Argentine update – Dec 12, 2016

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1. US DECLASSIFIES NEW DOCUMENTS ON ARGENTINA’S DICTATORSHIP (The Washington Post)

2. FACT SHEET: ARGENTINA DECLASSIFICATION PROJECT (Whitehouse.gov)

3. ARGENTINE PESO HITS ALL-TIME LOW 16.1 PER U.S. DOLLAR (Reuters News)

4. #NIUNAMENOS: A LETTER FROM LUCÍA’S BROTHER (Open Democracy)

5. ARGENTINA: COUNTRY OUTLOOK (Economist Intelligence Unit – ViewsWire)

6. ARGENTINA ECONOMY: QUICK VIEW – GOVERNMENT TRIES TO DRUM UP INVESTMENT FROM CHINA (Economist Intelligence Unit – ViewsWire)

1. US DECLASSIFIES NEW DOCUMENTS ON ARGENTINA’S DICTATORSHIP (The Washington Post)
December 12, 2016

BUENOS AIRES, Argentina — The U.S. government on Monday declassified a second set of records relating to human rights abuses committed during Argentina’s 1976-1983 dictatorship.

The release is part of a decision announced by President Barack Obama during a visit to Argentina in March coinciding with the 40th anniversary of Argentina’s military coup. The first batch was released in August.

The release of the second set of about 550 documents was announced at the former Argentine Navy School of Mechanics where thousands of leftist dissidents were jailed and tortured during the dictatorship. [RELEASE WAS DURING A CEREMONY HONORING FORMER STATE DEPARTMENT OFFICIAL PATT DERIAN FOR HER HUMAN RIGHTS WORK IN ARGENTINA. ]

Argentina’s human rights secretariat is expected to publish the documents in English between Tuesday and Wednesday.

The documents belong to the CIA, FBI and other agencies. They include the presidencies of Richard Nixon, Gerald Ford, Jimmy Carter and Ronald Reagan.

2. FACT SHEET: ARGENTINA DECLASSIFICATION PROJECT (Whitehouse.gov)
December 12, 2016

President Obama announced during his March 2016 visit to Argentina that the United States would embark on a comprehensive effort to identify additional records related to human rights abuses committed under Argentina’s dictatorship. In a ceremony to commemorate the victims of the dictatorship at the Parque de la Memoria in Buenos Aires, President Obama said, “to continue helping the families of the victims find some of the truth and justice they deserve, I can announce that the U.S. Government will declassify even more documents from that period including, for the first time, military and intelligence records, because I believe we have a responsibility to confront the past with honesty and transparency.”

The declassification project represents an historic effort by U.S. Government agencies and departments to search, identify, review for public access, and provide records that shed light on human rights abuses in Argentina between 1975 and 1984. In 2002, the United States declassified over 4,000 State Department cables and other documents from the period of the Argentine military dictatorship. These records have helped Argentina hold human rights abusers accountable, for example, by supporting Argentine criminal investigations into human rights violations under the dictatorship.

This additional effort – requested by Argentine President Mauricio Macri and human rights groups – involves over 14 U.S. Government agencies and departments, including for the first time the Central Intelligence Agency, the Federal Bureau of Investigation, the National Archives and Records Administration and the archives of four Presidential Libraries, as well as several components of the Department of Defense, including the military departments, the Joint Chiefs of Staff, and the Defense Intelligence Agency.

Secretary of State John F. Kerry delivered an initial set of 1,000 declassified records to President Macri on August 4, 2016. This second set totals approximately 500 newly declassified records. Many reside at the Jimmy Carter Presidential Library, but there are also records from the Presidential Libraries of Gerald R. Ford, Ronald W. Reagan, and George H.W. Bush, including a small set of documents produced after 1984. These records, alongside the documents released earlier in 2016, are available to the public at http://www.icontherecord.tumblr.com, and will also be made available in hard copy at each of the relevant Presidential Libraries. This set also includes portions of the President’s Daily Briefs from the Carter and Reagan administrations, in the first significant release of CIA presidential briefing documents from these administrations.

The United States provided these documents to the Government of Argentina today as part of Argentina’s commemoration of the work and life of an American diplomat, Patricia Derian, who served as the first Assistant Secretary of State for Human Rights and Humanitarian Affairs from 1977-1981, and who passed away in May 2016. Derian was a tireless advocate for human rights, and her work is reflected in many of these documents, including several that she personally drafted that addressed the detention, torture, and disappearance of Argentine civilians at the hands of the dictatorship. In recognition of her dedication to human rights, Argentina honored Derian in 2006 with its highest award for a foreign government official, the Order of the Liberator General San Martín. In today’s commemoration, Argentina will further honor Derian by placing a plaque with her name at the Archivo Nacional de la Memoria.

This ongoing declassification project, led by the Office of the Director for National Intelligence (ODNI) with support from the White House and Executive branch agencies, involves hundreds of hours of agency staff resources, including records managers, archivists, historians, and declassification and information access professionals. U.S. Government officials are searching records for relevant information to review for potential public release. The reviews of these records are on a “word-for-word” basis – a more exacting and revealing process than the typical reviews agencies conduct on their historical records when they release or withhold entire records on a “pass-fail” basis.

U.S. Government agencies are conducting this declassification effort through five major tasks. With the public release of documents today, the first two tasks are complete:

• Make records from the Gerald R. Ford, Jimmy Carter, Ronald W. Reagan, and George H.W. Bush Presidential Libraries available to the public. Records from the Presidential Libraries are of great historical interest, given their importance in documenting U.S. decision-making at the highest level. Archivists at the four Presidential Libraries searched their holdings for relevant classified documents and provided them for interagency review. In addition to the records of Presidents Ford, Carter, and Reagan, archivists also identified several documents from Vice President George H.W. Bush’s files at the George H.W. Bush Presidential Library.

• Make responsive portions from the President’s Daily Brief (PDB) available to the public. The PDBs are considered the Intelligence Community’s most important product, providing information on the most significant global national security issues. The release of the relevant portions of these PDBs is only the 3rd time in history PDBs have been declassified, and the first-ever Carter-era and Reagan-era PDBs publicly released.

U.S. Government agencies continue their work on the three remaining tasks:

• Make previously withheld information from the Department of State’s 2002 declassification project available to the public. While the Department of State declassified its cables and records that provided evidence of human rights abuses, it withheld some information for national security classification or statutory-based restrictions. The Department of State and other relevant agencies will re-review these cables and records in an effort to publicly release additional information. This re-review is expected to be completed in early 2017.

• The U.S. Government will make available to the public records related to human rights abuses that occurred between 1975 and 1984 in Argentina. This will be a comprehensive search of hundreds of federal records series and hundreds of thousands of pages to identify relevant individual documents for review and potential release. The ODNI will coordinate an interagency public access review of relevant records. This review is expected to be complete in late 2017.

• Make the 1977-1981 Foreign Relations of the United States South America volume available to the public. The Historian’s Office at the Department of State is expediting publication of this volume, with the goal of publishing the Argentina and Regional Issues chapters by late 2017.

These newly declassified records represent a continued commitment by the United States to promote justice and reconciliation in Argentina, to underscore the importance of transparency, and to highlight our shared commitment to human rights. These records represent the second step in a lengthy and ambitious declassification process.

3. ARGENTINE PESO HITS ALL-TIME LOW 16.1 PER U.S. DOLLAR (Reuters News)
By Walter Bianchi
Dec 12, 2016

Dec 12 Argentina’s peso currency weakened 0.62 percent to an all-time low of 16.1 per U.S. dollar on Monday as residents of the South American country sought dollars ahead of year-end holiday vacations, local foreign exchange brokers said.

President Mauricio Macri took office a year ago after winning office on a free-markets platform. He allowed the peso to float on the foreign exchange market, scrapping years of currency and trade controls that had scared off investors.

Macri promised a wave of foreign direct investment would enter Argentina during 2016. But it remains low with the economy stuck in a recession and household purchasing power slammed by annual inflation expected by economists to end the year at 40 percent.

4. #NIUNAMENOS: A LETTER FROM LUCÍA’S BROTHER (Open Democracy)
By Matías Pérez
12 December 2016

Touching letter from the brother of Lucía Pérez, the 16-year-old Argentine girl, whose recent murder resulted in important protests in Argentina, with great international repercussion.

Let her close her eyes and rest in peace.

Two men brought the limp body of a 16 year old girl to the doors of an addiction clinic in Mar del Plata, Argentina. They said she had overdosed on drugs. But doctors found that she had been sexually tortured, with the final act of impaling her causing such pain that her heart ruptured.

A week after this horrific murder and a year after thousands protested the stabbing death of an Argentine woman in broad daylight by a man she had turned down, even more women came out to the streets in Argentina, Uruguay, Mexico, Chile and other countries to raise the alarm about violence against women. On social media, they are using the hashtag #NiUnaMenos, #NotOneWomanLess.

According to an article in Argentine magazine Página 12, it was the younger of two men, aged 23 and 41, who lured the girl out of her home and brought her to his house, where she was drugged with cocaine and subjected to depraved acts including being impaled on a rod in a manner recalling a “bestial practice from the 6th and 5th centuries BC.” A third man helped clean and redress her before they dumped her at the clinic.

Lucía was especially close to her brother, aged 19. On his Facebook, he wrote:

I wish I could have illustrated this letter with a photo of me and my sister laughing, or a picture of her being hugged by our parents. But no, we can’t even do this, because while we are still trying to deal with the fact that they killed her and the way that they killed her, we also have to deal with the death threats raining down on us.

What was Lucía like? She loved art, rock music and animals. There she would be, in every verse of a Viejas Locas song, bopping along, hugging an abandoned pet, always smiling, cuddling her dog, sending out good vibrations in every direction, just because.

She led a quiet life, not going out much until that cursed Saturday, October 8. They came to get her at 10 am, after Dad had already left for work. When my mom came home at 3 pm, she found her Facebook open on her computer next to her set for making mate, because yes, Lucía thought she would be right back. They had tricked her into leaving.

At 6 pm, a girlfriend told me that we had to go the police station because my sister had been involved in an accident. I could never have imagined what was waiting for me. The officer who met me and my mom didn’t know how to tell us, leaving us in an office for 10 interminable minutes until someone gave us the news. And the whole world crumbled on us. I asked to see her body, but they said no. I refused to leave and would not give up until they let me. She was on a stretcher, her eyes slightly opened as she used to do when she went to sleep.

Today, three suspects, Matías Farías, Juan Pablo Offidani and Alejandro Maciel, are under arrest. But for us, that’s not enough. We want true justice, we want all the cases they are involved in to be investigated and every person who has information to be able to go and give it to the prosecution. We need support, from anyone, because this is a case concerning all of us, independent of party lines. A girl, my sister, was horrifically murdered.

And we need to recognise that maybe this time it was Lucía who suffered because of this brutal gender-based violence, but next time it could happen to you, or to someone you love more than anyone else in the world. We need to gather the strength to come out to the streets and scream all together now more than ever, “Not one woman less.”

It’s the only way we’ll stop a thousand more Lucías from being killed. It’s the only way we can close her eyes and let her rest in peace.

5. ARGENTINA: COUNTRY OUTLOOK (Economist Intelligence Unit – ViewsWire)
12 December 2016

Argentina: Country Outlook

FROM THE ECONOMIST INTELLIGENCE UNIT

POLITICAL STABILITY: The president, Mauricio Macri, who was inaugurated in December 2015 for a four-year term, is pressing on with a programme of economic policy adjustments. Mr Macri, of the centre-right Propuesta Republicana (Pro) party, is working to reduce economic distortions and return the economy to sustainable growth. Reflecting the scale of economic mismanagement under the previous government, the adjustment process requires politically unpopular austerity measures. As he approaches the end of his first year in government, these measures are taking a toll on Mr Macri’s popularity, whose opinion poll ratings have fallen below 50% in recent weeks. The combined effect of a post-devaluation inflationary spike and cuts in energy and transport subsidies is hitting consumers hard, and their patience with adjustment is wearing thin.

ELECTION WATCH: Mr Macri’s Pro party is small but increasingly influential. Apart from the presidency, it now controls the governments of Buenos Aires city (the capital) and province, which together account for almost half of the population. However, the Pro is in a minority position in both houses of Congress and, although it may make some gains in mid-term legislative elections in October 2017, it is likely to remain in this position throughout the forecast period given the dominance of the Peronist party in national politics and its strong grassroots presence. The Peronist party continues to be split into various competing factions. As it loses the powers of patronage bestowed on it by the presidency and struggles with corruption allegations, the leftist-populist Frente para la Victoria (FV) wing of the party will lose influence and the position of the traditional Peronist wing will improve, leaving it well placed to make gains at the expense of the FV in the 2017 mid-term elections.

INTERNATIONAL RELATIONS: Efforts by the Macri administration to repair relations with trade and investment partners have achieved rapid results, and The Economist Intelligence Unit expects relations with key trade partners in the region and elsewhere to remain strong, with the possible exception of the US. Like most other governments in Latin America, the Macri administration was wrong-footed by the victory of Donald Trump in the US presidential election in November. After cultivating increasingly strong ties with the current US administration, led by Barack Obama, Mr Macri is likely to abandon efforts begun as recently as October to secure preferential trade ties with the US with a view to an eventual free-trade agreement. The Argentinian government will remain keen to seek trade deals under the auspices of the Mercado Común del Sur (Mercosur, the Southern Cone customs union, comprising Argentina, Brazil, Paraguay, Uruguay and Venezuela). The problem for Argentina and its Mercosur partners is that, just as the grouping has started to reverse its own protectionist tendencies, free trade has shifted off the political agenda not only in the US but also in Europe. Our forecasts do not currently assume a successful conclusion of free-trade talks with the EU, but the workings of intra-Mercosur trade are, at least, likely to improve in the forecast period. Efforts at joining the Alianza del Pacífico (Pacific Alliance, a regional trading bloc that includes Chile, Peru, Colombia and Mexico) may also make progress, although this is not currently reflected in our five-year economic forecasts.

POLICY TRENDS: The Macri administration has made good initial progress on a programme of adjustment intended to put the economy on a sounder footing, but much remains to be done. Having devalued the peso, reduced agricultural export duties and energy subsidies, and secured a deal with holdout creditors allowing Argentina to exit default, the government’s attention has turned to the reduction of inflation, which is another key condition for a recovery in private consumption and investment. Monetary policy is easing after a sharp increase in interest rates early in 2016, but rates remain high and will dampen price growth. However, reductions of the fiscal deficit and nominal wage growth will also be required to reduce inflation, and these will be polit1ically difficult. Our baseline forecast assumes that there will be some progress in both areas, which should slow inflation and ultimately boost investor confidence. However, there are substantial risks to this assumption, as adjustment is taking place amid a post-devaluation inflation spike that will test the patience of voters and unions, and raise public spending pressures. Even under our baseline forecast we do not expect inflation to fall to single-digit levels until 2019.

ECONOMIC GROWTH: Based on available data for the second half of 2016, and on a recent downward revision to our 2017 GDP forecast for Brazil (Argentina’s biggest trade partner), we have revised down both our 2016 GDP estimate and our 2017 GDP forecast. After a contraction of 2.2% in 2016 (previously 2%) we continue to expect real GDP to return to positive territory in 2017. But with Brazil now likely to post barely positive growth next year, manufacturing activity in Argentina will be subdued, limiting GDP growth to just 2.5% (down from a projected 2.7% last month). We currently expect the recovery to peak at 3.7% in 2018. However, the annual growth rate for that year masks an expected sequential deceleration in the second half of 2018 resulting from a projected weakening of Chinese import demand. By 2019, when we also project a cyclical downturn in the US economy, real GDP growth in Argentina will slide back below 3%, before a modest recovery takes hold again in 2020-21. We have not made downward adjustments to our forecasts for Argentina in the light of the recent victory of Donald Trump in the US presidential election, although this does present some downside risks to our forecasts.

INFLATION: The Macri administration introduced a new consumer price index in May 2016 in an effort to address widespread concerns about the quality of official data. However, reflecting a lack of historical data to provide a full picture of 12-month inflation trends, we are, for now, continuing to use the Buenos Aires consumer price index as a proxy for inflation at the national level. This showed 12-month inflation of 44.7% in October, reflecting currency and tariff adjustments by the new administration. Assuming tight monetary and fiscal policy (spending will remain negative in real terms until 2018), the inflationary spike will prove transitory, and we expect gradual disinflation in the medium term, provided that domestic demand remains subdued relative to the boom years of 2004-11 and domestic supply strengthens on the back of an improved regulatory environment for agricultural producers. The main risks to this forecast stem from possible failure to tighten fiscal policy as projected, a weaker than expected peso and the difficult process of reining in nominal wage growth. However, if the Macri administration is able to tackle the high level of wage indexation (a key obstacle to the reduction of inflation towards OECD levels) there is also the potential for inflation to slow more than we currently project in the medium term.

EXCHANGE RATES: Some modest depreciation pressure following Brexit in June and the US election on November 8th caused the peso to weaken to Ps15.9:US$1 in early December, from around Ps14:US$1 at mid-year. We expect further weakening in 2017-21 as domestic interest rates continue to decline and the Federal Reserve (the US central bank) continues a monetary tightening cycle. However, the positive outlook for portfolio and foreign direct investment (FDI) inflows will be supportive of the currency, which will dampen depreciation pressure and produce some periods of real currency appreciation. In nominal terms, we expect the peso to end 2017 at Ps18.04:US$1 and to end 2021 at Ps23.96:US$1.

EXTERNAL SECTOR: As the terms of trade improve and a weaker peso gradually boosts goods and services exports, improvements in the trade and services accounts will offset a rise in profit remittances related to the removal of foreign-exchange controls, causing the current-account deficit to narrow from 2017. From a peak of 2.6% of GDP in 2016, we expect the deficit to fall fairly steadily to 1.5% of GDP by 2021. We also expect the country’s ability to finance moderate current-account deficits to improve, assuming that portfolio and FDI inflows pick up as investor confidence in the Macri administration grows. The result will be a rise in foreign reserves in nominal terms. Our forecasts currently assume FDI inflows averaging 2.1% of GDP in 2017-21, and foreign reserves representing import cover of an annual average 6.5 months in the same period.

6. ARGENTINA ECONOMY: QUICK VIEW – GOVERNMENT TRIES TO DRUM UP INVESTMENT FROM CHINA (Economist Intelligence Unit – ViewsWire)
12 December 2016

Event

The interior minister, Rogelio Frigerio, is currently in China in a bid to drum up investment to finance around US$33bn in public works projects.

Analysis

The visit forms part of a broader effort on the part of the government to seek external finance for domestic investment, with the need for fiscal tightening precluding a sharp increase in public-sector outlays. Although China has appeared open to the idea of boosting trade and investment ties with Latin America in the wake of the US election victory for Donald Trump, Mr Frigerio nevertheless has an ambitious wish list, seeking Chinese investment in 19 projects spread across eight of Argentina’s provinces.

These include, among others, a US$2.2bn investment in the construction of a hydroelectric plant on the Neuquén river in central Argentina; a US$2bn investment to revive the San Martín commuter railway line in the Buenos Aires metropolitan area; a US$1.1bn hydroelectric plant in the western San Juan province; US$1.1bn to improve water infrastructure in the Salado river basin south of Buenos Aires; and a US$1bn project to construct hydroelectricity facilities at Potrero del Clavillo, in the northern Tucumán province.

Mr Frigerio’s trip is particularly important because government pledges to raise inward foreign direct investment (FDI) have not yet yielded results. The president, Mauricio Macri, stated at the beginning of the year that a potential US$20bn in inflows was possible in 2016, but FDI reached only US$3.4bn in the first six months-only half of the level registered a year earlier, owing partly to a relaxation of foreign-exchange controls that led to a slump in reinvested earnings by multinationals.

The government will hope that the recent passage of private-public partnership legislation will incentivise Chinese investors. However, securing the targeted US$33bn in investment is likely to prove difficult. Most of the projects identified by the government are not new, with some having been on the drawing-board for decades. A combination of technical difficulties, caution from external investors and bureaucratic delays have stalled several of these projects.

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