• 21/05/2016 |

Fearless in the face of Massera

• By Santiago Del Carril

Former US State Department official had stared down miltary dictatorship in Buenos Aires

Derian, who was also a strong advocate for the African-American Civil Rights movement in the United States, was hailed yesterday by voices both local and global. 
For her work as then-US president Jimmy Carter’s assistant secretary of state for human rights and humanitarian affairs, she will forever remain in the memories of the Argentine victims who were saved by her actions. 
She was a woman who looked the dictators straight in face, an “Iron Magnolia” who held off pressure in her homeland from influential figures such as Henry Kissinger, who had backed the military Junta. 
In her later years, her actions during those dark days would be recognized. She received the Order of the Liberator San Martín Award — the highest honour that Argentina can bestow on a foreign official. 
Her beliefs and her actions speak volumes. And so does her legacy. 

Patricia Murphy “Patt” Derian was born in New York City in 1929. Later in life, she would be known as an activist, an advocate of the African-American civil rights movement and the assistant secretary of state for human rights and humanitarian affairs. 

Her capacity and desire to care for others was evident early on. She earned a degree in nursing from the University of Virginia, which she later put to use in the civil rights movement. As the struggle grew, she decided to move to Mississippi to support the campaign for public school desegregation.

But, at least locally, it is her time heading up Jimmy Carter’s Human Rights and Humanitarian Affairs mission that will remain long in the memory. 
When Carter was elected in 1976, he had decided to make the defence of human rights one of the main cornerstones of his administration’s foreign policy, in contrast to the Nixon/Ford administrations. Carter wanted to replace the drive against Communism with a new platform, the advancement of civil liberties across the world. His newly created post, assistant secretary of state for human rights and humanitarian affairs, delivered Derian a seat at the decision-making table, and the attention of former secretaries of state Cyrus Vance and Christopher Warren. She took full advantage of this opportunity to vigorously campaign for human rights around the world.


“She saw human rights as a single moral issue, not as something that should be secondary to US international business deals,” former US diplomat “Tex” Harris told the Herald. 
Harris, a figure well-known for his reporting of human rights abuses in Argentina, backchannelled stories and cases to Derian that would later be used to denounce the military Junta. 
Tex believes Derian’s experiences of dealing with segregationists in the Deep South benefitted her in her detailings with the Junta. As head of the Human Rights bureau, she played a key role in institutionalizing human rights as a part of US foreign policy, which was put into effect in Argentina.

She was fearless, confronting Argentina’s dictators who were ordering the mass murder of thousands of citizens out of sight. The bodies of the victims were being discarded, hidden from view forever.

“She was an Iron Magnolia. She combined the strength of iron with an exterior of graciousness and Southern charm,” said Tex. 

She certainly caught their attention. Former Herald editor-in-chief Robert Cox recalled how Derian was constantly being followed by the military secret police. Somehow, he says, she was able to remain unmoved by it all. Derian would continue to face the dictators directly, confronting them about the murders she knew they were committing. 
“She told us once how she went to (former Navy Admiral) Massera’s office in the ESMA (ex-navy academy that was used as a clandestine detention centre),” Cox recalls. “And that Massera denied that he was torturing and killing people. She responded ‘You know very well that you are torturing people right here,’ pointing her finger to the ground.”

Massera responded to Derian’s insistent questioning darkly, saying: “Do you know what happened to Pontius Pilate?” 

The assistant secretary would described the event later as one of the most eerie moments in her life.


Cox explains that at that time, the media portrayed her unfavourably because all the major newspapers were controlled by the dictatorship then. The military government considered her public enemy number one and even made plans to assassinate her. 

During her three visits to Argentina in 1977, Derian received more than 5,000 complaints of human rights abuses from the victims or their family members. 

Her efforts were integral in getting the Inter-American Commission of Human Rights to visit Argentina in 1979, with her at its head of mission. It was the first international organization to offer a detailed report on the human rights violations 

“Patt was a very savvy assessor of how to move people in one direction or the other,” said Mark Schneider, who served as the senior deputy assistant secretary in the human rights bureau. “She understood how power has both positive and negative effects. And she used this to try make the US government have a positive impact in Argentina and the rest of the world.”

After she left the bureau, Derian returned to give testimony in the infamous Trial of the Juntas in 1985. She delivered crucial evidence that was used to convict the Junta of human rights crimes. 
Throughout the 1980s, she continued to be politically active. She was very critical of former Republican government official Jeane Kirkpatrick’s support for military dictatorships in Nicaragua and El Salvador.


In 2006, in recognition of her human rights activism, the administration of former president Néstor Kirchner awarded Derian the Order of the Liberator San Martín Award — the highest prize that Argentina can award to officials from foreign governments.

“This award is in recognition of her actions in favour of human rights during the last military dictatorship,” the administration said at the time. 

During the ceremony, she offered a touch of what her work in Argentina meant to her. She returned the emblematic handkerchiefs that the Mothers of the Plaza de Mayo would give her when she visited all those years ago. 
Among those iconic bits of fabric was one owned by Azucena Villaflor de Vincenti, one of the founders of the Mothers of the Plaza de Mayo, who was murdered by officers working for the last military dictatorship. “I’ve had these since then, and its time to return them,” Derian said, handing them over to the former Argentine consul to New York City, Héctor Timerman.


— ———————-








By Taos Turner and Santiago Perez
8 June 2016

The hedge fund that successfully fought for more than a decade against Argentina has a new target: Mossack Fonseca.

In a grudge match playing out in federal court in Nevada, NML Capital Ltd., a unit of hedge-fund giant Elliott Management Corp. managed by New York billionaire Paul Singer, is suing the Panamanian law firm for obstruction of justice. Mr. Singer zeroed in on Mossack Fonseca in 2013, as he searched the globe for Argentine assets his fund could seize as compensation for bonds on which Argentina had defaulted. Mr. Singer’s NML alleged the law firm set up shell companies in Nevada that were used to siphon stolen money from Argentina and then obstructed its efforts to uncover those links.

Earlier this year, NML reached a settlement with Argentina that would pay the fund $2.4 billion, but that doesn’t mean it is giving up on the Panamanian firm.

“Mossack Fonseca actively engaged in the concealment and destruction of evidence,” NML wrote in a filing with the U.S. District Court in Nevada in late May. “They should be held accountable for their conduct.”

Mossack Fonseca said the companies in Nevada aren’t linked to Argentine corruption scandals and that it can’t be held liable for the behavior of companies after it helps set them up. The law firm said that it has made an extraordinary effort to comply with NML’s various requests and has never been accused of wrongdoing by any court.

“Mossack Fonseca has and will continue to defend itself in the face of these baseless allegations,” a spokeswoman said.

The suit adds another chapter to Mr. Singer’s combative history and another source of pressure on the Panamanian law firm, which is engulfed in the Panama Papers scandal. The open case threatens further exposure and possibly damaging disclosures for the firm, and could put it on the hook for NML’s legal fees, which the fund said are substantial.

Mossack Fonseca has been reeling from a massive leak of documents related to its business setting up some 240,000 corporate entities in tax havens around the world. Among those corporate entities were more than 1,000 opened in Nevada.

Mossack Fonseca has called the data leak illegal and has denied any wrongdoing in setting up the offshore companies. It also says it shouldn’t have to turn over extensive information in the Nevada proceedings because it lacks a U.S. presence and because it was contractually required to keep information about the companies confidential.

The companies were represented in the U.S. by M.F. Corporate Services Nevada. In a sworn statement in 2015, Jurgen Mossack, one of Mossack Fonseca’s founders, said his firm had no parent-subsidiary relationship with M.F. Nevada and that it didn’t control its internal affairs.

That is a point the hedge fund disputes. NML filed its obstruction allegations after reviewing internal Mossack Fonseca emails published in April by the International Consortium of Investigative Journalists. The emails, which also were reviewed by The Wall Street Journal, appear to show that Mossack Fonseca officials discussed wiping information from computers in the offices of M.F. Nevada to prevent the court from finding out about the law firm’s ties to M.F. Nevada.

M.F. Nevada didn’t respond to requests for comment.

Mossack Fonseca said the emails in question don’t show any wrongdoing.

Last year, U.S. Magistrate Judge Cam Ferenbach, who was overseeing the suit, agreed with NML that the Nevada firm was an “alter ego,” or an instrument for Mossack Fonseca.

Nevada slapped a $10,000 civil penalty on M.F. Nevada in May, the maximum allowed under state law, for failing to maintain updated contact information for its clients. Shortly afterward, M.F. Nevada resigned as the representative for the shell companies in the state.

Now, Mossack Fonseca is fighting it out with NML. People familiar with the case say that the parties could reach a settlement, potentially giving Mr. Singer another legal victory. The hedge-fund manager not only beat Argentina in court, but got the country to pay his legal fees in doing so.

By Roula Khalaf
June 8, 2016

Notebook – the selection process for probably the most impossible job in the world

It is not as momentous as the contest for the US presidency and it doesn’t have a Donald Trump in the mix. But it is as global as it gets and as tricky a job as can be. The competition for the post of UN secretary-general is under way and it is no longer the opaque affair we are accustomed to. For the first time in UN history, it is taking place not only in the smoke-filled rooms of embassies but also out in the open. Only the other day I attended a debate at the Barbican Centre, London, where three candidates were grilled on how they would make the world a better place.

This is probably the most impossible job in the world. The replacement for Ban Ki-moon, who steps down at the end of the year, is decided by the five permanent members of the security council. Because they work against each other more often than they co-operate, the P5 tend to compromise over a person (usually a man) they believe will not challenge them. The job is at its best when there is consensus among the P5 and at its worst when there is discord. Think of the carnage in Syria over the past five years.

Yet many people still believe in an ideal world in which the UN, in the person of its boss, should fix all our problems. And so hundreds of organisations have banded together to demand an end to a selection process that is more secretive than the appointment of a pope. It is still the P5 who will play the decisive role after the usual horse-trading and before the decision is rubber stamped by the General Assembly.

What’s different this time is that we know of 11 candidates so far (yes, we rarely knew the names in the past) and they are actively pitching, including submitting to questioning by the General Assembly. According to the UN tradition of rotating regions, it is eastern Europe’s turn to take up the seat. But, quite rightly, it is also time for a woman to be UN chief. Much speculation has focused on eastern European women candidates.

Some contenders have been willing to open themselves up for public scrutiny in events such as the one I attended. “The UN is not playing the role we think it should be playing and it’s not acceptable in this day and age for a decision like that to be taken behind closed doors,” Natalie Samarasinghe, executive director of the United Nations Association in the UK, an independent organisation that organised the Barbican debate, told me. “It’s not just that this year we know the candidates but we also have some specific, bold ideas out there that could last beyond the selection process.”

Having prepared myself for the prospect of a woman secretary-general, I was disappointed to see three men in suits take the stage at the Barbican: Vuk Jeremic, former foreign minister of Serbia; Igor Luksic, foreign minister of Montenegro; and António Guterres, the former UN High Commissioner for Refugees and ex-prime minister of Portugal. Soon enough, though, they had to respond to a question about the extent of their feminism. All three promised greater gender diversity in the (heavily male) ranks of under-secretary-generals.

Of the three, Mr Guterres came across as the most modest, motivated and experienced. Those closely watching the selection process tell me he has emerged in recent months as the clear frontrunner among male candidates. None of the three applicants, however, had a convincing answer to the most important question: how would they hold the P5 to account if they stray?

Diplomats expect that by September, Russia and the US will cancel each other’s first choices (potentially, along the way, also eliminating either the woman option or the eastern European option) and look to settle on a compromise. I hear that at this stage the US favours Susana Malcorra, the foreign minister of Argentina, while Russia is more inclined towards Bulgaria’s Irina Bokova, the head of Unesco, though this may change if others join the fray.

Even if campaigners are under no illusion about where the decision-making ultimately lies, they predict that the more open process will have an effect. The impressions the candidates make cannot be ignored. As one campaigner put it: “If we don’t get the best possible outcome, the new process can avoid getting the worst possible one.”

Back to contents

By Robin Wigglesworth and Elaine Moore
June 7, 2016

The payout of $2.4bn from Argentina to Elliott Management spurred efforts to tighten the restructuring process

At 8:13am in New York on April 22, about $2.4bn ticked into the bank account of Elliott Management, a fearsome hedge fund known for its dogged pursuit of countries that default on their debt.

The money came from Argentina, the final pay-off from Elliott’s 15-year legal crusade against the South American country. Elliott had led a band of creditors that sued Buenos Aires after it defaulted on $80bn of debt in 2001, culminating in a financial blockade of Argentina that resulted in another default in 2014.

This year, the reformist government of President Mauricio Macri resolved the debacle. In February, Argentina reached an accord with Elliott, a handful of other hedge funds and creditors that had refused to take its original punitive debt restructuring offering. The money was raised in April through the biggest bond sale — worth $16.5bn — by a developing country.

A saga that has captivated the sovereign debt world is finally over, yet economists and lawyers are now examining the broader implications. The suspicion is that the legal tactic successfully used by Elliott — and its eye-watering profit — could embolden other hedge funds to try to exploit countries in distress and make it harder for states to tackle excessive debt burdens.

“It’s a disaster for the world,” says Joseph Stiglitz, an economics professor at Columbia University and a Nobel laureate. “It sets an enormously bad precedent and will cause a lot of anxiety in the global financial system.”

Moreover, bankruptcies from countries such as Greece and Ukraine have exacerbated other faultlines that could complicate the sovereign debt restructuring process. This is an immediate worry, as states such as Venezuela and a host of others dependent on commodity exports are facing difficulties.

The financial system’s guardians have rallied in response to these concerns. The International Monetary Fund and finance industry bodies have spent the past few years overhauling aspects of the sovereign bankruptcy architecture. Yet it remains an open question whether the measures, such as beefed-up bond clauses, will be sufficient.

Dealing with creditors

When the Libertad, an Argentine frigate, docked at the Ghanaian port of Tema in October 2012, the captain and its 220-strong crew expected a brief, enjoyable goodwill visit to the west African state. But Elliott Management had decided otherwise.

Within a day of anchoring, Elliott’s lawyers had filed a claim against the ship as partial recompense for Argentina’s debts. Eventually a UN tribunal ruled that the Libertad was protected by sovereign immunity, allowing its crew to sail back home. But Elliott enjoyed much more success in the US courts.

All bonds boast an array of often boilerplate terms and conditions. Elliott argued that one called the pari passu clause meant Argentina could not continue to shun them while making payments to creditors who grudgingly accepted the 30 cents on the dollar offers made in 2005 and 2010 and held new “exchange” bonds.

Not only did Thomas Griesa, a US district court judge, agree with Elliott’s interpretation, he slapped an injunction against anyone helping Buenos Aires to avoid the order. In practice this left Argentina with the unpalatable choice between paying its nemeses or defaulting again. In 2014, President Cristina Fernández de Kirchner opted for the latter.

After Mr Macri’s more emollient government came to an agreement with Elliott and other creditors earlier this year, Judge Griesa lifted his injunction, the default has now been “cured” and Argentina rehabilitated. But the litigation could leave a significant legacy.

Many sovereign bonds have pari passu clauses, and Elliott’s financial bonanza could embolden other creditors to pursue similar tactics in the future, says Mitu Gulati, a law professor at Duke University. “I’m fearful this movie is not over. The potential returns are astounding and could create a whole industry of mini-Elliotts.”

Although every situation varies greatly, there are indications that creditors are beginning to take a tougher approach with countries. Franklin Templeton played hardball with Ukraine, and Gramercy, another US hedge fund, is now suing Peru over some of its old, long-defaulted bonds.

Jay Newman, a senior portfolio manager at Elliott and Argentina’s primary antagonist, argues that the hand-wringing over the impact of his successful action is wildly overdone. He points out that most restructuring proceeds relatively smoothly and highlights the sheer length of Elliott’s litigation as a deterrent against other firms pursuing legal remedies in the future.

“These situations can be resolved quickly and amicably if there is a willingness on both sides to sit down and negotiate,” Mr Newman says. “The lesson of Argentina is that litigation is not a fruitful course for countries or their creditors . . . Litigation will never be the primary course. Argentina is an aberration. It is the tail wagging the dog.”

Indeed, research by Elena Duggar of Moody’s Investors Service in 2013 found that most restructuring over the previous 15 years was resolved quickly and almost all had occurred without ligation from “holdout” creditors. In 34 cases, creditor participation averaged 95 per cent and deals were sealed 10 months after a government announced plans to restructure. Only Argentina’s case led to persistent litigation.

Argentina may be an outlier, but many other experts are less sanguine over the long-term impact. One of the reasons there has been little litigation is that most countries simply elect to pay off any holdouts — but crucially this depends on their number being limited. Even if few creditors have the legal nous, resources and sheer stubbornness of Elliott, the very fact that it was so successful could cause copycat litigation.

“Holdouts will now have something to point to,” says Mohamed El-Erian, chief economic adviser to Allianz. “I think restructurings will become much more contentious now.”

Moreover, the defaults of the likes of Greece, Ukraine and Jamaica have highlighted related problems. These include corralling creditors into an agreement, encouraging early dialogue with investors, the IMF’s own actions and the difficulties in assessing exactly when a country has gone bust. Most of all, countries have a tendency to delay debt workouts — worsening the challenges when reality finally bites.

Group action

Many of these issues are being tackled. In the wake of Greece’s crisis the IMF examined the sovereign debt restructuring process, and it has reconfigured swaths of its own framework. This includes scrapping a controversial exemption on its lending policy that initially allowed the institution to bail out Greece, without insisting on a debt restructuring.

But perhaps the most meaningful overhaul has come from the private sector, albeit with some cajoling from the US government. In April 2013, the US Treasury orchestrated an informal group of creditors, bankers, lawyers and governments to find a solution to the problem. Over the course of a year the “Sovereign Debt Roundtable” meetings were attended by representatives from multilateral institutions, major governments and the London-based International Capital Markets Association.

Bringing governments and the private sector together was difficult but vital, according to someone with knowledge of the Treasury’s thinking. “We knew both sides had to be involved from the beginning — nothing would have been agreed otherwise,” says one participant. “These are huge markets and huge changes. Everyone had to feel involved.”

By August 2014, an agreement was reached. ICMA published proposed new bond guidelines that clarified the wording of the pari passu clause to neutralise its legal importance, and urged a revamp of so-called collective action clauses designed to stymie the threat of holdouts.

CACs typically stipulate that if more than 75 per cent of creditors vote for a restructuring deal, then it binds all creditors. The clauses became more popular after Argentina’s 2001 default and these days, most countries — certainly developing ones — include CACs in their bonds. But they have one big weakness that creditors can exploit: they only work bond by bond, so if an investor manages to snap up 25 per cent of a security they can block its restructuring — something that hedge funds did with a clutch of Greek bonds in 2012.

Although the Greek restructuring was still completed — thanks to retroactively fitting CACs into local-law bonds — this rattled many government officials worldwide and made action imperative, according to Leland Goss, ICMA’s chief lawyer. “People were very, very frightened and concerned at the time. So as a result, something had to be changed in the global financial architecture,” he says.

In the immediate aftermath of the eventual Greek restructuring in March 2012, Brussels said all countries in the eurozone should include next-generation CACs that lower the voting threshold and crucially include “aggregation” to allow votes to bind across a country’s debt pile. ICMA expanded that by updating the bond issuance guidelines for all its members.

Take-up of the new “super-CACs” was swift. Within two months, Kazakhstan became the first country to introduce the features, followed by Mexico, one of the largest borrowers in emerging markets.

Argentina’s jumbo bond sale this year includes the new clauses. Contrary to the worries of some governments, investors took the changes in their stride and the new debt showed no discernible difference in price. Even China is said to be considering rewriting its debt to show support for the new international framework.

Voluntary adoption

Other sore points are still being addressed. Many investors also want clauses that require timely disclosure and good-faith negotiations with creditors to be enshrined. So-called creditor committee clauses are under discussion at the IMF and an announcement is expected this year.

Yet these developments are hardly a panacea. ICMA’s guidelines are precisely that, and not every country has adopted the reworked terms. The changes are voluntary and some governments have simply chosen to copy their existing bond literature. Recent bonds issued by countries including Nigeria and South Africa do not feature the new clauses.

Moreover, neutered pari passu clauses and super-CACs will only appear in new bonds, leaving trillions of dollars worth of debt outstanding that could prove vulnerable.

Whether sovereign debt restructuring is in need of a more fundamental rethink will become more apparent in the coming years — with Venezuela likely to be the first and biggest test case.

“There has been a lot of progress, but it’s probably more incremental than we would have liked,” admits Sean Hagan, the IMF’s top lawyer.

Venezuela: The default favourite thanks to the oil price drop
Venezuela is likely to be the first major test case of the sovereign debt restructuring system in the wake of the Argentina deal and the batch of reforms introduced in recent years.

The oil-rich country is mired in a deep recession and the government’s finances are in tatters following the collapse in energy prices. So far, Venezuela has managed to defy expectations of an imminent government default through selling gold reserves and other assets, but most analysts say a default is a near-certainty. A $4bn Venezuelan bond due in 2027 is trading at just 44 cents on the dollar. A default could happen as early as autumn, when state-owned oil company PDVSA has $3bn of debt payments due.

A default could quickly become a messy affair, given how much of its debts are held by international investors, and due to the scope of any likely restructuring. Moreover, the legal framework of Venezuela’s bonds is unhelpful and could lead to an Argentine-style debacle, with lawsuits to seize overseas assets or intercept oil exports.

For example, Venezuela’s $32bn of government bonds mostly have old-fashioned “collective action clauses” where a determined creditor could in theory block a restructuring, and the $36bn PDVSA bonds have none whatsoever.

Lee Buchheit, a senior partner at law firm Cleary Gottlieb, doubts that the two debt piles can be disentangled. “The market is perpetually asking the question: can you restructure one of those obligors without restructuring the other,” Mr Buchheit told the FT earlier this year. “My sense is that if the shoe drops it will probably drop for both.”

Back to contents

By Eliana Raszewski and Nicolas Misculin
June 7, 2016

Argentina and Brazil have agreed to extend a bilateral deal on automobile exports for another year, the Argentine minister of production said on Tuesday.

The current deal, which expires at the end of the month, allows each country to export a set value in vehicle production to the other.

Demand is weak in both countries, as Brazil, the top foreign buyer of Argentine cars, weathers a recession and Argentina grapples with high inflation and a currency devaluation which has lowered the value of the peso by 29 percent.

The current deal allows Brazil to export $150 in vehicle value for every $100 it imports from Argentina.

“It will continue with the same terms, which is very good for Argentina,” minister Francisco Cabrera told journalists.

Argentine auto exports and production for 2016 are expected to hold steady or drop slightly, the ADEFA association of Argentine vehicle makers said this year.
The country produced 543,467 vehicles in 2015 and reported a 31.3 percent slide in vehicle exports.

Brazil was until recently one of the world’s five biggest auto markets and remains a major base of operations for Fiat Chrysler Automobiles NV (FCHA.MI), Volkswagen AG (VOWG_p.DE), General Motors Co (GM.N) and Ford Motor Co (F.N).
Stronger exports are unlikely to keep Brazil’s production from falling for a third straight year, the country’s automakers association said on Monday. Output is expected to shrink 5.5 percent in 2016.

Back to contents

7 June 2016

The administration of the president, Mauricio Macri, has in recent weeks been deepening the foreign policy shift that it began when it took office December 2015, seeking to develop ties with several countries in search of new trade opportunities and foreign direct investment (FDI). With a political crisis facing Brazil, Mr Macri is emerging as a more prominent regional leader, which has given him greater scope to propel his agenda, including trade deals between the Mercado Común del Sur (Mercosur, the Southern Cone customs union, of which Argentina is a member) and both the Alianza del Pacífico (the Pacific Alliance, comprising Chile, Peru, Colombia and Mexico) and the EU. In the short term, the candidacy of the foreign minister, Susana Malcorra, for secretary-general of the UN also appears to be shaping Argentina’s international relations.

As part of Mr Macri’s efforts to increase trade liberalisation, he has been manoeuvering slowly to strengthen ties between Argentina and the Pacific Alliance. Under the previous president, Cristina Fernández de Kirchner (2007-15), the government shunned the alliance for ideological reasons. However, on June 1st Ms Malcorra said that Argentina had requested to become an observer state. On July 1st Mr Macri will attend the 11th summit of the bloc in Chile.

Mr Macri’s overtures to the Pacific Alliance fit within Argentina’s broader foreign-policy backdrop. The government wants to expand trade ties as it moves to insert Argentina into the global economy and boost exports-part of a wider macroeconomic overhaul-after years of growing isolation under Ms Fernández. To achieve this, Mr Macri is seeking a new direction for Mercosur, whose full member states are Argentina, Brazil, Paraguay, Uruguay and Venezuela.

In recent years Mercosur has become increasingly politicised, as highlighted in 2012 by the temporary suspension of Paraguay-after the impeachment of a leftist president-and the inclusion of socialist Venezuela. Mr Macri wants to realign Mercosur and link it with the Pacific Alliance. Ms Malcorra said that there has already been a “technical” meeting between the two groups. Nonetheless, The Economist Intelligence Unit is very sceptical about the possibility of a deal, which has been floated in the past, although Argentina may find some support from the interim Brazilian president, Michel Temer, who also wishes to liberalise trade.

According to local news reports, during a May 23rd visit to the Argentinian capital, Buenos Aires, José Serra, Mr Temer’s foreign minister, told Mr Macri and Ms Malcorra that he approved of a link between Mercosur and the Pacific Alliance. Brazil wields large influence in Mercosur, and Mr Temer’s administration is reported to be preparing to block Venezuela from taking over the rotating presidency this month.

Building trade bridges with the EU

In addition to a potential deal with the Pacific Alliance, Mr Macri has also been pushing for a trade deal between Mercosur and the EU, which is its biggest partner, accounting for 20% of Mercosur’s total trade in 2013, according to European Commission figures. Mr Macri’s evolving role as a sub-regional leader-driven, in part, by the political upheaval in Brazil-appeared to be the catalyst on May 11th for the EU and Mercosur to exchange offers regarding market access for the first time since 2004. Although the details of the offers have not been made public, it seems that sensitive items for negotiation, such as beef and ethanol-which are subject to higher scrutiny and tension with certain stakeholders, notably farmers in the EU-were excluded from the list. The offers are currently being evaluated, but, as they stand, do not seem to be considered satisfactory by Mercosur.

This revival comes as Argentina seeks to expand bilateral ties with European nations such as Germany and Italy as it searches for flows of FDI to bolster the macroeconomic outlook. On May 6th the cabinet chief, Marcos Peña, met with representatives from 21 EU countries in Buenos Aires. In another bid to lure FDI, Mr Macri also received a visit in May from a large Italian business delegation, including Italy’s deputy economic development minister. On July 5th the Argentinian president will travel to Germany to meet the chancellor, Angela Merkel.

New governments, new relationship between Argentina and Brazil

The Macri administration is seeking to foment ties with several regions. In a show of support for Mr Temer in Brazil, an agreement was signed during Mr Serra’s visit to boost shrinking bilateral trade; Brazil is Argentina’s largest single trade partner. Bilateral trade disputes that have emerged in past years-linked to non-tariff trade barriers between the countries and, notably, a request from Brazil for Argentina to ease paperwork to facilitate imports from Mercosur-are likely to improve under the new political leadership.

In other moves to secure external financing, following the March visit of the US president, Barack Obama, Ms Malcorra visited the Chinese capital, Beijing, on May 19th to review the terms of agreements signed with China by Ms Fernández. Ms Malcorra returned to Buenos Aires with assurances over the peaceful use of a satellite and space tracking station in the province of Neuquén that will be operated by China, and consolidated the relationship through tweaked deals for the construction by Chinese firms of hydroelectric dams in Patagonia, as well as plans for China to build nuclear reactors in Argentina and finance upgrades to a cargo train network. Ms Malcorra also progressed with the easing of visa requirements for Chinese nationals, according to local news reports. In April Ms Malcorra visited her Russian counterpart, Sergey Lavrov, cementing ties fostered by Ms Fernández and commenting that Russia was prepared to make investment commitments in Argentina.

With Mr Macri spurring more of a regional leadership role for Argentina, the economy minister, Alfonso Prat-Gay, has expressed the administration’s desire to be incorporated into the 34-member OECD, which could boost trade in the long term. Mr Macri also recently approved the candidacy of Ms Malcorra for the job of secretary-general at the UN, for which there is a field of ten candidates. The continued co-operation with China and Russia should be considered in this context, as those nations are permanent members of the UN’s Security Council, which will select one of the candidates to then be approved by the General Assembly.

Ms Malcorra’s candidacy appears to having an impact on other aspects of foreign policy. As she seeks votes in the assembly, Argentina’s policy toward Venezuela, for instance, has softened. The Organisation of American States is seeking to begin a process that could result in Venezuela’s suspension over allegations that the country’s government has been acting undemocratically. Mr Macri has in the past indicated that he would back such a process, but Ms Malcorra and Mr Peña are now warning against outside intervention, instead calling for dialogue between the Venezuelan government and the political opposition.

The first steps on foreign policy adopted by the Macri administration are in line with the overall agenda of reforms that the president is pushing for. The government’s foreign policy approach focuses on strengthening economic ties, not only with Argentina’s neighbours, but also with the rest of Latin America, and Europe and the US, two key global markets. The administration appears to be focusing on ending more than a decade of relative isolationism, potentially opening Argentina to the world.

By Charles Newbery
7 June 2016

Buenos Aires (Platts)–7Jun2016/1109 am EDT/1509 GMT Argentina’s YPF confirmed Tuesday the appointment of Ricardo Darre as its new CEO, as the state-led company seeks to sustain oil and natural gas production this year while cutting capital expenditures.

An Argentine industrial and mechanical engineer with more than 30 years in the oil sector, Darre will start July 1, YPF Chairman Miguel Gutierrez said in a statement.

Darre will come to the post after working in the upstream business in Argentina, France, Norway, Russia, Thailand and the UK since 1987 at France’s Total. Before that, he worked in oil production services for Schlumberger in Angola, Argentina and Zaire, YPF said. Darre’s latest post was as president and CEO of exploration and production for Total in the US, where he led the company’s shale oil and gas production and its ultra-deep water operations in the Gulf of Mexico, YPF added.

Gutierrez said Darre’s appointment was part of an effort to promote “the development of our production and our strategic positioning in the market with a focus on productivity, innovation and technology,” according to the statement. “This is essential to maximize our investments and the leading role of the company in the pursuit of energy self-sufficiency of the country.”

Darre’s predecessor, Miguel Galuccio, helped turn around a decade of dwindling production during his four years at the helm, with a focus on developing the country’s huge shale and tight-sand resources. However, a plunge in global oil prices since mid-2014 and the impact of a contracting Argentine economy on domestic sales forced YPF to sideline rigs since this past December and cut its capital-expenditures plan by 20% to 25% for this year. The spending cuts will lead to flat production this year compared with 2015, the company has said.

Darre said YPF “has very good geological areas and a solid industrial base that is highly competitive in all stages of the process, from the well to our customers,” adding that its local professionals are top-notch and will help drive the company’s growth.

Darre will take over for Daniel Gonzalez, the CFO who was appointed interim CEO after Galuccio’s exit on April 30 at the bidding of Argentina’s new conservative government of President Mauricio Macri, which took office in December after 12 years of populist-left rule.

As part of the changes at YPF under the new government, which oversees the state’s 51% holding in the company, the board of directors has split Galuccio’s duties between a chairman and a CEO, with the latter to handle the day-to-day operations at the company.

YPF has said it will focus this year on boosting gas production to help rein in a 25% deficit in national supplies, encouraged by the government’s move to nearly double wellhead prices to an average of $5.20/MMBtu and offer incentives of up to $7.50/MMBtu. It has partnerships with Chevron, Dow Chemical, Petronas and other companies for developing shale and tight resources, including in the giant Vaca Muerta play.

Back to contents

Responder Responder a todos Reenviar Más



Introduce tus datos o haz clic en un icono para iniciar sesión:

Logo de

Estás comentando usando tu cuenta de Cerrar sesión / Cambiar )

Imagen de Twitter

Estás comentando usando tu cuenta de Twitter. Cerrar sesión / Cambiar )

Foto de Facebook

Estás comentando usando tu cuenta de Facebook. Cerrar sesión / Cambiar )

Google+ photo

Estás comentando usando tu cuenta de Google+. Cerrar sesión / Cambiar )

Conectando a %s

A %d blogueros les gusta esto: