies that could benefit from lower-cost international funding.

The first wave of corporates may be those with immediate refinancing needs.

Real estate company Raghsa, confectionery company Arcor, Banco Macro, credit card company Tarjeta Naranja, tollroad Autopistas del Sol and state-owned oil company YPF all have US dollar debt falling due over the next year or so, according to Thomson Reuters data.

YPF has already mandated banks on a US$500m bond, while real estate firm IRSA is marketing a seven-year bond to fund a debt tender.

Power company Pampa Energia is also considering a bond issue to help finance its potential acquisition of assets from Brazilian oil company Petrobras, a company official told IFR this week.

PALATABLE TRADE

Corporate debt could be a palatable trade for hedge funds already involved in Argentina but looking to rotate out of the sovereign as spreads compress.

“We are pitching to local corporates,” said Agustin Rabinovich, head of sales at boutique investment bank AdCap.

“First [they could do] something local, then a private placement abroad and then an international debt .”

After years of depressed capital expenditure and limited access to the capital markets, Argentina corporates have plenty of room to increase debt to fund new projects.

“The corporate sector is under-leveraged relative to other countries,” said Daniel Marx, executive director of financial advisory firm Quantum Finanzas and Argentina’s former secretary of finance.

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5. THE POLITICAL ECONOMY OF ARGENTINA’S SETTLEMENT WITH THE VULTURE FUNDS (The Hill)
By Mark Weisbrot, contributor
March 14, 2016

After 15 years of court battles, injunctions, smear campaigns, lobbying and other interventions, the vulture funds have finally won a tentative agreement with the new Argentine government. Vulture funds — the name preceded this particular dispute — are so called because they buy up defaulted debt for a very small fraction of its face value, then sue (and use other tactics) to collect an exorbitant return.

In the case of Argentina, the chief vulture, American billionaire and major Republican campaign donor Paul Singer, will get an estimated 370 percent return; another vulture fund in the settlement did even better, with a return of 950 percent.

The agreement is tentative because President Mauricio Macri of Argentina still has to get the nation’s Congress, in which he does not have a majority, to change some laws in order to finalize the deal. And he will also have to reach agreement with some remaining “holdout” creditors. And now the vulture funds are appealing the judge’s order that would allow Argentina to issue new debt, presumably in an effort to extract even more concessions. Assuming it all works out, though, there are some important lessons to be learned from this long war over sovereign debt.
Argentina arguably had no alternative but to default in 2002, but the government also did the right thing by standing up to the International Monetary Fund (IMF) and its international creditors until it reached a deal (in 2003 and 2005) that would allow the economy to recover.

International lenders — in this case, a creditors’ cartel headed by the IMF — often succeed in getting a settlement that keeps the country trapped in recession, depression or very low growth with an unsustainable debt burden; the settlement also entails numerous conditions (cuts to social spending, public pensions, public employment) that harm the majority of the debtor country’s citizens. Some of the worst recent examples of these abuses can be seen in countries like Greece and Jamaica, and will likely include Puerto Rico if there is a debt restructuring there.

By taking a hard line with its foreign creditors, Argentina reached an agreement with 93 percent of them that allowed the country to do very well over the ensuing 14 years. Instead of a prolonged depression as in Greece, or limping along from one crisis to the next, Argentina began an extraordinarily robust recovery just three months after its default and enjoyed very high growth — more than 90 percent in real gross domestic product (GDP) from 2002 to 2015. (There is some dispute over the exact number, but it does not change the story.) This enabled Argentina to reduce poverty by about 70 percent and extreme poverty by 80 percent, in the 10 years from 2003 to 2013.

So, even though the country would later run into economic trouble — in the world recession of 2009, but also in the last four years — there is no doubt that it pursued very successful economic policies which it would not have been able to implement under a less-favorable agreement with its creditors. Now, about the slowdown of the past four years, in which the economy has grown by about 1.1 percent annually: Part of the problem was that Argentina could not borrow on international markets, due to its inability to settle with the vulture funds. For Argentina’s detractors, this proves that the default and subsequent tough negotiation were wrong. But clearly that is not the case; the alternative offered by the IMF and the creditors was vastly worse.

The problem is really the vulture funds, and also the foreign policy goals of certain actors within the United States who were against the prior government of Argentina. Here is Judge Thomas Griesa, of the Federal District Court for the Southern District of New York, to whom The New York Times devoted an article describing his incompetence: “Put simply, President Macri’s election changed everything.” That was from Griesa’s decision of Feb. 19, explaining why he decided to conditionally lift the injunction he had imposed against Argentina in 2014, which the Financial Times editorial board generously described as “eccentric rulings,” and which prevented Argentina from making its debt payments. In other words, he much preferred the new, right-wing, pro-Washington government, as opposed to the prior, left-wing government that he helped get rid of. Griesa’s unprecedented decision to take 93 percent of Argentina’s creditors hostage on behalf of the vulture funds was obviously political at the time. Now he has admitted it, to the chagrin of our legal system.

Argentina had appealed Griesa’s injunction to the U.S. Supreme Court, and the governments of France, Brazil and Mexico, and the Nobel Prize-winning economist Joseph Stiglitz, filed briefs on its behalf. Interestingly, the IMF announced that it, too, would file a brief on behalf of Argentina. This was not because the IMF loved the Argentine government, but because Griesa’s decision was considered a threat to the stability of the international financial system. But the U.S. Treasury forced the IMF into an embarrassing retreat, most likely due to pressure from the vulture lobby and some anti-Argentina members of Congress, in particular from Florida, who could threaten to hold up legislation that the IMF needed.

Did I mention that vulture fund chief Paul Singer is a major contributor to Florida Sen. Marco Rubio

(R), and is rumored to become finance chair for his presidential campaign?

The U.S. government also stopped blocking loans to Argentina at the World Bank and the Inter-American Development Bank just after Macri was elected. Macri himself also has an interesting history with the U.S. State Department: In conversations with U.S. officials leaked by WikiLeaks, Macri chastised them for being “too soft” on the Argentine government and encouraging its “abusive treatment” of the U.S.

The main lesson from this whole episode is the importance of national economic sovereignty for middle-income countries like Argentina. This is what allowed Argentina to recover from disastrous economic policies implemented under IMF tutelage; and it was the infringement on this sovereignty by U.S. courts and other actors that made it difficult for Argentina to resolve the economic problems of the past few years. We will see how this new, less sovereign government fares going forward, now that it has settled with the vultures.

Weisbrot is co-director of the Center for Economic and Policy Research in Washington and the president of Just Foreign Policy. He is also the author of the new book “Failed: What the ‘Experts’ Got Wrong About the Global Economy” (2015, Oxford University Press).

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6. THE HONEYMOON IS OVER FOR ARGENTINA’S MACRI (National Interest.org)
By Nicholas Borroz
March 13, 2016

The post-Kirchner president faces an uphill battle to pass further reforms

The international investment community is smitten with Argentina’s new president, Mauricio Macri. A wealthy businessman who was voted into office in November 2015, Macri vows to facilitate foreigners’ access to his country by reducing trade barriers. Additionally, he plans to cut domestic subsidy programs, which will improve Argentina’s economic stability and therefore make it a more attractive investment destination.

Macri’s neoliberal approach contrasts starkly with that of his predecessor, Cristina Kirchner. She shielded Argentina from foreign investment in order to grow domestic businesses, imposing currency controls and restricting trade. Domestically, she instituted a comprehensive web of subsidies. These trade barriers and costly welfare programs are the primary targets of Macri’s economic reform.

After nearly a decade of populist and protectionist rule, Macri’s approach has been likened to shock therapy: necessary but painful. And so far, the results have been promising for foreign investors.

On February 29, Macri’s government tentatively reached an agreement to resolve a longstanding international legal battle that has tarnished Argentina’s reputation abroad. Fifteen years ago, the country defaulted on $100 billion in debt. Since then, most of Argentina’s creditors have accepted a debt restructuring, but a small group of creditors have steadfastly refused to be shortchanged. Kirchner maligned these “vulture funds,” and a resultant legal dispute with them severely hurt Argentina’s international image, locking the country out of many capital markets. But in February, Macri’s government announced it was closing in on a deal to repay these holdout creditors.

Another indication of the international investment community’s satisfaction with Macri occurred a week before the creditor settlement. Dan Ammann, the president of auto manufacturer GM, indicated that Brazil should adopt more business-friendly policies like those of Argentina. He said this while discussing his company’s potential scale-down of operations in Brazil, which is reeling from economic malaise and a corruption scandal. Ammann stated that Argentina shows “how the situation can quickly change with the right leadership of the economy.”

Ammann’s remarks would have been unimaginable two years ago. Brazil was until recently a major foreign investment destination—one of the so-called BRIC countries, along with Russia, India and China, which was expected to lead future global economic growth. Argentina, on the other hand, had achieved near pariah-like levels of isolation in the West due to Kirchner’s policies.

At first glance, Macri appears to deserve the praise of GM and other investors. If he continues pressing through with his reforms, international businesses investing in Argentina stand to gain much from the country’s reconfiguration.

What investors forget, however, is that Macri needs domestic support in order to implement his reforms. It really doesn’t matter how much of a darling he is outside of Argentina if he fails to rally domestic support behind his policies.

This is important to remember because Macri has a tenuous mandate. He only beat Daniel Scioli, the candidate from Kirchner’s party, by less than 3 percent of the popular vote last November. And many individuals who voted for Macri did so not out of any particular allegiance to him, but rather out of fear that Scioli would continue Kirchner’s policies.

Macri is still trying to figure out his plan to dismantle the onerous web of subsidies left by Kirchner. Given his intent to clean the country’s fiscal house, though, it seems clear that the extent of subsidies’ removal will be far-reaching. Media reports, for instance, speculate that electricity rates will rise as much as 500 percent. These rumors are anxiously circulated throughout the country, where many households have seen their disposable income shrink in recent years. For those individuals who cannot manage ballooning utility costs, the cutting of subsidies may well cost Macri their support.

Other, noneconomic, issues also hurt Macri’s popularity at home. In December, merely days after assuming the presidency, Macri appointed two supreme court judges by decree. In January, Macri again bypassed the Congress by declaring a nationwide public security emergency that would last for one year. This decree strengthened Argentina’s armed forces’ role in maintaining internal security, ostensibly with a focus on combating drug trafficking and organized crime.

Many Argentinians fear Macri’s apparently authoritarian bent, which is understandable, since the country previously suffered under decades of military rule. The public psyche is still scarred by the “disappearance” of tens of thousands of enemies of the state during that time. Suspicions of Macri were strengthened by his seeming reticence to meet with leaders of a group representing the families of the disappeared. Only after significant criticism did he finally meet with them in February.

All of this means that Macri’s sweeping economic reforms are less impressive than they first appear. If he continues to alienate large portions of the population, it is conceivable that Macri will be unable to continue his reform process. More dramatically, his reforms could be repealed once he leaves the office.

Some cynical political analysts believe Kirchner has purposefully decided to step out of the limelight to leave Macri to deal with the fallout of her policies. Once Macri fails in his attempts to save the economy, Kirchner’s movement will triumphantly return to impose protectionism and populism anew, according to this theory. Whether or not this is Kirchner’s plan, what is true is that a botched reform process would strengthen the likelihood of a swing back to the left after Macri’s presidency.

Any investor looking at Argentina should closely monitor Macri’s domestic policies, even those that do not directly impact the country’s investment climate. If Macri does not take a more conciliatory approach at home, investors abroad should not be comforted by his reforms, which may ultimately turn out to be nothing more than fleeting. As long as Macri continues down his path of shock therapy, praise for him is not yet warranted.

7. THE VULTURE: HOW BILLIONAIRE RUBIO BACKER PAUL SINGER MADE BILLIONS OFF ARGENTINA DEBT CRISIS (Democracy Now)
March 11, 2016

Argentina has reached an agreement to pay U.S. hedge funds that have sought for 14 years to profit off the country’s debt. The hedge funds bought up Argentina’s debt for bargain prices after its financial crisis, then demanded full repayment. Former Argentine President Cristina Fernández de Kirchner had refused to pay the firms, calling them “vulture funds.” But under new right-wing President Mauricio Macri, Argentina has agreed to pay $4.65 billion to four hedge funds, including Elliott Management, run by billionaire Paul Singer. The deal would see the hedge funds take about 75 percent of what they demanded from Argentina—several times more than what they actually paid for the debt. Singer’s fund itself netted $2.4 billion—10 to 15 times its original investment. We speak to journalist Greg Palast. His recent article is called “Rubio’s Billionaire Wins Ransom from Argentina.”

JUAN GONZÁLEZ: Argentina has reached an agreement to pay U.S. hedge funds that have sought for 14 years to profit off the country’s economic crisis. The hedge funds bought up Argentina’s debt for bargain prices after its financial crisis, then demanded full repayment. Former Argentine President Cristina Fernández de Kirchner had refused to pay the firms, calling them vulture funds. But under the new right-wing President Mauricio Macri, Argentina has agreed to pay $4.65 billion to four hedge funds, including Elliott Management, run by billionaire Paul Singer. The deal would see the hedge funds take about 75 percent of what they demanded from Argentina—several times more than what they actually paid for the debt. Singer’s fund itself netted $2.4 billion—10 to 15 times his original investment.

AMY GOODMAN: Paul Singer is the longtime Republican fundraiser who has endorsed Republican establishment favorite Marco Rubio in this election cycle.

For more, we go to Los Angeles, where we’re joined by journalist Greg Palast, Puffin Foundation fellow for investigative reporting. His recent article, “Rubio’s Billionaire Wins Ransom from Argentina.”

Greg Palast, explain.

GREG PALAST: Well, what happened is, is that Paul “The Vulture” Singer, who we’ve been—I’ve been following him for BBC and for Democracy Now! for about nine years. This is the guy who does—he’s called “The Vulture” not just by Argentina; he’s known by that by his friends in the banking industry. He grabs old debts of dying nations, dying companies, even dying people, and when there’s a famine or a war, for example, in Argentina, during the military dictatorship when Argentina went broke, he bought up old bonds for $50 million, just sold them back to the government of Argentina, a government he helped place in power, for two-and-a-half billion dollars. And he does this—he did this through what the Argentine government and the United States Treasury call extortion. He says, “If you don’t pay me, I’m going to stop you from borrowing money. I’m going to choke your nation to death.” He even seized an Argentine naval ship on the high seas. I mean, he’s basically a privateer or pirate.

And his—what’s important about what’s coming up in this election, the reason he influenced the Argentine election was to get a puppet president who would write him a check, which would give him a 10,000 percent profit. He’s looking for the same in the United States. Paul “The Vulture” Singer is the number one donor to the Republican Party—not the Kochs, by the way; Paul Singer. He’s the number one donor to American Crossroads, run by Karl Rove, which is basically your racial-vote-suppression-on-an-industrial-scale operation.

So, he is—why is he involved in the U.S. elections? Because during his attack on Argentina, the secretary of state, working with the president, the secretary of state sent her lawyers into a U.S. federal court and said, “Don’t force Argentina to pay off this guy.” She tried to stop the extortion on Argentina, and the president joined her and the U.S. Justice Department. And she even said, her lawyers said, that Paul Singer’s business model is a threat to the entire world financial order. This guy is like a kind of financial terrorist, actually. And that’s what Hillary Clinton accused him of. By the way, Bernie Sanders has taken a similar, very tough position against these vulture financiers.

So, Paul Singer—this issue of Argentina ain’t just 11,000 miles away, Amy and Juan. It is coming home to roost, literally, because he’s got to make sure that there is no Hillary president or President Bernie that will put him out of business. Hillary’s action probably cost him a half-billion or a billion dollars. And he’s going to—he wants blood. And he wants his guy in the White House, which means anyone but Bernie, anyone but Hillary.

JUAN GONZÁLEZ: Well, but, Greg, so why did he come behind Marco Rubio? Because, obviously—well, obviously, in Donald Trump, Trump is a candidate who’s never seen a bankruptcy he didn’t like. But what—on what basis did he go behind Rubio?

GREG PALAST: Well, Rubio did his work for him. Rubio made an unethical, frankly—it horrified a lot of people. He made direct approaches to the State Department on behalf of his top donor. Paul “The Vulture” Singer is the number one donor to Marco Rubio. And Rubio kept banging on the State Department to back his vulture donor against our ally, Argentina. This is just way out of line, even in a country where money talks. This was money screaming.

And the other thing is that, for example, Rubio was trying to help Puerto Rico by allowing Puerto Rico to have bankruptcy rights, like any American state, and then suddenly another vulture financier friend of Singer called Herenstein held a big fundraiser for Rubio. Rubio flipped around his position on Puerto Rico and said, “No, they shouldn’t have any rights. They should fire teachers and firemen and policemen, and cut pensions,” rather than cut payments to vultures like Singer and Herenstein and his donors. He literally flipped, literally within days of being funded by these guys. So Rubio showed that he’s a perfect puppet.

Now, do understand, I don’t think they expect Rubio to pull it off at this point. That would be their dream. But, you know, they’re happy with a Trump, who’s actually, you know, a member of the club. And they’re happy with any Republican at this point, mainly because both Democratic Party candidates have not only said that they don’t—that they’re not going to do what Singer wants, that they might actually put him out of business. And that, he is not going to tolerate. That’s why he’s backing Karl Rove and American Crossroads, because no matter who is there, he’s got to make sure that the—if all the votes are counted and you count the Puerto Rican-American vote in the United States, and, you know, if you count the progressive vote and the minority vote, they can’t win, so he’s got to come up with other ways of doing it. That’s—so, Singer is not just—it’s not just backing Rubio. It’s backing the whole vote suppression machinery that’s being run by the Republican Party. I’m not being partisan. You know, I’m an investigative reporter. I’ve been—

AMY GOODMAN: We have five seconds, Greg.

GREG PALAST: —following this guy for years around the planet. OK.

AMY GOODMAN: Greg, I want to thank you very much for being with us from L.A., journalist and Puffin Foundation fellow for investigative reporting. His recent piece, we’ll link to, “Rubio’s Billionaire Wins Ransom from Argentina.”

And that does it for the show. Democracy Now! has three job openings: broadcast engineer, a director of finance and operations and a director of development. Visit democracynow.org for more information.

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