Archive for the ‘ARGENTINE UPDATE’ Category


30 noviembre, 2015




















By the Editorial Board
27 November 2015

Even by the operatic standards of Argentine politics, the upset victory of Mauricio Macri, the mayor of Buenos Aires, on Sunday was a stunner that is likely to set in motion a transformational era at home and in the region. Long considered the underdog, Mr. Macri narrowly beat Daniel Scioli, the Peronist candidate endorsed by President Cristina Fernández de Kirchner. Mr. Macri’s motto, ”Let’s Change,” gained traction as Argentines soured on Mrs. Kirchner’s bumbling management of the economy and abrasive style.

Mr. Macri’s most urgent task is to untangle the web of economic controls and unsustainable subsidies established by Mrs. Kirchner and her husband, Néstor Kirchner. Mr. Kirchner governed from 2003 until 2007, when his wife was elected. The couple dug Argentina out of an economic crisis, buoyed by a commodities boom, and adopted protectionist policies popular with the working poor.

Reforming the stagnant economy will be painful in the short run, but could make Argentina more attractive to foreign investors. Inflation has been soaring in recent years and the country is running low on foreign reserves. Borrowing abroad to make reforms palatable will be tough until Argentina manages to restructure its foreign debt.

Mr. Macri needs to level with Argentines about the depth of the economic problems, which the Kirchners went to great lengths to hide, and offer a sensible path forward. Weaning Argentina from its decades-long habit of spending more than it earns will require deftness, because Peronists and other opposition parties that dominate Congress are likely to stand in the way of reforms.

On foreign policy, Mr. Macri could have an immediate and profound impact. The Kirchners aligned Argentina with the leftist flank in Latin America, supporting authoritarian leaders in Cuba and Venezuela, and cultivated strong ties with China, Russia and Iran. Mr. Macri has signaled he intends to chart a new course by expanding trade with the United States and Europe. American officials are eager for cooperation on law enforcement and energy policy and are hopeful the president can be an ally, or at least a reasonable actor, in regional diplomacy.

On Monday, Mr. Macri took a bold and principled stance against Venezuela’s despotic leader, Nicolás Maduro, vowing to seek Venezuela’s ouster from the regional trade group Mercosur if Venezuela keeps opposition politicians in prison. By taking on Mr. Maduro so forcefully in a region where leaders, by tradition, tend to air grievances privately, Mr. Macri could galvanize the political opposition in Venezuela in the leadup to the Dec. 6 parliamentary election there and embolden other leaders to isolate Mr. Maduro. That would be healthy for a region where entrenched leaders and systems of patronage have made victories like Mr. Macri’s relatively rare lately.

By Jonathan Gilbert
29 November 2015

BUENOS AIRES — Diana Sacayán was found tied up in a 13th-floor apartment in Buenos Aires in October, stabbed to death. A month earlier, Marcela Estefanía Chocobar, 26, was decapitated and her body dumped on a vacant lot in Río Gallegos, in Patagonia. Also in September, in Santa Fe, a city on Argentina’s Pampas lowlands, the corpse of Fernanda Olmos, 59, was discovered on her bedroom floor, a plastic bag pulled over her head. She had also been stabbed.

The unsolved killings of transgender women in recent weeks have jolted Argentina, prompting soul-searching in a country that has introduced some of the most liberal civil rights legislation in Latin America, but that critics say remains mired in conservative and macho attitudes toward gender identity.

”Society hasn’t changed in the slightest,” said Andrea Cantero, 29, a hairdresser who until last year was called Andrés. ”We’re people like anybody else,” she added, ”but I feel it was a message to say, ‘You’re worthless.’ ”

Ms. Cantero, who says she is regularly insulted and threatened over her gender identity, spoke at a recent march of gay and transgender Argentines. She had tied her hands and ankles with rope, painted blood stains on her skin and written on her chest, ”Liberate us from violence.”

At the march, protesters held handmade signs denouncing the murder of Ms. Sacayán, 40, one of the most prominent transgender activists in Argentina. She led a group that fights discrimination against transgender people and was a regional representative of the International Lesbian, Gay, Bisexual, Trans and Intersex Association. On the street, someone had stenciled graffiti that read, ”Basta de travesticidios,” or ”Enough transgendercide.”

In recent years, legislators have passed a series of laws to protect the rights of transgender and gay people in Argentina. Although conservative attitudes on social issues persist and the Roman Catholic Church remains influential, the government of President Cristina Fernández de Kirchner has pushed for greater equality, seeing the issue as a crucial human rights concern. In 2010, Argentina became the first country in Latin America to allow same-sex marriage.

Three years ago, legislators passed a groundbreaking gender identity law that allows people to change their gender without a psychiatric diagnosis or surgery. It also requires state health care and private insurers to provide hormone therapy and gender reassignment surgery.

In Buenos Aires Province, Argentina’s most populous, lawmakers passed a bill in September that requires public sector employers to allocate 1 percent of jobs to transgender workers.

About 6,000 people, including a 6-year-old boy, have changed their gender on official documents in the last three years, compared with a handful before the 2012 law, said Esteban Paulón, president of the Argentine Federation for Lesbian, Gay, Bisexual and Transgender People.

Government ministries have in some cases supported transgender people searching for jobs by subsidizing wages and helping arrange medical attention.

But despite these advances, many challenges remain.

The gender identity law has been carried out slowly, critics say, noting that the provision for hormone therapy and surgery was only enforced this year. And few cities have doctors trained to perform reassignment operations. Similarly, as activists like Ms. Sacayán hailed the provincial labor law, doubts were being voiced in some quarters, like trade unions, about whether it would ever be respected.

In addition, hostile and uninformed attitudes on gender equality remain commonplace, according to many transgender people. In 2011, Susana Giménez, a popular television host, offered a glimpse of these attitudes when she said on air that she would rather die than be lesbian.

Silvia Augsburger, a former congresswoman who drafted the gender identity law, said, ”We have passed hugely important laws so that the community can express itself.” But, she added, ”as a state, we still don’t have the resources to guarantee them lives free of discrimination.”

A 2014 report by the National Institute Against Discrimination, Xenophobia and Racism estimated that 40 percent of Argentines held discriminatory attitudes toward transgender people.

A survey of nearly 500 transgender Argentines by the Huésped Foundation, published last year, said that discrimination had diminished in some contexts, like in schools and medical clinics, since the 2012 gender identity law was passed. But it also highlighted the challenges that transgender people face.

More than 60 percent of the people interviewed were prostitutes, pointing to the difficulties transgender people have finding other employment. A majority had not finished high school. Transgender life expectancy is 35, according to the foundation. In the general population in 2013, according to the World Health Organization, it was 73 for men and 80 for women.

”We are still victims,” said Daniela Ruiz, the founder of Artetrans, a transgender art cooperative.

Gay and transgender Argentines are now pushing for modifications to an existing law that targets traditional forms of discrimination, like those based on religious or political beliefs. They want provisions that would explicitly criminalize discrimination against transgender people.

Some are also urging transgender people to break out from the safety of their own community, which might speed up societal acceptance. ”Because they don’t integrate much, prejudices persist,” said Cristian Reches, 39, a gay university student who was at the march. ”There’s responsibility on both sides.”

Gender equality issues were also a factor in the campaign leading up to the presidential election on Nov. 22, won by Mauricio Macri, an opposition leader.

In the final weeks of the race, Daniel Scioli — the governing party’s candidate — and his supporters, including Mrs. Kirchner, sought to scare voters away from Mr. Macri, seen as socially conservative. Mr. Macri once called homosexuality a ”disease” and, last year, defended the harassment of women. ”Deep down, all women like being catcalled,” he told a radio station. ”There can’t be anything nicer.”

But Mr. Macri, currently the mayor of Buenos Aires, said this month that he would not thwart the gender rights movement. ”We have respected minority rights,” he said of his municipal government, which has supported same-sex marriage.

Despite the murders and the complaints about enduring discrimination, there are also signs that attitudes are changing.

In Chivilcoy, a city of 64,000 that has drawn attention for efforts against gender discrimination, a municipally funded medical center for transgender people opened last year, one of several similar facilities nationwide.

The center provides services like hormone and psychological therapy, vaccinations and speech coaching for transgender people to alter the pitch of their voice.

”When we would face up to our families, we were thrown out of our homes,” said Victoria Ocampo, 40, a transgender nurse at the center. ”But that’s changing now.” She recalled two teenagers grappling with gender dysphoria who recently turned up at the center with their parents.

”I focus on the progress,” Lizy Tagliani, a transgender woman in her 40s who is a hair stylist and a local TV celebrity, said as fans huddled around her. ”I don’t worry about what’s yet to be achieved. I always try to see the glass half full.”

By Benedict Mander in Buenos Aires
November 29, 2015

When Alfonso Prat-Gay took charge of Argentina’s central bank in 2002 at the age of just 37, the economy was still reeling from a meltdown less than a year earlier that saw what was at the time the biggest sovereign debt default in history.

In almost two years at the helm of the central bank, the former JPMorgan currency strategist not only oversaw a huge drop in inflation, but he also successfully unified the peso that had splintered into an array of quasi-currencies after bankrupt regional governments had been forced to issue scrip to pay their bills.

More than a decade later, Mr Prat-Gay once again finds himself with the task of fixing an economy afflicted with soaring inflation and a chaotic currency regime — this time as finance minister, after being picked by Mauricio Macri, Argentina’s centre-right president-elect, to mastermind the economy’s revival when he takes power on December 10.

Mr Prat-Gay now faces an additional challenge: fathoming the depths of Argentina’s economic woes given that figures published by the state statistics agency have become widely discredited.
“Truth is a pillar of what we have to offer. The sooner we let the mask drop, the better off we will all be,” Mr Prat-Gay told the Financial Times, arguing that the problems must be tackled in the right order. “Sequencing is at the heart of the matter,” he says.

Describing himself as a Neo-Keynesian, Mr Prat-Gay’s first move will be to remove strict capital controls in place since 2011 and to unify the currency, which Mr Macri has promised to do on his first day in office.

That will lead to a de facto devaluation, since the official exchange rate of 9.6 pesos to the dollar will be discarded, with the new exchange rate likely to be closer to the rate of about 14.5 pesos used in certain stock market transactions.

Martín Redrado, who replaced Mr Prat-Gay as governor of the central bank, said his predecessor’s success in the early 2000s was a “great achievement”. But he pointed out that the difference now was that the central bank badly needed to rebuild its reserves which it has burnt through as it tries to prop up the peso.

Central bank reserves have fallen by half to less than $26bn since his resignation in 2010 after a spat with the government over the use of reserves for paying debt. But some economists argue that liquid reserves are close to zero.

Born into the Buenos Aires elite, Mr Prat-Gay was educated at the same secondary school as Mr Macri, who is from one of Argentina’s richest families. Speaking flawless English, he later studied at the University of Pennsylvania before spending eight years with JPMorgan in New York, London and Buenos Aires.

Although he was nominated as Euromoney magazine’s central banker of the year in 2004, Mr Prat-Gay’s term was not renewed owing to clashes with the then president, Néstor Kirchner, over the independence of the central bank. He went on to set up an asset management company in 2005, before being elected to congress in 2009.

Perhaps the greatest concern is that Mr Prat-Gay could trip up in the remorseless world of Argentine politics. He has had to fight allegations of tax evasion, which he has demonstrated to be false; and in the run-up to the elections a video of him criticising Argentines’ weakness for electing little-known “caudillos” from far-flung rural provinces was circulated on YouTube, prompting accusations of elitism.

“On a technical and intellectual level [Prat-Gay and his team] have certainly got what it takes — let’s just hope that they do from a political perspective too,” says Mr Redrado, highlighting Mr Macri’s lack of a majority in congress as a major challenge. “The honeymoon is going to be short.”

Despite concerns that a devaluation would lead to a spike in inflation, investors and analysts are optimistic that Mr Prat-Gay has the skills to manage the complex transition. After all, at the central bank he presided over a fall in inflation from 40 per cent to 5 per cent.

“Alfonso is a pragmatist, and one of the smartest people around,” says Daniel Melhem, managing partner of Knightsbridge Partners, an investment management firm in Buenos Aires. “His tenure at the central bank was at a time of great economic distress, however he immediately brought stability and grew its reserves,” he adds.

“He is one of the most brilliant economists of his generation,” says Andrés Borenstein, BTG Pactual’s chief economist in Argentina, naming a handful of other Argentine economists, including Federico Sturzenegger, who Mr Macri has earmarked to head the central bank.

By John Paul Rathbone and Benedict Mander
November 27, 2015

Mauricio Macri sounded peeved but unsurprised when he described his meeting this week with Cristina Fernández, Argentina’s outgoing president. “It wasn’t worth it,” was his curt summary of their 40-minute conversation at the presidential residence; a comment that left his interviewers from a local television news station flabbergasted.

Two days earlier, the country’s voters had chosen Mr Macri as their new president in a surprise election that promises to turn politics in Argentina, and maybe even across Latin America, on its head. The swing from left to right is striking.

Out goes Ms Fernández, a sharp-tongued populist who models herself on Eva Perón. In comes Mr Macri, a 56-year-old millionaire who says Ayn Rand’s The Fountainhead is the book he would take to a desert island, and whose campaign promise to change Argentina and reinsert it into the modern global economy contradicts almost everything Ms Fernández stands for.

She invited Mr Macri for a private discussion about the transition. There was much they could have talked about. The commodity price crash and the gloomy prospects of Argentina’s closest trade partners, Brazil and China. Or how to co-ordinate the handover on December 10. Instead, their conversation focused on the event’s ceremonial niceties .

“Was that it?” asked the dumbfounded journalist. “That was the conversation we had,” replied Mr Macri. “And that is how we left it.”

Such a lack of co-operation marks an inauspicious start for the transition, especially as Mr Macri needs all the help he can get. For starters, South America’s second-biggest economy is a shambles. Bereft of hard currency, it is isolated from international capital markets, ravaged by inflation of more than 20 per cent. It has an overvalued exchange rate, with the peso hovering on the brink of a devaluation. The promise of “change” that won Mr Macri the election will be hard to effect.

Mr Macri is the oldest child of one of Argentina’s most prominent industrial tycoons, Italian-born Franco Macri, now 85. The latter has long had a relationship with Boca Juniors, Argentina’s most popular football club; Macri junior became president of the team in 1995.

Mr Macri found a political calling at 32, after rogue police officers kidnapped him, stuffed him into a coffin and re­leased him a fortnight later after his father paid a ransom. “It’s not an experience I would recommend,” Mr Macri told the Financial Times last month.

Two decades later, investors are applauding his aim to resuscitate what a century ago was one of the world’s most prosperous economies by cutting trade tariffs and ending a decade of heavy-handed state intervention. In the past month alone, the local stock market has soared 41 per cent.

Mr Macri has made a good start, assembling a technocratic team that includes Alfonso Prat-Gay, a respected former central bank chief, as finance minister. He has made an about-face on foreign policy, saying he wants to repair relations with the US and eject socialist Venezuela from a regional trade group because of its rights abuses. Domestically, he has promised a more conciliatory approach than Ms Fernández’s confrontational style, handing out Nelson Mandela’s biography to his cabinet.

Even so, he faces formidable obstacles. As his coalition lacks a majority in Congress, Mr Macri will be as weak a leader as any president since the return of democracy more than 30 years ago. Moreover, the last time that Argentina embraced free-market economics was in the 1990s under the freewheeling presidency of Carlos Menem.

That experiment ended in 2001 with a $100bn debt default and disastrous devaluation that has scarred the Argentine psyche. Mr Macri’s aloof mien and playboy lifestyle — his second wife is a model, his third a fashion designer — will make the bitter economic medicine Argentina will probably have to swallow even more unpalatable. In a telling comment, the footballer Diego Maradona, who found early fame at Boca, described him witheringly as: a “guy [who] does everything wrong. He’s a rich kid who knows nothing . . . he never even polished his shoes.”

Still, Mr Macri is no neophyte. His 12-year leadership of Boca is now a Harvard Business School case study: under his leadership, the finances of the near-bankrupt team were revived and the club won a string of trophies.

While at Boca, Mr Macri launched his political career — first as the founder of a new political party in 2003; next, as mayor of Buenos Aires in 2007. He was re-elected as mayor in 2011.

Mr Macri has a penchant for flamboyant 1970s pop stars: Rod Stewart and Freddie Mercury are favourites. Yet his record as mayor, akin to London’s Boris Johnson but without the jokes, is res­pectable. Despite lacking a majority in the local legislature, he created a police force that enjoys public trust, invested in infrastructure and installed widely used bicycle lanes.

Yet it is Boca, Mr Macri says, that taught him most, and he compares the presidency to a groundsman: someone who ensures the grass is neatly clipped and the lines tidily painted so the teams can play by “clear rules of the game”.

There is little tidy or clear, though, about modern Argentina, and as the recession continues to bite Mr Macri’s honeymoon will be brief. As one aide commented to the FT this week: “To say we feel swamped may be the understatement of the year.”

By Benedict Mander, Elaine Moore and Miles Johnson
November 26, 2015

Market gains must be franked by new ‘pro-investment’ government

After massive gains in Argentine stocks and bonds over the past two years, investors are beginning to wonder just how much longer the rally can continue as a new government takes power.

Storied hedge fund investors from George Soros to Dan Loeb have been piling into Argentine assets, speculating that better times await Latin America’s third-largest economy once its fiery nationalist leader, Cristina Fernández, quits power.

At last that moment has arrived. Better still, the market’s preferred candidate, the centre-right Mauricio Macri, clinched victory in presidential elections on Sunday. He promises to put an end to more than a decade of protectionism and state intervention, ushering in a new era of pro-investment policies.

“Argentina has an unparalleled opportunity,” says Emily Fletcher, co-manager of BlackRock’s Frontiers Investment Trust, who argues that Mr Macri’s proposed reforms could finally allow Argentina to realise its true economic potential.

“While we wouldn’t be surprised to see some profit-taking in the short term, the long-term outlook for Argentina is brighter than it has been for some time,” she adds, pointing out that the MSCI Argentina Index rose by 45 per cent in October alone.

Indeed, the tiny and volatile Buenos Aires stock exchange — whose market capitalisation is similar to a large US company — has fallen since Mr Macri’s victory, although Argentina’s heavily-traded bonds have registered slight gains.

Prices for the bonds that were issued by Argentina following its 2001 default have nudged upwards this week, with the yield on debt due to be repaid in 2033 falling eight basis points to 6.96 per cent since the start of the week. That comes after prices for the bond have more than doubled in the last two years to 114.5 cents on the dollar, up from just 51.5 cents in mid 2013.

Alejo Costa, head strategist at Puente, an investment bank in Buenos Aires, thinks that bond yields could continue to fall over the next few weeks as investors react positively to initial announcements by Mr Macri.

“But eventually we will need to see concrete results for the rally to continue,” says Mr Costa. “Soon investors are going to have to start to face up to reality,” he added, pointing to serious challenges facing the next administration.

Argentine stocks and bonds

First, Mr Macri will inherit a toxic economic legacy from Ms Fernández that will require immediate action. Faced with an acute shortage of foreign exchange reserves, Mr Macri has promised to remove strict capital controls on his first day in office.

He has also pledged to move swiftly to unify Argentina’s overvalued official exchange rate, which will effectively mean devaluing the currency. That, in turn, could spur the inflation rate, which is already one of the highest in the world thanks to the wholesale monetisation of a widening fiscal deficit.

Nevertheless, Mr Costa argues that the next government’s biggest problems are in fact political. Lacking the majority in congress that is needed to pass legislation, he warns that Mr Macri could run into grave governability issues.

“The economic problems are extremely serious and urgent. But even if you have the skills to solve them, that’s no use without political willingness,” he said, arguing that most of the major reforms planned by Mr Macri require congressional approval.

One of the most important is the resolution of a long-running legal dispute with a group of so-called “holdout” US hedge funds that has blocked Argentina’s access to international capital markets since its 2001 sovereign debt default.

Although credit rating agency Moody’s raised Argentina’s credit outlook to positive on the back of expectations that the new administration would seek to put an end to the saga, uncertainty about the success of this plan prevented an outright credit upgrade.

Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, points to factors beyond Argentina’s control that are also playing against Mr Macri chances of success. He lists the rapid slowdown of China’s economy, the crash in commodity prices, and the imminent start of the US Federal Reserve’s monetary tightening cycle.

“Macri couldn’t be assuming the presidency at a worse time from an emerging market sentiment standpoint,” says Mr Spiro. “This makes the implementation of economic reform in Argentina all the more difficult — but also all the more urgent.”

Such concerns explain why Jan Dehn, head of research at Ashmore, worries that Mr Macri could end up like other well-intentioned reformist presidents in the region unable to overcome tough circumstances. “The risk is clearly that Macri becomes to Argentina what [Vicente] Fox was to Mexico: an ineffective breath of fresh air,” he says.

By Daniel Lansberg-Rodriguez
November 25, 2015

His victory shows change is possible through the ballot box, writes Daniel Lansberg-Rodriguez

This is how socialism ends, not with a bang but with a squeaker. Despite a commanding lead during the run-up to Sunday’s presidential run-off election, in the end conservative challenger Mauricio Macri’s victory came down to only 200,000 votes in a nation of more than 40m. The defeat of Cristina Fernández’s political machine has prompted euphoria in much of Buenos Aires. Once it dies down, the president-elect will have his work cut out.

In democratic Argentina, non-Peronist presidents are the rarest of birds; none has finished a term in office. Mr Macri does not command a majority of Senate seats (although he can block hostile legislation). He has relatively little support among Argentina’s powerful provincial governors.

Meanwhile, much like Juan Domingo Perón, whose style shifted from militant nationalism to populist socialism, Peronism is amorphous, more patronage than ideology. It will recover.

Mr Macri may need time to transform the economic wasteland he inherits from predecessors who were happy to default on their country’s debt and shield inefficient industries from competition. But the effects of his victory may be sooner felt outside Argentina.

As the socialist tide in Latin America has receded, dragged back by the death or retirement of its charismatic leaders and the turning of the commodity cycle, it has left many a bloated government high and dry — in Brazil, Venezuela and Chile as well as Argentina. Still, Kirchnerism is the first to expire.

200,000 Macri’s victory came down to this number of votes

As the largest Hispanic country in South America, Argentina casts a sizeable shadow, and Mr Macri has promised to re-engage with the US and strengthen ties with the EU. Just as the rise of Hugo Chávez in Venezuela helped bring populist movements to power across the continent, Argentina’s choice of a market-friendly pragmatism may galvanise opposition movements elsewhere.

In Venezuela’s legislative elections next month, Mr Macri’s victory has shown a nervous electorate that real change is possible through the ballot box. There is even a remote chance it might strengthen the resolve of Brazilians seeking to impeach Dilma Rousseff, or persuade Bolivians that there can be workable alternatives, ahead of February’s referendum on scrapping term limits for Evo Morales.

Beyond what he represents, the importance of Mr Macri lies in what he can do. The past two decades has seen the proliferation of supranational organisations in South America, which has weakened US influence over the sovereign affairs of their members. This, though, has led to an erosion of values. A code of silence has prevailed as like-minded nations refused to call out one another on the chipping away of democratic protections, free media and human rights.

Nowhere is this as visible as in Venezuela, now governed by Nicolás Maduro, a gaffe-prone Pierrot who succeeded Mr Chávez and displays a penchant for collecting political prisoners. Mr Maduro is the most visible symptom of the region’s troubling slide towards authoritarianism.

Mr Macri invited Lilian Tintori, the wife of jailed Venezuelan opposition leader Leopoldo López, as guest at his victory speech. He has promised to invoke a “democracy clause” and suspend Venezuela from the Mercosur trade bloc during a summit in Paraguay, days after he takes office.

There might be costs: all but one of Mercosur’s other voting members are allied with Mr Maduro, and Brazil has already made its opposition to the suspension clear. Standing up to Mr Maduro would be worth it. It is the one campaign promise that Mr Macri can deliver unilaterally. Moreover, it would signal to the US and the EU that Mr Macri is the future and that the future is bright.

The writer teaches Latin American business at the Kellogg School of Management

By Benedict Mander in Buenos Aires and John-Paul Rathbone in London
November 25, 2015

It is a measure of the challenges facing Mauricio Macri as Argentina’s president-elect that on the eve of his electoral victory, as champagne cooled in the fridge and most Argentine minds were elsewhere, the central bank issued a stealthy decree enabling it to raid bank deposits.

In a bid to bolster precariously low foreign reserves, the institution ordered Argentine banks to sell half their dollar assets at an unfavourable exchange rate. For Mr Macri’s camp it was jut another reason why central bank chief Alejandro Vanoli has to go.

“The central bank is our most urgent problem,” said Federico Pinedo, a leading congressman for Mr Macri’s Pro party, who has filed a legal complaint against Mr Vanoli that led to a police raid on the bank last week.

In addition, though, the move went to the heart of the most pressing problems Mr Macri faces when he assumes the presidency on December 10: what to do about Argentina’s overvalued exchange rate and how to best dismantle capital controls.

Few issues are more divisive in a country where people look to the dollar as a store of value and where the outgoing government of Cristina Fernández has used every trick in the book to prop up the Argentine peso in order to suggest all is well.

“If you look at the numbers, which do not lie, they clearly show that when it comes to the economy, the government of Cristina Fernández did little good,” said Luis Secco, an Argentine economist.

Leaving aside Mr Vanoli’s legal problems, the broader fix that Argentina’s central bank is in is plain to see — especially as Mr Macri has pledged to dismantle its system of currency controls on “day one” of his presidency in a bid to restore market confidence.

The official exchange rate is 9.6 pesos to the dollar, but in the black market it trades at about 15. To support the official rate, the central bank therefore needs to sell dollars for pesos. However, it lacks sufficient dollars to do so indefinitely.

“The appreciated peso and exchange rate controls are choking economic growth,” Pilar Tavella and Sebastian Vargas, analysts at Barclays, said in a note to clients.

CHART: Argentine peso against the dollar

The logical alternative is to devalue — especially as the currency of Brazil, Argentina’s biggest trade partner, has fallen 45 per cent against the dollar over the past year, while the peso has dropped just 14 per cent.

The peso’s devaluation “is one of the most anticipated in Argentina’s history”, said Mr Secco, who argued that current exchange rate policy is unsustainable given hard currency reserves at an almost 10-year low.

According to the central bank, reserves are less than $26bn. But Nicolás Dujovne, an economist, said liquid reserves are just $2.7bn. Moreover, these are falling “dangerously” fast, dropping more than $1bn in November.

CHART: Argentine currency reserves fall

This is the backdrop to two recent central bank moves.

One is the November 21 order that commercial banks must sell half their dollar holdings at the official rate. Mr Dujovne estimated the move, which recalls the government’s 2008 nationalisation of pension funds, could add $1.2bn to reserves.

The other has been the central bank’s attempt before the election to prop up the official exchange rate by selling about $17bn of future dollar contracts.

The scheme, under which investors can buy dollars six months ahead for about 11 pesos to the buck, essentially guarantees healthy profits if there is a devaluation before then. That has produced almost “unlimited demand” from investors, said Mr Pinedo.

As a way of propping up the peso, though, this also virtually guarantees large losses for the central bank. Hence the legal complaint lodged against Mr Vanoli, who has been charged with damaging the national patrimony by selling futures at an artificially low rate.

At his first press conference as president-elect, Mr Macri asked Mr Vanoli, who has headed the central bank since October 2014, to resign.

Mr Vanoli has refused to step down before his term officially ends in 2019, saying: “You don’t appoint someone because they want a central bank that’s at the service of a devaluation.”

The central bank’s complications go further still. Lacking reserves, economists say it will be difficult for the incoming government to remove capital controls and avoid the exchange rate “overshooting” to a much weaker level. That, in turn, would fuel inflation already running at more than 20 per cent.

In addition, Argentina’s racing inflation is due to a collapse in the independence of the central bank, which has been forced to print money to finance a fiscal deficit estimated at 7 per cent of gross domestic product.

Although Mr Macri insists he wants to remove capital controls and unify the exchange rate, there is disagreement within his camp as to how fast the economy should be opened after more than a decade of isolation from international markets.

That, plus the political fallout of a sudden move and the possibility of other financial time bombs lurking in the vaults, explains Mr Macri’s call for “patience” on Monday when asked about his precise economic plans. “We really don’t have good information. We still don’t know [the exact situation we are inheriting],” he said.

By Raymond Colitt, Anna Edgerton and Charlie Devereux
November 30, 2015

* Macri beat Argentina’s ruling party candidate in Nov. 22 Vote
* President-elect pledges market friendly policies, freer trade

President-elect Mauricio Macri is pledging to turn Argentina’s economic and foreign policy on its head, introducing market-friendly and free-trade measures — a nail in the coffin of the economic populism that has dominated much of South America for a decade.

Macri, a 56-year-old wealthy businessman, has said he will abandon currency controls, cut subsidies, embrace closer ties with open economies of the Pacific Alliance, and seek to oust socialist Venezuela from the regional trade block Mercosur, just about three years after it won entry.

Leftist leaders throughout the region are losing support as money for their generous social programs is running out with the end of the commodity boom, said Riordan Roett, director of Latin American Studies at Johns Hopkins University’s School of Advanced International Studies in Washington. Venezuela’s Hugo Chavez and Brazil’s Luiz Inacio Lula da Silva no longer bestride the continent, propounding a new form of socialism for the 21st century and baiting the U.S.

“The populist left is marching out the door,” said Roett by phone. “They all rode on this commodity boom beginning in the early 2000s, misspent it, didn’t invest it. Now there’s no money.”

Argentina will post its biggest fiscal deficit in about three decades this year, while Brazil’s widens to a record. Venezuela doesn’t even report its fiscal balance any longer as its economy slips into chaos.

Good News

The shift to more orthodox policies is good news for business, said Michael Shifter, head of the Inter-American Dialogue in Washington.

Macri spoke by phone with President Barack Obama Wednesday to discuss trade and the energy sector, while agreeing to strengthen investment links with the U.K. in a separate call with Prime Minister David Cameron. Current President Cristina Fernandez de Kirchner had poor relations with the U.S. and worse still with the U.K.

Macri has also said he will push the Mercosur to move along in trade talks with the European Union.
In Brazil, the shift in policy means the government is turning to private and foreign investors to help finance infrastructure projects. In an effort to help shore up public accounts the government last week sold the rights to operate 29 hydro-power plants, raising 17 billion reais ($4.4 billion) from bidders including China’s Three Gorges Corp.

Even Bolivia’s Evo Morales, who seized foreign-owned gas fields in 2006 and maintained his anti-capitalist rhetoric after winning a third term last year, has shown signs of embracing private capital. In October he was courting investors in New York to lure hydrocarbons and mining investment.

Tread Carefully

Still, don’t expect a return to the kind of economic liberalism the region adopted during the so-called Washington Consensus in the 1980s and 1990s, when import tariffs were slashed, state assets sold off and industries deregulated, said Shifter.

“The new leaders coming in, like Macri, politically can’t afford to go back to the pure market formulas of a couple of decades ago and reject the social policy advances that have been made,” said Shifter.

“They’re going to have to accept them because people expect them to continue — if not there could be a backlash.”

Faced with the fiscal shortfall, Brazil’s President Dilma Rousseff is unwinding tax breaks, cutting spending and lifting price caps on fuel and energy as the budget deficit balloons. In response, her disapproval rating has surged to the highest of any Brazilian head of state.

The only large economy in South America bucking the trend is Venezuela, where President Nicholas Maduro is clinging to a myriad of stop-gap economic policies including multiple exchange rates and price controls to buffer the impact of the plummeting price of oil, its main export item. Yet even here change may be on the horizon. Polls show the opposition is set to obtain a majority in December congressional elections for the first time in 16 years as shortages spread to everything from toilet paper to medicine.

Mercosur Debate

Macri’s first point of conflict may be his pledge to oust Venezuela from Mercosur. Diosdado Cabello, president of Venezuela’s National Assembly, has already referred to Macri’s election as an “historic mistake” and warned him against meddling in the South American nation.

Macri will also seek closer ties with the more open economies of the Pacific Alliance –Mexico, Chile, Colombia and Peru — which have avoided recession following the slump in commodity prices. That more open attitude will certainly include closer ties to the U.S.

“There is a sense that there are changes afoot in the region, that the old kind of ’blame the U.S., run into the arms of Beijing and hope for eternally high commodity markets’ doesn’t cut it anymore,” said Eric Farnsworth, Vice-President of the Council of the Americas.

By Charlie Devereux
November 28, 2015

* Soybean export tariff to be lowered from 35 percent on Dec. 10
* Tax on corn, wheat, beef and sunflowers completely eliminated

Argentina will reduce its tariff on soybean exports by five percentage points, to 30 percent, when President-elect Mauricio Macri takes office, Clarin reported, citing designated Agriculture Minister Ricardo Buryaile.

The new government also will fulfill electoral pledges to remove tariffs on wheat, corn, beef and sunflowers from Dec. 10, Buryaile said, according to Clarin. The soybean tariff will be cut by five percentage points a year until its elimination in seven years, Clarin said.

Argentina, the world’s third-largest soybean producer, is forecast to export 10.75 million tons of soybeans in its 2015-16 marketing year, according to the U.S. Department of Agriculture.

By Ye Xie and Katia Porzecanski
November 25, 2015

* Macri reiterates pledge to lift nation’s currency controls
* Official and black-market rates are currently 58% apart

If there’s one point Argentine President-Elect Mauricio Macri has been crystal clear about, it’s that he hates all the rules and restrictions throttling the country’s currency market. On Tuesday, two days after defeating the pro-government candidate, Macri reiterated his pledge to do away with the foreign-exchange controls immediately upon taking office next month.

It’s an audacious plan, one that has the potential to jump-start his efforts to lure much-needed investment to the country but also one that comes with great risk. With the official and black-market exchange rates currently 58 percent apart, lifting the controls will almost certainly trigger a plunge in the value of the peso. That could cause a surge in consumer prices in a country where inflation is already running above 20 percent, deepen the economic slowdown and spark a public and political backlash against the new government.

The plan is so fraught with risk and so logistically difficult that many outside observers insist that he won’t really try to pull it off so quickly. They chalk it up to campaign rhetoric. But Macri isn’t toning down his language as president-elect. When asked Tuesday how fast he’d move, he replied Dec. 11, one day after he’s sworn in.

“History is littered with the corpses of countries that have abandoned capital controls precipitously,” said Barry Eichengreen, an economics professor at the University of California at Berkeley and former senior policy adviser to the International Monetary Fund during the 1997-1998 Asian financial crisis.

Should Macri, two-term mayor of Buenos Aires and wealthy businessman, follow through on the rhetoric, the $540 billion economy could suffer a big blow. “There will be a single exchange rate,” Macri said Tuesday. “The controls don’t make sense any more since there aren’t even any dollars left to defend in the central bank.”

Assuming he devalues the peso by 39 percent to 15.8 percent in three months to align the exchange rate with black-market prices and removes utility subsidies, the central bank will have to raise interest rates to 40 percent by September to control inflation, according to Oxford Economics, a U.K. research firm. Under such a “shock therapy,” the economy will shrink by about 3 percent annually in the next two years before picking up in 2018, economist Luiz Kessler wrote.

Venezuela, a neighbor and long-time ally, has been there before. In 1989, newly-elected President Carlos Andres Perez abruptly lifted foreign-exchange controls and let the currency plunge after finding that the central bank was running out of foreign reserves. Consumer prices soared 21 percent in one month alone, leading to the “Caracazo” riots that killed hundreds and spurred Hugo Chavez, then an Army officer, to accelerate plans to stage a coup attempt that launched his political career.

Instead of shock and awe, Macri should adopt a gradual transition to a free-floating exchange rate, said Paulo Vieira da Cunha, a former Brazilian deputy central bank governor. That would give the government time to pass measures that will soak up extra pesos, implement a credible fiscal plan and draw in cash from abroad, he said.

“There is a difference between doing something gradual with credibility and doing something haphazardly into a void,” said Cunha, now chief economist at Los Angeles-based money manager Ice Canyon.

No one is saying Macri shouldn’t start implementing changes quickly. After 14 years of rule under the Kirchners, the economy is reeling from the lowest foreign reserves in nine years at $25.8 billion, the biggest budget deficit in three decades and a regulated currency that’s failed to depreciate in line with inflation. In the last four years, the peso has fallen just 55 percent, compared with annual price increases of more than 20 percent since 2011.

Excluding items such as dollars held for commercial lenders and a $10 billion currency swap with the People’s Bank of China, the country has just $2 billion in readily-available reserves, according to Barclays Plc. Rigid currency controls are one of few measures that keep the country afloat amid relentless capital flight.

But for Macri, the margin for error is thin. As 49 percent of voters went for his opponent the ruling party candidate Daniel Scioli, unpopular measures of large devaluation, coupled with spending cuts and tax increases, would only alienate Argentines and erode his political support.

Mario Blejer, the nation’s former central bank president who devalued the peso in 2002, said capital controls should only be phased out and lifted sector by sector, starting with importers. To mitigate the impact, Macri will have to increase interest rates on central bank notes and spur demand for pesos, said Blejer, who boosted those yields to 140 percent 14 years ago.

“We used to think about it as an equation in which the greed for higher interest rates will trump the panic of holding pesos,” Blejer, who was most recently advising Scioli, said from Buenos Aires. “They’ll see that it’s difficult. You can’t just change everything from one day to the next.”

Another doubt for investors is the ease with which Macri can implement these changes without the support of the central bank. Alejandro Vanoli, who was appointed by Cristina Fernandez de Kirchner to govern the bank and deemed unqualified for the job by Macri, has vowed to carry out the rest of his term through 2019. He’s being investigated for illegal operations in the dollar futures market. While Vanoli has said the fraud allegations are politically motivated, they may pressure him to step down, according to Barclays strategist Sebastian Vargas.

Ultimately, Macri’s narrow victory over Scioli may be the loudest call for a gradual approach, said Vargas.

“What I’m seeing is that they’re becoming aware of the magnitude of the adjustments, maybe because of how close this race was, and that’s going to impact how aggressive they are,” he said in an e-mail.

By Charlie Devereux
November 25, 2015

* New ruling party official cites Prat-Gay as finance minister
* Prat-Gay served as central bank president from 2002-2004

A former JPMorgan Chase & Co executive, Alfonso Prat-Gay, will become finance minister in Argentina’s new government, said the head of a think-tank linked to the party of the incoming president. Prat-Gay confirmed he would be a member of the cabinet, while declining to say which ministry he would take over.

“We already know who the minister is – it’s Alfonso Prat-Gay,” Francisco Cabrera said in an interview on Radio Latina Wednesday. Marcos Peña, Cabinet Chief for President-elect Mauricio Macri, said he will announce the full cabinet at 5 p.m.

Macri has pledged to open up the country’s economy following a dozen years of trade protectionism and state intervention. He has also said he plans to reduce the power of the current economy ministry to diversify decision-making, with the finance minister playing a key role in a newly-formed economic cabinet comprised of six ministries. Prat-Gay said Wednesday that Macri’s government plans to present a package of new laws to Congress in its first week.

Asked to define exactly when Argentines will be able to step into an exchange house and buy dollars following four years of currency controls, Prat-Gay said it would be a priority.

“The president-elect has said he wants them to be lifted as soon as possible and we’re working toward that,” he said.

Cabrera said Federico Sturzenegger, a lawmaker from Macri’s Pro party who was also president of Banco Ciudad, the bank owned by the Buenos Aires city government, would become president of the central bank. Cabrera told the radio that he would become production minister.

Tough Challenge

The new finance minister will inherit a challenging economic scenario: reserves are at a nine-year low, the budget has the widest deficit in 30 years and the peso is at its most overvalued against the Brazilian real since the establishment of the Mercosur trade bloc in 1991. One of his first tasks would be to find a resolution to a decade-long legal battle with disgruntled creditors from the 2001 default that’s blocking Argentina from international capital markets.

“They’re building a great team with solid technical grasp, it’s way superior to what we’ve had previously,” said Fernando Jasnis, a money manager at Explorador Capital Management. “It’s a good signal, this team is going to promote trust. They’re people with a great track record and reputation in the market.”

As central bank president from 2002 to 2004, Prat-Gay halted a surge in inflation following the debt default and currency devaluation and helped spark a recovery from Argentina’s worst recession on record. He cut the inflation rate to 5.3 percent in 2004 from 40 percent at the start of his term in December 2002.

Despite winning the Euromoney magazine central bank governor of the year award in 2004, former President Nestor Kirchner chose not to renew his mandate as Prat-Gay pushed for more autonomy for the central bank.

Prior to his appointment as president of the central bank, Prat-Gay was the head of emerging market research at JPMorgan Chase. After leaving the central bank, he founded Tilton Capital, an asset management company. He entered politics in 2009 when he was elected as a lawmaker for the opposition’s Civic Coalition led by Elisa Carrio.

By James Gibney
November 25, 2015

Sunday’s election of Mauricio Macri as president promises a fresh start not only for Argentina, but also for its ties with the U.S., which have been mostly chilly since Argentina’s massive default in 2001.

Yet that will only happen if the U.S. revisits and learns from its own role in precipitating this diplomatic deep freeze. When President George W. Bush came into office, he threw away a budding, multi-faceted relationship to make Argentina a misguided object lesson in fiscal probity. If the U.S. truly wants Latin America’s “pink tide” of populist socialism to recede, and to rejuvenate its own regional diplomatic mojo, it needs not only to engage more deeply with the continent but also to take a more strategic approach to advancing its interests.

For decades, U.S.-Argentine relations have been marked, as one historian put it, by “repeated misunderstandings, extended periods of tension, and missed opportunities for cooperation and friendship.” They took a turn for the better with the 1989 election of President Carlos Menem. Partly this was driven by Menem’s conclusion that the only way to end Argentina’s recurrent economic travails was to break with the statist policies of the past — a decision that cheered U.S. policy-makers.

But according to Domingo Cavallo, who served both as Menem’s foreign and economic minister, Argentina also saw the Cold War’s end and President George H.W. Bush’s effort to create a New World Order as a chance to lock in economic and political benefits by aligning Argentina more closely with the U.S.

Over the next decade, a series of remarkable policy shifts followed. Argentina set aside its nuclear rivalry with Brazil and ratified the Nuclear Non-Proliferation Treaty. It sent ships to participate in the Gulf War. It cancelled a controversial program, funded by Egypt and Iraq, to develop a medium-range missile. Menem became Latin America’s “most vociferous critic” of Cuba’s human rights record.

Argentina also dramatically stepped up its participation in United Nations peacekeeping, and in 1997 the administration of President Bill Clinton designated the country a major non-NATO ally. At least figuratively, Argentina had achieved the “carnal relations” that Menem’s Foreign Minister Guido di Tella famously declared he sought with the U.S.

Then came the break-up.

Despite achieving brisk economic growth in the 1990s, Argentina’s government also continued to borrow heavily, and the decision to peg its currency to the dollar made the country vulnerable to external shocks. When the 1997 Asian crisis hit, falling demand for Argentine exports shrank its foreign reserves, making debts harder to cover. Meanwhile, the dollar’s appreciation rendered Argentina’s exports less competitive.

The U.S. at first tried to help. After crashes in Asia and Russia, the Clinton administration worried about a knock-on crisis in its good friend and star neoliberal pupil. So in 2000 it backed a $20 billion support package from the International Monetary Fund. Even with that in place, however, Argentina’s economic troubles mounted.

Unfortunately for Argentina, the incoming administration of George W. Bush was less sympathetic — skeptical about the wisdom of “bailouts,” and suspicious of the growing influence of multilateral organizations.

Treasury Secretary Paul O’Neill told Congress that the IMF “had been too often associated with failure”; in his earlier years as an academic, Treasury Undersecretary for International Affairs John Taylor had called for its abolition. (I leave it to Sophocles and psychologists to explain the glee with which the younger Bush undermined every multilateral pillar of the New World Order laid out by his father.)

In the summer of 2001, the administration signaled it was reluctant to support more IMF help for Argentina. As O’Neill put it, “Argentines have been off and on in trouble for 70 years or more. They don’t have any export industry to speak of at all. And they like it that way. Nobody forced them to be what they are.” The U.S. punted, and the IMF decided in November 2001 to pull the plug on further financial support. In December, Argentina defaulted on $132 billion in debt.

In the year that followed, the economy shrank by 11 percent, savings evaporated and more than 50 percent of Argentines were plunged into poverty. A revolving door of caretaker regimes led to elections in 2003 that brought to power Nestor Kirchner, who regularly lambasted the U.S. and IMF for beggaring his country.

Of course, blame for the conditions that led Argentina to collapse rests primarily with the Argentines. But the U.S. decision to let Argentina fall was neither necessary nor consistent. Even as the U.S. railed against the IMF and bailouts, it backed assistance to Turkey, Brazil, and Uruguay. And consider some of the costs. In Argentina, public opinion toward the U.S. turned sharply negative; there, as in the rest of Latin America, the U.S. reinforced its reputation as a fickle ally by abandoning a more-than-willing partner.

Worse, that partner then became a pain in the pampas. Kirchner not only repudiated neoliberalism and the so-called Washington Consensus; he and then his wife Cristina Fernandez unhitched Argentina from U.S. goals.

Kirchner cozied up to Cuba, and he and his wife went on to sign more agreements with Hugo Chavez’s Venezuela than with any other country, including inviting it into the Mercosur trade bloc. Kirchner opposed the invasion of Iraq and bucked the U.S. at the UN and the Organization of American States. As the host of the 2005 Summit of the Americas, he helped organize a counter-summit to attack the U.S. and its plans for a Free Trade Area of the Americas.

After taking office, his wife continued the sniping and skirmishing — trumped-up incidents like withdrawing from U.S. police training programs that Argentina said promoted oppression, or confiscating equipment to be used for joint security exercises. More seriously, her administration reportedly conducted secret negotiations with Iranian officials offering, in return for Iranian oil, to deflect charges that they organized the 1994 bombing of a Jewish community center in Buenos Aires. And Fernandez has opened the door to growing Chinese influence with a string of financial deals, motivated both by the country’s post-default needs for cash and her belief in the advantages of a multi-polar world.

The election of Macri promises better diplomatic days ahead: He plans to shift Argentina’s foreign relations away from China, Iran, Russia and Venezuela toward the U.S. and Europe.

But given the sharpening global competition for influence (not least with China), the U.S. had better reciprocate. Macri will need American support to finally regain access to the international credit markets. That’s a subject of heated dispute, with lobbying groups (bankrolled by hedge funds who bought up Argentina’s defaulted bonds) pushing the U.S. to take a hard line. President Barack Obama shouldn’t put that narrow interest ahead of rebuilding its partnership with Argentina and its broader influence in the hemisphere.

28 November 2015

BUENOS AIRES, Nov 28 (Reuters) – Argentina’s incoming government will abolish export taxes on corn and wheat the day after it assumes office and reduce the export tax on soy by 5 percent, designated Agriculture Minister Ricardo Buryaile confirmed to the daily Clarin.

President-elect Mauricio Macri won the election last Sunday on a platform of wholesale change. He has vowed to end interventionist measures like these taxes that have hobbled growth in Latin America’s third largest economy.

“The wheat and corn taxes will be eliminated from the first day, in line with what we promised,” Buryaile was cited as saying by Clarin.

“The tax on soy will drop by 5 percent from the start of Mauricio Macri’s term,” he added. “What we are examining is which methodology we will use.”

For years growers in the world’s No. 3 soybean exporter have been stung by a 35 percent tax on all international shipments.

The country collects a 23 percent export tax on wheat and a 20 percent levy on corn shipments.

By some estimates, Argentina will have doubled wheat shipments and surpassed Russia and Brazil as a corn exporter by the end of Macri’s four-year term, as the abandonment of years-long trade restraints unleashes the full potential of the country’s vast Pampas farm belt.

By Charles Newbery
27 November 2015

Buenos Aires (Platts)–27Nov2015/1015 am EST/1515 GMT Juan Jose Aranguren, the next energy minister of Argentina, said Friday he will seek to rebuild investor confidence in the country by improving business conditions after taking office December 10.

“We need, as in other sectors of economic activity, to restore rationality,” he said on Radio Mitre a day after getting tapped for the post by the conservative President-elect Mauricio Macri. “We must emerge from the schizophrenia we have lived in the energy sector in recent years.”

Aranguren, who comes to the post after working for years as the chief executive of Shell Argentina, said he will cut energy subsidies and push for a rapid increase in energy production to reduce imports.

He called it “a crime” to subsidize energy “in a country that imports 15% of its energy” when it also has rich resources of oil, gas and renewable power.

“Only countries that are exporters subsidize energy,” he said in his first public comments since getting appointed. “Our country is the only case that is an importer and subsidizes energy.”

Argentina holds among the world’s greatest potential for shale oil and gas, of which only about 54,000 b/d of oil equivalent is now in production.

The outgoing populist-left government has paid subsidies on energy since coming to office in 2003, at first to keep down gas and power bills to help pull the economy out of a 2001-02 crisis by fueling consumer spending.

In recent years, the outgoing administration has been paying producers subsidies to prop up wellhead prices at up to $80/b for crude and $7.50/MMBtu for gas to encourage rebuilding production after dwindling by 20% over the past decade.

The effort has helped to stabilize oil production at 532,000 b/d and to increase gas production by 3.2% to 117.3 million cu m/d in the first three quarters of 2015 compared with the annual average of 113.7 million cu m/d in 2014, according to the Argentine Oil and Gas Institute, an industry group.

However, with energy consumption continuing to rise, imports of crude, diesel and gas have held steady.

Aranguren warned that if temperatures surge this summer, blackouts could return because of years of insufficient investment in improving distribution.

By Dimitra DeFotis
November 25, 2015

Markets have heralded new, more market-friendly leadership in Argentina, but now the hard part comes: and recession is possible.

This is showing up in the market: The Argentina Merval Index fell more than 55 points or 0.41% Tuesday; the Global X MSCI Argentina exchange-traded fund (ARGT) is down more than 3% this week, and has pared gains for the year. The ETF is now up 1.8% year to date. Argentina banks Banco Macro (BMA), BBVA Banco Frances (BFR) and Grupo Financiero Galicia (GGAL) are down 10% apiece this week. Tamping down inflation and cutting government spending — tighter macro policy in the short term – could lead to an economic recession, writes Fathom Consulting, which adds:

“While [Macri’s] presidency provides an opportunity for longer-term economic reform, there is a risk that it will be impaired by his party’s failure to hold a majority in either houses of Congress. Mr. Macri’s agenda also faces challenges from abroad, with China in the midst of a hard landing; deepening recession in Brazil; and the US on the brink of raising interest rates for the first time in nearly a decade.”

Barclays analysts Pilar Tavella and Sebastian Vargas are a little more optimistic:

“Mauricio Macri will face three economic battles and a political one as soon as he is sworn in as president of Argentina: re-capitalizing the central bank; devaluing the ARS and ending FX controls; reducing the primary fiscal deficit from 4.8% of GDP; and preserving governability. We expect Macri’s administration to win the first battle quite quickly, boosting net reserves from the current US$2 billion to US$7 billion in the first quarter … we expect a decline of 1.1% in 2016, as a result of falls in real income related to the potential pass-through effects of a devaluation and fiscal adjustment. We expect higher growth (3.5%) in 2017 and beyond on positive-supply side effects following from much-needed adjustments …”

An inflation-targeting program may hasten the exit of Argentina’s central bank President Alejandro Vanoli, Barclays adds.

By Silvio Canto, Jr.
November 30, 2015

We mentioned last week that Argentina has a new president. He is already sounding a lot different than the incumbent. President-elect Mauricio Macri of Argentina sent a message to Venezuela and Iran:

Only a day later, Mr. Macri moved quickly to strike a different tone from that of the departing president, Cristina Fernández de Kirchner, who — along with her late husband, Néstor Kirchner — had controlled the presidency for the last 12 years.

At a news conference on Monday, Mr. Macri emphasized how his administration would differ from that of Mrs. Kirchner on foreign policy. He announced an effort to get Venezuela — a close ally of Argentina under the Kirchners — suspended from the Mercosur regional trade bloc over claims of the infringement of civil liberties there.

And he made clear his desire to revoke an agreement struck under Mrs. Kirchner with Iran to jointly investigate the 1994 bombing here of a Jewish center, which killed 85 people. Some investigators have accused senior Iranian officials, including a former Iranian president, of planning and financing the attack, making the agreement to give Iran a direct role in the investigation a political lightning rod.

Mr. Macri has also announced plans to improve diplomatic ties with the United States, which became strained in recent years over Argentina’s international debts and Washington’s sway in the hemisphere.

“There is little doubt that Argentina’s relations with the U.S. under a Macri administration will become friendlier,” said Michael Shifter, president of the Inter-American Dialogue, a policy group in Washington.

Mr. Macri understands how the Kirchner regime has hurt Argentina, from a relationship with Iran to demonizing foreign investors to distract the people from the failures of crony capitalism.

Let’s hope that president-elect Macri will also restart the investigation into the death (or murder) of Mr. Nisman, the prosecutor who was killed in his apartment the day before he was to appear in Congress.

It will take time, and patience, but Argentina has a chance to turn it around and become a vibrant economy and U.S. trade partner.

Singing a different tune with Iran and Venezuela is the right “tango” for the moment!

By John Charlton
1 December 2015

Further evidence that copyright protection terms appear to be heading in only one direction comes from Argentina. The country’s ruling party, Front for Victory, recently proposed a draft bill extending the term of copyright protection on photographs from 20 years to life of the photographer plus 70 years. This would put the copyright term for photographs on the same footing as that for books and may, effectively, sextuple the period of protection from 20 years to 120.

If the proposal passes into law, it would apply retroactively and may prompt the removal of many images from the public domain. It’s very likely that photographic images owned by foreign individuals and entities will also get the lengthier protection term. Argentine pressure group Fundacion Via Libre, which campaigns for more open access to digital information, is against the proposal. According to its secretary, Beatriz Busaniche, it is “fighting in the congress and in the media” to open the debate on copyright. “We are trying to build public awareness,” says Busaniche. “We are also talking to congressmen and women to provide them input on the consequences of this kind of [bill]. … [W]e hope our representatives will hear our voice.”

Busaniche says that Fundacion Via Libre has been “working in the copyright field since 2000,” and its research shows that “copyright extensions [have] negative effects [on] human rights, [especially] cultural rights…. We also defend public domain and free culture projects like Wikimedia Commons, which will be directly affected by this proposal.”

Earlier this year, Jamaica increased copyright protection to life plus 95 years, while in 2011, the European Union (EU) raised the term for music recordings to 70 years. In 2009, Cambridge University academic Rufus Pollock authored a paper that used mathematical models to show the optimum term for copyright protection should be 15 years. The Association of Graphic Reporters of Argentina is pressing for the copyright extension.

Rob Ward
26 November 2015

As the ideology known as Kirchnerismo begins to fade in Argentina following the defeat of outgoing president Cristina Fernandez de Kirchner’s intended successor in elections Sunday, shippers and container terminal operators in Buenos Aires may benefit from an increase in trade.

Kirchner’s economic policies and penchant for picking fights with neighboring countries have caused the country’s container trade to decline and the election of Mauricio Macri, the current center-right mayor of Buenos Aires, holds the promise of better days ahead.

Macri has promised major change on all fronts, including better relations with neighbors in South America, the United States and the European Union.

“It is going to be very interesting to see how President Macri deals with the many problems that have been left behind by the Kirchner regime,” Antonio Zuidwijk, an experienced and well-respected port consultant based in Buenos Aires told

These issues include protectionist policies such as import and export restrictions in addition to runaway inflation of more than 20 percent and trade spats with neighbors Brazil and Uruguay. The government also put too much of a focus on the domestic market rather than nurturing international trade, Zuidwijk said.

Zuidwijk, who was operations manager for Argentina, Uruguay and Paraguay for the U.S.-based Moore McCormack Lines in the 1970s when containerization was first being established in South America, said that these issues have caused the container trade in Argentina to shrink to where it was in 1998.

The country’s largest port, Puerto Nuevo in Bueno Aires, which is responsible for 90 percent of the country’s container trade, handled 1.2 million 20-foot-equivalent units in that year. The port moved 997,000 TEUs in 2014.

That decline took place even as containerization continues to grow throughout South America. For example, the Port of Santos, Brazil, which has surpassed Puerto Nuevo to become the continent’s largest container gateway, may pass the 4 million TEU mark this year, after breaking 2.5 million TEUs in 2010.

Argentina’s port sector must also contend with the government’s narrowly-focused approach to transportation. “The problem here is that no one looks at the complete picture, a transport policy for the country as a whole, of which the ports should form part,” Zuidwijk said. “The complete relationship between ports and the hinterland, between trucks, rail and waterborne transport.”

The government must also come up with policies to better manage the River Plate, which is shared with Uruguay, and work with Uruguay to figure out the best way to manage the entire River Plate Basin, Zuidwijk said.

Another positive aspect of Macri’s accession to power for the wider community of shippers and transport specialists is that the new Argentina president wants to bolster the local South America trade bloc of Mercosur.

Mercosur, which includes Brazil, Uruguay, Paraguay, Argentina and Venezuela, has been an ineffective body over the past 10 years and that has largely been due to Argentina’s intransigence and opposition to free trade under Kirchner.

For more than 10 years the EU has been trying to forge a free trade pact with Mercosur, but Argentina has often proved the stumbling block.

By Frank Holmes
Nov 29, 2015

It might be hard to believe now, but Argentina once ranked among the top 10 wealthiest nations in the world, following the United Kingdom, United States and Australia.

Today, however, it’s one of the most corrupt, according to Transparency International, a group that annually measures public sector corruption around the world. In 2014, Argentina ranked 107, sandwiched between Niger and Djibouti.

That’s largely because for more than half a century, Argentina has been led almost exclusively by the far-left Justicialist Party, based on the political thought of Juan Perón—an admirer of Mussolini—and his wife Evita.

But this week, Argentina said “no, gracias” to further leftist rule when it elected conservative businessman and two-term Buenos Aires mayor Mauricio Macri to succeed Cristina Fernández de Kirchner as president. It was an upset victory for the people of Argentina, who have seen their once-prosperous nation deteriorate under decades of Marxist policies.

It was also a strong win for investors around the globe. Not since Narendra Modi’s election last year has a leader’s entry on the world stage inspired such bullishness.

In the three months leading up to the November 22 election, Argentina’s Merval Index rose 30 percent as optimistic investors anticipated a win by Macri.

This week I was in San Francisco attending the Silver Summit & Resource Expo, where many fund managers commented that their Argentine holdings had seen huge jumps recently. Many people I spoke with were bullish on the country.

Latin America Veering Right to Escape Corruption

I join many others in expressing my belief that this change in leadership points to an ideological shift in Latin America and a rejection of the Peronism that has threatened to turn the region into an also-ran economy. I’m confident that once Argentina demonstrates to its neighbors that market-friendly policies stir economic growth and help lead to widespread prosperity, the people of Colombia, Brazil, Venezuela and others will demand similar corruption-free leadership.

In Venezuela—which is slightly less corrupt than the likes of Yemen, Libya and Iraq, according to Transparency International—the people are still reeling from Hugo Chávez’s disastrous administration. With food shortages and hunger worsening, the government implemented fingerprint scanners in grocery stores last year to limit purchases of basic goods.

This, despite Chávez—a leader who was supposed to be “for the people”—being worth an estimated $2 billion at the time of his death two years ago. It’s believed that he stole much of his wealth from the country’s oil industry. Today, his daughter Maria Gabriela is the wealthiest woman in Venezuela, worth double that.

In August, global intelligence company Stratfor conducted an analysis of satellite imagery taken of Puerto Cabello, Venezuela’s main port of entry for imports, between February 2012 and June 2015. The visible reduction in food container traffic is alarming.

Meanwhile, in Peru, First Lady Nadine Heredia is being investigated for money laundering and the usurpation of public functions. When I was in country earlier this month speaking at the Mining & Investment Latin America Summit, there was a lot of discussion on rule of law and corruption in Peru and surrounding South American countries. It’s estimated that stolen public money in Peru adds up to about 2 percent of GDP annually.

Latin Americans are increasingly saying enough is enough.

“What happened in Argentina was the first change in Latin America,” said former Brazil finance minister Maílson da Nóbrega, speaking to the Wall Street Journal. “It may be the start of a downfall in populist governments. I think the next one should be Venezuela. And I think Brazil will follow suit in 2018.”

Brazil President Dilma Rousseff, who won reelection last year, currently has an approval rating in the single digits. As I shared with you last month, her Marxist policies have suffocated business development. The country tumbled 18 points this year in the annual Global Competitiveness Index (GCI) and is now considered to be one of the worst in terms of burdensome government regulations and unethical business practices. The people of Brazil deserve better.

his is part of the reason why I believe active management is so important. When I travel around the world and talk to different people, I obtain and return with tacit knowledge that can’t be found by simply reading Bloomberg.

Macri Bucks the Trend

In this troubling context, Mauricio Macri is a breath of fresh air. He’s not what most people envision when they’re asked to describe the stereotypical South American leader. Unlike Fidel Castro, Chávez, Rousseff and others, Macri never served as a Marxist guerilla in his youth. There are no pictures of him posing heroically in a steaming jungle, attired in military garb like fellow Argentine Che Guevara. Macri’s more likely to be found playing a friendly game of soccer than delivering a rousing hours-long speech from a balcony. By most accounts, he’s contemplative and soft-spoken.

But change is precisely what Argentina needs now. For the last 12 years, former President Néstor Kirchner and, following his death, wife Cristina managed only to cripple the country’s economy even further. The size of the state doubled in the last 10 years alone. Entire industries were nationalized, taxing and spending skyrocketed, foreign investment fled and inflation exploded at an average pace of 20 percent a year.

Under these conditions, holding gold in Argentina pesos has been a good bet for investors.

Realistic or not, Macri has vowed to roll back many policies from previous administrations. He also plans to cultivate a warmer business climate with Brazil, Argentina’s top trading partner, and staunch the outflow of foreign capital. Last year, $2 billion left the country, a 75 percent increase from 2013, according to the Organization for Economic Cooperation and Development (OECD).

Which is a shame. Argentina has a huge amount of untapped potential—a highly educated population, the fastest-growing middle class in Latin America and an abundance of natural resources.

Here’s hoping Macri’s administration can succeed at fostering a more welcome environment for business, one that might benefit the Argentine people and global investors alike.

As Argentina is facing steep inflation, American consumers today are spending a little less on essentials such as food—more specifically, Thanksgiving dinner.

According to the Texas Farm Bureau’s Thanksgiving Meal Report, a typical spread of turkey, stuffing, sweet potatoes, cranberry sauce and more cost $46.48 this year, down 31 cents from 2014.

(The one Thanksgiving staple we spent more on this year was pecans. They’re up 11 percent as China’s appetite for the nut has increased.)

The reason for the savings? Lower fuel and grain prices. As a whole, grains are down about 11.5 percent from a year ago, while crude oil is off more than 36 percent. According to AAA’s Fuel Gauge Report, gas averages $2.05 per gallon right now, a 27 percent decline from this time last year.

As I’ve been saying since last December, this “oil peace dividend” is helping us save not only

By Patrick Gillespie
November 25, 2015

American Airlines won’t accept Argentina’s money.

The airline announced that it will no longer allow customers to pay for flights with Argentine pesos.

“We currently do not have inventory available for purchase in Argentine pesos due to repatriation issues,” American Airlines said in a statement.

Translation: American Airlines faces problems converting its pesos to dollars.
American Airlines had already changed its policy once — in September — allowing Argentines who buy with pesos to fly within 90 days of the purchase.

Now, no flights can be purchased with pesos. American Airlines is still accepting purchases in Argentina with foreign credit cards.

“American Airlines’ action is very strong,” says Pablo Singerman, CEO of an economic think tank, Singerman y Makon, in Buenos Aires.

There’s two issues for American Airlines (AAL) in Argentina.

First, Argentina’s central bank recently reduced the amount of money foreign companies could bring back to the U.S. on a daily basis. The reduction comes amid growing concerns over the central bank’s declining foreign reserves — a warning sign of economic instability.

Second, major changes to Argentina’s currency are coming.

Just last Sunday, Argentines elected Mauricio Macri as its new President. Macri has promised major economic reforms to turn around the country’s stagnant economy.

One of those reforms will be ending the government’s currency controls set by the previous administration led by Cristina Fernandez de Kirchner. The controls put the peso on a mostly-fixed exchange rate.

Right now one dollar equals $9.67 Argentine pesos. But many people believe that the peso is overvalued, and most Argentines exchange money on a black market at an exchange rate of 15 pesos to the dollar.

Kirchner put the controls in place to fight Argentina’s rising inflation, which has risen over 20% annually in recent years.

Ending the currency controls might lead to some volatility in the short term, but experts applaud the move and will likely lure back foreign investors.

“Macri is going to devalue the peso,” says Singerman. Long-term for foreign companies: “It’s a great time to invest in Argentina.”

It won’t be a surprise if undoing the currency control will immediately cause Argentina’s currency to be significantly devalued.

With a devaluation likely coming, American Airlines may not want to accept a currency that many experts say is well overvalued.

The situation in Argentina is similar to what’s already happening in Venezuela, where airlines have $3.7 billion held in the country because of currency controls, according to the International Air Transport Association. Venezuela has four official exchange rates and it also limits how much American companies can send back to the United States.

American Airlines is one of the biggest international airlines to fly to the Argentina. It has 27 weekly flights from various cities around the U.S. to Buenos Aires, the capital.

-CNN’s Diego Laje contributed reporting from Buenos Aires

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By Editorial Board
November 24, 2015

FOR MOST of the past 75 years, Argentina, once upon a time a wealthy nation, has isolated and impoverished itself with a mix of economic populism and jingoistic nationalism. The past dozen years of rule by Cristina Fernández de Kirchner and her late husband, Néstor Kirchner, were no exception: Like numerous previous regimes, theirs produced a boom-and-bust economic cycle and poor relations with democratic states. Now, however, a surprising presidential election has given the country a chance to rejoin the Western world — and dealt a blow to Latin America’s already flagging socialist camp.

The winner of the election, Buenos Aires Mayor Mauricio Macri, is a rightward-leaning former businessman who defeated the nominee of the Kirchners’ Peronist movement. Mr. Macri offered voters a simple but, in the Argentine context, radical agenda: to return the country to mainstream economic policies and end the autocratic attacks on the media, judiciary and other institutions. In the short term, Mr. Macri promises to remove capital and export controls that have drained the country’s hard currency reserves while creating a thriving black market. He could also seek a deal with international creditors that would end Argentina’s 15-year-long exclusion from global capital markets.

The economic restructuring will likely be an uphill battle, obstructed by Peronist control of the National Congress and unions, and Mr. Macri has indicated he will proceed cautiously, holding off on privatizations and cuts in social benefits. He is no doubt mindful that all three of the previous non-Peronist civilian presidents elected since 1955 were driven from office before completing their terms.

However, Mr. Macri could quickly have an impact in foreign policy, where he appears ready to rupture the Kirchners’ cozy relations with China, Iran and — especially — the Chavista government of Venezuela. In his first news conference, Mr. Macri said he would seek Venezuela’s expulsion from the Mercosur regional trading group because of its violations of democratic norms. He could also seek sanctions under the democracy charter of the Organization of American States. Lilian Tintori, the wife of imprisoned Venezuela opposition leader Leopoldo López, was at Mr. Macri’s side on election night.

The Argentine’s willingness to take a stand is particularly important because of Venezuela’s upcoming legislative elections on Dec. 6. At best, the threat of multilateral sanctions could help to deter the government of Nicolás Maduro from trying to impede what polls show will be a decisive opposition victory.

Even a successful election will leave Venezuela — ground zero for the self-defeating autocratic populism that infected Latin America in the 2000s — a long way from reconstituting its institutions or rescuing its collapsing economy. But under Mr. Macri, Argentina could forge a path that new leaders in Caracas, and eventually other countries, could follow. The formula is not complicated: It amounts to embracing the free-market, trade-promoting policies that are working for Chile, Mexico, Colombia and other Latin American democracies. The problem has not been technocratic, but political — the susceptibility of some Latin electorates to cheap populist appeals. The fact that Argentines, who have fallen for those nostrums more often than virtually any other nation, finally have chosen a different course can only be encouraging.

By Joshua Partlow
24 November 2015

BUENOS AIRES — The first news cycle after the election of Mauricio Macri as president of Argentina included an unusual contribution from La Nacion, one of the country’s top newspapers: an editorial headlined “No More Vengeance.”

The gist of the instantly controversial piece was that the time had come to forget about the crimes committed during Argentina’s 1976-1983 military dictatorship. The editorial argued that the old regime’s leftist opponents were “ideologically committed to terrorist groups” and acted in a way “no different” from the militants who attacked Paris earlier this month. It also bemoaned the “shameful” treatment of regime officials imprisoned for human rights crimes despite their “old age.”

“One day after citizens voted for a new government, the desire for revenge should be buried once and for all,” the editorial read.

The piece provoked swift condemnation by many Argentines, including many of the newspaper’s own reporters. They took to social media to disavow the unsigned opinion piece, and the newspaper published a photo of dozens in the newsroom holding up signs that said, “I condemn the editorial.”

“La Nacion’s editorials exclusively represent the editorial position of the newspaper and not the position of its journalists or employees in other parts of the company,” read an article published in response.

The editorial waded into especially sensitive territory — the legacy of the “Dirty War,” in which tens of thousands of people were killed or made to “disappear” by government forces, and ongoing human rights trials against the perpetrators.

Part of the concern was the timing, as it prompted fears that the newly elected Macri government might be more open to forgiving these crimes than voters had been led to believe. As Jonathan Watts and Uki Goñi wrote in Britain’s Guardian newspaper, “Many middle- and upper-class Macri supporters want the trials to end. They prefer to speak of ‘reconciliation’, a catchword for amnesty, now that hundreds of former officers have been convicted — many of so advanced an age that about 300 are estimated to have died so far in jail, either serving their sentences or pending trial.”

Macri said in his first news conference as president-elect that the trials should continue and that the judicial system should operate with independence, although he didn’t address the editorial directly.

Read more:

In Argentina, distrust over move to abolish intelligence agency

Orphaned in Argentina’s dirty war, man is torn between two families

By Joshua Partlow;Irene Caselli
24 November 2015

BUENOS AIRES — The stereotypical Latin American leader of the past generation has been a firebrand populist who could deliver hours-long impromptu speeches on television, painted the United States as the source of all evil and had probably fought as a guerrilla in some steamy jungle.

That type of leader — think Cuba’s Fidel Castro, Venezuela’s Hugo Chávez or Argentina’s Cristina Fernández de Kirchner (minus the guerrilla experience) — is the opposite of Mauricio Macri, the understated engineer and Buenos Aires mayor who was elected president of Argentina on Sunday.

Macri’s win comes as further evidence that the often-cited “pink tide” of the Latin American left has started to ebb. Across the region, countries such as Bolivia, Ecuador and Venezuela that had joined forces to oppose the United States and “neoliberal” capitalism have seen their influence diminish as they battle economic challenges. The severe slump driven by low oil and commodity prices in the region’s leader and biggest economy, Brazil, has pushed ratings for President Dilma Rousseff, a former guerrilla, into the single digits amid calls for her impeachment.

Nicaragua’s Daniel Ortega, a socialist ex-Sandinista guerrilla leader, is pro-business and beloved by Washington. Cuba is forging a rapprochement with the United States. A comedian with no political experience was just elected in Guatemala. Former Uruguayan president José Mujica, an ex-guerrilla famed for his ascetic lifestyle and liberal policies such as legalizing marijuana, was replaced by Tabaré Vázquez, a doctor. While support remains strong across the region for generous spending on social programs, the tone of the discourse has softened.

“You’re seeing this wave or tide or whatever you want to call it has run its course. They don’t have the economic sustenance to continue,” said Michael Shifter, president of the Inter-American Dialogue, a Washington think tank. “This kind of fiery leftist rhetoric was a function of the economic situation, and that has changed dramatically for many of these countries.”

In Macri’s first step as president-elect, a low-key Monday morning news conference at a table flanked by his aides, he said he would seek to suspend Venezuela from the South American trade bloc Mercosur, citing human rights violations and limits on free speech. That represents a sharp break with Fernández, the outgoing president, who has had close relations with Venezuela.

“To the brothers of Latin America and the whole world, we want to have a good relationship with all the countries,” Macri said in his victory speech. “The Argentine people have much to offer to the world.”

Macri comes across as a calm, fact-favoring engineer more interested in quietly tinkering with economic levers than addressing the masses in soaring palace-balcony speeches. His aides describe him as a shy, somewhat socially awkward man who took a while to adapt to the crowds on the campaign trail. Macri was no student militant in the Latin American mode; he has said he doesn’t even regularly read newspapers.

His appeal stems in part from his lack of a strong ideology — a sharp contrast to Fernández’s fierce nationalism. Macri, a scion of one of the country’s richest families, headed the soccer team Boca Juniors and is serving his second term as mayor of Buenos Aires, where he is known for sprucing up the capital, bringing in art and music performances, and adding bus lanes.

“He’s the anti-Cristina,” said Diego Guelar, a foreign policy adviser to Macri. “He’s a doer. That would be exactly his ideology.”

Roberto Digon, who served alongside Macri at Boca Juniors before the two fell out over sales of players, said that Macri initially had trouble giving a speech or getting his ideas across but that he improved over time, in part because he wanted “to show his father that he was an important and capable person.”

“He must have undertaken some public speaking and presentation courses, because he was very weak politically and ideologically,” Digon said. “Macri was brilliant when it came to business. He was very capable. He learned about politics little by little.”

Guelar, a former Argentine ambassador to the United States and a potential candidate for foreign minister, said Macri’s first foreign policy priority would be building closer ties with Brazil, a neighbor and trading partner that Macri on Monday called “our most important partner of the future.” The incoming president’s team also wants to pursue a free-trade deal with the European Union. Another goal is to clarify some aspects of the relationship with China, including making public the terms of a Chinese-funded space observatory — to ensure that it won’t have any military use — and reviewing a plan for a Chinese-built nuclear reactor.

As far as the United States is concerned, Macri seeks to settle a creditor dispute over debts from the financial crisis and cultivate a warmer overall relationship including encouraging foreign investment. During Fernández’s tenure, there were some bizarre episodes, such as in 2011 when Foreign Minister Héctor Timerman used a pair of nail clippers to open a case in the airport allegedly containing secret U.S. military codes.

Guelar said there would likely be the “normal conflicts of a normal agenda that you share with a partner and a friend,” such as trade disputes over whether Argentine oranges or meat would be allowed into the United States.

“What’s going to change is the American Embassy is not going to be the embassy of an enemy,” he said.

Macri’s chief strategist and campaign manager, Marcos Peña, added in an interview that “there are no reasons for us to have bad relations with the United States.”

“There can be a mature relationship of friendship, with a joint agenda to exchange and grow together,” he said. “The world is an opportunity, not a threat.”

By Christopher Whittall
Nov 24, 2015

Removing currency controls is one of several reforms President-elect Macri has vowed to lure investors

For Richard House, it was the black market currency booths he saw on a recent visit to Buenos Aires that dissuaded him from investing in Argentina.

Mr. House, head of emerging-markets debt at Standard Life Investments, had to pay for local hotels and restaurants at the official exchange rate of a little over 9 pesos to the dollar—far more expensive than the black market rate of around 16 pesos he found on the street.

The experience brought home the radical changes, including to the currency, needed to resuscitate Argentina’s flailing economy after this weekend’s presidential elections.

“Everyone knows there’ll be devaluation,” said Mr. House, whose firm oversees £250 billion ($378.89 billion) in assets.

Removing currency controls is one of several reforms president-elect Mauricio Macri has vowed to make in an effort to boost Argentina’s competitiveness and to lure foreign investors back to the country.

Many foreign investors don’t want to get in while the peso is artificially high, fearing that they’ll be the ones to bear the brunt in a coming devaluation. But once the devaluation happens, the decks are more clear. A concurrent relaxation of currency controls would also remove a major roadblock to investors worried that they mightn’t be able to get out.

Marcelo Assalin, head of emerging market debt at NN Investment Partners, hasn’t been involved in Argentina since early 2014, when he was put off by uncertainty around being able to repatriate money from the country.

But he said he could be tempted back if the Macri administration follows through on the reforms it has promised.

“Investors won’t invest in Argentina until we have a currency devaluation. Investors need to be comfortable they’re not getting into another trap,” said Mr. Assalin, whose firm oversees €180 billion ($191.23 billion) in assets.

But Mr. Macri’s victory is still encouraging, he says. “It’s a large country, with big opportunities,” Mr. Assalin added.

Maintaining an artificially strong peso helped the administration of outgoing president Cristina Kirchner contain inflation, which is already estimated to reach 25% this year.

But the currency controls hurt companies selling their goods abroad, deterred foreign investors and encouraged Argentines fearful of having their savings erased to hoard dollars.

Propping up the peso has also been costly, contributing to a sharp fall in foreign-currency reserves that have almost halved since 2011 to $26 billion.

Investors have welcomed the prospect of a more business-friendly administration, pushing up stocks and bonds in recent weeks after Mr. Macri moved ahead in the polls ahead of Sunday’s presidential election.

Mr. Macri previously said he would lift currency controls, but has yet to outline how he will do so.

Argentina has let the peso weaken somewhat this year, though at a pace far less than inflation. That means that, in real, trade-weighted terms, the peso has actually strengthened around 15% this year through the end of October, according to the Federal Reserve Bank of St. Louis.

But lifting currency controls and allowing the peso to fall more radically poses risks: from stoking already-high inflation to denting the value of local-currency investments when translated back into U.S. dollars.

Some investors reckon Mr. Macri will have to take a gradual approach to implementing his pro-market agenda given many measures are likely to be unpopular, his election victory was narrow and the opposition Peronist movement holds power in both houses of congress.

Denise Prime, a London-based emerging-market investment specialist at GAM Holding, expects Buenos Aires to weaken the peso by 25% in early December after Mr. Macri takes power to coincide with the lifting of an export tax on soybeans that is planned for the same time. That should incentivize farmers to sell their crop on the international market and show the benefits of a weaker currency, she said.

Still, Ms. Prime expects Argentine economic growth to take a hit in the first half of 2016, with the central bank likely having to raise rates in response to higher inflation following the currency weakening.

Pilar Tavella, an economist at Barclays, said a change of leadership at Argentina’s central bank, as well as a recapitalization of the institution, would be needed before the exchange controls are relaxed. Meanwhile, the Macri administration needs to outline a credible set of monetary policies to avoid the currency weakening too much, she said.

“It’s very hard to say what the value of the peso will be. A higher overshooting [on the currency] could lead us to have higher inflation,” she said.

Non-deliverable forward contracts, a type of derivative, show investors expect the exchange rate to fall to around 16 pesos to the dollar six months from now from the current official rate of around 9.7.

Money managers have factored in the impact of a weaker currency on their investments. Ms. Prime, whose firm oversees 124 billion Swiss francs ($121.57 billion) in assets, recently bought a small amount of peso-denominated debt issued by the European Bank of Reconstruction and Development, which she says trades with a yield of around 80%. Even if there is a sharp devaluation, the yield would still be sufficiently high.

—Taos Turner contributed to this article.

November 23, 2015

Voters weary of Mrs. Kirchner’s destructive populism
Mr. Macri a pro-market economic pragmatist
He would do well to repair relations with United States

Argentina’s voters opted for a better future on Sunday by electing Mauricio Macri to the presidency, replacing an exhausted political dynasty whose populist policies led the country to the brink of ruin with a pragmatic center-right figure aligned with pro-market forces.

After eight years with Cristina Fernández de Kirchner at the helm, following the four-year term of her late husband, Néstor Kirchner, the country was overdue for a change toward sound economics and less political and social polarization. Such was the promise of Mr. Macri’s underdog campaign. He chose tolerance over confrontation in defeating Danilo Scioli, a former vice president under Mr. Kirchner.

Voters were plainly tired of Mrs. Kirchner, who often demonized the private sector and anyone who disagreed with her government. Under her, Argentina’s domestic politics became progressively harsher and meaner. She thrived on controversy and political feuds. Self-promotion and blistering attacks on rivals and critics became hallmarks of her tenure at Casa Rosada, Argentina’s national palace.

On the international front, she courted Iran’s radical leaders and made common cause with leftist political figures throughout the region whose own populist schemes were as destructive as her own, if not more so, including the late Hugo Chávez and his successor as president of Venezuela, Nicolás Maduro.

Mr. Macri, the mayor of Buenos Aires, has wisely vowed to maintain some popular social programs introduced by the Kirchners, including cash subsidies for poor families. He also said he plans to keep some big nationalized companies, like Aerolineas Argentinas, under government control, but he also promised to steer a centrist economic course and work with, instead of against, the private sector.

It is in the realm of foreign policy where his ideas stand in sharpest contrast to those fostered by Mrs. Kirchner.

He has vowed to end her close ties with Venezuela and even said he will call for that country’s suspension from the regional economic group known as Mercosur for not complying with the bloc’s democratic clause requiring members to abide by democratic principles. That would further weaken an increasingly isolated President Maduro, who faces parliamentary elections on Dec. 6 that do not bode well for his party.

Relations with the United States are also likely to improve under Mr. Macri, who will happily tone down Mrs. Kirchner’s pointless anti-American rhetoric and reach out to both the U.S. government and private business. Years of strained relations with major industrial nations have left Argentina broke and economically isolated. It needs to restart its economy and restore a strong private sector alongside a business establishment that has confidence in the nation’s government — which was impossible under Mrs. Kirchner.

Nothing could do more to raise his nation’s international profile than for Mr. Macri to annul Argentina’s agreement with Iran to jointly investigate the deadly 1994 attack on a Jewish community center in Buenos Aires. This smelly deal, fostered by Mrs. Kirchner, is simply a cover-up of Iran’s responsibility for the attack. Instead, Mr. Macri should order an investigation into why the outgoing government was so willing to get in bed with Iran over this horrendous crime.

One election does not a trend make. But certainly the decision by Argentina’s voters to reject the Kirchner legacy suggests that the populist strain may have run its destructive course throughout Argentina and the region. It can’t happen too soon.

November 24, 2015

Argentina still has a long way to go before it can return to the international debt market, but its newly elected president Mauricio Macri got a small vote of confidence from Moody’s, which raised its outlook on the country’s credit rating.

Moody’s, the only one of the big three ratings agencies to still have a view on Argentina after the country defaulted on some of its debts in the summer of 2014, raised its outlook on the rating to positive from stable.

It kept its Caa1 deep junk rating on the country.

It said the change in outlook is based on the view that Mr Macri’s election victory will result in more market-friendly economic policies that will help turn around Argentina’s struggling economy.

Moody’s said:

The main driver of the outlook change to positive from stable is Moody’s expectation that Argentina’s policy stance will become more credit positive in the aftermath of Sunday’s elections in which Mauricio Macri was elected Argentina’s president for the 2015-19 term.

A prompt resolution of the holdout saga is a key Macri pledge in this regard, and is required for the government to borrow abroad, which it will probably need to do in order to meet upcoming debt service obligations

We expect the new administration to devote efforts to improving the economic and institutional environment over the coming months, through a series of reforms aimed at tackling persistently high levels of inflation and lack of data accountability.

By Kiran Stacey, Energy Correspondent
November 24, 2015

Two of the companies drilling for oil off the Falkland Islands are set to combine efforts after Rockhopper agreed an all-share takeover of Falkland Oil and Gas.

The companies announced on Tuesday that shareholders in FOGL would receive just under a third of a Rockhopper share for each of theirs.

Based on the valuation of London-listed Rockhopper at the end of Monday’s trading, that would value each FOGL share at 10.7p, an 11 per cent premium to Monday’s closing price, which values the combined company at about £57.1m.

The companies described the deal as a merger, but Rockhopper executives will be in charge of the combined group. Tim Bushell, chief executive of FOGL, and John Martin, its chairman, are to become non-executive directors. The board of FOGL said it would unanimously recommend the deal to its shareholders.

The history of drilling for oil and gas in the Falklands has been a bumpy one, marked by optimism and disappointment. Shares in Rockhopper hit close to £4 in 2012, but are now worth around 35p.

Rockhopper was the first company to discover oil in the seas north of the disputed islands, when it discovered the Sea Lion field in 2010. It had hoped to begin production from that field by 2017, but engineering challenges, a lack of financial support and the collapsing oil price have pushed that start date back.

Sam Moody, Rockhopper’s chief executive, told the Financial Times earlier this year he hoped a scaled-down plan for the field, costing $1.8bn or less in initial expenditure, could start production before 2020. The companies said on Tuesday the takeover would mean “enhanced prospects of progressing the Sea Lion project through its final investment decision”.

There have also been political challenges as Argentina continues to claim sovereignty over the islands it calls the Malvinas. Earlier this year, Argentina launched legal action against three British-listed companies, including both Rockhopper and FOGL, as well as their larger rival Premier Oil, for illegal drilling.

Pierre Jungels, Rockhopper’s chairman, said: “By combining Rockhopper and FOGL, we shall create a more coherent licence ownership structure in the North Falkland Basin, driven by a technically accomplished organisation with a strong exploration and appraisal track record, well positioned to access the opportunities in this emerging hydrocarbon province.”

John Martin, FOGL’s chairman, said: “The enhanced scale, capabilities and financial position of the merged FOGL and Rockhopper entity will provide FOGL shareholders with a platform from which to bring these quality resources into development.”

Rockhopper’s executives told the Financial Times on Tuesday they believed the deal would help attract another financial backer to help them begin production at Sea Lion, by offering increased access to assets in the area.

Mr Moody said: “In the discussions we have had with third party backers, it became apparent that access to those barrels [owned by FOGL] and that upside is something that had to be sorted out to get them in.”

Mr Moody also said the recent election of Mauricio Macri, the conservative mayor of Buenos Aires, as president, would improve the company’s prospects in the region.

Analysts at Citigroup said: “The combined company will be the largest licence and resource holder in the North Falklands basin and should benefit from increased scale that could help the company seek additional financing in order to help fund their share of future development (Sea Lion) and exploration and appraisal activities in the region.”

November 24, 2015

Mauricio Macri’s victory in Argentina’s presidential election has raised expectations of a big shift in policy after 12 years of leftist rule. Living up to those hopes won’t be easy.

Macri’s margin of victory was slender and he faces some formidable obstacles. To push through the economic liberalization he’s promised, the new president will have to be a smart tactician and choose his targets carefully.
Argentina’s reserves are at a nine-year low, and currency controls put in place by the administration of President Cristina Fernandez de Kirchner have created a black market that values the dollar at 15 pesos, versus 9.7 at the official rate. Macri’s campaign promise to let the peso float right away would have triggered a big devaluation and immediate instability. Wisely, he’s reconsidered. His first priority should be a fiscal program that restores the public finances, preparing the way for currency reform.

Macri also pledged to remove export taxes that have transformed Argentina’s productive farmers into world-class hoarders. This too makes sense as a medium-term goal — but in the short run and without offsetting measures, it would worsen the country’s fiscal deficit, which stands at a 30-year high. Temporary export-tax relief, pending a full fiscal reform, is the best way to proceed.

Restoring Argentina’s access to international credit markets is vital. That will take a deal with holdout creditors, reviled as “vulture funds” by Fernandez. Her party passed a law that requires any deal to be approved by the legislature, which is still dominated by Fernandez’s party and other Peronist factions.

To win sufficient backing, Macri will have to contend with a larger historical legacy. During the 1990s, Argentina did a lot to free its economy and enjoyed a period of strong growth. Soon, though, it all went wrong because of fiscal indiscipline and an increasingly overvalued exchange rate. The crash that followed was harrowing — and for many Argentines, discredited the very idea of liberalization.

Macri’s victory shows that voters are tired of heavy-handed populism and are willing to give pro-market reforms another chance. To seize the moment, the new president must be cautious but deliberate. He can’t end export taxes in one fell swoop, but he can abolish export quotas. He’ll have to move gradually on currency reform, but he can cut the tangle of red tape that suppresses trade without delay. Plans to fix the country’s dodgy statistics needn’t wait, nor his proposals to overhaul the economic policy-making machinery. Most urgent, though, are a new fiscal strategy and moves toward a settlement with creditors.

A lot is riding on Macri, and not for his country alone. If he puts Argentina’s limping economy on a path to faster growth, he could help lift spirits across the wider region and turn global investors’ attention back to Latin America’s enormous potential — something else that can’t happen fast enough.

November 24, 2015

BUENOS AIRES, Argentina – Opposition candidate Mauricio Macri won Argentina’s presidential election on Sunday after campaigning on a platform of change following 12 years of rule by Cristina Fernandez de Kirchner and her late husband.

Here is how Macri has explained what that change will involve:

– Macri reiterated Tuesday his plan to lift currency controls on his first full day in office. Asked by the Clarin newspaper if the controls would be removed gradually or on Dec. 11, he replied “December 11.” On Monday, he had said that Argentina would have only one exchange rate “when things get in order.”

– The president-elect says he would re-establish the central bank’s independence and would seek to remove bank President Alejandro Vanoli, whom he claims isn’t qualified for the job. “We’re going to see what the real state is of the public accounts is, what the real situation is of the central bank,” he said Monday. Macri will seek Vanoli’s removal before he assumes office on Dec. 10, Cronista reported Tuesday, citing sources within Macri’s economic team.
– Macri says Argentina should seek to end a conflict with holdout hedge funds from the 2001 default. Still, faced with criticism that he is selling the country out to “vulture” funds, he pledges to seek the best deal possible for Argentina. Perhaps seeking to strengthen his bargaining power, Macri said in an interview on Tuesday that while ending the standoff is important, it’s not his immediate priority.

– Macri’s energy adviser Juan Jose Aranguren said that 2 million families or 16 percent of households will continue to receive virtually free electricity. With the budget deficit soaring to about 7.2 percent of gross domestic product this year, many others may face cuts. Macri said in an interview with La Nacion on Tuesday that while the energy sector needs reforming, he will remove subsidies gradually and maintain them for the poor.

– Macri’s adviser Juan Jose Aranguren says energy independence is not a priority and would import some energy needs while global oil prices are low.

–Macri has said he will remove tariffs on grains including corn, wheat and sunflower seeds and says he will reduce the tax on soy by 5 percent per year. Two of his advisers told Bloomberg he may introduce a 90-day tax amnesty to encourage farmers to sell an estimated $8 billion of hoarded grains.

–Macri says he can reach single-digit inflation within two years. He has said his government won’t lie about official numbers and pledged to reform the statistics agency.

– Macri says he will revise the tax system to reflect inflation so that those who weren’t paying tax in 2007 won’t need to do so now. He said Monday he will raise the income tax threshold

By Charlie Devereux
November 24, 2015

Argentina’s President-elect Mauricio Macri tapped United Nations Secretary-General Ban Ki-Moon’s cabinet chief as his foreign minister in his first major appointment since winning Sunday’s election.

Susana Malcorra, who was born in Rosario in Santa Fe province in 1954, was appointed by Ban Ki-Moon in 2012. Prior to that she worked as Chief Operating Officer and Deputy Executive Director of the World Food Programme and as an executive at IBM and Telecom Argentina.

Macri defeated ruling party candidate Daniel Scioli in a runoff vote on Nov. 22 on a pledge to unwind President Cristina Fernandez de Kirchner’s currency controls and trade protectionism and open up Argentina’s economy. With foreign reserves plunging to a nine-year low, he has emphasized the need to lure foreign investment to replenish the central bank’s coffers.

“She is coming to add her vision of international politics in this new stage of change that we will soon begin,” Macri said in a post on his Facebook account. “Argentina needs to connect with the rest of the world’s countries in order to develop opportunities for growth and prosperity for all Argentines.”

By Carolina Millan
November 24, 2015

* Prompt resolution of `holdout saga’ is key pledge: Moody’s
* Moody’s to watch proposed reform of national statistics agency

Argentina’s credit outlook was raised by Moody’s Investors Service to positive amid optimism that president-elect Mauricio Macri will implement changes to boost the credibility of South America’s second-largest economy.

The decision comes two days after second-round presidential elections, where opposition candidate Macri beat ruling-party’s Daniel Scioli. Moody’s had previously raised the country’s outlook from negative to stable on Nov. 2, a week after a first-round vote.

Argentina has been locked out of international credit markets following a decade-long legal battle with holdouts from its 2001 default. The credit rating could further increase depending on “the nature of future policy announcements and the anticipated pace of implementation,” including a resolution with holdout creditors, according to the New York-based firm. Moody’s rates Argentina Caa1, or seven levels below investment grade.

“Mr. Macri has consistently and increasingly made clear his administration’s policies will represent a major market-friendly break from those observed during the last 12 years,” Moody’s analysts led by Gabriel Torres wrote in a statement. “A prompt resolution of the holdout saga is a key Macri pledge in this regard, and is required for the government to borrow abroad, which it will probably need to do in order to meet upcoming debt service obligations.”

Investors are now watching Macri’s next steps as he changes course from the populist policies of President Cristina Fernandez de Kirchner. Inflation is estimated to be at 24 percent, foreign reserves are at a nine-year low, the currency is overvalued and controls have damped foreign investors’ desire to bring their money to the country.

In addition to a resolution with the holdouts, Torres said in a phone interview that Moody’s will pay close attention to Macri’s proposed reform of the national statistics agency. The reliability of the country’s economic data has been questioned by the International Monetary Fund and analysts.

“One of the greatest challenges of analyzing Argentina is that official data is not reliable,” Torres said from Buenos Aires. “We don’t really know exactly what’s happening with unemployment, growth, inflation, and other measures. Having a reliable statistics agency will be a big signal that the country’s policies are changing.”

Standard & Poor’s analyst Daniela Brandazza wrote in a note Tuesday that the election results have no effect on the company’s selective default credit rating for Argentina’s sovereign debt.

“The foreign currency ratings will remain at ‘SD’ until Argentina cures the default, through payment, exchange, or other settlement,” she wrote. “If and when that happens, we will reassess the sovereign’s general credit standing, most likely raising the foreign currency rating to the ‘CCC’ or low ‘B’ categories.”

By Mac Margolis
November 24, 2015

Fresh off a bruising campaign that toppled a political dynasty and split Argentina in two, incoming president Mauricio Macri was blunt at a Monday news conference. “If I said I’d do it, we’ll do it,” he declared when asked if he planned to make good on his campaign promise to bring Venezuela’s autocratic regime to task for violating human rights and trampling democracy.

Macri vowed that he’d press neighbors and allies to question Venezuela’s claim to be a democracy. “It’s clear that what’s happening in Venezuela has nothing to do with the democratic commitments that we have pledged to keep in Argentina,” he said.

The broader message of the need to safeguard democracy should not be lost on Latin America, a region where authoritarians linger — in Venezuela, Ecuador and Bolivia — but a clubby pact keeps democratically minded leaders from raising a fuss.

Consider Brazil’s president, Dilma Rousseff, who was first elected on a vow to speak up when human rights were under assault. She has yet to raise her voice against Venezuelan President Nicolas Maduro, who like his predecessor, Hugo Chavez, has strengthened his hand by intimidating the critics he hasn’t jailed. Maduro has blocked all outside observers — save a delegation from the Chavez-inspired Union of South American Nations — from monitoring Venezuela’s Dec. 6 legislative vote, including Rousseff’s own envoy.

True, Luis Almagro, secretary general of the Organization of American States, recently sent Maduro’s government an 18-page letter rebuking it for stifling political dissent and rigging the rules against political opponents. But the organization’s Inter-American Democratic Charter has only been invoked twice against truculent countries since its 2001 signing. The one admonishment directed at Venezuela censured not Chavismo’s excesses, but enemies of the regime who plotted a 2002 coup against Chavez that later failed.

Macri’s tough stance is remarkable not only because of Latin America’s diffidence before strongmen, but also because of the Argentine government’s cozy relations with the Bolivarian Republic. Outgoing president, Cristina Fernandez de Kirchner didn’t just look the other way when Chavez, and then Maduro, trampled democratic rights. She struck a strategic alliance with Venezuela.

After a massive debt default shut Argentina out of the international credit market, then-president Chavez swooped in to buy Argentine bonds. When Chavez’s calamitous economic policies led to soaring inflation and emptied supermarket shelves, Fernandez came to the rescue with shipments of beef and other food staples in exchange for Venezuelan oil.

In 2007, an airport security officer in Buenos Aires caught a Florida businessman just off a flight from Venezuela’s capital carrying a suitcase with about $790,000. The money was reportedly an off-the-books donation from Chavez’s government to Fernandez’s reelection campaign.

In 2012, Argentina hosted a meeting of the Mercosur trade bloc where countries voted to suspend Paraguay from the group after its legislature ousted unpopular President Fernando Lugo. Paraguay happened to be the only country opposed to Venezuela joining the bloc, and with it out of the way, Venezuela was quickly welcomed into the fold.

Macri has now vowed to put Venezuela’s ejection on the table at Mercosur’s next meeting. Indeed, the new president — who takes office Dec. 10 — will have his hands full, trying to rescue a sinking economy and govern before a largely hostile legislature. But whatever his election means for domestic policy, it seems clear that Venezuela is about to lose its last best friend. In a region where democracy is still at risk, that’s something to celebrate.

By Richard Lough and Sarah Marsh in Buenos Aires and Daniel Bases in New York
Nov 24, 2015

Argentine President-elect Mauricio Macri plans to push through economic reforms that will buy him time for a “tough negotiation” with U.S. hedge funds suing the South American country over unpaid sovereign debt, he told the daily Clarin newspaper.

The pro-business Macri, who narrowly won Sunday’s presidential election, vows to get Argentina’s stalled economy moving again but needs to settle a decade-long legal battle with the holdout creditors before he can return to global credit markets.

“We’re not worried about this,” Macri said in the interview published on Tuesday. “We want to bring policy solutions that give us time to establish a framework for a tough negotiation so that we can defend the rights of Argentines.”

That will mean finding a quick way to bolster the central bank’s dwindling foreign currency reserves, which have fallen to a nine-year low below $26 billion as outgoing President Cristina Fernandez battles to prop up the peso currency ARS=RASL.

Macri campaigned on a promises of sweeping economic reforms to tackle weak growth, high inflation and a burgeoning fiscal deficit after more than a decade of free-spending leftist populism.
Macri told Clarin his government might issue debt to finance a backlog in payments for imports, estimated by economists at $8 billion.

Argentina’s debt fight with New York hedge funds led by billionaire Paul Singer’s Elliott Management plunged Latin America’s No. 3 economy back into default last year. The holdouts rejected sharp haircuts on their bondholdings after Argentina’s record 2002 default and demand full repayment.

Many Argentines supported leftist Fernandez’s unflinching stance against the creditors and the U.S. judge who ruled in favor of the creditors, and Macri has said he will haggle hard in talks.

Elliott Management did not responded to several requests for comment since Macri’s election win. A second complainant, Aurelius Capital Management, declined to comment on the election results.
The U.S. judge overseeing the litigation last month ruled in favor of complainants in 49 lawsuits seeking the same treatment as Elliott Management’s NML Capital Ltd and Aurelius Capital.

By Hugh Bronstein and Louis Charbonneau
24 November 2015

BUENOS AIRES/UNITED NATIONS (Reuters) – Argentine President-elect Mauricio Macri named U.N. Secretary General Ban Ki-moon’s chief adviser as his future foreign minister, signaling a sharp break from the diplomacy of outgoing leader Cristina Fernandez.

Macri said on Tuesday that Susana Malcorra will be his top foreign representative after his Dec. 10 inauguration.

U.N. diplomats and officials described Malcorra as the second-most powerful person in the United Nations system. Ban relies on her on matters ranging from the war in Syria to diplomatic minefields such as the Israeli-Palestinian crisis.

“She has vast and detailed knowledge of the agenda that moves the world,” Macri said in a statement.

Malcorra will succeed Fernandez’s Foreign Minister Hector Timerman, known on the international stage for his appeals over the Falkland Islands and campaign against bondholders, who he calls “vultures” for suing Argentina over defaulted sovereign debt.

“Argentina’s foreign policy under Fernandez was mostly domestically oriented, benefiting from a ‘rally round the flag’ effect,” said Buenos Aires-based political analyst Ignacio Labaqui “Macri’s first announcements signal a clear change.”

Fernandez, for example, is an ally of Venezuelan President Nicolas Maduro, who Macri says should be suspended from the Mercosur trade bloc over his jailing of political opponents.

A major plank of Fernandez’s foreign policy has been her failed effort to open talks with Great Britain over the sovereignty of the Falkland Islands, which are close to Argentina in the South Atlantic but governed by the British.

Macri, the business-friendly mayor of Buenos Aires who vows to retract Fernandez’s protectionist trade controls, won Sunday’s run-off vote against Fernandez ally Daniel Scioli. His election was hailed by Venezuela’s opposition as a blow against leftists across Latin America.

Malcorra was born in Rosario, which is also hometown to revolutionary Ernesto “Che” Guevara and soccer phenomenon Lionel Messi. She has been Ban’s chief of staff since 2012.

“Ms. Malcorra has been by my side during one of the busiest and most-turbulent periods in the history of the United Nations,” Ban said in a statement. “Throughout, I have treasured her advice, admired her dedication and benefited from her leadership.”

Prior to her appointment as Ban’s chief-of-staff, Malcorra was U.N. under-secretary-general for field support, making her one of a small group of the most important peace keeping officials.

(Additional reporting by Louis Charbonneau at the United Nations; Editing by Alan Crosby)

By Taos Turner
25 November 2015

BUENOS AIRES–President-elect Mauricio Macri has vowed to transform Argentina’s economy by curbing currency controls and restoring investor confidence. But while business leaders here welcome his plans, they say some policies, including a widely expected devaluation, could be painful in the short term.

Topping the list of challenges facing Mr. Macri when he takes office on Dec. 10 is a two-headed monster: 25% inflation and an artificially strong currency that has made Argentine goods uncompetitive abroad. Besides grappling with that, he will be called upon to move quickly to stanch the bleeding of foreign-currency reserves at Argentina’s central bank, which importers say owes them more than $9 billion for goods they have brought into the country.

“We don’t know how many dollars we’re going to get,” said Isela Costantini, president of General Motors Co. in Argentina, Paraguay and Uruguay. “It’s not that I’m telling you that we don’t know what’s going to happen in three months or in one year. We don’t know what’s going to happen next week.”

The dearth of greenbacks affects companies big and small, and has caused problems for imports of everything from automotive parts and surgical gloves to screws and bolts needed to maintain manufacturing equipment. It also hurts farmers.

“I import chemicals from China. I have to pay the Chinese and I can’t pay them because I can’t get the dollars to do it. So this creates a problem for me because if I can’t import, I have to close my factory,” said Gustavo Grobocopatel, chief executive of Grupo Los Grobo, one of Argentina’s biggest agribusiness firms.

Departing President Cristina Kirchner imposed the foreign-exchange controls in 2011, seeking to contain rising demand for dollars. But the move had the opposite effect. Since then the central bank’s official reserves have plummeted to below $26 billion from $52 billion–and many local economists say the bank’s net balance is negative.

“We don’t know how many reserves there are,” Mr. Macri said Monday, adding that Argentina’s economic statistics are so unreliable that his economic team will have to take office and evaluate the situation before announcing policy initiatives.

Mr. Macri has called for the resignation of Central Bank President Alejandro Vanoli, who is under investigation for allegations that he directed the bank to illegally sell dollar derivatives at a low exchange rate, potentially costing the central bank billions of dollars. Mr. Vanoli, who has accused Mr. Macri of planning a devaluation, denies wrongdoing and says the bank was acting to defend the value of the peso.

Former government officials and economists warn that currency controls are difficult to dismantle, and that doing so abruptly could lead Argentines to ditch their pesos en masse, making it even harder for the central bank to oversee a smooth transition to a new exchange-rate system.

Many Argentines have already been buying dollars to protect their savings ahead of a possible devaluation. Others have stocked up on cars, televisions and other goods before prices rise.

“I came to the shopping center today to buy a cellphone because I was told prices would rise,” said Juliana Levy, 38, a ballet dancer. “I don’t think Macri will devalue abruptly. In any case, in Argentina we’re used to devaluations.”

Argentina has a largely fixed official exchange rate, which is now 9.68 pesos to the dollar. But since the government doesn’t have enough dollars to meet demand, people have turned to a thriving black market, where dollars currently sell for around 15 pesos.

Mr. Macri has said those diverging rates could eventually converge if the government let the fixed rate slide, but he has provided few details about when this might happen. And he has said he would be a Nobel Prize winner in economics if he knew exactly what that rate would be.

“There is a significant amount of money outside of Argentina from Argentines who are waiting for a more benign economic environment. So I suspect the pain will be short-lived,” said Jorge Mariscal, chief investment officer for emerging markets at UBS Wealth Management, which manages $1 trillion in assets.

Observers say Mr. Macri will also have to reduce costly gas and electricity subsidies to narrow a rapidly rising budget gap. But that could hit poor people hard if they are not targeted exclusively to middle and upper-income households.

“One of the things Argentina has learned in recent years is that it has to change things in ways that don’t leave people behind. Otherwise, the changes will be unsustainable,” said Mr. Grobocopatel.

Mr. Grobocopatel, known here as the “soybean king” because of his agricultural production, estimates that exporters are hoarding between $6 billion and $10 billion worth of soybeans and other food products. Dollar inflows could rise significantly if Mr. Macri cuts a 35% export tax on soybean exports and fixes the exchange-rate system.

Mr. Macri is also hoping to obtain fresh funding from international banks which are already negotiating a multibillion package of loans to the country, according to a person familiar with the matter.

Alberto Messer contributed to this article.

By Dimitra DeFotis
November 24, 2015

Moody’s Investors Services said the outlook has improved for Argentina’s credit market, though it cautioned investors are still likely to suffer losses on defaulted debt.
The Global X MSCI Argentina exchange-traded fund (ARGT) is down 0.3% today. State-controlled oil producer YPF (YPF) is down 1.3%. Banks Banco Macro (BMA),BVA Banco Frances (BFR and Grupo Financiero Galicia (GGAL) are all lower, as is internet sales platform MercadoLibre (MELI).

Moody’s changed its outlook to postive from stable on Argentina’s Caa1 issuer rating, and on (P)Caa2 foreign-legislation and restructured local-legislation foreign currency obligations, citing Mauricio Macri’s narrow win over Daniel Scioli, the would-be successor to outgoing Peronist President Cristina Fernandez de Kirchner likely means “a major market-friendly break” from the last 12 years:

“The main driver of the outlook change to positive from stable is Moody’s expectation that Argentina’s policy stance will become more credit positive in the aftermath of Sunday’s elections in which Mauricio Macri was elected Argentina’s president for the 2015-19 term … President-elect Macri will take office on 10 December, becoming only the third non-Peronist President since 1983 …

A prompt resolution of the holdout [bond-investor] saga is a key Macri pledge … and is required for the government to borrow abroad, which it will probably need to do in order to meet upcoming debt service obligations. Official reserves have fallen to below $22 billion, raising uncertainty about the government’s ability to meet 2016 debt service obligations and adding pressure for a swift resolution with holdout creditors.

In addition, we expect the new administration to devote efforts to improving the economic and institutional environment over the coming months, through a series of reforms aimed at tackling persistently high levels of inflation and lack of data accountability. At around 25%, Argentina’s inflation rate is one of the highest in the region and among sovereigns rated by Moody’s.”

That said, Moody’s affirmed ratings on defaulted bonds, writing:

“The (P)Caa2 rating on the foreign legislation and restructured local legislation foreign currency obligations reflects the likelihood of higher losses to investors from the continuing default of bonds caught in he ongoing legal proceedings in US courts, thereby differentiating this portion of Argentina’s debt from the rest.”

Nov. 25, 2015

After 12 years under the leftist De Kirchners, Argetina just elected a center-right president—but can he fix the country’s disastrous economy?

After 12 years of rule by Nestor de Kirchner and his wife, Cristina Fernandez, Argentina welcomed a new era on Sunday with the former mayor of Buenos Aires, Mauricio Macri, winning the presidential election.

Macri is the first president, since the return of democracy in 1983, to not belong to one of the two main parties in Argentina, the Radicalists or the Peronists. This could end up being a major challenge for his government. He also inherits deep economic difficulties from outgoing president Cristina Fernandez de Kirchner’s time in office.

Unlike the left-leaning Fernandez de Kirchner, Macri is a center-right politician and former businessman who has promised to lift foreign exchange market regulations, devaluate the peso, and reduce taxes on exports. He also has said he plans to implement several harsh or unpopular measures, such as cuts in public spending and higher prices for public services.

The biggest problem that Argentina’s economy faces right now is the appalling lack of U.S. dollars in the economy and the Central Bank reserves, along with a sky-high inflation rate, which is expected to rise over 30 percent next year.

To solve the first issue, Macri is expected to bring a dramatic shift in the country’s relations to the international financial community. At the top of his to-do list is definitively closing the 2002 default complaints and regaining access to international capital markets. He also will look to revive relationships with the International Monetary Fund (IMF) and other multinational financial entities.

Also on the agenda: cleaning up the state’s statistics institute, which now provides official but unreliable data on prices, employment and social indicators such as poverty and economic growth. Getting accurate data will be crucial in rebuilding foreign confidence in Argentina’s credit-worthiness, especially as Argentina has issued bonds that adjust by inflation or GDP.

The new political and economic era that Macri promises to inaugrate in Argentina is also of major importance to the rest of Latin America. In the past decade, both Kirchner administrations had chosen the anti-U.S. governments of Venezuela and Ecuador and Boliiva as main allies. This will surely change, as Macri has already announce that he plans to overhaul Argetina’s foreign policy. And indeed, after his victory, he repeated statements he had made during the campaign about requesting Venezuela’s suspension from Mercosur for “breaking” the regional bloc’s democratic clause.

And while Merci said he expects to “build good relations with our brothers,” he also warned that Venezuela must respond to the bloc’s democratic clause and cautioned the Nicolás Maduro administration about its ‘persuction’ of opposition leaders there. He also vowed to improve ties among Mercosur members, especially Brazil, and the with the European Union.

“We have to recover the dynamics in the Mercosur and with the European Union to converge towards the Pacific Alliance,” said Macri, who will assume office on December 10. “Integration will have to do with the dynamics of the Mercosur that has been frozen over the past years.”

By Thomaz Favaro
November 25, 2015

BUENOS AIRES – After years of viewing Argentina as a challenging jurisdiction to do business, multinational corporations greeted the election of Mauricio Macri, mayor of Buenos Aires and leader of center-right opposition Let’s Change (Cambiemos) coalition, as a breath of fresh air. Marci won the first ever presidential run-off in Argentina’s history on November 22, ending a twelve year period of increasingly statist government under presidents Cristina Fernández and her late husband and predecessor Néstor Kirchner (2003-2007).

Macri has been mayor of Buenos Aires since 2007 and in that time has been one of Fernández’s staunchest critics. He entered politics in 2005, when he founded the Republican Proposal party (PRO) in 2005 – prior to that he was a civil engineer and successful businessman. Together with the Civic Radical Union (UCR) and a range of smaller parties they created the conservative, market-oriented Cambiemos coalition in this general election.

Once thought to be a long-shot, Macri took 51.4% of the vote, winning outright in the populous provinces of Jujuy, La Rioja, San Luis, La Pampa, Mendoza, Córdoba, Santa Fe and Entre Ríos, as well as in the capital Buenos Aires.

Opponent Daniel Scioli, President Cristina Fernández de Kirchner’s handpicked choice as her successor, only took 48.6% of the vote. So ends the long tenure of kirchnerismo with its expropriations, bondholder lawsuits and defaults.

While Macri has pledged not to roll back many of the welfare programs introduced by the Kirchners, the country’s trade unions as well as the political opposition will monitor the implementation of Macri’s economic plans and could take to the streets if reforms are perceived to run against their interests.

In the election, the fragile state of Argentina’s economy proved to be pivotal. Rising government deficit, legal fights with creditors abroad and efforts to mask persistent high levels of inflation triggered the electorate’s desire for a partial liberalization of economic policies. The government’s confrontational stance against its critics – including the media and the judiciary – has also generated a backlash against Fernández. Macri’s focus on reducing state intervention via protectionism, currency controls, price controls and export taxes hit the nail on the head for many Argentines.

Under Macri, the Economy Ministry will not be headed by a single individual. Instead a Treasury and Finance Minister along with a team of six officials will share the duties of running Argentina’s economy as members of an economy cabinet.

Despite Macri’s mandate, his ability to pass and implement structural reform will be limited by his party’s weak position in Congress. Fernández’s Front for Victory (FPV) remains a clear majority in the Senate (upper houses) and a plurality in the Chamber of Deputies (lower house). Thus many reforms will be negotiated on a case-by-case basis to secure approval.

The reduction of public spending and the state’s role in the economy will produce an initial shock likely to trigger bouts of civil unrest. This threat is further complicated by the fact that Macri will become the third non-Peronist leader since the end of military rule in 1983. Neither of his two predecessors finished their terms, a reminder of the difficulties entrenched Peronist interests may give Macri if he proves unable to negotiate with the opposition.

By Mark Weisbrot

The election of right-wing candidate Mauricio Macri as Argentina’s president on Sunday, which was unexpected just a few months ago, is a setback for Argentina and for South America.

In the past 13 years, Argentina made enormous economic and social progress. Under the Kirchners (first Néstor and then Cristina Fernández de Kirchner), poverty fell by about 70%, and extreme poverty fell by 80%. NOT REALLY (This is for 2003 to mid-2013, the last year for which independent estimates are available; they are also based on independent estimates of inflation.) Unemployment fell from more than 17.2% to 6.9%, according to the International Monetary Fund. .

But Daniel Scioli—the candidate of the Peronist “Front for Victory” party who represented the governing coalition, including President Fernández—did not do a good job defending these achievements. He also didn’t seem to make clear what he would do to fix the country’s current economic problems. In the past four years, growth has been slow (averaging about 1.1% percent), inflation has been high, and a black market for the dollar has developed. This gave Macri (and his “Cambiemos,” or “Let’s Change” coalition) an opening to present himself as the candidate of a better future.

With skilled marketing help from an Ecuadorean public relations firm, Macri defined himself as something far more moderate than he is likely to be, winning over voters who might otherwise be afraid of a return to the pre-Kirchner depression years.

Some of the things Macri has indicated he would do could have a positive impact, if done correctly. He will likely cut a deal with vulture funds that have been holding more than 90% of Argentina’s creditors hostage since New York judge Thomas Griesa ruled in 2014 that the government is not allowed to pay them. If the cost isn’t too high, it could reopen a path for Argentina to return to international borrowing—something Scioli would likely have also done.

A liberalization of the exchange rate that got rid of the black market could be a big step forward. But much depends on how it is done: If it causes inflation to spike and the government does nothing to protect poor and working people, they could lose a lot.

Macri may also take measures to bring down inflation, which is something that needs to be done, but he’s likely to do so by shrinking the economy. He wants to reduce the central government budget deficit, which will grow as a percentage of GDP with austerity. Given his ideology, there is serious risk of a downward spiral of austerity and recession, as the country suffered from 1998 to 2001. If there is inflation from the devaluation, this could make matters worse.

In his campaign statements, Macri made it clear that he is against a government role in promoting industry, so the country’s economic development is likely to suffer as a result. He has proposed tax cuts for upper-income groups. That suggests that budget cuts are in the offing, since Macri has pledged to reduce the government budget deficit. The majority of Argentines are likely to suffer from such an economic transition.

But Macri won’t have a working majority in Congress, so it’s unclear how much he can do. Immediately, he has demonstrated his overwhelming loyalty to the United States government, which had been previously made clear in confidential U.S. embassy cables published by WikiLeaks. One of his very first statements after being elected was to denounce Venezuela and threaten to have the country suspended from the Mercosur trading bloc of South American nations. The issue wasn’t of pressing concern to Argentine voters, so it may very well be related to a U.S.-led international campaign to delegitimize Venezuela’s government and the elections in the run up to its Dec. 6 elections.

In joining the effort against Venezuela, Macri showed a willingness to take steps that no other South American president would do. In the past decade, South American presidents have repeatedly joined together to defend democracy in the region when it was under attack—with Washington on the other side—not only in Venezuela in 2014, 2013, and 2002, but in Bolivia (2008), Honduras (2009), Ecuador (2010), and Paraguay (2012). Macri runs a serious risk of damaging relations in the Western Hemisphere if he continues down this road.

Washington has maintained a policy of “rollback” and “containment” against almost all of the leftist governments that have won elections in the 21st century. So there is quite a bit of excitement among the business and foreign policy elite over the wave of setbacks among Latin America’s left, with Brazilian President Dilma Rousseff facing a recession and political crisis and Venezuela’s ruling Chavista party confronting an economic crisis and possible loss of its first national election in 17 years. Articles are already sprouting up, welcoming the long-awaited demise of the Latin American left.

But reports of this demise, to paraphrase Mark Twain, are somewhat exaggerated. A more likely outcome is like what we saw in Chile, where a lackluster candidate was unable to take advantage of Socialist Party President Michelle Bachelet’s 80% approval rating and lost to a right-wing billionaire in 2010. He lasted four years, and then the country went back to Bachelet.

Argentina and the surrounding region have changed too much over the past 15 years to return to the neoliberal, neocolonial past. The Washington foreign policy establishment may not understand this, but Macri’s handlers did. That’s why they took the trouble to package him as something very different from what he is.

By Andres D’Alessandro and Chris Kraul
24 November 2015

BUENOS AIRES — Sweeping changes lie ahead for Argentina’s economy and foreign policy, including an end to protectionism and unquestioned support for the leftist government in Venezuela, President-elect Mauricio Macri told reporters Monday.

Macri spoke in Buenos Aires at his first news conference after winning Sunday’s runoff election against Daniel Scioli.

The victory marks the end of 12 years of Kirchnerismo, the populist left-leaning politics of outgoing President Cristina Fernandez and her late husband and predecessor, Nestor Kirchner.

Macri said he will implement spending cuts and a slate of free-market policies that will reverse the controls on the economy instituted by Fernandez.

Her populist programs sought to keep a lid on domestic prices by shutting off access to foreign markets for Argentine producers of staples such as beef, corn and wheat.

But critics say such controls distorted the economy, stunted exports and scared away foreign investors.

Addressing a primary voter concern, Macri said he will declare a state of emergency against the “unpardonable” rise in violent crime across Argentina spurred by an increase in drug use and trafficking. Policing techniques that he said brought crime down in the capital, where he has served as mayor since 2007, will be instituted.

“It’s a pressing need that we advance professionalism of the nation’s security forces, just as we accomplished it here in the metropolitan force,” Macri said.

Although Macri promised to rein in government spending that will produce a 7 percent fiscal deficit this year, he has also vowed to retain her expanded social programs that include education subsidies, pensions and senior citizen care.

The 56-year-old former soccer club president beat Scioli, the governor of Buenos Aires state, by 51.4 percent to 48.6 percent, with a relatively high turnout of 82 percent.

Macri will meet with Fernandez on Tuesday to begin the transition before taking office Dec. 10.

The incoming president faces serious challenges implementing his proposals as his coalition of parties called Change controls only a minority of seats in both houses of Congress.

Macri served notice that Argentina’s close relationship with the leftist government of Venezuelan President Nicolas Maduro may be coming to an end. He voiced support for opposition politicians, including former Caracas borough Mayor Leopoldo Lopez, jailed since 2014 on what critics maintain are trumped-up charges.

He said he would also propose that Mercosur, the trade bloc of South American nations, suspend Venezuela for its “undemocratic” actions against opposition politicians.

Argentina’s confusing currency policy is also coming to an end, with Macri promising a “single exchange rate.” The government currently enforces an official exchange rate between the peso and dollar that is below the unofficial black market rate. Macri has called the policy, intended to contain inflation, “an error.”

Many Argentine farmers who opposed Fernandez’s restrictions on their access to foreign markets applauded Macri’s election. They hope it will usher in a period of dialogue with farmers and better access to international markets.

Macri also said he would nullify a memorandum of understanding that Fernandez signed with Iranian officials in which she promised to try to lift an Interpol arrest order for 10 Iranians wanted in connection with the 1994 bombing of a Jewish cultural center in Buenos Aires that killed 85.

A civil engineer by profession, the president-elect hails from the city of Tandil in Buenos Aires state and is the son of one the country’s richest men, Franco Macri, a construction magnate.

By Silvio Canto, Jr.
November 24, 2015

Argentina made an important right turn on Sunday. Mauricio Macri, the opposition candidate, won Sunday’s election. He is not perfect, but he offers a more realistic option than the misguided populist policies of the incumbent party.

At the same time, argentinos longing for change will have to be patient, because Mr. Macri is inheriting a mess of huge proportions, as we read in Bloomberg:

Neither candidate has addressed the elephant in the room: the reforms needed to reduce inflation, fix a fiscal deficit of 7.2 percent of gross domestic product – the largest in over 30 years – and lure back investment dollars which have stayed away due to currency controls, a lack of regulatory predictability and a decade-long dispute with holdouts from the 2001 default.

Macri’s victory is also a huge defeat for “the Kirchner way,” the populist philosophy that guided Argentina for a decade. John Fund has a good analysis about this point:

Argentina’s election on Sunday represented the starkest choice the country has faced since the authoritarian era of Juan and Evita Peron began in the 1940s.

The seven-point victory of center-right candidate Mauricio Macri may herald a real shift towards more sensible economics and less anti-U.S. policies in Latin America.

Defeated Peronist candidate Daniel Scioli was a hand-picked defender of the interventionist economics of his party’s retiring President Christina Fernandez de Kirchner.

In a recent TV interview, Scioli summed up the differences between him and Macri simply: “I defend the role of the state and he defends the role of the market.” He accused Macri, a leading businessman and mayor of Buenos Aires, of representing policies of “savage capitalism” that would devastate the poor.

Argentina’s voters have often fallen for such rhetoric, but not this year.

The record of Kirchner and her Peronist party was a disaster and not easily ignored.

It won’t be easy but Mr. Macri is a better option. He has a better chance of attracting the kind of foreign investment that the country needs to create jobs and help the struggling middle class.

Good luck to Mr. Macri.

Written by Charles Scaliger
November 24, 2015

Weary of years of corruption, repression, and economic malaise under hard-Left president Cristina Fernández, Argentines have elected conservative Mauricio Macri (shown), businessman, two-term former mayor of Buenos Aires, and sometime owner of one of Argentina’s two most popular soccer clubs, Boca Juniors.

The Argentine economy has been reeling from the effects of a default on government debt — Argentina’s second in the last 15 years — and from repressive currency controls imposed by the dictatorially-inclined Fernández. With inflation running over 20 percent and roughly one fifth of the entire government budget allocated to subsidies, Argentina will have to take tough medicine to remedy one of the most intractable economic crises in history.

Macri is only Argentina’s third president since 1983 not to have belonged to the country’s Peronist party. For generations, Argentina has been addicted to welfare-state programs and the massive public debts that they unavoidably entail, making this beautiful and formerly wealthy South American nation a poster child for political instability and chronic inflation. When this author was living in Argentina in the late 1970s, inflation was running at 100 percent or more.

Argentines did not save money; instead, they purchased real estate, foreign currencies, precious metals, and any other assets that retained value.

In the early 1980s, the military junta fell after the failed invasion of the Falkland Islands, and Argentina restored popularly-elected government.

But old habits die hard. Over the ensuing three decades, Argentina has not relinquished her embrace of socialism, causing debts to spiral higher and higher and inflation to continue taking its toll on what was once one of the world’s largest economies.

In December 2001, after an acute depression of almost four years, Argentina finally defaulted on its massive foreign debt. At the time, the default represented about one seventh of all debt owed by the developing world.

In the years since, the combative leftist Argentine presidents Nestor Kirchner and his widow, Cristina Fernández, managed to bluff their way (temporarily) out of the debt crisis by negotiating settlements with some of their creditors and rebuffing the others. For a few years, Argentina appeared to be on the mend.

But Argentina’s socialist policies caused new debts to pile up. Cristina Fernández, instead of proposing spending cuts and downsizing the country’s gargantuan public sector, placed all the blame for the country’s misfortunes on wicked “vulture” capitalists overseas. The xenophobic rhetoric played well — for a while. But eventually, Argentina’s economy worsened to the point that Argentines were again hiding their assets in foreign accounts and carrying out transactions in U.S. dollars. The desperate response of the Fernández government was to impose strict currency controls, which forbade citizens from acquiring dollars or taking other actions to avoid using Argentine pesos — and created a huge black market in U.S. dollars.

After several years of currency controls and deepening economic malaise that included a second default last summer, Argentines appear to be finally fed up. Having defeated Daniel Scioli, Fernandez’s handpicked successor, Macri appears to have broad public support for a new economic direction that may involve lifting of currency controls and a return to the bargaining table with foreign creditors so as to once again open global credit markets.

The true state of Argentina’s economy is probably much worse than advertised, since the Fernández administration is widely believed to have manipulated economic data to conceal inconvenient truths. Cristina Fernández, a hardline doctrinaire socialist (and friend of Hillary Clinton) made herself unpopular both at home and abroad for her abrasive, histrionic style of leadership, blaming all of her and Argentina’s woes on foreigners and greedy financial capitalists.

Mauricio Macri’s honeymoon with the Argentine public and with lawmakers is likely to be short-lived, as Argentines discover the price to be paid for so many years of public profligacy. Whether he can succeed where previous would-be reformers, such as Raúl Alfonsín and Fernando de la Rúa, failed, remains to be seen. It is worth noting that neither Alfonsín nor de la Rúa finished their respective terms in office, with Alfonsín resigning six months early with hyperinflation consuming the economy and de la Rúa fleeing by helicopter from the presidential residence as angry mobs raged and rioted outside. The reforms being contemplated by Macri and his allies are sure to cause a little “short-term pain for long-term gain,” according to Edward Glossop, market analyst with Capital Economics, but will lead to more prosperity after 2017.

The question is whether Argentines, accustomed for generations to short-term socialist panaceas, will have the patience to wait that long.

Nov 24, 2015

BUENOS AIRES, Argentina – Argentine President-elect Mauricio Macri on Monday prepared to confront myriad problems in Latin America’s third largest economy, including soaring prices and high government spending that are a legacy of outgoing President Cristina Fernández.

Macri, fresh off his historic election win late Sunday, began laying out how he would achieve some of the promises that helped him put an end to 12 years of “Kirchnerismo,” a movement aligned with the poor led by Fernández and her late husband and predecessor, Néstor Kirchner.

Macri, the outgoing mayor of Buenos Aires who will assume the presidency Dec. 10, said a key task is just spelling out the true nature of problems such as 30 percent inflation and government spending that many private economists warn is not sustainable.

“Argentina today doesn’t have credible information on the economy,” said Macri, criticizing the Fernández administration for widely discredited statistics on everything from inflation to poverty rates. “We need to know the real state of public accounts.”

Macri said that instead of a single economy minister, he would build a cabinet with six ministers assigned to specific areas of the economy.

Such a structure is in line with Macri’s technocratic approach, which emphasizes decisions based on data analysis and efficiency over style. It also cuts a sharp contrast with Economic Minister Axel Kicillof, a top official in the Fernández administration who wielded enormous power over key policies, such as the decision not to negotiate with a group of creditors in the U.S. that took Argentina to court in New York and won.

Macri reiterated his promise to lift unpopular restrictions on buying U.S. dollars and thus eliminate a booming black market for foreign currencies that creates distortions in the economy. He said the restrictions were an error that impeded growth, but did not provide details on his next steps to address the system.

Lifting restrictions would likely lead to a sharp devaluation of the Argentine peso, which officially trades at 9.5 to the U.S. dollar but on the black market is around 16 pesos.

With foreign reserves around $26 billion, low for such a large economy, Macri’s administration would need a quick infusion of dollars to keep the government afloat and meet the demand of Argentines looking to trade their pesos.

That could come from many different international economic bodies, but ultimately would require some fast reforms to signal that structural changes to the economy are forthcoming.

Macri will also likely encounter fierce resistance in Congress, where he doesn’t have majorities in either chamber. The makeup of Congress, filled with many Fernández loyalists including her son, is particularly important for the long-standing debt spat with a group of creditors in the U.S.

By law, Congress has to approve any measures regarding the country’s debt. The Fernández administration refused to negotiate despite repeated rulings by a U.S. federal court judge against Argentina, a stance that ultimately kept the South American nation from accessing international credit markets.

The close finish in Sunday’s historic runoff — Macri got 51.4 percent of the vote compared to 48.6 percent for Scioli — will embolden ruling party stalwarts to question his moves.

“It was practically a tie,” said Fernández’s Cabinet chief Aníbal Fernández, adding that the ruling party “will be preparing to return to power.”

Macri’s own background and the bruising campaign could feed into Argentina’s political polarization after more than a decade of left-leaning government.

He hails from one of the country’s most prominent families and rose to fame as president of the popular Boca Juniors soccer club.

Ruling party candidate Daniel Scioli frequently attacked Macri, saying he would subject this nation of 41 million people to the market-driven policies of the 1990s, a period of deregulation that many Argentines believe set the stage for the financial meltdown of 2001-2002.

Despite the challenges, Macri’s win signals a clear end to the era of Fernández and her late husband. During their years in office, the power couple gained both popularity and sharp criticism by spending heavily on programs for the poor, raising tariffs to protect local economies and increasing government involvement in all walks of life — much of which Macri wants to roll back.

Macri has also made clear that he’ll break from some of the previous administration’s alliances, such as its close relationship with Venezuela.

On Monday, he reiterated his promise to push to expel Venezuela from the South American trade bloc known as Mercosur because of the jailing of opposition leaders. That would be a huge change for a continent where many countries, including neighbors Chile, Brazil and Bolivia, have left-leaning democratic governments that have maintained close ties with Venezuela.

As if to emphasis his commitment, during his victory celebration Sunday night, Macri took a picture with Lilian Tintori, the wife of Leopoldo López, an opposition leader in Venezuela who has been jailed since early last year.

By Michael Lohmuller
Tuesday, 24 November 2015

Argentina’s newly elected president Mauricio Macri has pledged to implement tough anti-crime measures as soon as he assumes office, but he faces a tough task in reversing the country’s slide into insecurity and the spread of organized crime.

After winning a hotly contested election by 51 percent of the vote against opponent Daniel Scioli’s 49 percent on November 22, Macri announced one of his first acts after taking office on December 10 will be to declare a state of emergency against the “unpardonable” rise of violent crime, reported the Los Angeles Times.

“We have to start from the first day [in office] to take control of the territory,” Macri asserted, sending “a clear message to those [drug traffickers] who are hoping to install themselves and operate in Argentina.”

Macri added that government inaction to halt the advance of drug trafficking in Argentina under the administration of his predecessor, Cristina Fernandez de Kirchner, has been “incomprehensible and inexcusable.”

Once in office, Macri said a plan would be put in motion to “professionalize” provincial police forces. Policing techniques that Macri claims reduced crime in Buenos Aires, where he has been mayor since 2007, will be instituted across the country, according to the Los Angeles Times.

During his campaign, Macri promised to “defeat drug trafficking,” and expressed support for militarizing drug policy, including the shooting down of suspected drug planes.

InSight Crime Analysis

Reining in Argentina’s rising violence levels and growing role in the regional drug trade will be an uphill battle for Macri.

In recent years, organized crime and drug trafficking have been on the increase in Argentina, with foreign drug trafficking organizations establishing a strong presence and becoming increasingly entrenched in the country. These foreign groups use Argentine territory as a transit point for drug shipments destined for West Africa and Europe, and also help fuel a growing domestic drug market.

Of further concern — and potential frustration for Macri’s anti-crime efforts — is that the spread of drug trafficking has demonstrated signs of hollowing out Argentine state institutions via corruption, with recent cases including allegations over the complicity of government officials in cocaine production and federal judges taking bribes from drug traffickers. Such criminal allegations have even reached the upper-echelons of government, with Anibal Fernandez, Argentina’s current Chief of the Cabinet of Ministers, accused of heading a precursor chemical trafficking network.

Compounding the challenges Macri will face in enacting new security policies is that he lacks majority support in Congress, and is inheriting a deeply divided political environment. However, Macri can at least take some comfort in that Argentina’s judiciary appears to be ready to take on a more active role in supporting government attempts to dismantle criminal networks operating in the country.

By Guillermo A. Makin
24 November 2015

The Argentine electoral system exhibited its virtues by showing that an incumbent can be defeated, and a centre-right president has been elected. Will he repeat the right-wing’s major errors of the past?

Mauricio Macri, of the centre right party operating with the acronym PRO, for Republican Promise, is now the president elect of Argentina, after winning the runoff election as candidate for the Cambiemos (Let’s Change) political alliance, a coalition integrating the PRO, the Coalición Cívica ARI and the Unión Cívica Radical . He will be sworn in on 10th December.

In his acceptance speech, Macri said that he had learnt much whilst campaigning. He already signalled his swift learning curve when he unveiled the first statute of Perón in Buenos Aires city, the rich province Macri governed for 8 years, making a virtue of favouring the well off. He puzzled most anti-Peronists stating below Perón’s statue that “I owe a lot to Perón” and that none of the recent social reforms will be rolled back. If this is the case, the defunct and wily old general will have chalked up an unexpected victory, now that even anti-Peronists seem to favour the Peronist policies.

It will be a new form of hegemony. Anti-Peronists, if we go by Macri’s latest statements, appear to have been converted. Whatever is the case, by signalling this volte-face Macri has delivered a hostage to fortune, allowing the 48% that did not vote for him to think he has broken his promises if he backtracks.

On the positive side, the Argentine electoral system, long known to be fraud proof, exhibited its virtues by showing that an incumbent can be defeated and that the results are known speedily. By midnight, 60% of the polling centres had sent in results verified by representatives of all parties. The most momentous news item is that, for the first time since electoral reform introduced universal male suffrage in 1912, the right wing has shown its is able to win an election.

Torcuato Di Tella, in a famous article in Desarrollo Económico, one of the best social sciences journals published in Argentina, argued in 1965, whilst Peronism was banned, that coups resulted from the inability of the establishment to win elections. Likewise, in 1977 Alain Rouquié, a French political scientist, writing about the military, since the 1980’s no longer a relevant political actor, said that coups were “the revenge of the defeated by universal suffrage.” With PRO’s electoral success, narrow though it may be by some 3%, the Argentine political game sheds one of its features: the establishment is no longer unable to win elections. As from the 10 December Argentina is under new management: the country will be run by its proprietors

Governability and the economy

Now PRO and its allies will have to show that they know how to govern. If again they run up the national debt, currently at 45% of GDP, of which only 7% is in foreign currency, Argentines will remember the 2001-2003 debacle. At the time the default and depression resulted from the debt ran up by politicians and economists praised by Washington and financial circles in the nineties. The debt, then 141% of GDP, caused the default. It could be neither serviced nor paid.

Joseph Stiglitz persuasively argues that, if debt is acquired to improve infrastructure and make exports competitive, it is not a bad thing. The trouble is that Argentina, since the 1820’s, has a nasty penchant for relying on the debt to cover ordinary state expenditure, with only occasional attention to infrastructure. It is now for Cambiemos to show it does not follow the same road to failure, pursued by previous right-wing governments.

The Argentine portfolio held abroad amounts to a humongous U$S 440 billion, 81% of GDP. It is high time Argentina came up with financial instruments designed to provide a higher return than the dollar. Brazil has long been doing this. Argentina used this approach after 2003, but later dropped them and only partly reinstated them in the run up to the election. After all, the dollar also fluctuates. Who can tell what will its standing be with eternal deficits, coupled with never ending wars against Islamic enemies, a strategy that, along with US pro-Israeli policy, acts as a recruiting sergeant of outraged Islamic extremists?

Cristina Kirchner’s errors

As to the causes of Macri’s victory, in a country where Peronists are used to winning elections –the only exception was in 1983, when the Radical party under Raúl Alfonsín–, the best summary is that the Kirchner three 4-year periods in office were, on the whole, praiseworthy in terms of economic growth, low unemployment, paying off the debt and lowering of the level of poverty. However, the list of errors makes sorry reading:

On the first place, the most promising political reform, forcing all parties to hold primaries was spoilt by Mrs Kirchner wading in, imposing the election of Daniel Scioli, the lacklustre governor of Buenos Aires, despite too many Peronists doubting his credentials. Secondly, Mrs Kirchner’s constant speechifying tired the middle class. And finally, an array of economic policy mistakes that include exchange controls unworkable with 21 Century IT technology; scandalously high subsidies on electricity and gas for the well off; dropping the policy of twin surpluses in state expenditure (4% of GDP between 2003 and 2007) and trade, some U$S 10 to 15 billion pa. (currently the deficit is 7% of GDP, and exports have plunged due to exchange rate controls); and finally ignoring that the un-integrated nature of Argentine industry (requiring hefty imports) something that was known since the 1970’s. This feature meant that, when domestic economic activity expanded, it resulted in foreign exchange scarcities.

These mistakes caused the electorate to cease to support the kirchenist project. It has made it crystal clear that praiseworthy policies, if not backed by economic hard-headedness, become all too fragile.


The Cristinista version of kirchenism has served those on low incomes patchily. Néstor Kirchner (2002-2007) always made sure resources were not undermined. His economics ensured that GDP growth averaged 8% pa. Mrs Kirchner has also served the independent trading and foreign policy of her husband badly. Nestor Kirchner’s version of kirchenismo was financially viable. Even taking into account counter-cyclical policies to combat the post 2008 international slump, Nestor Kirchner’s policies were steadily and inexplicably dropped. This trend became more marked as from 2007. By 2011, having won a second term with 54% of the vote, 17% points ahead of the runner up, Cristina Kirchner thought she could walk on water and harboured no criticism.

Financial errors

Dealing with the sabotage engineered by the vulture funds that, for a few dimes, bought 7% of the total of the bonds held by foreigners became more complicated by the parochialism of the kirchenist advisors. They fell into the trap and went along with the jurisdiction of US courts, a toxic policy introduced during the 1976-1983 military dictatorship. European courts would have been acceptable, but the Kirchners failed to push for this.

In 2014 the vulture funds got Judge Griesa, a New York circuit judge, to grant them more favourable treatment than the terms secured by the 93% that accepted the two-tranche renegotiation in 2005 and 2010, embargoing Argentine payments to the creditors that had accepted the renegotiation. One of the financial centres offering better terms is the City of London and yet, as long as the South Atlantic dispute remains unresolved, Argentina has sought, except during the vilified nineties, to avoid financial dealings with the UK.

Macri’s likely foreign policy priorities

David Cameron, in the UK Defence review, and contrary to long standing expectation, decided to purchase aircrafts to arm the two new aircraft carriers under construction. Therefore, the window of opportunity to negotiate with the UK will soon be slammed shut again. Argentina wallows in a legalistic and declarative policy on the South Atlantic, ill-designed to profit from the crucial point made by Lord Shackleton that the Falkland Islands were neither economically nor demographically feasible, unless they integrated with Argentina.

Other foreign policy actions of president Macri are likely to include the absolute priority of relations with Brazil. Also Mercosur, which was developed strongly under President Carlos S. Menem (1989-1999) a well known right-wing Peronist. Also distancing Argentina from a misguided and increasingly erratic Venezuela is not a danger is an urgent requirement. And then the development of closer financial and political relations with China and Russia will be halted, with the emphasis on trade allowed to predominate, even though little can be expected from the USA and Europe other a regeneration of debatable conditionality and fresh attempts to submit Argentina to their priorities.

The formidable constellation of problematic issues is further complicated. It appears that the most recalcitrant right-wingers will seek to halt the 700 trials for human rights abuses during the 1976-1983 dictatorship. It is only partly promising that, in his first press conference on 23rd November, Macri gave his word that the courts would be allowed to proceed. However, the human rights movement concludes that a Macri administration will cease to encourage the trials. Macri holds that human rights are a money-making wheeze, dismissing it as “un curro” (too much work).


Lastly, judicial reform initiated by the Kirchners has been halted by the courts protecting their privileges, showing an unconstitutional tendency to actively make the law, muscling in to annul laws passed by Congress and the president.

As Christmas is upon us, the shopping list that Argentines might pen would include an overdue democratization of the governance and trade unions, and the manner in which strikes are called.

Responder Responder a todos Reenviar Más


25 noviembre, 2015

Fuertes repercusiones por un editorial de LA NACION
El texto “No más venganza” suscitó fuertes críticas y rechazos en ámbitos políticos y periodísticos
Trabajadores de la nacion, ayer, en la Redacción
Trabajadores de la nacion, ayer, en la Redacción.Foto:Rodrigo Néspolo28140
El editorial publicado ayer en LA NACION con el título “No más venganza”, de amplia repercusión en la opinión pública y en las redes sociales, suscitó numerosas críticas, tanto en ámbitos políticos como en distintos medios periodísticos. Entre estos últimos está buena parte del propio staff de LA NACION, cuya Asamblea de Trabajadores promovió una declaración y una foto que se publican aparte.
En ejercicio de la libertad de expresión que caracteriza a LA NACION, periodistas de este medio manifestaron, por medio de las redes sociales y en la propia Redacción, su disidencia con el contenido del editorial para dejar en claro su posición. Las notas editoriales de LA NACION representan exclusivamente la posición editorial del diario, por lo que no expresan la posición de sus periodistas ni de los integrantes de otras áreas de la empresa.
Además, LA NACION le hace llegar a la senadora Norma Morandini -mencionada en el editorial- su pedido de disculpas en la medida en que ella sienta que ese texto no reflejó su sensibilidad ni opinión en el tema en cuestión. El editorial cita una nota publicada el 16 de noviembre en LA NACION por la senadora Morandini con el título “Los derechos humanos no se defienden con mentiras”. La legisladora consideró ayer que el editorial es “una burla” y sostuvo: “Trato de superar la idea de los dos bandos y ahora me veo envuelta en una utilización”. Aclaró, además: “Cuando hablo de reconciliar no es con los represores, sino con nosotros mismos, que seamos capaces de argumentar, de debatir, de no ofendernos y descalificarnos, de no usar la mentira para descalificar al otro”.
Entre quienes expresaron sus críticas al texto se encuentran el ex jefe de Gabinete Jorge Capitanich, que calificó el editorial como “abominable”. Del mismo modo, el abogado Eduardo Barcesat consideró que se “está reclamando el cese de una supuesta conducta de venganza, cuando se trata de crímenes de lesa humanidad que, bajo cualquier régimen político de cualquier país que haya suscrito los tratados de derechos humanos, forzosamente debían ser juzgados bajo las mismas pautas que operaban en la Argentina”.
La legisladora Victoria Donda emitió un comunicado en el que dice: “LA NACION publicó un editorial donde asegura que la elección de un nuevo gobierno es momento propicio para terminar con las mentiras sobre los años 70. Los dueños del centenario diario, irresponsablemente, hablan de venganzas, comparan lo sucedido en aquellos años en nuestro país con el terrorismo internacional que mantiene en vilo a Europa por estos días, para terminar justificando de manera muy elemental el terrorismo de Estado”.
Y continúa: “Triste favor le hacen a Mauricio Macri contenidos periodísticos de esta naturaleza de parte de un diario que estos últimos años mostró su preocupación por defender la democracia y la república. Veo con alegría que muchos de sus trabajadores ya dieron testimonio repudiando el contenido de dicho editorial. Desde nuestro espacio político trabajaremos firme e incansablemente para que bajo el nuevo gobierno la Justicia siga actuando en contra de la impunidad de los genocidas y sus cómplices, que arrastraron a la Argentina a la peor dictadura cívico-militar de nuestra historia. Para los que añoran aquellos años y reescriben oxidadas editoriales en los diarios, sólo resta reafirmarles: ¡ni olvido ni perdón!”.
Además, el Foro de Periodismo Argentino (Fopea) emitió un comunicado en el que expresa: “En relación a la nota editorial publicada hoy por el diario LA NACION, «No más venganza», Fopea señala que las posiciones editoriales que asumen las empresas periodísticas son responsabilidad de sus respectivas direcciones. Estas posiciones editoriales no necesariamente representan a los periodistas que integran las redacciones. Si bien el medio tiene su derecho a publicar sus editoriales, sobre el contenido del artículo editorial, Fopea comparte las discrepancias de los periodistas del diario que así se manifestaron por redes sociales e incluso en una asamblea.”
En rigor, el editorial no aboga por suspender los juicios sobre violaciones de los derechos humanos que se están llevando a cabo ni reivindica a genocidas. Por el contrario, condena el terrorismo de Estado, al tiempo que también cuestiona a grupos terroristas que actuaron en los años 70.
El editorial expresa la necesidad de resolver “la situación de padecimiento de condenados, procesados e incluso de sospechosos de la comisión de delitos cometidos durante los años de la represión subversiva y que se hallan en cárceles a pesar de su ancianidad” y de que se ponga fin a “actos de persecución” contra magistrados judiciales en actividad o retiro.
Comunicado de los trabajadores

La Asamblea de Trabajadores de Prensa y Gráficos de LA NACION y sus respectivas comisiones internas difundieron ayer el siguiente comunicado
Los trabajadores de S.A. LA NACION le decimos no al editorial que, con el título “No más venganza”, se publicó este lunes 23 de noviembre en la página 32 del diario.
Quienes trabajamos en el diario LA NACION, en las revistas que edita la empresa, en las versiones online de todos los productos periodísticos, entendemos que la vida democrática implica la convivencia de distintas ideas, proyectos e identidades políticas. Convivimos entre estas paredes trabajadores que expresamos esa diversidad y desde nuestras diferencias construimos un sentido común.
Desde esa diversidad rechazamos la lógica que pretende construir ese editorial, que en nada nos representa, al igualar a las víctimas del terrorismo de Estado y el accionar de la Justicia en busca de reparación en los casos de delitos de lesa humanidad con los castigos a presos comunes y con una “cultura de la venganza”.
Los trabajadores del diario LA NACION les decimos sí a la democracia, a la continuidad de los juicios por delitos de lesa humanidad y le decimos no al olvido.
Por memoria, verdad y justicia.

































32. ARGENTINA’S MACRI FACES ROUGH ROAD (Dow Jones Institutional News)















By Peter Prengaman
November 23, 2015

BUENOS AIRES, Argentina — Argentine President-elect Mauricio Macri on Monday prepared to confront myriad problems in Latin America’s third largest economy, including soaring prices and high government spending that are a legacy of outgoing President Cristina Fernandez.

Macri, fresh off his historic election win late Sunday, began laying out how he would achieve some of the promises that helped him put an end to 12 years of “Kirchnerismo,” a movement aligned with the poor led by Fernandez and her late husband and predecessor, Nestor Kirchner.

Macri, the outgoing mayor of Buenos Aires who will assume the presidency Dec. 10, said a key task is just spelling out the true nature of problems such as 30 percent inflation and government spending that many private economists warn is not sustainable.

“Argentina today doesn’t have credible information on the economy,” said Macri, criticizing the Fernandez administration for widely discredited statistics on everything from inflation to poverty rates. “We need to know the real state of public accounts.”

Macri said that instead of a single economy minister, he would build a cabinet with six ministers assigned to specific areas of the economy.

Such a structure is in line with Macri’s technocratic approach, which emphasizes decisions based on data analysis and efficiency over style. It also cuts a sharp contrast with Economic Minister Axel Kicillof, a top official in the Fernandez administration who wielded enormous power over key policies, such as the decision not to negotiate with a group of creditors in the U.S. that took Argentina to court in New York and won.

Macri reiterated his promise to lift unpopular restrictions on buying U.S. dollars and thus eliminate a booming black market for foreign currencies that creates distortions in the economy. He said the restrictions were an error that impeded growth, but did not provide details on his next steps to address the system.

Lifting restrictions would likely lead to a sharp devaluation of the Argentine peso, which officially trades at 9.5 to the U.S. dollar but on the black market is around 16 pesos.

With foreign reserves around $26 billion, low for such a large economy, Macri’s administration would need a quick infusion of dollars to keep the government afloat and meet the demand of Argentines looking to trade their pesos.

That could come from many different international economic bodies, but ultimately would require some fast reforms to signal that structural changes to the economy are forthcoming.

Macri will also likely encounter fierce resistance in Congress, where he doesn’t have majorities in either chamber. The makeup of Congress, filled with many Fernandez loyalists including her son, is particularly important for the long-standing debt spat with a group of creditors in the U.S.

By law, Congress has to approve any measures regarding the country’s debt. The Fernandez administration refused to negotiate despite repeated rulings by a U.S. federal court judge against Argentina, a stance that ultimately kept the South American nation from accessing international credit markets.

The close finish in Sunday’s historic runoff — Macri got 51.4 percent of the vote compared to 48.6 percent for Scioli — will embolden ruling party stalwarts to question his moves.

“It was practically a tie,” said Fernandez’s Cabinet chief Anibal Fernandez, adding that the ruling party “will be preparing to return to power.”

Macri’s own background and the bruising campaign could feed into Argentina’s political polarization after more than a decade of left-leaning government.

He hails from one of the country’s most prominent families and rose to fame as president of the popular Boca Juniors soccer club.

Ruling party candidate Daniel Scioli frequently attacked Macri, saying he would subject this nation of 41 million people to the market-driven policies of the 1990s, a period of deregulation that many Argentines believe set the stage for the financial meltdown of 2001-2002.

Despite the challenges, Macri’s win signals a clear end to the era of Fernandez and her late husband. During their years in office, the power couple gained both popularity and sharp criticism by spending heavily on programs for the poor, raising tariffs to protect local economies and increasing government involvement in all walks of life — much of which Macri wants to roll back.

Macri has also made clear that he’ll break from some of the previous administration’s alliances, such as its close relationship with Venezuela.

On Monday, he reiterated his promise to push to expel Venezuela from the South American trade bloc known as Mercosur because of the jailing of opposition leaders. That would be a huge change for a continent where many countries, including neighbors Chile, Brazil and Bolivia, have left-leaning democratic governments that have maintained close ties with Venezuela.

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24 November 2015

There’s something hopeful to sing about in the Argentine. The election of Mauricio Macri, 56, the center-right mayor of Buenos Aires, as the new president is an attempt — the latest — to write permanent finis to the Peronista epoch in the nation’s history.

Juan Peron and his shrewish and beautiful wife, Eva (aka Evita), ruled the country for less than a decade, 1946 to 1955, but his presence and then Evita’s, have cast a long shadow across the country since. Senor Macri, in fact, who campaigned for change and a return to market economics, once dedicated a statue to Peron. Endowed with enormous natural resources, the Argentine economy has often danced to the seductive music of the Peronistas.

At the turn of the 19th century Argentina was well on its way to replicating the living standards of Europe and the United States. From 1880 to 1905, expansion resulted in a dramatic growth in gross domestic product, with per capita income rising from 35 percent of the American per capita income to 80 percent. But the Great Depression took a toll, and by 1941 its GDP fell to about half that of the United States.

Peron, a devoted admirer of the European fascist dictatorships of the 1930s, was originally installed as president in a military coup, and appealed to the rapidly growing industrial work force. He pledged respect for workers and built a government-controlled Peronista union organization of 2 million workers. He attacked the legacy of the country’s corrupt oligarchic regimes, with their lip-service dedication to democracy, and courted the Argentine underclass, the “descamisados,” or “shirtless ones.” The glamorous Evita became a national and international icon, the toast of the beautiful people everywhere after she died in 1952.

Peron nationalized railroads, strategic industries and services, improved wages and working conditions, paid off the external debt and achieved nearly full employment. But the economy went into decline in 1950 because of the unsustainable rapid growth of Evita’s elaborate social welfare benefits, and with her death and a falling out with the military, Peron’s day in power ended abruptly. But for seven decades the Peron legacy dominated Argentine politics and even became something of a model for the rest of the continent.

Mr. Macri’s victory on Sunday now sends a signal throughout Latin America. Buenos Aires has long been an important cultural influence in the Spanish-speaking world, and his triumph is the most significant defeat of a candidate of the left in South America for more than a decade. He faces formidable obstacles, not least the memory of the example of President Carlos Menem, who in the 1990s attempted to correct the Peronista drift, privatizing state-owned utilities and cutting the size of the government. His free market program collapsed in 2002.

Mr. Macri proposes a formidable agenda. He wants to lift at once restrictions on imports and on U.S. dollars. He must tame inflation, surging at 30 percent annually, with devaluation of the currency. The president of the Central Bank, AlejandroVanoli, a Peronista, offers no help. He insists he will finish his term of office in 2019. Mr. Macri promised the powerful farm lobby that he would eliminate corn and wheat export taxes and a quota system, and he will have to redeem that promise amid a sagging world commodities market.

He enjoys popularity as a former executive of the Boca Juniors, a soccer term. Indeed, he once aspired to soccer stardom himself, and he was described during the campaign as the spoiled son of a rich Italian immigrant father. He is likely to face a hostile Congress. But if he succeeds it could be a turning point not only for Argentina, but for the continent.

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By Joshua Partlow Irene Caselli
24 November 2015

BUENOS AIRES – The stereotypical Latin American leader of the past generation has been a firebrand populist who could deliver hours-long impromptu speeches on television, painted the United States as the source of all evil and had probably fought as a guerrilla in some steamy jungle.

That type of leader – think Cuba’s Fidel Castro, Venezuela’s Hugo Chà¡vez or Argentina’s Cristina Fernà¡ndez de Kirchner (minus the guerrilla experience) – is the opposite of Mauricio Macri, the understated engineer and Buenos Aires mayor who was elected president of Argentina on Sunday.

Macri’s win comes as further evidence that the often-cited “pink tide” of the Latin American left has started to ebb. Across the region, countries such as Bolivia, Ecuador and Venezuela that had joined forces to oppose the United States and “neoliberal” capitalism have seen their influence diminish as they battle economic challenges. The severe slump driven by low oil and commodity prices in the region’s leader and biggest economy, Brazil, has pushed ratings for President Dilma Rousseff, a former guerrilla, into the single digits amid calls for her impeachment.

Nicaragua’s Daniel Ortega, a socialist ex-Sandinista guerrilla leader, is pro-business and beloved by Washington. Cuba is forging a rapprochement with the United States. A comedian with no political experience was just elected in Guatemala. Former Uruguayan president José Mujica, an ex-guerrilla famed for his ascetic lifestyle and liberal policies such as legalizing marijuana, was replaced by Tabaré Và¡zquez, a doctor. While support remains strong across the region for generous spending on social programs, the tone of the discourse has softened.

“You’re seeing this wave or tide or whatever you want to call it has run its course. They don’t have the economic sustenance to continue,” said Michael Shifter, president of the Inter-American Dialogue, a Washington think tank. “This kind of fiery leftist rhetoric was a function of the economic situation, and that has changed dramatically for many of these countries.”

In Macri’s first step as president-elect, a low-key Monday morning news conference at a table flanked by his aides, he said he would seek to suspend Venezuela from the South American trade bloc Mercosur, citing human rights violations and limits on free speech. That represents a sharp break with Fernà¡ndez, the outgoing president, who has had close relations with Venezuela.

“To the brothers of Latin America and the whole world, we want to have a good relationship with all the countries,” Macri said in his victory speech. “The Argentine people have much to offer to the world.”

Macri comes across as a calm, fact-favoring engineer more interested in quietly tinkering with economic levers than addressing the masses in soaring palace-balcony speeches. His aides describe him as a shy, somewhat socially awkward man who took a while to adapt to the crowds on the campaign trail. Macri was no student militant in the Latin American mode; he has said he doesn’t even regularly read newspapers.

His appeal stems in part from his lack of a strong ideology – a sharp contrast to Fernà¡ndez’s fierce nationalism. Macri, a scion of one of the country’s richest families, headed the soccer team Boca Juniors and is serving his second term as mayor of Buenos Aires, where he is known for sprucing up the capital, bringing in art and music performances, and adding bus lanes.

“He’s the anti-Cristina,” said Diego Guelar, a foreign policy adviser to Macri. “He’s a doer. That would be exactly his ideology.”

Roberto Digon, who served alongside Macri at Boca Juniors before the two fell out over sales of players, said that Macri initially had trouble giving a speech or getting his ideas across but that he improved over time, in part because he wanted “to show his father that he was an important and capable person.”

“He must have undertaken some public speaking and presentation courses, because he was very weak politically and ideologically,” Digon said. “Macri was brilliant when it came to business. He was very capable. He learned about politics little by little.”

Guelar, a former Argentine ambassador to the United States and a potential candidate for foreign minister, said Macri’s first foreign policy priority would be building closer ties with Brazil, a neighbor and trading partner that Macri on Monday called “our most important partner of the future.” The incoming president’s team also wants to pursue a free-trade deal with the European Union. Another goal is to clarify some aspects of the relationship with China, including making public the terms of a Chinese-funded space observatory – to ensure that it won’t have any military use – and reviewing a plan for a Chinese-built nuclear reactor.

As far as the United States is concerned, Macri seeks to settle a creditor dispute over debts from the financial crisis and cultivate a warmer overall relationship including encouraging foreign investment. During Fernà¡ndez’s tenure, there were some bizarre episodes, such as in 2011 when Foreign Minister Héctor Timerman used a pair of nail clippers to open a case in the airport allegedly containing secret U.S. military codes.

Guelar said there would likely be the “normal conflicts of a normal agenda that you share with a partner and a friend,” such as trade disputes over whether Argentine oranges or meat would be allowed into the United States.

“What’s going to change is the American Embassy is not going to be the embassy of an enemy,” he said.

Macri’s chief strategist and campaign manager, Marcos Peña, added in an interview that “there are no reasons for us to have bad relations with the United States.”

“There can be a mature relationship of friendship, with a joint agenda to exchange and grow together,” he said. “The world is an opportunity, not a threat.”

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24 November 2015

History is replete with great nations that decline into tragic despotism and poverty, but less common is the story of national revival and renewed prosperity. The latter is the challenge for Argentina’s new President-elect Mauricio Macri, who swept away 12 years of Peronist rule on Sunday in some rare good news for global freedom.

The Buenos Aires Mayor has a heroic task ahead, with an economy in recession and 25% annual inflation. Yet Argentines deserve credit for showing more fight than Brazilians and Venezuelans have in shaking off left-wing populism. Restoring Argentina’s reputation for following the law will be crucial to reviving domestic confidence and attracting foreign capital, so allow us as friendly outsiders to offer some suggestions.

Start with a credible probe into the suspicious death of Alberto Nisman, the prosecutor who was investigating the 1994 bombing of a Buenos Aires Jewish community center that killed 85 people. He indicted seven Iranians for the crime and alleged that President Cristina Kirchner’s government was involved in a cover-up of Iran’s role.

In January, the day before he was to present his findings to the Argentine congress, Nisman was found dead in his apartment with a bullet through his head. Mrs. Kirchner’s government has sullied the probe into his death by trashing Nisman’s reputation and initially calling it a suicide. Maybe it was, but Argentines deserve a finding by someone untainted by the Kirchner clique.

Argentina also needs to restore its credibility in global capital markets, and it can start by settling with creditors who hold claims totaling more than $15 billion from the country’s 2001 default. This fight has turned into an international legal brawl, with Mrs. Kirchner denouncing “vultures” for the sin of wanting their contracts honored.

It’s in the interest now of Mr. Macri and the U.S. bondholders at Elliott Management, among others, to find a financial compromise. This could mean the issuance of new bonds, but the key point is that Argentina needs to show it wants to clean up its debt sheet and honor international lending mores. Then it will be able to return to global capital markets for the investment it needs to grow.

Investors also need impartial Argentine courts to protect their property rights, and Mr. Macri can stop the Kirchner habit of politicizing the judiciary. When Mrs. Kirchner wanted to nationalize the Spanish oil company Repsol she alleged that it was not keeping its investment obligations. The company denied the charge, but it had no hope of winning in Argentine courts. Mr. Macri wants investors to return to develop the country’s huge oil reserves, and one place to start would be revisiting the Repsol robbery.

Much of Latin America took a bad left detour 15 or so years ago, and it’s too early to know if Mr. Macri’s victory signals a larger movement back to free markets. But he can make such a shift more likely by showing that a return to the rule of law is essential to restoring broad prosperity.

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By Taos Turner
Nov 23, 2015

Victory by the conservative mayor of Buenos Aires seen as turn away from 12 years of leftist rule.

BUENOS AIRES—The conservative mayor of this capital, Mauricio Macri, asked Argentines to give him time to address the country’s economic problems after winning Argentina’s presidential election.

Mr. Macri, the candidate of the Let’s Change opposition coalition, narrowly beat his opponent, Gov. Daniel Scioli of the ruling Victory Front party, getting 51.4% of the vote to Mr. Scioli’s 48.6% after more than 99% of the votes had been counted.

“I ask for you to have some patience,” Mr. Macri said at a press conference early Monday. “Do not leave me alone.”

He said Argentina’s official economic statistics are unreliable and that his team will need to take office and obtain a better assessment of the country’s macroeconomic situation before it can implement key policy decisions.

“We have to get the country up and running again and fix the things that need fixed,” Mr. Macri said. “The currency controls we have were a mistake, we don’t have access to trustworthy statistics and the central bank is not independent. These are things we’re going to fix and in the coming days we will move ahead on them.”

Mr. Macri said that, unlike previous presidents here, he would not appoint an all-powerful economy minister and that instead he would name an economic cabinet comprising six ministers who would handle issues ranging from finance to infrastructure. He said he would be putting the team together over the next two weeks.

Mr. Macri’s win was seen as a rejection of departing leader Cristina Kirchner’s interventionist economic policies and a turn to the right after 12 years of leftist rule.

His winning platform resonated with an electorate weary of a stagnant economy and high inflation. Mr. Macri, 56 years old, promised to revive the economy after a drop in commodities prices halted growth and rising government spending fueled inflation. The country faces recession next year, according to the International Monetary Fund.

“He will open up the economy and be very welcoming to foreign investors and domestic investors,” said Susan Segal, president of the New York-based Council of the Americas, a policy group that closely follows business issues here. She offered praise for Mr. Macri’s economic advisers. “They understand the world and they understand why it is important for Argentina to be integrated into the global economy.”

Mr. Scioli came out on top in the first round of voting on Oct. 25, but didn’t get enough support to win outright. Just before the first-round vote, pollsters had predicted he could win the final runoff as well. But Mr. Macri received far more support than expected in the first round, triggering a runoff. He then took the momentum from Mr. Scioli.

Mr. Macri has signaled that he aims to improve frayed ties with the U.S.

“We want to have good relations with all countries,” he said. “We expect to build an international agenda based in cooperation.”

He said he would seek to have Venezuela expelled from the Mercosur trading block because of political prisoners jailed in that country, a position that would make him the first Latin American leader to call for tough action against Venezuelan President Nicolás Maduro. Other countries in the region—most of them led by leftist governments—have remained silent about alleged rights abuses of Mr. Maduro’s opponents.

Mr. Scioli, 58, governor of Buenos Aires province and Mrs. Kirchner’s choice to succeed her, had said he would maintain the various social programs—from pensions for poor laborers to support for worker cooperatives—created by the Kirchner administration.

But pollsters said Argentines were disillusioned by rising crime and weary of what they see as a combative government that had polarized this country of 40 million.

Carlos Salcedo, 54, who described himself as a common laborer, said corruption—frequently covered in newspapers—as well as high food prices and crime were among his main concerns.

“They just think of themselves,” he said of the ruling Victory Front coalition. “That is why I voted for change.”

Mr. Macri, a wealthy businessman who for 12 years headed the famed Boca Juniors soccer club here, will have to confront a host of economic problems.

Central-bank reserves are at a nine-year low. Argentina can’t access international credit and inflation is the second highest in Latin America. Mrs. Kirchner recently added loyal ruling-party members to a government payroll that economists say is bloated. She has also encouraged the sale of U.S. dollar derivatives by the central bank to contain rising demand for greenbacks, a move Mr. Macri’s advisers say could cost the country billions.

While voting, Mrs. Kirchner defended the administration’s accomplishments since her late husband and predecessor Néstor took over the presidency in 2003.

“There has never been a period in government with such tangible economic progress,” Mrs. Kirchner told reporters at a polling station in her Patagonian hometown of Rio Gallegos. “It would be painful to see these achievements being eroded.”

Mrs. Kirchner’s allies in her Peronist movement have warned that the coming of Mr. Macri would mean deprivation, unemployment and economic disaster, assertions he denied.

They also reminded voters that under non-Peronists—in 1989 and 2001—Argentina was rocked by economic calamity and social turmoil.

Buenos Aires schoolteacher Laura Lemes recalled budget cuts by Mr. Macri in his time as mayor.

“Teachers in the capital went through a lot of suffering,” she said. “We had to stage a very tough fight to secure wage increases. He thinks we are ranch hands.”

Mr. Macri, who has been sharply critical of Mrs. Kirchner’s handling of the economy, has promised extensive changes. He has said he would negotiate with foreign bondholders who have sued Argentina for failing to repay billions of dollars—a plan Mrs. Kirchner has publicly criticized. He also vowed to scrap currency controls that have generated a thriving black market for dollars.

Mr. Macri’s victory would have been a surprise just a month ago. Some pollsters then had predicted Mr. Scioli could win the first-round vote on his way to succeeding Mrs. Kirchner, who steps down Dec. 10.

He still could have won in this round. But in a debate between the two men in mid-November, Mr. Scioli failed to score the victory analysts said he needed to kick-start a faltering campaign.

Polls show that the high disapproval rate that had long dogged Mr. Macri, who was derided by some voters for his patrician background, dissipated in recent weeks.

Mr. Macri also avoided discussing specific policy adjustments, which scare Argentines concerned that broad overhauls of the economy will hurt them. Instead, he had focused on how he would bring efficient government and economic growth.

“We can live in an Argentina without poverty, where we can all aspire to have our own homes with running water and a sewage system,” Mr. Macri said on Thursday.

The messages appealed to people like Leon Tobal, 52.

“I got tired of this government, especially the lack of security,” he said, speaking of Mrs. Kirchner’s government. He said the shop he runs has been robbed three times in a month and that he had seen increased poverty, leading him to vote for Mr. Macri.

Another voter, Nestor Shenkis, 33, said he chose Mr. Macri, too, because of the inflation.

“They gave me a raise in January, but the costs nearly doubled,” he said. “Yesterday I went to buy bread and it rose 20%” over the previous week.

More than 60% of voters believed that Mr. Macri had “moved his platform to the center,” according to a recent poll by Buenos Aires-based Consultora Wonder. That helped attract voters who are traditionally close to Argentina’s Peronist movement.

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By Jonathan Gilbert, Correspondent
November 23, 2015

Opposition candidate Mauricio Macri won Sunday’s presidential election. But his fight’s not over as the outgoing president’s party retains a strong grip on the levers of power.

Buenos Aires — Mauricio Macri has upended Argentina’s political establishment by defeating the ruling leftist party, in power for more than 12 years, in Sunday’s election.

Mr. Macri, the scion of an influential family and a former president of a popular soccer clubs, tapped into a groundswell of support among voters fatigued by the abrasive leadership of President Cristina Fernández de Kirchner.

“A totally new form of politics has emerged,” says Carlos Germano, an independent political analyst. He said Macri would bring a style of leadership based on building consensus.

In a news conference on Monday, Macri hinted at this new political culture. “The plan is to govern for everyone,” he said, adding that he would seek cross-party dialogue. “Progress,” he said in his victory speech hours earlier, “will not be the result of one enlightened person,” alluding to President Kirchner and other past leaders seen as centralizing power in the presidency and diminishing the role of other branches of the government

That said, Argentina’s Peronist party movement, which includes Kirchner’s party, has dominated politics here for seven decades. And outsiders like Macri have typically struggled to govern: Twice since Argentina’s return to democracy in 1983, non-Peronist leaders have exited prematurely. Macri, who takes office on Dec. 10, will have to broker deals with a Peronist-dominated Congress, Peronist governors, and influential trade unions also aligned with the movement.

“He’s the fresh breath of air that Argentina needs,” says Macarena Martínez, a dentist who was celebrating the election result late Sunday night. “But it’s going to be tough. I hope the Peronists channel their energy to build a better country.”

Shock-therapy politics

Macri won with 51.4 percent of the vote in Sunday’s runoff election, beating Daniel Scioli, who ran as Kirchner’s successor. Macri has promised market-oriented reforms to revive the economy. These could include a currency devaluation, lower energy subsides, and easing protectionist policies like currency controls. He is also likely to distance Argentina from Latin America’s hard-left governments like that of Venezuela.

But his small margin of victory means he must be cautious about the speed and depth of any economic reforms that cause short-term pain. His mandate for change is less than he would have hoped for, analysts say.
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ARGENTINE UPDATE – Nov 20 & 21, 2015

21 noviembre, 2015














By Andrés Oppenheimer
November 18, 2015

If the polls are right and opposition leader Mauricio Macri wins Sunday’s elections in Argentina, we may see a huge change in Latin America’s political map: Macri has vowed to take distance from Venezuela’s leftist-populist regime, and seek closer ties with the pro-market Pacific Alliance bloc made up of Mexico, Colombia, Peru and Chile.

When I asked Macri in an interview earlier this year what would change in Argentina’s foreign policy if he becomes president, he started out by responding, “Everything!” Judging from his statements in recent days, that may turn out to be true. Here are some of Macri’s foreign policy plans:

On Venezuela, Macri has vowed to end outgoing President Cristina Fernández de Kirchner’s close political alliance with Venezuela. During the Nov. 15 presidential debate with government-backed candidate Daniel Scioli, Macri said that he would call for Venezuela’s “suspension” from Mercosur — the southern cone’s economic bloc made up of Brazil, Argentina, Uruguay, Paraguay and Venezuela — for not complying with the group’s democratic clause requiring all member countries to abide by democratic principles.

Macri did not elaborate, but one of his closest foreign policy advisers, Diego Guelar, told me that Macri may propose Venezuela’s suspension from Mercosur shortly after his Dec. 10 inauguration, during a Mercosur summit scheduled for Paraguay on Dec. 21.

According to Guelar, a Macri government would demand Venezuela’s suspension at that meeting if there is fraud in Venezuela’s Dec. 6 legislative elections, and if Venezuela’s political prisoners, including opposition leader Leopoldo Lopez, are not freed by then. “If those two things are not corrected by then, in our judgment, Venezuela will not be complying with Mercosur’s democratic clause,” Guelar said.

On South America’s economic and political blocs, Macri has said that his first priority will be forging a “strategic alliance” with Brazil to jointly start unity talks with the Mexico-Colombia-Peru-Chile Pacific Alliance bloc. Until now, Argentina has been opposed to that, in line with Venezuela’s claim that the Pacific Alliance is too friendly with “U.S. imperialism.”

Sources close to Macri say that, while Brazil until recently also opposed teaming up with the Pacific Alliance, there has been a major change in Brazil over the past six months. With Brazil mired in one of its worst economic crises in recent times, Brazil desperately needs investments, and new free trade deals that would reenergize its economy, they say.

On Iran, Macri has said that he would annul Argentina’s recent agreement with Iran to jointly investigate the 1994 attack on the AMIA Jewish community center in Buenos Aires. Critics say that deal amounted to a cover-up of Iran’s responsibility in the attack. Argentine prosecutor Alberto Nisman was found dead in his apartment a day before he was to testify in Congress about his charges that the Fernández government had conspired with Iran to kill the AMIA investigation.

On ties with the United States, Macri has said that he would revamp bilateral relations, which were severely damaged during the Fernández presidency. The first area in which he would forge closer ties with Washington would be in anti-drug efforts, Macri said.

A Macri government would also significantly tone down Argentina’s current anti-U.S. rhetoric. “The current government has chosen the systematic confrontation with almost the entire world, which has left us very isolated,” Macri told me during the interview in March. “We must reach out to the world, create new long-term strategic agreements, and recover markets for our products.”

My opinion: Politicians tend to say whatever is needed to differentiate themselves from their rivals, but Macri may be sincere in his foreign policy plans for the simple reason that Argentina is broke, and the country badly needs to restore its relations with the world’s biggest markets — the United States and Europe — after years of estrangement.

Argentina’s economy has not grown for the past three years, international prices for its raw materials have fallen and are not likely to come back anytime soon, and its current closest friends — Venezuela, Russia and China — are either bankrupt or suffering from economic slowdowns. Argentina’s foreign policy will change no matter who wins on Sunday, but it will change much more under a President Macri.

November 18, 2015

BUENOS AIRES, Argentina — Several Argentine human rights groups, including the Grandmothers of the Plaza de Mayo, are endorsing ruling party candidate Daniel Scioli in Sunday’s presidential runoff election.

The groups expressed their support at a Wednesday news conference. They say the ruling party has focused on what is best for all Argentines with policies of “inclusion” that they say would be threatened by an opposition victory.

Outgoing President Cristina Fernandez and late husband and predecessor, Nestor Kirchner, made uncovering human rights abuses and trying perpetrators from the military dictatorship central in their administrations. Rights groups estimate 30,000 people were killed or disappeared during the 1976-83 dirty war.

Opposition candidate Mauricio Macri has called the rights polices under Fernandez “vindictive” and says the government must focus on human rights abuses of the 21st century.

By Andre F. Radzischewski
November 18, 2015

BUENOS AIRES — Just days before Argentina’s presidential runoff vote, center-right Buenos Aires Mayor Mauricio Macri has emerged as the unlikely front-runner as voters appear poised to turn the page on the 12-year rule of populist incumbent Cristina Fernandez and her late husband and predecessor, Nestor Kirchner.

A Macri win in the continent’s second most populous country would mark the first major electoral defeat for the leftist governments that have dominated South America for the better part of a decade. A member of a prominent family of entrepreneurs, the opposition leader would likely embark on a more market-friendly course and aim to improve Argentina’s strained ties with Washington.

Anticipating a U-turn in foreign policy, Mr. Macri said in Sunday’s final debate with Daniel Scioli, Ms. Fernandez’s handpicked heir, that he would ask the Mercosur trade bloc to suspend Venezuela over the “abuses” of leftist President Nicolas Maduro, whom he accused of holding “political prisoners” and fostering “military participation” in government.

Ms. Fernandez — a close personal friend and admirer of Mr. Maduro’s predecessor, Hugo Chavez — had long counted the Venezuelan leader as one of her key allies and routinely accused the U.S. of interfering in the internal affairs of their countries. She is barred from running again after eight years in the Casa Rosada, Argentina’s executive mansion.

Critics of the outgoing Argentine president have warned that her policies might lead to a Venezuelan-style economic meltdown, and Mr. Macri has argued that tight currency controls have failed to quell capital flight in both countries.

His arguments appear to be finding an audience.

In an opinion poll published Nov. 13 by the Clarin daily, Mr. Macri holds an 8-point lead over Mr. Scioli, the governor of the Buenos Aires region. With opposition parties largely coalescing around the challenger, the former president of the Boca Juniors soccer club has held similar advantages in nine out of 10 surveys conducted since he came in a close second Oct. 25 in the first round of the election.

What had been a lackluster campaign has turned into a fiery duel between the candidates, with Mr. Macri assailing his rival’s deep ties to the increasingly unpopular president and Mr. Scioli warning that a Macri win would invariably end in a doomsday scenario of brutal spending cuts, fiscal austerity and concessions to Argentina’s foreign creditors.

Most observers now believe that the election is Mr. Macri’s to lose, in part because Mr. Scioli faces a dilemma in trying to win over voters critical of Ms. Fernandez without offending his own base, said Joaquin Morales Sola of the La Nacion daily.

In interviews and TV spots, the candidate of the Peronist Front for Victory coalition attempted that balancing act, promising to be “more Scioli than ever” and acknowledging voters’ “anger” over the recent record of the government.

Still, “it is going to be very difficult for Scioli,” Mr. Morales Sola said.

“Sixty percent of society has asked for a change,” he said. “That is what has provoked such a change in the scenario.”

Jab-filled debate

Sunday’s jab-filled debate, meanwhile, may only have solidified the situation as both candidates largely stuck to their guns. Predictably, Mr. Macri never tired of comparing his rival to Ms. Fernandez during the clash, attacking what he said was her abrasive and authoritarian governing style.

“What have you turned into, Daniel? What have they turned you into? ” the mayor asked at one point. “… We need a president who talks less and listens more, who does press conferences and not televised statements, who understands the value of the team and not [a] personality cult.”

A fidgeting Mr. Scioli, meanwhile, accused his challenger of trying to camouflage his supposed commitment to obey a U.S. judge’s order to pay off foreign bondholders of Argentina’s debt instead of investing the money at home, a potent issue in Argentina.

“Either we again kneel before Judge Griesa or we have an Argentine development bank,” he said. “It is either the International Monetary Fund that once again dominates us, or it is Argentine pride and Argentine self-esteem.”

Mr. Scioli’s tone was in line with what critics have dubbed his “scare campaign” linking Mr. Macri’s policy proposals to those that caused the 2001 economic meltdown and the ensuing civil unrest and devaluation — still fresh in the memories of many Argentines.

“Do you imagine yourself without a roof? Do you imagine the hunger? Do you image [what happens] if Macri wins?” asked a TV spot for the 58-year-old former powerboat racer set to footage of riots, looting and homeless vagrants scavenging through garbage.

But Mr. Scioli’s tactics so far have not paid off in the polls, in part, perhaps, because Mr. Macri largely refused to take the bait and instead chose to mock the apocalyptic warnings.

“My daughter, Antonia, came to me to ask if it was true that Kinder Eggs would no longer have surprises from Dec. 10 if I won,” he said, referring to a popular chocolate candy that contains a gift. ” We have to move away from the idea that fear is what governs us.”

Analysts say Mr. Macri has cannily tapped into voter fatigue with the country’s grinding economic and currency crises and struck a chord with those put off by what they view as Ms. Fernandez’s governing style and lack of respect for the country’s institutions, said Facundo Cruz, a political scientist at the University of Buenos Aires.

“The citizenry asks that it is time to change the form of doing politics,” Mr. Cruz said, noting that the still-unexplained January death of federal prosecutor Alberto Nisman and the president’s meddling in the judiciary left many Argentines uncomfortable.

Leaders from Mr. Marci’s PRO party, founded just 10 years ago, will soon govern both the Argentine capital and the surrounding Buenos Aires province — home to about half of the country’s population. So if the 56-year-old capitalizes on his lead and captures the presidency Sunday, it would mark a historic political shift for the country, Mr. Morales Sola said.

“It would demonstrate that one can win without Peronism,” he said.

Although he views Mr. Macri as the front-runner, Mr. Cruz cautioned that voters could deliver a Truman-versus-Dewey moment despite the polls.

“[Mr. Scioli’s allies] still have a very strong territorial base,” he said. “Argentine politics is always good for a surprise.”

By Benedict Mander in Buenos Aires
November 18, 2015

A police raid on Argentina’s central bank, which has been accused of jeopardising dwindling foreign exchange reserves with controversial derivatives trading, was not politically motivated, according to the prosecutor who ordered the move.

As Argentina heads towards a run-off presidential vote on Sunday, officials accused the opposition of orchestrating the raid in order to trigger a devaluation before the elections to avoid having to implement such a politically unpopular move itself if it wins.

With polls showing the opposition centre-right candidate Mauricio Macri leading by some eight points, the government-backed candidate Daniel Scioli has intensified accusations in recent days that the market-friendly mayor of Buenos Aires intends to devalue Argentina’s overvalued official exchange rate if he wins the elections.

The raid on the central bank’s trading desk on Tuesday followed a complaint filed by opposition lawmakers earlier this month that the price at which the central bank sold dollar futures, for fewer pesos than they fetch on the international futures market, constituted a serious financial loss for the state.

Analysts estimate that the central bank has open positions on futures contracts worth around $16.6bn, mostly expiring between January and April. The majority have been sold for around 10-11 pesos to the dollar, compared to the official exchange rate of 9.6 pesos, while dollars are currently worth around 15 pesos on unofficial markets. Many analysts speculate that a sharp devaluation by Mr Macri could quickly bring the dollar value close to the unofficial rate.

President Cristina Fernández waded in on Tuesday night suggesting that the search, carried out during the central bank’s operating hours, may have been aimed at triggering a run on the currency since the bank’s officials were not able to carry out their duties in the currency market.

It would be the last thing left to fall into the hands of the judiciary: the dollar and monetary policy
– Cristina Fernández

“Could it be that the devaluation Macri won’t talk about, he wants to carry out via the judiciary,” Ms Fernández wrote on her website. “It would be the last thing left to fall into the hands of the judiciary: the dollar and monetary policy.”

Claudio Bonadio, the prosecutor investigating the monetary authority, retorted that it would be “absurd” and “illogical” not to carry out the raid just because of the proximity of the elections, warning that he risked losing evidence if he waited.

“I realise that we are four days away from the elections, but what am I supposed to do, drop everything and come back on December 11?” Mr Bonadio asked during an interview on local radio on Wednesday, referring to the date of the inauguration of the new president.

Mr Bonadio ordered the raid after hearing technical evidence from former central bank presidents now linked to the opposition, Alfonso Prat Gay and Martín Redrado.

Alejandro Vanoli, the central bank president, said the move was designed to “generate anxiety” and backpedalled on a pledge to step down if Mr Macri wins the elections, saying he would seek to see out his term that ends in 2019, regardless of the winner.

“It’s my duty to make sure the position is respected and I will do it,” Mr Vanoli told reporters on Wednesday morning. “You don’t appoint someone because they want a central bank that’s at the service of a devaluation.”

Mr Macri has said he would seek to remove Mr Vanoli if he is president, claiming the former securities regulator is unqualified for the central bank job and a government activist.

By Marc Jones
Nov. 18, 2015

Nov 18 Argentina may see its credit rating slowly rise if the current election favourite, Mauricio Macri, wins and pushes through proposed reforms, Moody’s top Latin America analyst said on Wednesday.

Macri leads the polls in the final days before Argentina’s presidential run-off vote on Sunday, and his pro-business credentials are kindling hopes that he can pull the country back from the brink of default.

Moody’s currently rates Argentina Caa1, which signifies a substantial risk of default. But its bonds have been rallying since Macri’s surprisingly strong performance in the first round of elections.

“If Macri starts pushing for the right policies and is able to deliver them you could argue that that will improve the fundamentals,” senior Moody’s analyst Mauro Leos said at an investor day.

“Maybe that would be sufficient to remove Argentina from the Caa group. But if we move, we are going to be really cautious,” he added, saying that worries about low foreign exchange reserves were unlikely to disappear any time soon.

“It is very rare we do consecutive upgrades one year after the other. But let’s assume that could be the case, how long would it take so to get to the top of the B category. That would be uno, dos, tres, three years.”

For Moody’s to consider even more aggressive “multi-notch upgrades,” Leos said, everything would have to go almost perfectly for Macri’s reform plans, something that Argentina’s recent record makes almost unimaginable.

By Walter Bianchi
Nov. 18, 2015

Nov 18 -Argentina will likely end the year with a fiscal deficit of 3.5 percent of gross domestic product, Economy Minister Axel Kicillof said on Wednesday, rejecting estimates by the opposition for a deficit around twice as high.

“The opposition justifies the alleged need for austerity with lies because the truth is that the deficit is not as they say 7.2 percent, nor 6 percent,” he told Argentine radio broadcaster Nacional Rock.

“We will have to see how the year ends but it will be 3.5 percent of GDP.”

Private analysts often question the credibility of Argentina’s official statistics. Many say heavy government spending by outgoing President Cristina Fernandez is driving an expansion in the deficit that has been masked by government figures.

Goldman Sachs, for example, has said the deficit will reach 7.1 percent this year and says fiscal consolidation should “be given urgent consideration” as it is partly to blame for soaring inflation and exchange rate pressures

By Charlie Devereux
November 18, 2015

* Macri has 7.7 percentage-point lead over Scioli ahead of vote
* Among 11 percent undecided voters, Macri has better image

The only pollster to accurately predict the outcome of the first round of Argentina’s elections is now auguring a comfortable victory for the opposition’s Mauricio Macri in Sunday’s runoff vote.

Macri, who is vowing to dismantle President Cristina Fernandez de Kirchner’s economic model of currency controls and trade protectionism, has 47 percent of intended votes against 39.3 percent for the ruling party’s Daniel Scioli, who advocates making slower and fewer changes. After projecting the 11 percent of voters who remain undecided, Macri’s lead rises to 8.8 percent, with Elypsis expecting him to capture 54.4 percent versus 45.6 percent for Scioli.

Elypsis, an economic research firm that only began political polling this year, correctly detected a late surge in votes for Macri ahead of the Oct. 25 first round. He garnered 34 percent against 37 percent for Scioli, confounding other polls that expected Scioli to win by at least 10 percentage points.

While the election could still be swayed by 11 percent of voters who remain undecided, Elypsis says Macri has a better image among those voters than of Scioli. The current mayor of Buenos Aires has a 42 percent positive image and a 20 percent negative image compared to Scioli whose positive and negative images are the same at 33 percent.

All but a few surveys by minor pollsters expect a victory for Macri. The average of four polls seen by Bloomberg, that includes Elypsis’ latest survey, sees an average of 47.9 percent of intended votes for Macri against 41.3 percent for Scioli.

By Katia Porzecanski
November 19, 2015

* Macri vows to unwind policies banks say hindered lending
* Spain’s Santander, BBVA seen in best position to benefit

After years of enduring double-digit inflation and government interventionism, foreign banks in Argentina are hoping for a payoff with Sunday’s presidential election.

The frontrunner, opposition candidate Mauricio Macri, has vowed to unwind policies that he says fueled stagflation and kept Argentina isolated from international capital markets for more than a decade. In addition to regulating peso trading, President Cristina Fernandez de Kirchner imposed measures such as rate caps and fee limits that impeded their ability to lend at a profit.

Local units of Spain’s Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA lead foreign banks in deposits, loans and assets, putting them in the best position to capitalize if reforms revive credit growth that’s flagged amid one of the fastest inflation rates in the world. While austerity measures such as higher interest rates may initially weigh on the economy, analysts surveyed by Bloomberg say growth will revive by 2017, at about 2.5 percent.
Banks Poised for Post-Election Payoff
Banks Poised for Post-Election Payoff

“One hope is that if the opposition wins, all these distortions will disappear and banks can begin functioning normally,” Juan Manuel Vazquez, a bank analyst at Buenos Aires-based brokerage Puente Hnos SA, said by phone. “In that scenario, there’s great potential for foreign banks like Santander and BBVA to grow and eventually utilize all the excess capital they have — which is a lot.”

Ulla Karppinen, a BBVA spokeswoman, declined to comment. Santander officials didn’t reply to e-mails seeking comment.

Macri had 46.5 percent support in a Nov. 9-12 Management & Fit poll of 2,400 people, compared with 39.9 percent for ruling-party candidate Daniel Scioli. The survey, which had a margin of error of 2 percentage points, shows 11.1 percent of people are still undecided, with 2.1 percent planning to cast a blank vote.

Citigroup, HSBC

Citigroup Inc., based in New York, has been in Argentina more than 100 years, while London’s HSBC Holdings Plc, Brazil’s Banco Itau BBA SA and the Industrial & Commercial Bank of China Ltd. also have operations in the country. Banco do Brasil SA is the majority shareholder of Buenos Aires-based Banco Patagonia SA.

Awash with pesos, banks have mainly used their excess cash to buy high-yielding central bank notes instead of making more loans — which has kept their credit quality in good condition, Vazquez said.

Estimated inflation of 26 percent has made banks reluctant to approve long-term loans at fixed rates, he said. At the same time, consumers are balking at floating-rate debt, because costs might soar, as overall demand slows with the economy. The nation’s mortgage market, which accounts for less than 10 percent of total lending, could boom once inflation is contained, Vazquez said.

Fee Caps

Banks suffered from measures that sapped profits from lending businesses, imposed by Fernandez to spur consumption and limit the outflow of dollars. They include interest-rate caps on consumer loans, forced lending to small companies at negative real interest rates, a minimum rate banks have to pay on deposits, and limits on fees, commissions, dividend payments and foreign-currency holdings.

“All of our banks have positive hopes for the next phase of our country,” Claudio Cesario, president of the Argentine Banking Association, said in an e-mail. “There’s consensus that the next government will make the necessary and appropriate measures to rid the obstacles that provoke our isolation from the rest of the world and prevent sustained economic growth.”

Skeptics abound. The nation that’s defaulted twice in the past 14 years will need to show concrete progress before analysts such as Banco BPI SA’s Carlos Joaquim Peixoto believe Argentina can be a genuine source of revenue growth for foreign banks.

“After such a long period of turbulence, particularly with inflation, you need to actually start seeing changes to start believing in them,” Peixoto said in an interview from Porto, Portugal. “If indeed a positive scenario materializes, you have the scope for Argentina to regain some momentum, and of course Santander and BBVA as relevant players in the market will be well-placed to benefit from that.”

By Charlie Devereux
November 18, 2015

* Vanoli says he won’t step aside if Macri is elected president
* Macri has pledged to remove currency controls in first week

Opposition candidate Mauricio Macri’s pledge to end Argentine currency controls should he win Sunday’s election just got harder after the central bank president vowed to stay on, criticizing any attempt to devalue the peso.

Alejandro Vanoli, whose term doesn’t end until 2019, backpedaled on comments from Tuesday in which he said lifting restrictions on currency purchases implied a devaluation of 50 percent and that he would step down rather than having to implement it.

“It’s my duty to make sure the position is respected and I will do it,” Vanoli told reporters in Buenos Aires on Wednesday during a morning briefing with Cabinet Chief Anibal Fernandez. “You don’t appoint someone because they want a central bank that’s at the service of a devaluation.”

With less than a week to go before the first runoff in Argentina’s history, the campaign is focused on front runner Macri’s plan to lift currency controls that have been in place since 2011, enabling companies to repatriate dividend payments and step up imports. Ruling party candidate Daniel Scioli says that will lead to a devaluation and a spike in inflation, triggering an economic downturn.

While the official exchange rate is 9.6 pesos per dollar, many Argentine companies and individuals pay as much as 15 pesos per dollar on a number of parallel markets. Macri argues that the peso will find an equilibrium that represents the average of what most Argentinians already pay to gain access to foreign currency. That equilibrium will be less than the current price of the peso on the black market, which today traded at 15.3 pesos per dollar.

Fernandez’s Appointees

Macri has said he would seek to remove Vanoli if he is president, saying the former securities regulator is unqualified for the central bank job and an activist for President Cristina Fernandez de Kirchner’s political alliance. In the past year, Fernandez has appointed nine out of 10 directors on the central bank board, including Vanoli.

Fernandez in 2010 removed central bank President Martin Redrado after he refused to comply with her orders to use international reserves to pay debt obligations. The process took a few months. Vanoli and his board members could present a similar obstacle to Macri, said Fausto Spotorno, chief economist at Orlando Ferreres y Asociados in Buenos Aires.

“If Macri wins the first thing he’ll have to do is to modify the central bank,” Spotorno said. “If the bank wants to put up a fight with the government, it can do so but it won’t win.”

Macri’s allies lodged a complaint against the central bank on Oct. 30 for “defrauding the public administration” by selling dollar futures at an artificially low rate. Police inspected the central bank offices Tuesday as part of the investigation.

While the bank doesn’t publish data on the futures contracts, they may total as much as $10 billion, according to consulting firm Elypsis. The onshore future prices suggest the peso will trade at 10.3 per dollar in the next three months, compared with 14.9 pesos per dollar in the offshore market.

The estimates have led to growing concern that the central bank’s daily contract sales on the local futures market are creating a growing liability for the government before the country’s next administration takes office next month.

November 18, 2015

BUENOS AIRES— A little known city administrator has emerged as a major player in Argentine politics after her surprise victory to lead the country’s biggest province and her role in the campaign of Mauricio Macri, the front-runner in Sunday’s presidential vote.

If Macri, the business-friendly mayor of Buenos Aires, beats the ruling party candidate, he will owe part of the victory to Maria Eugenia Vidal, who rose from obscurity over the last year to clinch one of the country’s top jobs.

She unseated the Peronist party from its traditional perch atop the Buenos Aires provincial government in the October 25 general election. Macri defied the polls that same day by easily forcing a presidential runoff against ruling party candidate Daniel Scioli.

Vidal was nominated for Buenos Aires governor with the support of Macri back when she was a city official. By winning the governorship of Peronist stronghold Buenos Aires, Vidal raised expectations that Macri may be able to do the same at a national level.

“Macri is going to do good things, just as we saw in the provincial election with Vidal. That was a sign of hope,” said Ana Montes, a nurse in the Buenos Aires suburb of La Matanza.

Scioli has been endorsed by President Cristina Fernandez, who is revered by the poor for widening the social safety net but reviled by investors for heaping controls on the economy.

Macri blames the ruling party for Argentina’s slow economy and promises to restore investor confidence and break with Fernandez’s free-spending populism.

“With her middle-class roots Vidal acts as counterweight to Macri, whom Scioli’s Front for Victory party often portrays as a neo-liberal born into money and privilege,” said Jimena Blanco, an analyst with the Verisk Maplecroft consultancy in Britain.

Vidal, 42, even figures in one of Macri’s TV ads. “How can you not be optimistic?” she says, her voice accompanying images of her and Macri talking with voters.

Scioli says he will keep Fernandez’s popular welfare programs while gradually pursuing investor-friendly reforms.

Macri promises a quicker shift toward free markets. He has a lead in the opinion polls, but Scioli is still in the race.

“The greatest contribution that Vidal made to Macri is making people realize that change is possible,” said political analyst Alejandro Catterberg. “If Peronism was defeated in Buenos Aires province, it is easy to imagine it can be defeated on the national level.”

Vidal will start her four-year term as governor December 10, the same day that either Macri or Scioli will be sworn in as president.

November 18, 2015

BUENOS AIRES, Argentina – From the tables of Buenos Aires pizza parlors to the fields of this South American nation’s farmlands, Argentines are intensely debating a question they must answer during Sunday’s presidential runoff election: How large a role should the government play in their lives?

At the center of the debate is the contentious legacy of outgoing President Cristina Fernandez and “Kirchnerismo,” the political movement aligned with the poor that she created with her late husband and predecessor, Nestor Kirchner.

During 12 years in power, the power couple rewrote Argentina’s social contract, gaining both impassioned followers and fierce critics. They designed programs for the poor, nationalized the YPF oil company, raised tariffs on imports to protect and develop local economies and passed laws to aid the elderly, handicapped people, homosexuals and other groups on the margins, such as becoming in 2010 the first Latin American nation to legalize gay marriage.

Fernandez’s chosen successor, Daniel Scioli, presents himself as the continuation of such policies — he calls them “the national project” — while promising to make fixes where necessary.

Opposition candidate Mauricio Macri promises to maintain a safety net for the poor but says he will overhaul the economy to address inflation estimated around 30 percent and a byzantine monetary system that has spawned a booming black market.

“The big question is the degree to which voters feel comfortable with continuity with a twist versus complete change,” said Jason Marczak, deputy director of the Atlantic Council’s Adrienne Arsht Latin America Center.

That’s a weighty proposition in a nation where most people are old enough to remember the 2001-2002 financial melt-down, when Argentina defaulted on $100 billion in debt and millions of people were plunged into poverty.

If last month’s first electoral round is an indication, Argentines are mulling their options. Scioli, the governor of the Buenos Aires province, got 37 percent of the vote compared to 34 percent for Macri, the mayor of Buenos Aires. The tight finish meant a runoff, and both men have been scrambling to appeal to the nearly 30 percent of voters who picked one of the other four candidates in the first round.

Macri has emerged as the front-runner, with several polls giving him an 8-point lead. But those same polling companies predicted Scioli would win the first round by more than 10 percentage points, which indicates the race is up for grabs.

During a debate last weekend, Scioli argued that Macri’s policies would eliminate subsidies, cut programs for the poor and provoke a sharp devaluation of the Argentine peso.

“Who will pay the price of lifting subsidies?” asked Scioli, a former speed boat racer who lost his right arm in an accident. “Families need to know how they will pay their light, gas and transportation bills.”

Macri accused Scioli of distorting his proposals. But he also argued an overhaul is needed to jump start the economy after four years of stagnation.

“Argentina can only grow with a government that will tell the truth,” said Macri, who comes from one of the country’s richest families and gained a national profile as president of a popular soccer club Boca Juniors.

Beyond the sluggish economy, voters are thinking about allegations of corruption involving people in Fernandez’s administration and the president herself, a rise in crime and drug trafficking and accusations of government’s mismanagement of the social programs it frequently touts.

“The government has created a factory that produces lazy bums,” said Guillermo Boianelli, who owns a recycling center on Buenos Aires’ outskirts and plans to vote for Macri.

Gladys Malverde, a mother of five who plans to vote for Scioli, sees it differently. She earns $275 a month cleaning buildings in a government jobs program that she says has helped her return to school to study nursing.

“If Cristina could run again, we would all vote for her,” said Malverde, who like many Argentines refers to the president by her first name.

Constitutionally barred from running for a third consecutive term, Fernandez still has been a force in the campaign — an object of both adoration and scorn in a deeply polarized country of 41 million people.

Scioli has embraced Fernandez’s policies while presenting himself as his own man capable of fixing huge problems, including a long-standing fight with bond holders in New York federal court that has kept Argentina on the margins of international credit markets.

Macri has criticized Scioli for aligning with Fernandez. But he also praises many government moves, such as nationalizing Aerolineas Argentinas.

He even inaugurated a statue of Juan Peron, a three-time president and founder of a working class movement that helped inspire Kirchnerismo. The ceremony raised eyebrows because Macri’s overarching ideology is free-market, but it underscored the resonance of the government’s hand in society, a force not easily discarded.

“We know that people want change and that Kirchnerismo will come to an end” when Fernandez leaves office, said Roberto Bacman, director of the Center for Public Opinion Studies, a South American research firm. “But therein lies the real question: What will change mean?”

By Elijah Stevens
November 18, 2015

According to one report, traffickers are increasingly using amphibious aircraft to smuggle drugs into Argentina, a development which may possibly be in response to the country’s efforts to combat aerial drug trafficking.

Claudio Izaguirre, head of non-governmental organization the Argentine Anti-Drugs Association, told Diario Popular that drug traffickers have started using amphibious aircraft — planes with the ability to land on and take off from water — to smuggle drugs into the country via its rivers.

Izaguirre stated that this new approach is allowing traffickers to evade radar detection and police forces. According to Izaguirre’s estimates, traffickers are now bringing drugs into Argentina on approximately three “narco-aquatic” flights per day.

Many flights are taking off from the Paraguayan city of Pilar and landing on the rivers of Parana and Uruguay in Argentina, he added. This shift away from landing on clandestine airstrips may be in response to police and Gendarmerie activity along the northern border, he said.

Criminal organizations have been known to transport drugs from Bolivia and Paraguay into Argentina by plane, landing on clandestine airstrips in several northern provinces.

InSight Crime Analysis

Given that Argentina had previously taken steps such as destroying airstrips and installing radar in order to combat aerial drug trafficking, it is possible that Izaguirre’s assessment is correct. Criminal organizations are more than capable of shifting their tactics in response to pushback from law enforcement, and in Argentina, aerial traffickers may have found multiple advantages to landing on rivers rather than airstrips.

Other security officials in Argentina have not yet backed up Izaguirre’s assertions. Nevertheless, criminal groups have been known to use the Southern Cone’s network of rivers for transporting drug shipments. The governor of one of Argentina’s most violent provinces, Santa Fe, has said that one of the country’s biggest problems is drug smuggling via the Parana river. In Uruguay, authorities have also seized drugs from smugglers on the Uruguay river.

November 18, 2015

DENVER (CBS4) – The president of Argentina is blocking a court order to send a Denver murder suspect back to Colorado.

Kurt Sonnenfeld is accused of killing his wife at their Denver home back in 2002. He claims he’s being framed because of video he took at Ground Zero after Sept. 11.

Sonnenfeld fled to Argentina. Then-governor Bill Owens agreed to waive the death penalty if Sonnenfeld returned for trial.

“Kurt Sonnenfeld is definitely gaming the system, though someday, hopefully, that game may run out,” Owens said.

CBS’s “48 Hours” has been following the case since 2004. They recently flew to Buenos Aires to meet with Sonnenfeld and his new wife.













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

By Juan Forero and Santiago Perez
Nov. 19, 2015

Working-class districts that ring Buenos Aires, which powered Peronism for decades, are slipping from the movement’s grasp

SAN MIGUEL, Argentina—As a “point man” for the ruling Peronist movement, Javier Llanos works teeming slums of dirt streets and plywood homes, exhorting prospective voters in this industrial suburb of the capital to cast ballots for Daniel Scioli in Sunday’s presidential election.

But the working-class districts that ring Buenos Aires—packed with millions of voters who powered Peronism for decades—are slipping from the movement’s grasp.

Several polls show that opposition candidate Mauricio Macri, the business-friendly mayor of Buenos Aires, has a lead of five to eight points over Mr. Scioli, a signal that after 12 years, a movement that thrives on a mix of welfare programs and nationalism may be defeated.

“We’ll lose it all if Macri wins,” lamented Mr. Llanos, echoing the Peronist message that a vote for change will mean disaster for Argentina. “There will be a lot of suffering for the poor.”

But many Argentines—even those in poor districts who benefited from years of generous programs—disagree. They speak of decaying or nonexistent infrastructure and rising crime and drug trafficking under Mr. Scioli, who has been governor of the Buenos Aires province for the past eight years.

“I’m 52, and I have always known Peronism,” said voter Susana Arraskaita. “I want to see something different.”

Mr. Scioli, a 58-year-old former powerboat racing champion, fell short of the threshold needed to win in a first round of voting on Oct. 25 and barely squeaked by Mr. Macri, 56. Other outcomes of that election also went against President Cristina Kirchner and the Victory Front, the Peronist coalition she leads.

In large and populous Buenos Aires province, Mrs. Kirchner’s choice for governor, her mercurial cabinet chief Aníbal Fernández, lost in the October vote to Mr. Macri’s young and charismatic candidate, María Eugenia Vidal—the first time in 28 years a non-Peronist won that post.

The Victory Front’s mayoral candidates also took a beating in the 33 densely populated districts that ring Argentina’s capital and contain about 27% of the country’s 32 million voters, with Mr. Macri’s allies scoring victories in Peronist strongholds like the bedroom city of Lanús, population 500,000.

“With the results, the myths collapsed,” said Damián Sala, an activist who works for Lanús Mayor-elect Nestor Grindetti. “We learned that even in Lanús, a movement that’s not Peronism could win.”

Peronists are now feverishly trying to get the votes they need—a campaign to be won or lost in these 33 key districts. Of particular interest to both sides are three million votes that a dissident Peronist, Sergio Massa, received in the first round.

“The mother of all battles takes place in these working-class suburbs,” said Carlos Coronel, a teacher whose second job as a local Peronist representative entails organizing activists to convince San Miguel’s voters to cast ballots for Mr. Scioli.

In Mrs. Kirchner’s two terms—and in her husband Néstor’s previous 2003-07 term—Peronism has meant largess here in the capital’s industrial belt.

In the most costly expansion of social welfare since the rule of Peronism’s founder, Gen. Juan Domingo Perón, more than six decades ago, it has delivered everything from pensions for retired manual laborers to stipends for young mothers. For those fanatical about soccer, there is “Football For All,” which broadcasts games free that had once been available only on pay-per-view. Those who are hard to employ can work in government-supported neighborhood cooperatives, producing T-shirts or toys.

Peronist organizers now remind people here that deprivation and economic calamities of the past—like the 2001 debt default, which led to riots and poverty—took place under non-Peronist leaders.

“I remember 2001, I lost everything,” said Pedro Multari, a 54-year-old San Miguel resident. “We had to start selling things so we could have enough to eat.”

Peronism built up a fierce loyalty decades ago, winning territorial control by forging close ties to organized labor, said Rodrigo Zarazaga, a Jesuit priest who has spent two decades as chaplain in these downtrodden communities. Under the Kirchners, allegiance has been secured with public assistance.

But it has come at a cost. Ballooning government spending has fueled inflation, the second-highest in Latin America, which hits the poor hard. Rev. Zarazaga said the state has also ignored infrastructure: Nearly half of all households are without sewerage or potable water in the cities ringing Buenos Aires. Many roads are unpaved, large urban areas are prone to flooding,schools are decaying and decrepit commuter trains are overcrowded.

“The urgency was to resolve problems with massive cash transfers, but the lack of infrastructure is a problem,” said Rev. Zarazaga, a Harvard-trained social scientist who directs the Research and Social Action Center, a Buenos Aires think tank. “If Mr. Scioli doesn’t recover lost ground in these suburbs, he doesn’t have a chance.”

Mr. Macri’s efforts to win support in working-class wards haven’t been easy. The message activists of his Let’s Change coalition have hammered home in small-scale meetings with voters is that for Argentina to have a stable economy, it must resolve such issues as falling reserves and the lack of access to credit, said Lanús Mayor-elect Grindetti, who is currently Mr. Macri’s finance chief in the capital.

“That’s not the first problem people think about,” Mr. Grindetti said.

A few miles to the northwest, Mr. Coronel, the Peronist organizer in San Miguel, acknowledges how hard it has been to rev up the base. “There’s a sense of fatigue with regards to Mrs. Kirchner, so the runoff looks complicated,” he said while driving in San Miguel’s neighborhoods.

Mr. Coronel and other Peronist organizers have been actively trying to help residents with everyday problems, from assisting senior citizens with paperwork for pension benefits to sprucing up sport facilities. The idea, they say, is to make clear that their help is tied to Mr. Scioli.

“What some call populism is pejorative for us,” Mr. Coronel added. “We see this as social justice.”

Even with the headwinds for Peronism, many remain loyal.

In a San Miguel avenue where Peronist activists pass out pro-Scioli pamphlets, 63-year-old María Cristina Miranda recounted how she received retirement benefits under Mrs. Kirchner´s administration, though neither she nor her employer had ever contributed to a pension plan. And she doesn’t want to lose it.

“I pray to God and the Virgin that Scioli will win,” she said.

By Benedict Mander in Buenos Aires
November 19, 2015

Just a month ago, Daniel Scioli looked to be a shoo-in as the next president of Latin America’s third-largest economy. As the chosen successor of Argentina’s fiery leader, Cristina Fernández, he promised Argentines continuity — albeit a more moderate version of her populist, free-spending and nationalist policies.

This Sunday’s presidential election was his to lose. Especially, it seemed, as he could paint his centre-right opponent, Mauricio Macri, as a bloodless “neoliberal” who would wreak untold economic pain on his countrymen.

“His ideas, decisions and proposals are a danger for the whole of our society,” Mr Scioli inveighed during Argentina’s first-ever presidential debate last Sunday. Mr Macri’s promises of change are a “great lie”, he added.

Yet now, on the eve of the vote and with Argentina’s economy in the doldrums, it is Mr Macri, the “turnround candidate” and pro-business mayor of Buenos Aires, who is leading the polls — and with a convincing nine point lead, according to Elypsis, a reputed local pollster.

The shift is a striking illustration of how many countries in the region, such as Brazil and Venezuela, are also adjusting to the end of a decade-long economic boom and how voters are rejecting the governments and charismatic leaders that presided over them.

Mr Scioli’s fear campaign was a “mistake”, said Juan Germano, director of Isonomia, another local pollster.

“Scioli failed to understand what Argentines want”, he said, especially after 12 “very intense” years of being ruled by the imperious Ms Fernández and Néstor Kirchner, her late husband. “The desire for a change among Argentines is pretty clear.”

That became obvious on October 25, when Mr Macri won 34 per cent of the vote in the first round. It was not enough to beat Mr Scioli, who won 37 per cent, but it put him within spitting distance.

Crucially, Mr Macri also had voter momentum behind him.

In addition, the government suffered an unprecedented defeat in Buenos Aires province, Argentina’s largest. Traditionally a stronghold of the ruling Peronist party, Mr Scioli had ruled it for the past eight years. The seat instead went to the fresh-faced María Eugenia Vidal, formerly Mr Macri’s deputy mayor.

It is not just the public that is clamouring for change in a country whose stagnating and investment-starved economy is struggling with a widening fiscal deficit, double-digit inflation, an overvalued currency and an acute shortage of dollars. Businesses want change, too.

Early signs that foreign investment is flowing back into an Argentina on the verge of change include a $16bn nuclear deal with China signed last week, while US businesses have been eagerly sending teams to Buenos Aires to scope out opportunities.

Financial investors are also hugely expectant. Argentine equities and bonds have rallied for the past month as investors have bet that Mr Macri, a former president of Boca Juniors, one of Argentina’s most popular football clubs, will introduce much-needed economic reforms and strengthen the country’s degraded institutions.

“I have never seen such demand for an Argentine economist,” said Andrés Borenstein, BTG Pactual’s chief economist in Argentina.

“If Macri wins, there is going to be a rally. There is a part of the Macri dividend that is not yet priced in,” he said, estimating that investors are assuming a 60 to 80 per cent probability that Mr Macri will win.

There will be a difficult start for whoever triumphs. The dire economic legacy left by Ms Fernández requires urgent attention. The most immediate problems are an acute shortage of foreign exchange reserves and an overvalued currency.

Mr Macri told the Financial Times in a recent interview that he would lift strict capital controls implemented four years ago on “day one” of his presidency, which will lead to a significant devaluation from Argentina’s official exchange rate and could stoke inflation already running at about 20 per cent.

There are also high hopes that the next government will swiftly settle a marathon legal dispute with a group of “holdout” hedge funds that has blocked Argentina’s access to international capital markets since it defaulted on $100bn of debt in 2001.

Despite the challenges, José Manuel Ortega, a Spaniard who owns a winery in the province of Mendoza, describes a “feeling of hope” among Argentines, who are “tired of more of the same” and realise the economy “cannot continue as it is”.

“From all parts of society to foreign and local investors, people are looking for change. Argentines do not want more conflict. They don’t want an absolutist monarch in power any more,” he says.

By Charlie Devereux
November 19, 2015

* Opposition’s Macri has solid lead over ruling party’s Scioli
* Economic changes expected even if race goes in unpredicted way

Four weeks ago, it was widely expected that the next president of Argentina would be the candidate of the ruling party. But in a first-round election that stunned the nation, opposition leader Mauricio Macri stole the momentum, and as voters return to the polls on Sunday the presidency looks like his to lose.

Macri is the more market-friendly candidate and global companies are lining up to invest, persuaded that the country will reopen for business since he is leading the ruling Peronist party’s Daniel Scioli by 6 to 8 percentage points. Up to a tenth of voters remain undecided, however, and polls were off a month ago, so there is room for surprise.

A central plank of Macri’s policies is the immediate lifting of currency controls to boost investor confidence amid the lowest reserves in nine years. Scioli says Macri’s plan would lead to a massive devaluation that would destroy purchasing power and fuel inflation already running at 24 percent.

In reality, the state of the economy will dictate austerity measures from either candidate, said Diego Ferro, co-chief investment officer at Greylock Capital Management.

“Argentina unfortunately doesn’t implement changes when it should, only when it has to and there is no doubt that next year they will have to implement changes regardless of who wins,” Ferro said by phone from New York.

Elephant In The Room

Neither candidate has addressed the elephant in the room: the reforms needed to reduce inflation, fix a fiscal deficit of 7.2 percent of gross domestic product – the largest in over 30 years – and lure back investment dollars which have stayed away due to currency controls, a lack of regulatory predictability and a decade-long dispute with holdouts from the 2001 default.

The men have put forth different images, with Scioli claiming the populist mantle. Campaigning on Thursday, he said the election is between Macri, whom he called “an arrogant guy from Barrio Parque,” an exclusive neighborhood in Buenos Aires, and him, the son of a worker who understands the needs of the people.

Both candidates will nonetheless probably prescribe a similar recipe, albeit with distinct dosages, analysts predict.

Macri says he will seek to end the holdout conflict that caused Argentina to default once again last year. He will eradicate tariffs on grain exports and reduce the 35 percent tax on soybeans, Argentina’s largest source of export revenue, by 5 percent a year. He also pledges to bring inflation to below 10 percent in two years and to restructure the statistics agency after the International Monetary Fund censured Argentina for misreporting economic data.

Scioli, while defending the legacy of President Cristina Fernandez de Kirchner, is promising similar changes in the agricultural sector while saying inflation will take a full four-year term to tame. Seeking to contrast himself to Macri, he says he will continue to protect Argentina’s industrial sector by sticking with the policy of a peso whose exchange rate is administered by the central bank.

Markets React

Markets have already reacted to a likely Macri win, cushioned by the knowledge that a Scioli victory would also be an improvement on the status quo.

The stock market is at a record high, bond yields are at their lowest in eight years and Morgan Stanley is advising soybean producers to sell their stock now in anticipation of a post-electoral glut.

Both candidates will not only change economic policy but the way that the government handles its trade partners, its opponents and its communications, said Juan Gabriel Tokatlian, of the University of Torcuato Di Tella. What will differ is the pace.

Fernandez’s eight years have been characterized by standoffs — with farmers over export taxes, international trade partners over import restrictions and the country’s middle class over access to buying dollars. All of those will likely ease, irrespective of who wins. The fact that 12 years of rule by Fernandez and her deceased husband Nestor are ending is creating a buzz of possibility.

Both candidates will face challenges in finding consensus to implement changes. Macri will govern with a minority in both houses of Congress, although he is bolstered by the surprise capture of Buenos Aires province in last month’s election which has caused fractures in the Peronist alliance. Scioli will have to distance himself from the rhetoric of continuity that has dominated his campaign, said Greylock Capital’s Ferro.

“There is no ambiguity in the case of Macri and that’s one of the reasons why the market was so happy, because we know that from moment zero there will be a coherent plan to get Argentina out of its problems,” Ferro said. With Scioli, “we will get there but it will take longer.”

By Carolina Millan and Emma Orr
November 19, 2015

* Bond selloff is a big risk if Scioli pulls off surprise win
* Opposition candidate Macri leads polls with 46% support

Bond investors may be putting too much stock in Argentina’s presidential polls.

The country’s benchmark bonds have surged to an eight-year high as voter surveys show opposition candidate Mauricio Macri will win Sunday’s runoff vote, potentially setting the stage for sweeping policy changes that may allow the government to regain access to foreign debt markets and revive the economy.

But given how wrong the polls turned out to be in the first round of voting last month, the final result may still be a toss-up, said Bianca Taylor, a sovereign analyst at Loomis Sayles in Boston. The ruling party’s Daniel Scioli had long figured as the clear frontrunner in surveys leading up to the Oct. 25 election only to unexpectedly end up in a near tie with Macri when all the votes were counted. A selloff is likely to ensue if Macri loses to Scioli, who has promised to make only gradual changes to policies investors blame for stagnant growth and soaring inflation.

A Scioli win means “significant downside,” Jim Barrineau, director of Latin American fixed income at Schroder Investment Management, said from New York. “All the momentum is with Macri. But you have to allow for erratic polls in emerging markets.”

Macri had 46.5 percent support in a Nov. 9-12 Management & Fit poll of 2,400 people, compared with 39.9 percent for Scioli. The survey, which had a margin of error of 2 percentage points, shows 11.1 percent of people are still undecided, with 2.1 percent planning to cast a blank vote.

Before the first-round vote, a poll by the same firm showed Scioli was favored by 38.3 percent of voters, compared with 29.2 percent for Macri.

A poll released late Wednesday by Elypsis, an economic research firm that correctly detected a late surge in votes for Macri ahead of the first round, showed that the opposition candidate would capture 47 percent of the vote versus 39.3 percent for Scioli. The election could still be swayed by 11 percent of voters who remain undecided, according to the survey.

Investor caution on election projections comes after high-profile polling misfires around the world in the past year, notably in Greece, Israel and the U.K., have called into question whether technological and social shifts are hampering polls’ reliability.

Argentina’s $4 billion of defaulted bonds due in 2033 have gained 6.9 percent since Oct. 25 to 113.3 cents on the dollar as investors bet a Macri victory means the country will look to settle its decade-long debt dispute and end currency controls. In July 2014, President Cristina Fernandez de Kirchner’s refusal to abide by a U.S. court ruling requiring Argentina repay disgruntled creditors led to the nation’s second default in 13 years.

While a Scioli victory may initially trigger a bond slump, the decline will be limited, said Gerardo Rodriguez, a money manager at BlackRock Inc. The fact that the elections went to a runoff was a “game changer” because it indicated Argentines want different policies.

“Markets have rallied, not only on the prospect of a Macri victory, but also on the fact that the mandate for Scioli if he wins will be one of change,” Rodriguez said.

Still, to AllianceBernstein LP’s Marco Santamaria, a Scioli win won’t be welcomed by bond investors. He pointed to Scioli’s inability to gain ground on Macri in a debate Sunday, which has made investors even more optimistic.

“The market has been getting used to the idea of a Macri win, given the recent polls and the outcome of the debate,” said Santamaria, who manages $27 billion in emerging-market debt. “So I think it would be logical to expect some disappointment in the market if Scioli were to pull off a surprise win.”

By Jack Kaskey
November 20, 2015

* Both presidential candidates vow to scrap crop export taxes
* Seed supplier says policy on farm-leasing also needs reform

Monsanto Co. executives said they’re hopeful that Sunday’s presidential election vote in Argentina will lead to an overhaul of agricultural policies that have been blamed for a slump in production and exports from one of the biggest producers of corn and soybeans.

Mauricio Macri, the opposition candidate and the frontrunner in voter surveys, has pledged for months to end export taxes of 23 percent on corn and 35 percent on soybeans. His rival in the runoff, Daniel Scioli, who’s backed by President Cristina Fernandez de Kirchner, said in October he’ll do the same.

Such a change would almost certainly be welcomed by most if not all the farmers who have protested for years over the taxes, hoarding production rather than pay up. For Monsanto, the world’s largest supplier of seeds, the Latin American country is an important growth market that could help it reach a target for higher earnings over the next four years. Ending the tariffs would incentivize sowing more acres, Chief Executive Officer Hugh Grant said.

“Growers in Argentina at the moment think twice before they plant, because the first piece of that harvest goes to the government,” he said in an interview Wednesday in St. Louis after the conclusion of two days of investor presentations.

Crop Rotation
Argentina has shipped $17.6 billion of grains and oilseeds abroad so far this year, the lowest for the period since 2009, according to data from an exporters group. Export tariffs have erased $10 billion a year in foreign agricultural sales, according to Jorge Brito, chairman of cattle producer Inversora Juramento SA.

Also in need of reform, according to Mike Frank, Monsanto’s global commercial vice president, are government policies limiting farm leases to one year. The current situation inhibits long-term investment in a country where half of agricultural land is rented, he said, as well as discouraging crop rotation, which can help stop pests developing resistance to crop-specific insecticides.

“I get a chance to meet with farmers from all over the world, and I would say the farmers that are the most challenged today are farmers in Argentina,” Frank said.

There are already signs of optimism among the country’s farmers. A Buenos Aires Grain Exchange report in September forecast they would cut as much as 20 percent of the corn planting area this season and soybean planting by 1 percent, but that outlook may be raised because changes to the export taxes are increasingly likely, said Esteban Copati, chief analyst at the exchange.

Royalty Payments
Argentina remains the third-biggest grower of soybeans and the fourth-largest exporter of corn.

Monsanto gets about 6 percent of its revenue from the country and is counting on farmers there and in Brazil to buy its new Intacta soybeans, which are genetically modified to ward off insects and tolerate the application of weedkiller. Intacta sales in Latin America will be one of the three main drivers of profit growth through 2019, Grant told investors this week.

Another potential boost to the company is an agreement reached with grain handlers to collect Intacta royalty payments from farmers on the company’s behalf. Monsanto has had trouble getting paid by farmers for its modified soybeans, which are widely pirated in Argentina.

Monsanto withdrew a $47 billion takeover bid for pesticide maker Syngenta AG in August, and since then Grant has told investors his company doesn’t need an acquisition to achieve its goals for higher earnings. “We feel good” about Monsanto’s strategy, he said Wednesday. In Argentina, he said he’s encouraged by the promises of both candidates but wants to see what changes are enacted after Sunday’s election.

“The proof is in the delivery,” Grant said.

By Pablo Rosendo Gonzalez
November 19, 2015

* American depositary receipts fell as much as 13.5 percent
* Farm company invested in Israel’s IDBD via controlled IRSA

Shares of Cresud SACIF y A, Argentina’s largest publicly-traded owner of farmland, tumbled the most in three months after short-seller Spruce Point Capital Management said the company is overvalued.

The company, whose farmland holdings cover an area larger than Rhode Island, could drop to as low as $4.75 in New York trading. That would represent a 60 percent plunge from current levels.

The American depositary receipts fell 5.4 percent to $12 on Wednesday and trading volume jumped to 846,002, more than 11 times the three month average.

The Buenos Aires-based press office for Cresud and IRSA declined immediate comment on the report.

Cresud and its subsidiary IRSA Inversiones y Representaciones SA are “burdened” with $6.7 billion of debt after “IRSA recently invested approximately $300 million in IDB Development Corp,” the Spruce Point report said. The Israeli holding company’s debt should be consolidated into Cresud which could ultimately mean a breach of both IRSA and Cresud bond contracts, the New York-based fund wrote.

“It appears through IFISA, a related-party and controlled entity of IRSA’s Chairman, that IRSA owns a combined 81 percent of IDBD,” according to the report. IDBD has interests in real estate, communications, agricultural products, insurance and technology. Dolphin Funds, a firm controlled by IRSA, owns 49 percent of IDBD, according to data compiled by Bloomberg.

Spruce Point said that given its belief that IRSA is currently in violation of its debt covenants, the firm is in a “precarious position.”

In August, Spruce Point targeted Caesarstone Sdot Yam Ltd., an Israeli maker of quartz countertops, arguing the company was overvalued and causing shares to fall as much as 17 percent.

By Sarah Marsh
Nov 19, 2015

Nov 19 -Roberto Maceri is investing in machinery at his plastics plants ahead of Argentina’s presidential election, betting on a stronger domestic economy and a more competitive exchange rate that may bring foreign markets back into play.

Operations at Argentine companies like his have been hampered in recent years as the outgoing left-wing government restricted imports, raised the tax burden on businesses and the middle class, and maintained the peso artificially strong.

Argentina’s steady decline in competitiveness with neighboring economies hammered Maceri’s exports to Uruguay, Colombia and even the United States in the past three years.

But with pro-business opposition challenger Mauricio Macri the favorite to win Sunday’s presidential election run-off, Maceri is positioning himself for an economic rebound.

Even if the ruling party’s Daniel Scioli stages a late come-back, Maceri still expects a more favorable business environment because Scioli is closer to the political center than President Cristina Fernandez.

“We have invested in machinery and we are waiting for the next productive cycle with a lot of optimism,” said Maceri, who produces a range of plastic products from packaging and office supplies to fridge interiors and bathtubs.

He sustained output in the last few years by creating new product lines for the domestic market, which has been propped up by government incentives to encourage consumer spending.

Maceri’s new investments total more than $1 million, the first time in nearly a decade that he is spending heavily to expand production capacity.

“We’ll keep a close eye on whether we can export again.”

Many investors are more circumspect, preferring to sit tight ahead of the election. Even state-controlled energy firm YPF this month declined to give details on next year’s budget, saying it will depend on the election winner’s economic policies.
Fernandez introduced a raft of currency and trade controls to protect dwindling foreign reserves and stave off having to settle a legal dispute with creditors over defaulted debt. Hard currency stocks languish at a nine-year low.

Argentina is now ranked 121 out of 189 countries in the World Bank’s Ease of Doing Business index, lying well behind neighboring Chile on 48, Uruguay on 92 and Brazil on 116.

Both Scioli and Macri would seek a debt deal with creditors to regain access to global debt markets but have locked horns on the pace and depth of reforms to lift capital controls, with Macri seeking much swifter changes to open up the economy.

Latino TCA, which supplies utility firms with optic cables and other equipment, has cut its workforce as the central bank tightens access to dollars, making it almost impossible to import goods. With no stock to sell, it is simply focused on keeping its brand alive.

The company’s general manager Andrea Baena says Latino TCA may just break even this year. After that though, she says it is poised to benefit from a backlog of investment in utilities if the next president lifts a freeze on tariffs.
Even so, with inflation in double-digits and a widening fiscal deficit, there are no quick fixes for Latin America’s No. 3 economy.

“It won’t be easy, there is no magical solution,” said Baena. “We are waiting to see what happens.”


Foreign investors are watching closely.

“If ever there was a country in emerging or frontier markets that had the simplest route to a significant increase in economic output per capita, it is Argentina,” said Denise Prime, emerging market investment manager at GAM.
Prime hopes for a Macri win but said even a slight shift toward more orthodox policies under Scioli would bolster investor confidence.

GAM has been a buyer of American Depositary Receipts in Pampa Energia in anticipation that a Macri win would see domestic electricity costs increase.

A key cause for uncertainty is the widespread expectation of a devaluation, regardless who wins on Sunday, to correct the inflated rate of the peso currency. One dollar buys just 9.65 pesos at the official rate but 15.41 on the black market.

Scioli has campaigned against a devaluation, saying it would hurt Argentines’ purchasing power, but economists say it is inevitable as the central bank lacks enough dollars to keep the peso at the current rate.

“There will have to be an adjustment in the exchange rate,” said Federico Semeniuk, a financial expert at Ecolatina consultancy. “We reckon it will weaken between 30 and 50 percent in 2016.”

Semeniuk said a surge in demand for peso futures and local assets linked to hard currencies like dollar-linked bonds was due to businesses, institutional investors and savers seeking protection from a sharp fall in the peso.

Baena says Latino TCA needs immediate access to its cash in case an import authorization comes through but has it stashed in fixed deposits to shield it from inflation that economists estimate is running at around 25 percent.

Both Maceri and Baena are aware things will likely get worse before they get better. The next government will struggle to devalue and correct the fiscal deficit without damaging consumption in the short-term.

“They have made a very fragile mechanism like a bomb, and you have to disarm the bomb,” said Baena. “Next year will be very tough, no matter who wins.”

By Jonathan Gilbert
November 19, 2015

President Cristina Fernández de Kirchner tried to pick her successor. Then things went sideways.

It seemed like a winning game plan. Daniel Scioli, the presidential candidate for Argentina’s ruling party, promised voters a continuation of the outgoing government’s leftist policies, improved with a few tweaks to lure back those who’d drifted away over its 12 years in power.

Many pollsters predicted Scioli to win last month’s first-round poll outright. Even if he didn’t and had to go to a run-off, Scioli was still expected to eventually overcome the leading opposition candidate, Mauricio Macri.

But in a spectacular turn that underscores the unpredictability of election races, it is opposition candidate Mauricio Macri who has emerged as the favorite in Argentina’s presidential run-off election on Nov. 22.

Today, Scioli is widely perceived as the underdog to Macri, the center-right outgoing mayor of Buenos Aires who has tapped into a groundswell of support for a shift away from the ruling party’s economic platform and abrasive governing style.

“The majority of Argentines want change,” says Marcos Peña, Macri’s campaign manager.

As evidence of this, Peña points to the first-round results, in which opposition candidates collected 63% compared to the 37% who voted for Scioli. In the Argentine electoral system, a presidential candidate wins in the first round if he or she receives 45% of the vote, or 40% with a 10-point lead over the second place candidate.

Macri came in second with 34%.

Twelve Years in Power

The ruling party, the Frente para la Victoria (Front for Victory, or FPV), rose to power after Argentina’s economy collapsed in 2001 and 2002. Party leader Néstor Kirchner, a little-known governor from Patagonia, became President in 2003, and he guided Argentina out of the depths of a socioeconomic crisis by expanding government spending and levying high export taxes on soy beans, Argentina’s cash crop.

Kirchner became hugely popular. And his Vice President was Scioli, a former national tourism minister and one-time powerboat racer who’d lost his right arm during a 1989 competition.

On the back of this strong economic growth, Kirchner’s wife, President Cristina Fernández de Kirchner, twice led the party to re-election, while Scioli moved on to spend eight years as the governor of Buenos Aires province, Argentina’s largest.

As President, Fernández continued and amplified her husband’s big-government policies. She also developed a combative style.

Her husband had begun his presidency by declaring in a speech that he would not cede to “pragmatism” by leaving his “convictions at the gates of the presidential palace.” But many voters began to wonder if Fernández—who drafted the speech, according to a biographer—had taken this concept of leadership too far.

In recent years, they say, she has become imperious as she wrestled with Argentina’s business establishment, hectored foreign political and business leaders, and skewered her opponents in public speeches.

“I like the direction of the political project, but I don’t like a lot of things about her,” says José María Jáuregui, 52, who used to run a chain of hairdressing salons. “She doesn’t debate with anybody; it’s a monologue.”

Under Fernández, the economy has also begun to sputter. Refusing to borrow in the global markets to finance government spending and bolster currency reserves, she opted for protectionist economic policies. These included currency controls and import restrictions, which angered foreign investors, middle-class Argentines, and manufacturers.

Growth stagnated and inflation spiked, to an estimated annual rate of more than 25% today.

Fernández, 62, was barred from running for a third consecutive term, so she endorsed Scioli as her successor. With a FPV party base that makes up around 35% of the electorate, Scioli’s campaign calculated that he would only need to make a small pivot away from Fernández to bring back lost voters. That, in theory, could have secured him a first-round victory.

Moving to execute that strategy, Scioli, 58, emphasized his plans to build on the party’s successes but at the same time drew attention to his consensual leadership style and preference for teamwork over centralized power. He promised to foster a better investment climate and bring inflation under control by gradually reducing the budget deficit.

Momentum Shift

Scioli was unable to unglue himself from Fernández, however. His ability to criticize her style and politics was limited by his need for her support. And moves like his seemingly forced choice of a close Fernández advisor as his Vice President led many to wonder if Fernández intended to remain a shadow President after leaving office.

Momentum shifted toward Macri, who promised a clean break from the politics and style of the last 12 years, so Scioli poured his energy into drawing a clear line between himself and his rival. In doing so, he allied himself with Fernández and the Front for Victory’s ideologues. This, analysts say, has been counterproductive.

“A lot of voters wanted change, but not totally; Scioli represented this with a new leadership style,” says Mariel Fornoni, director of the polling company Management and Fit. “But when he left the new style behind, he turned into a continuity candidate and Macri became the change candidate.”

Some polls now give Macri, 56, a comfortable lead over Scioli. To reverse this, Scioli has engaged in a so-called “fear” campaign that mirrors Brazilian President Dilma Rousseff’s successful strategy in a run-off vote last year. Scioli has been aggressively trying to link Macri to unpopular free-market policies that many Argentines blame for the 2001 collapse.

“The word ‘change’ may generate enthusiasm and motivate people,” Scioli said in a Nov. 15 television debate between the two candidates, “But when you remove its veil, this appears: the free market, structural adjustment, devaluation and debt.”

Although Macri has largely tiptoed around the reforms he would make, they could include devaluing the peso; lifting currency controls; and reducing transport and energy subsidies.

“Such structural adjustment is truly scary,” says Alberto Pérez, a top Scioli adviser, referring to the likelihood of swift reforms that would be painful for Argentines in the short term.

Still, to the surprise of many, the broader mood of the nation now favors Macri.

“Satisfaction with the current administration is so strained,” says Federico Finchelstein, an Argentine historian at the New School for Social Research in New York, “that the hope of change is greater than the fear of what could happen.”

By Katy Barnato
November 20, 2015

Argentinians will head to the polls once again on Sunday, in a second-round of voting that will likely see the pro-business opposition trump the incumbent socialists.

It is less than a month since the first vote, on October 25, produced no outright winner. It is also the first time that an election has gone to a runoff in Argentina.

“We are in uncharted territory in Argentina’s political history. This will be the first runoff since the current election system was instituted under the 1994 constitutional reform (the 2003 election would have gone to a runoff between Carlos Menem and Nestor Kirchner, but Menem withdrew) and indeed, the first runoff ever,” Stuart Culverhouse, global head of research at Exotix Partners in London, said in a report last week.

Sunday’s vote will pit the two leading candidates against one another — that’s Daniel Scioli, who is backed by fiery President Cristina Kirchner and pro-business opposition candidate, Mauricio Macri. The Argentinian constitution bars Kirchner from running for a third term.

Macri is seen winning — and Argentina’s benchmark stock index, the Merval, has rocketed on the prospect of an end to 14 years of socialist rule. It has risen around 22 percent since the first vote in October and is around 60 percent higher on the year.

Both Macri and Scioli have pledged to resolve Argentina’s long-standing dispute with so-called holdout creditors, which has dragged on since a massive default in 2002. This could allow the country to re-access the international capital markets and raise much needed funds.

Macri is seen more likely, however, to scale back the swathes of interventionist measures that cripple the Argentinian economy at the moment. These range from capital controls to subsidizing electricity prices far below the market rate.

“A Macri victory would be positive for markets and investors, with the candidate pledging to end currency controls and bring about currency convergence,” Nicholas Watson, senior vice president at Teneo Intelligence, said in a report this week.

Argentina’s credit rating from Moody’s Investors Service is Caa1, suggesting a substantial risk of the country defaulting again on its debts. Earlier this month, however, the agency upgraded Argentina’s rating outlook to “stable” from “negative.”

“The outlook change is based on Moody’s view that shifts in the political climate are reducing the risk of investors suffering greater than expected losses once a new government assumes power on 10 December 2015,” it said.

Mauro Leos, senior credit officer at Moody’s, warned that adjustments to Argentina’s economic policy would cause short-term pain, however.

“Everybody is really excited about Argentina… but what markets are missing is that the economy has been mismanaged for 15 years… They have to adjust the economy and adjustment means pain,” he said at a briefing on Wednesday.

By Bryan Borzykowski, special to
November 19, 2015

The November presidential election has stoked a run in Argentine stocks.

Most Americans are likely focused on the looming U.S. election, but there’s another vote that global investors should be paying close attention to. On Nov. 22, Argentina will choose its new leader, and markets are hoping that Buenos Aires Mayor Mauricio Macri, who many see as an economic reformer, will walk away the victor as the country’s next president.

Until last weekend, most people didn’t think that Marci, the opposition leader, had much of a chance. Daniel Scioli, a member of the governing Peronist party and the hand-picked successor to current president Cristina Fernandez de Kirchner, was expected to take the most votes in an Oct. 25 election, but at the end of the night, the two candidates were separated by less than two percentage points, prompting a November runoff.

For long-suffering investors, this is good news. The Merval Buenos Aires Index has jumped by nearly 4 percent since the market opened on Monday, and if Macri wins, which many people now think is a real possibility, it could continue to climb higher.

But while the results came as a shock to many, just the fact that the current president can no longer lead the country — there are term limits in Argentina — has been a boon to the stock market. The index is up 36 percent year-to-date, making it the second-hottest market in the world, according to S&P Capital IQ.

For the last 15 years, the once mighty Argentina has been an economic wasteland. In 2001 it defaulted on its debt, and ever since, its leaders have refused to pay its creditors — including some U.S hedge funds.

The nonpayment has meant the country can’t borrow money from foreign governments, so it’s essentially had to self-fund its own operations, said Alfredo Coutino, Moody’s Analytics’ economist for Latin America.

That has wreaked havoc on the country’s economy and its stock markets.

“They couldn’t access international capital, and no one wanted to put their money in Argentina,” said Coutino. Those who do have investments in the region have had difficulty getting it out — capital controls have been put in place to stem outflows.

The government also implemented price controls to curb rapidly rising inflation and started nationalizing some energy, transportation and telecom companies. Huge deficits have been incurred, and the stock market barely budged for many years, added Coutino.

It’s likely that no matter who wins, financial reforms will have to take place, said Chuck Knudsen, an emerging markets specialist at T. Rowe Price — its Institutional Frontier Markets Equity fund has a 10.3 percent weighting to the country, the most out of any U.S.-based fund, according to Lipper.

However, if Macri is the new leader, changes will come much faster and be more pronounced than if Scioli wins, which will be better for the market in the immediate short term. Those who can be patient for three to five years, though, should see more meaningful equity gains in the region, regardless of who gets in power, he said.

Buying into Argentina

There are a number of ADRs on U.S. stock exchanges that investors can purchase. T. Rowe’s Institutional Frontier Markets Equity fund holds Grupo Financiero Galicia S.A., a Buenos Aries-based bank that’s listed on the Nasdaq. The banks are a good way to play the economic recovery, Knudsen said.

There are 29 U.S.-based mutual funds that hold Argentina stock, but only three hold between 8 percent and 10 percent in the country, and no fund holds more than 5.8 percent of Argentinian assets.

For a pure-play investment, buy the Global X Argentina ETF (ARGT), which holds 30 stocks. Some holdings are not based in the country, but a large percentage of their revenue is from Argentina.

Buyer beware: The ETF doesn’t reflect the Merval index. About 40 percent of ARGT’s holdings are in energy stocks, 20 percent in financials, 13 percent in information technology and 8 percent in consumer staples. While the country’s main index is up by a lot, the ETF has climbed only by about 0.8 percent this year.

“There are long-term prospects here, even if Scioli is elected,” Knudsen said. “The trend will be more positive, and some of the country’s potential [will] be unleashed.”

So what can investors expect from a new leader? Both Scioli and Macri have pledged to finally put an end to the country’s default debacle. Whether they’ll pay its debtors in full or renegotiate a new deal remains to be seen, but Jan Dehn, research director with Ashmore Group, an emerging markets-focused investment firm, is optimistic that something will happen.

When it does, the country will be able to regain access to international capital markets. It will then be able to borrow funds at far lower interest rates than it’s borrowing at now, and that will have a positive effect on its own financial position. “It can become part of the global family again,” said Dehn.

There’s also hope that they’ll denationalize some of the companies it now controls, relax foreign investment restrictions, better develop its large natural resources industry — it has the fourth-largest shale gas reserves on the planet — and, simply, “do the right thing,” said Dehn.

“There are long-term prospects here, even if Scioli is elected. The trend will be more positive, and some of the country’s potential [will] be unleashed.”
-Chuck Knudsen, emerging markets specialist at T. Rowe Price

If it does reform its economy, then the market will surely rise higher. Some experts estimate that $120 billion of “flight capital” — Argentinian money that’s been invested outside of the country — could return and get put into the domestic market, said Dehn.

“It may be a great fundamental story,” he said.

Devaluation risks

Don’t put your retirement savings in the country, though — the market is going to go through plenty of more ups and downs before it stabilizes. It’s also possible the reforms don’t happen as people expect them to, which would devastate the market.

One of the biggest concerns for Knudsen is a devaluation of its currency, which could happen if it opens up its economy. It’s been artificially supporting the peso up until this point, but it won’t continue to do that under a reformed economy, he said. That could hurt U.S. dollar investors, who will see their investment fall as the peso drops.

It will also have to reduce its deficit, and those debt payments could be significant. The new leader will likely have to reduce spending and, potentially, raise taxes on a struggling consumer, said Coutino.

For those who can see the bigger picture and don’t mind volatility, gains should come. The economy is growing by less than 2 percent this year, but Coutino thinks GDP growth could accelerate to 3 percent next year and 4 percent in about three to five years.

Its large agriculture sector, along with banks and telecoms, will also benefit from reform and could be areas for stock-picking investors to buy into. Energy is a big sector, too, but gains there are also dependent on global commodity prices.

By Richard Tomkins
Nov 19, 2015

A proposed sale of Bell 412EP helicopters to Argentina has been approved by the U.S. State Department.

WASHINGTON, Nov. 18 (UPI) — The proposed sale of four Bell 412EP helicopters to Argentina through the Foreign Military Sales program has received State Department approval.

The deal — together with spare parts, associated equipment and logistical support — would be worth about $80 million.

“The proposed sale will contribute to the foreign policy and national security of the United States … and will provide additional opportunities for bilateral engagements and further strengthen the bilateral relationship between the United States and Argentina,” the U.S. Defense Security Cooperation Agency in its notification to Congress.

DSCA, which manages the FMS program, said Argentina intends to use the aircraft for search-and-rescue operations, humanitarian assistance and disaster relief, peacekeeping support, scientific operations in the Antarctic, and other missions.

Bell’s 412 enhanced performance helicopter is a twin-engine utility aircraft with a cruise speed of 140 mph and a range of 609 miles.

12. ARGENTINA: COUNTRY OUTLOOK (Economist Intelligence Unit – ViewsWire)
18 November 2015


POLITICAL STABILITY: The second-round presidential election on November 22nd has been pitted as a choice between continuity, represented by the candidate of the ruling Frente para la Victoria (FV), Daniel Scioli, and change, represented by the opposition Cambiemos candidate, Mauricio Macri. However, whichever of the two wins in November, The Economist Intelligence Unit continues to expect substantial policy adjustment as the new administration works to reduce the risk of economic crisis and return the economy to sustainable growth. Reflecting the scale of economic mismanagement under the current government, led by Cristina Fernández de Kirchner, which has produced stagflation and strong currency devaluation pressures, the adjustment process will be a difficult one, involving politically unpopular austerity measures, including a scaling-back of fiscal expenditure. The risk of social unrest will therefore remain significant for much of 2016-20.

ELECTION WATCH: Although we had long expected the presidential race to be close, Mr Macri performed above expectations, coming in a very close second to Mr Scioli (the latter secured 37% of the first-round vote and the former 34%), and has strong momentum going into the second round. Opinion polls (which were generally unreliable as an indicator of voting preferences in the first round) now place Mr Macri in the lead. Mr Scioli is struggling to disassociate himself with an increasingly unpopular Fernández government. He is not close to the president, and his alliance with her is something of a marriage of convenience, required to cement his appeal among the 30% of voters that form the FV’s support base. In the second-round campaign, Mr Scioli has attempted to shift his own stance more clearly to the centre ground. At the same time, the government has attempted to paint Mr Macri’s policies as a throwback to the orthodox economic policies that are still widely blamed in Argentina for the 2001 crisis. Mr Macri, the well-known founder and leader of the centre-right opposition Propuesta Republicana (Pro) party, has tried to dismiss this campaign as a scare tactic, but it could well have some effect. To Mr Macri’s advantage, the third-placed candidate, Sergio Massa, has tacitly supported the latter’s campaign, while avoiding outright public endorsement. For both candidates, securing Mr Massa’s votes (he garnered just over 20% in the first round) will be crucial. Some of Mr Massa’s votes will go to Mr Scioli because both men are Peronists (the Peronist party dominates Argentinian politics; the FV is one Peronist faction of which Mr Massa was once a member, but he broke away in 2013 and is now the head of another Peronist faction). However, considering Mr Massa’s own stated desire for change (as represented by Mr Macri) many centrist voters are likely to spring for the opposition candidate.

INTERNATIONAL RELATIONS: We assume that the incoming government will move to repair relations with trade and investment partners that have been damaged by trade protectionism, nationalisation, failure to abide by rulings of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), and failure to exit default. Relations with the US remain at a low ebb following last year’s sovereign default, which was the consequence of Argentina’s defiance in the face of a New York court ruling. We assume that the incoming administration will work from 2016 to exit default (by arriving at a deal with holdout creditors) and normalise relations with creditor countries, suggesting improved relations with the US, Europe, and with partners in the Mercado Común del Sur (Mercosur, the Southern Cone customs union) in the outlook period. At the same time, China will remain a strategic partner. This position was cemented under the Fernández administration by a series of investment accords, and by a US$11bn, three-year currency-swap arrangement agreed in mid-2014 that has bolstered the foreign reserves and given the government a lifeline as it seeks to avoid a currency crisis.

POLICY TRENDS: We have long considered a substantial tightening of macroeconomic policy necessary to reduce inflation, improve external competitiveness and avoid an eventual balance-of-payments crisis. The Fernández administration is clearly reluctant to make these adjustments, which involve difficult austerity measures. Our forecasts assume that this will occur once a new administration takes office in December 2015. We expect the next administration to work fairly quickly to tackle distortions, and expect some fiscal and currency adjustment in 2016, combined with efforts to rein in nominal wage growth. This will be politically difficult, will encounter union resistance (particularly if Mr Macri is elected), and, in the short term, will subdue activity. However, this will be rewarded with a boost to investor confidence, assuming that the new government also works to exit default (eliminating the foreign-financing constraint) and strengthen confidence in the rule of law, which have been eroded by years of discretionary policy interventionism under Ms Fernández. Combined with macroeconomic adjustment, and a gradual removal of foreign-exchange and import controls, these policies should set the economy on a more solid long-term footing. These forecasts are based on a victory in the second-round run-off for Mr Scioli. If Mr Macri were to win, we would expect similar policy adjustments. However, they would occur much more quickly. Mr Macri has promised a rapid devaluation if elected, followed by a quick easing of foreign-exchange controls. (This is partly because he would have a harder time getting quick approval in the legislature for a deal with holdout creditors than Mr Scioli, and would therefore continue to face an external financing constraint that would require adjustments to improve net goods and services trade.) This would be likely to hit activity hard in the very short term, but would set the stage for a stronger recovery by rapidly addressing the problem of external competitiveness.

ECONOMIC GROWTH: GDP growth will weaken in the short term as macroeconomic policy tightening and rapid currency depreciation dampen demand, but this will set the stage for a pick-up in exports, investment and private consumption in the medium term. For 2015, we estimate growth to have reached 1.8%, reflecting a pick-up in private consumption, related to renewed rapid growth in nominal wages, and in government consumption, reflecting fiscal expansion ahead of the October presidential election. We remain concerned that this figure, which is based on official data, overstates the level of activity: export volumes continued to fall in the first half, industrial production remains subdued, and headwinds from recession in Brazil will have been substantial. Given the difficulties of Argentina’s key trade partner, and also considering investor uncertainty surrounding the government’s ability to muddle through the election period without prompting a currency crisis, our 2015 estimate assumes that growth will have slowed in the second half of the year, and we expect it to weaken even further in 2016 in the face of macroeconomic adjustment.

INFLATION: A new consumer price index was unveiled in February 2014, but concerns remain about the accuracy of official data. Until the official index has a better and longer track record, we will continue to use data from PriceStats, an Internet price-monitoring company, in our forecasts. According to these data, inflation came in at 26.7% in August (latest available data). This is well below a peak of over 40% in late 2014, reflecting the sharp fall of oil prices in recent months, along with base effects (inflation spiked in the immediate aftermath of the January 2014 devaluation). Inflation is likely to tick up again in the short term, given currency adjustment, strong nominal wage growth and loose fiscal policy, but we do expect gradual disinflation in the medium term, assuming that fiscal policy tightens, domestic demand remains subdued (relative to the boom years of 2004-11) and domestic supply strengthens on the back of improvements in microeconomic policy. Even so, annual inflation will remain in double digits until 2020, reflecting weak institutional underpinning of price stability and a high level of wage indexation.

EXCHANGE RATES: The monetary authority has maintained a rate of nominal depreciation of around 1% per month for most of the year to date. We assume that currency adjustment under the heavily managed float will accelerate to almost 30% in 2016 as commitment to adjustment improves under a new government. We also project nominal weakening of almost 15% per year in 2017-18. This would start to reverse the accumulated real appreciation of the peso over the past five years, which has eroded export competitiveness, and bring the real trade-weighted exchange rate close to 2012 levels. In the meantime, devaluation risk persists. The authorities have failed to address underlying fiscal and external imbalances. These have, in fact, worsened in 2015, prompting renewed pressure on the black-market exchange rate in the third quarter. If left unchecked, imbalances will eventually force some sort of steep currency adjustment.

EXTERNAL SECTOR: We expect the terms of trade to continue to deteriorate for much of 2016-20 and for the current-account deficit to continue to widen in the short term to a peak of 2.2% of GDP in 2016-17. Given Argentina’s restricted access to international finance, a deficit of this size will heighten concerns over the potential for a balance-of-payments crisis. However, currency adjustment should gradually bolster the current account as a weaker peso starts to boost goods and services exports, and rein in imports. On this basis, we expect the current-account deficit to start to narrow late in the forecast period. There are large upside and downside risks to this forecast, depending on the pace of currency and inflation adjustment. We expect capital inflows to pick up from 2016-17, reflecting renewed investor confidence in a new government. This will lift reserves. However, this will depend on clear moves by the incoming government to address the weak legal framework, severe macroeconomic imbalances and continued default. In the meantime, import cover will be weakened by the use of reserves to shield the peso from currency pressures and to repay external debt. There will be a continuing risk of a balance-of-payments crisis if capital flight does not subside and a tangible improvement is not seen in access to overseas finance.

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18 noviembre, 2015








By Taos Turner and Santiago Perez
18 November 2015

BUENOS AIRES — Police raided Argentina’s central bank as part of a federal investigation into allegations that it has put the country’s dwindling foreign-currency reserves at risk by aggressively trading derivatives.

Tuesday’s raid comes before Argentines vote for a new president on Sunday and amid rising concerns that the incoming administration will devalue the peso and tweak foreign-exchange policies to prevent a scarcity of U.S. dollars from suffocating the economy. Polls show Daniel Scioli of the ruling Victory Front coalition lagging behind opposition candidate Mauricio Macri.

The lack of greenbacks and the central bank’s criticism of Mr. Macri’s policy proposals to fix the currency system have taken center stage in the election campaign. The central bank is scrambling for ways to reduce tension in the exchange market ahead of the election, crimping access to dollars for individuals and companies and selling derivatives to offset foreign-exchange pressures.

Critics say that by setting artificial prices on futures contracts, the central bank is essentially subsidizing the price of dollars and that this could cost the next administration billions, just as it faces a cash crunch.

“I think it helped reduce pressure on the exchange rate, but it did so at an extraordinary cost to the country,” said former Economy Minister Jose Luis Machinea. “This is scandalous.”

Central bank President Alejandro Vanoli has accused Mr. Macri of planning to sharply devalue Argentina’s currency if elected. Mr. Vanoli, who economists here say is close to the current government, indicated he would be willing to resign if Mr. Macri were to win and devalue the peso.

His comments come after allies of Mr. Macri filed a criminal complaint against Mr. Vanoli and his board of directors for allegedly violating the bank’s charter by selling dollar futures contracts at below-market rates “to benefit third parties and causing grave damage to the bank’s assets.”

Federal Judge Claudio Bonadio ordered Tuesday’s raid as part of the investigation into the complaint. Experts say raids to secure evidence are standard procedure for Argentine judges after criminal complaints are filed.

The dispute arose after the trading volume of dollar futures rose sharply in late October, when investors jumped at the opportunity to profit from buying futures for just 10.6 pesos per dollar, when the market rate abroad was closer to 15 pesos.

After Argentina implemented foreign-currency controls in 2011, central-bank reserves fell by almost half to about $26 billion. The next president, who will be sworn in onDec. 10, will need to move quickly to stop the bleeding.

Mr. Macri has indicated that if elected, he would remove some foreign-exchange controls that have strengthened the peso to unsustainable levels. He has also criticized the central bank’s derivatives transactions.

“I’d be a Nobel Prize winner if I knew the peso’s exchange rate” after Dec. 10, Mr. Macri said last week. “No one knows how many foreign-currency reserves there are or how many will be left.”

The central bank doesn’t publish data on its futures transactions, and bank officials declined to comment on the matter. But economists estimate the bank has sold more than $15 billion in dollar futures over the past three months.

The bank could eventually have to finance the gap between those two rates, potentially increasing its liabilities by the equivalent of up to $7.3 billion at the current official exchange rate, according to Carlos Rodriguez, president of Ucema, a university in Buenos Aires that specializes in macroeconomic studies.

Such liabilities could widen the country’s budget gap, presenting a costly challenge to Argentina’s incoming president at a time when both Mr. Macri and his rival Mr. Scioli say the country is badly in need of fresh funding.

By Carlos Tejada
November 17, 2015

Beijing seeks to improve its international presence in nuclear technology

BEIJING—China struck a deal to build a nuclear reactor in Argentina and the agreement could result in more than 30 billion yuan (about $4.7 billion) in equipment exports, Chinese official media said.

The deal comes as China seeks to bolster its international presence in nuclear technology, where it hopes to someday export homegrown reactors.

The official Xinhua News Agency said this week that state-controlled China National Nuclear Corp. signed a commercial contract to build Argentina’s fourth nuclear power plant. The heavy-water reactor will be based on a Canadian technology called Canada Deuterium Uranium, or Candu.

State-run Industrial & Commercial Bank of China Ltd. , China’s largest bank by assets, will provide financing, which will cover 85% of the cost, according to Argentine and Chinese officials.

The two sides also struck a framework agreement—which is more tentative—for a long-discussed second reactor based on Chinese technology. Argentine officials said the two projects would require a total of about $15 billion in financing if the second project advances.

The second reactor would be based on a Chinese technology called Hualong-1, which China hopes will someday compete with reactors made by U.S. nuclear giant Westinghouse Electric Co. and French rival Areva SA . In April, China’s State Council, or cabinet, approved construction of the first Hualong-1 reactor.

Xinhua said the two sides hope to sign an agreement to begin construction on the second reactor in the coming months.

China has been broadening its presence in the global nuclear industry. In October, state-controlled China General Nuclear Power Corp. agreed to take about a one-third stake in the Hinkley Point nuclear-power project in the U.K.

By Kirk Mitchell
Nov 18, 2015

Former FEMA videographer Kurt Sonnenfeld claims he has framed to cover up evidence of U.S. complicity in 9/11 terror attacks

Argentina’s president has blocked the extradition of a Denver fugitive who claims he was framed for murder because video he took of ground zero proves U.S. complicity in the 9/11 terrorist attacks.

The government of Cristina Fernandez de Kirchner issued an executive order Sept. 16 overriding a December decision by the Argentina Supreme Court. The court had approved the extradition of Kurt Frederick Sonnenfeld to the United States.

The government’s order cited human rights in its denial of the request to grant extradition. It also says that extradition could put Argentina in a position of violating an international principle of not forcing the return of asylum seekers to countries where they could be persecuted.

Sonnenfeld, who was charged in the New Year’s Day 2002 murder of his first wife, Nancy, is a former videographer for the Federal Emergency Management Agency. His video over the course of several weeks in September 2001 documented rescue and recovery efforts that were broadcast around the world.

Sonnenfeld claimed in his book “El Perseguido” (“The Persecuted”) and in numerous interviews that he was framed for murder to silence him. He maintains his video proves U.S. authorities were conspirators in the 9/11 attack. He claims members of President George W. Bush’s government wanted to draw the country into a war with Iraq.

CBS’s “48 Hours” provided documents to The Denver Post on Tuesday that detailed the executive decision made by the government of Kirchner. The TV news magazine is airing a broadcast called “The Strange Case of Kurt Sonnenfeld” on Saturday.

Lynn Kimbrough, spokeswoman for Denver District Attorney Mitch Morrissey, said the office has not received any notice about Argentina’s decision in September. However, she added that such notification would come through the U.S. Justice Department.

Messages left for Peter Carr, spokesman for the U.S. Justice Department, were not returned Tuesday.

The latest order in Sonnenfeld’s case was signed by five officials from Kirchner’s government, including Hector Timerman, foreign relations minister of Argentina.

The Argentine Supreme Court approved Sonnenfeld’s extradition in December, 11 years after then-District Attorney Bill Ritter first sought his extradition.

The 2004 extradition request was initially rejected by an Argentine federal judge who said Colorado failed to offer adequate assurances that it would not seek the death penalty against Sonnenfeld.

In its extradition request, Ritter indicated that Sonnenfeld was charged under a statute that did not have death as a possible penalty. He also signed a document promising not to seek the death penalty against Sonnenfeld.

Former Gov. Bill Owens also signed a document saying that if Sonnenfeld was sentenced to the death penalty, he would not allow his execution.

By Katia Porzecanski
November 17, 2015

* Morgan Stanley and Owl Creek also reduced YPF holdings
* Gramercy Funds, Discovery Capital added to YPF stakes

Goldman Sachs Group Inc., Morgan Stanley and hedge fund PointState Capital LP reduced their stakes in Argentina’s state-controlled oil producer YPF SA before the nation’s presidential elections.

Morgan Stanley cut its position in the company held in various portfolios by $48 million in the third quarter to $23 million, while Goldman Sachs sold a $41 million stake to reduce its holdings to $88 million as of Sept. 30, according to regulatory filings. Zach Schreiber’s PointState, which began amassing a position in YPF in 2013, reduced its total holdings in YPF by about 70 percent to $12 million, and hedge fund Owl Creek Asset Management lowered its stake by 81 percent.

YPF, which was expropriated by the Argentine government in 2012, become a widely-held security among hedge funds betting on an investment boom once a new president is sworn into office next month, which could pave the way toward a settlement with creditors from the country’s 2001 default. While investors reduced their positions in the oil company amid a slump in crude prices in the third quarter, YPF’s American depositary receipts have rallied 35 percent since then as the nation heads towards a runoff election between market-favorite Mauricio Macri and Daniel Scioli on Nov. 22.

Companies including Rob Citrone’s Discovery Capital Management, Alan Howard’s Brevan Howard Asset Management, and Gramercy Funds Management increased their stakes in the third quarter. Still, Soros Funds Management lowered its holdings in the company for the second consecutive quarter, leaving billionaire George Soros’s position in the company at $154 million, the fourth-largest among minority shareholders.

By Carolina Millan
November 17, 2015

* Clorox, Telefonica also among companies with cash in Argentina
* Investors expect peso to plunge 38% over next three months

The currency devaluation that Argentina needs to restore its economic health is going to be painful for foreign companies swimming in pesos.

Coca-Cola Co., Clorox Co. and Telefonica SA are among businesses with millions of pesos that will lose value if the new government elected on Nov. 22 weakens the peso’s official rate, something economists are urging be done. Investors from George Soros to Richard Perry, and multinationals including Brazilian foodmaker BRF SA and American oilseed processor Bunge Ltd., have wagered on policy makers implementing much-needed economic reforms promised by the leading presidential candidates.

But the result could be bruising for some businesses with large hoards of cash, as currency controls have left foreign companies stuck with profits that they can’t move out of the country. There may be as much as $8 billion in company dividends that could not be repatriated in the period between 2012 and 2015, according to consulting firm Elypsis.

“It’s difficult, because they often have a lot of liquid cash that’s reserved for sending dividends abroad as soon as it’s possible,” said Orlando Ferreres, who runs Ferreres & Asociados, a consulting firm that advises companies including Coca-Cola and Total SA. “Some of them have bought buildings, but they don’t like that at all. It’s a way of protecting dividends, but it immobilizes the money.”

Argentina’s crawling currency peg has become one of the most prominent themes of the elections, with opposition leader Mauricio Macri vowing to lift currency controls and let the peso float freely on his first day in office. Ruling-party candidate Daniel Scioli has said he would lift restrictions gradually while continuing to control the exchange rate through central bank intervention so as to not hurt the purchasing power of Argentines.

Clorox, the U.S. consumer-products company that sells everything from bleach to salad dressing, has said it expects “business challenges” in Argentina next year, and warned it had $100 million of peso-denominated assets that would be affected by a devaluation. A 50 percent drop in the peso could have a material impact on earnings, Clorox executives wrote in a U.S. regulatory filing Sept. 25. The company is “monitoring developments in Argentina and is taking steps intended to mitigate the adverse conditions, but there can be no assurances that these actions will mitigate these conditions.”

Argentina contributed 4 percent of Clorox’s total sales in 2015, making it one of the about 70 companies in the Standard & Poor’s 500 Index that get at least a portion of their revenue from Argentina. A Clorox spokeswoman referred questions to the company’s latest earnings statement.

Coca-Cola said in a regulatory filing after the third quarter that it has $346 million stuck in Argentina because of currency controls. A Coca-Cola spokesman declined to comment on the country’s exposure to a peso devaluation. Madrid-based Telefonica told investors Nov. 6 that it has 105 million euros of pesos that it can’t send back to Spain. Telefonica declined to comment about its cash position in Argentina.

The list of companies that will be affected is incomplete because many break down their revenue by region, not specific country. Most also don’t specify how much cash they have in individual countries. It’s also not clear if the companies hedge their exposure to the peso, a move that could blunt any losses from a devaluation.

Investors expect the peso to fall 38 percent over the next three months to 15.5 per dollar, according to trading in non-deliverable currency forwards. That compares with the current official rate of about 9.6 per dollar. At the so-called blue-chip swap rate, a foreign-exchange value derived from buying bonds or stocks in pesos and then selling them abroad to obtain dollars, the peso trades at about 14.8 per dollar. Most individuals use illegal street markets to avoid controls, and pay 15 pesos per greenback.

Spanish security company Prosegur Cia. de Seguridad SA — after benefiting from increased demand for its armored-car services fueled by the country’s money printing –invested 70 million euros ($75 million) in real estate this year to “protect the cash” it has in the country, Chief Financial Officer Antonio Rubio Merino told investors Oct. 29. Prosegur gets 27 percent of sales from Argentina, according to data compiled by Bloomberg.

“Our business has a natural hedge because both our revenues and our costs, primarily labor, are in local currency,” Prosegur said in an e-mailed statement. “We also consider that the impact of a devaluation would be mitigated by Prosegur’s inflation adjustment.”

A devaluation could be advantageous for businesses that pay employees in the local currency while receiving dollars for their exports, such as mining companies. The chief executives of Silver Standard Resources Inc. and Globe Specialty Metals Inc. both told investors in recent presentations that a drop in the peso could be beneficial as it would lower their operating costs.

A peso devaluation would increase the flow of dollars into the country, helping rebuild foreign reserves, according to Barclays Plc strategist Sebastian Vargas. Exporters who have been delaying sending goods abroad in hopes of a better exchange rate will unleash a flurry of trade, he said.

Alejandro Diaz, the CEO of the local chapter of the U.S. Chamber of Commerce, which sent its first delegation to the country in 20 years earlier this month, said companies are looking toward the long term as they confront the upcoming changes.

“There’s a lot of expectation ahead — we’re not waiting for it to be Disney World in 2016, but we are ready for the challenges ahead,” Diaz said. “We’ve heard from different economic groups the intention to take the right long-term decisions, and we’re ready for these decisions and optimistic on how to face them.”

November 16, 2015

Facebook Page behind the Campaign Claims It Was All a “Joke”

The creativity of Argentinean government supporters has no limits when the goal is to win an election.

On Saturday, November 14, a day before the presidential debate ahead of the presidential runoff, pro-government groups on Facebook called on their follower to “hide the national ID” of relatives who don’t intend to vote for candidate Daniel Scioli of the ruling Front for Victory party.

The pro-Cristina Kirchner Facebook page “I Support Cristina” posted: “The campaign to ‘hide the national ID of your opponent relative’ has begun. If you couldn’t persuade them with arguments, and they can’t realize the government’s achievements, and, despite everything, they will still vote against themselves, don’t insist on making them listen to reason. On the 21st of November [one day before the election], hide their national ID card, and when they ask you about it, tell them: ‘it wasn’t magic.”

Felipe Alonso ‎@felipealonso19
Si tenes un familiar, amigo o conocido que vote a Macri NO LO DUDES, robale el DNI
1:47 PM – 10 Nov 2015
“If you have a relative, a friend, or an acquaintance that will vote Macri. Don’t think it twice, steal his national ID.”

The national ID is the only valid document to vote in Argentina.

The campaign quickly gained traction, first among pro-government supporters, and then among Kirchner’s opponents, who expressed outrage over the idea. Local media quickly picked up the post.

After 48 hours, however, the “I Support Cristina” page’s administrator wrote a new post explaining that the previous exhortation had been “a joke.”

“Who can believe that someone would steal a national ID card from someone else?” the page administrators wrote. “Do I have to explain that this was a joke? As you may know, our post has been widely covered by the media, but we win by being active every day on the streets.”

Buenos Aires Governor Daniel Scioli is now trailing in the polls. He was the favorite to win prior to the first round of voting on October 25, but he obtained less votes than expected.

While pollsters put Scioli between seven and 10 points ahead of Mauricio Macri, the candidate for the Let’s Change coalition of opposition parties, Macri came in only three percentage points behind — 34.15 percent to Scioli’s 37.08 percent — in the official results. After the narrow defeat, Macri gained sufficient momentum to overtake Scioli in the polls.

According to the pollster Management & Fit, Macri would defeat his rival, securing an eight-point difference over Scioli.

By Kabir Sehgal
Nov. 17, 2015

On Nov. 22, Argentines will go to the polls to elect a new president. It’s a watershed moment for the country, as the late Néstor Kirchner and then his wife, Cristina Fernández de Kirchner, have held the president’s office for 12 years — long and arduous years for Argentina.

During their back-to-back tenures, Argentina has experienced recession, high bouts of inflation, disputes with creditors and fiscal deficits. In 2009 it was downgraded from an emerging market to a frontier market. Many blame the populist policies of the Kirchners as causing and exacerbating the country’s problems. Therefore, the prospect and promise of a new president has some thinking that Argentina could finally turn the page on its lost decade. Argentina could shift to the right and adopt more market-friendly policies, which would benefit local and foreign investors.

So who will win the upcoming election? Argentines will choose between two candidates during this Sunday’s runoff election: Mauricio Macri, a businessman and current mayor of Buenos Aires; and Daniel Scioli, the former vice president of Argentina and the governor of Buenos Aires Province. A recent poll shows Macri leading Scioli by 8 points. Scioli is viewed as an incumbent and was endorsed by the current president. That Macri is leading suggests that Argentina is ready for a more dramatic change from Kirchnerism and wants to finally embrace the opposition party. “This is a problem of trust,” Macri said in a recent interview. “This government has destroyed trust among Argentines and the world. We are going to put Argentina back on a path to growth and back into the world.”

During the latest presidential debate, Scioli failed to disassociate himself from the Kirchners while attacking Macri as wanting to dismantle Argentina’s welfare programs. Macri counterattacked Scioli by saying, “You’re not change. You chose continuity.” Macri also made the case that Argentina’s roadblock was in fact its own government: “Argentina’s problem is not the dollar. It is a government that does not stop lying and has destroyed confidence in our country, which is why there’s no investment or growth.

Inflation has diluted the income of our retirees and our workforce.” Macri also said that he would emphasize market-friendly policies that would help generate confidence among local and foreign investors. Macri added that he would implement an ambitious infrastructure program of about $16 billion, cut taxes to attract investments, reduce tariffs to encourage trade and unwind many capital controls.

If Macri wins, Argentina’s market should respond favorably. There are a few companies with exposure to Argentina to watch: 98% of Americas Petrogas’s revenue comes from the country, 45% of Silver Standard’s (SSRI – Get Report) total assets, 18% of Mercado Libre’s (MELI – Get Report) revenue, and 8% of AMBEV’s (ABEV – Get Report) revenue. These stocks might appreciate on news of Macri’s potential victory.

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By Larry Neumeister
October 30, 2015

NEW YORK — Argentina cannot pay some bondholders while refusing to pay $6.1 billion in claims by creditors who refused to swap their bonds for steeply discounted replacements in the South American nation after it defaulted in 2001 on $100 billion in bonds, a judge said Friday.

U.S. District Judge Thomas Griesa’s written ruling means Argentina would owe about $8 billion to creditors who refused the swaps that were accepted by about 93 percent of Argentina’s bondholders in 2005 and 2010.

Griesa said the republic must pay all bondholders who refused to swap their bonds if it chooses to pay those who did. With the bond swaps, Argentina invited creditors to exchange their old bonds for newly issued bonds worth between 25 percent and 29 percent of the original bonds’ value.

The Manhattan judge said Argentina has violated its promise to treat the $6.1 billion in bonds equally with bonds distributed during the discounted swaps.

“The republic has made clear its intention to defy any money judgment issued by this court, and plaintiff has no other means to enforce its rights,” Griesa said.

An Argentina lawyer did not immediately comment.

But in court papers, lawyers for the republic had urged Griesa to reject adding the $6.1 billion in claims to money owed by Argentina, saying it would raise to a “staggering amount” of $8 billion the amount owed to bondholders who refused the swaps and would threaten the nation’s Central Bank reserves.

“Those reserves are vital to maintaining the healthy functioning of the Republic’s economy, and the requested orders would subject the Republic to an unacceptable degree of catastrophic risk,” the lawyers said.

After the 2001 default, U.S. hedge funds including NML Capital scooped up Argentina’s bonds, but refused the swap offers, choosing to sue to enforce the contracts they signed.

In a statement Friday, NML lawyer Robert Cohen said Griesa’s ruling does not change Argentina’s obligations but instead confirms that Argentina must treat its creditors equally.

By Andres Oppenheimer
31 October 2015

Here’s a scenario that seemed highly unlikely only a few weeks ago, but that has a 50 percent chance of happening in light of the political earthquakes that are rocking Argentina, Brazil and Venezuela, and that could mark the end of a 15-year-old leftist populist cycle in South America.

It would go like this:

Argentina’s center-right opposition leader Mauricio Macri, bolstered by his unexpectedly strong performance in the Oct. 25 first-round presidential elections, wins the Nov. 22 runoff elections. Macri would lure an avalanche of foreign investments and spur hopes of a dramatic economic recovery after several years of economic downturn.

An open critic of populist authoritarian regimes, Macri has said that if elected, he would demand that Venezuela abide by regional commitments to democratic rule. His election would make big headlines everywhere, and turn him into an important regional figure.

(A milder version of this scenario would take place in the event of a victory by Argentina’s government-backed candidate Daniel Scioli. He is more moderate than outgoing president Cristina Fernández de Kirchner, and would not be as close to Venezuela as she is.)

Meanwhile, in Brazil, prosecutors might link beleaguered President Dilma Rousseff, whose popularity has sunk to 9 percent, to the Petrobras oil company corruption scandal. Congress might decide to impeach her, and the country would plunge into a constitutional succession, or early presidential elections. Brazil would shift toward more market-friendly economic policies, and take greater distance from Venezuela and its leftist allies.

(A less dramatic version of this scenario would be if Rousseff decided to weather the storm by convening a “national unity” government with opposition parties to remain in office during the remainder of her term.)

These major changes in South America’s political map would have a major impact on Venezuela’s key Dec. 6 legislative elections. They would deprive Venezuelan President Nicolás Maduro from the support of the region’s biggest countries if he decided to rig the vote. With the economy shrinking by 8 percent this year, a 200 percent inflation rate — the world’s highest — and widespread food shortages, Maduro’s party would almost surely lose a free election, pollsters say.

In recent Venezuelan elections, Brazil and Argentina had immediately accepted official results, which were disputed by Venezuela’s opposition. That may not happen this time around.

Maduro, who has refused to allow electoral observers from the European Union or Organization of American States, could call for an urgent presidential summit of UNASUR, an Ecuador-based South American group that has often supported him, to validate a rigged election result on election night. He could still count with Argentina’s outgoing president Fernández, whose term expires Dec. 10.

But moderate UNASUR members, such as Chile and Colombia, would most likely schedule such a meeting for after Dec. 10, once the outgoing Argentine president is out of the picture. Without unconditional support from Argentina and with a skeptical Brazil — whose electoral tribunal has already announced that it will not send electoral observers to Venezuela because of concerns over that country’s electoral process — the Venezuelan government would only count with the support of smaller allies such as Bolivia, Ecuador and Nicaragua.

If Maduro’s party loses the Dec. 6 election and he refuses to concede, there could be enough consensus within the OAS to invoke the group’s Democratic Charter, which calls for the collective defense of democracy in the region.

Diego R. Guelar, head of Macri’s party’s international relations office, told me that a Macri administration would not validate a fraudulent election in Venezuela. Furthermore, it would seek to team up with Brazil to sign a free-trade deal with the European Union and the Pacific Alliance made up of Mexico, Colombia, Peru and Chile.

Macri’s election “would mark a significant regional shift, and end of our region’s isolation from the world’s biggest trading blocs,” Guelar said.

My opinion: An opposition victory in Argentina’s runoff vote would change Latin America’s political map, ending 15 years of corrupt leftist populist governments that have left their countries bankrupt. I’m not yet willing to bet that this regional scenario will come true, but there’s an even chance that it will.

By John Paul Rathbone
November 1, 2015

Volatile times ahead in region as popular expectations remain high

The commodity supercycle ended and in the Americas the political repercussions have followed swiftly. Almost everywhere, the status quo is being upended. Citizens are agitating for change. Their ends are sometimes revolutionary.

In Argentina, pro-business presidential candidate Mauricio Macri may well end 12 years of populist rule at an electoral run-off on November 22. In Brazil, Dilma Rousseff, elected president last year, is now the most unpopular leader in national history, while her Workers Party is in disgrace.

In Venezuela, the long-ruling socialist party will likely be trounced in December’s mid-terms; the only question is by how much. In Guatemala, a television comedian with no political experience has been elected president while his predecessor has been indicted for corruption.

The list of political reversals goes on. Nor is this only a Latin phenomenon: it extends to Anglo-Saxon commodity countries in the hemisphere, too.

Stephen Harper, Canada’s prime minister, was toppled from office last month. Like his Latin counterparts, Mr Harper had happily ridden the commodity super-cycle. During his election campaign, he imagined a fourth term. Instead, voters swung against his divisive “prairie conservatism” and unexpectedly chose the inexperienced social democrat Justin Trudeau instead.

What is going on? Are there common themes linking these events?

In South America, it seems that voters have grown tired of a decade of mostly leftist rule, the so-called “pink tide”, and are now moving back to the centre. But in Canada the pendulum has swung the other way. That suggests more complex underlying reasons.

One common theme is that the stability of the recent past is now associated with stagnation. Another is popular disgust with incumbents who overstayed their time in power, becoming arrogant and often corrupt. Brazil’s $2bn corruption scandal at Petrobras, the state owned-energy company, is a striking example. But it is far from the most venal. For that look to Venezuela; its government has become a byword in the region for intransigence and criminality.

This new middle class has lofty personal aspirations and high expectations of what government should be: modern, transparent and open to creating opportunity. These are reasonable goals but many are also quick to mobilise in pursuit of them, especially the young

What is striking is how citizens now feel empowered to challenge the status quo. Sometimes that is testament to stronger institutions, especially the judiciary. But it may also be due to Latin America’s “new middle class”, which has doubled to 200m people since 2001, according to the World Bank.

This new middle class has lofty personal aspirations and high expectations of what government should be: modern, transparent and open to creating opportunity. These are reasonable goals but many are also quick to mobilise in pursuit of them, especially the young.

This can have positive outcomes, but not always. Sometimes it just generates “corrosive social conflict, government paralysis and political instability”, notes Moisés Naim of the Carnegie Endowment.

That is especially so now that economic growth has slowed, discontent is rising and governments are looking for ways to re-ignite growth. Some policies are easy to discern: more investment in decayed infrastructure (one of Mr Trudeau’s promises for Canada); and improved productivity (a central plank of Mr Macri’s pro-business agenda in Argentina.) Less easy is how to maintain the social gains of the recent past while also balancing government books.

Argentina dramatises this tension, which is why its election is such an important harbinger. Outgoing president Cristina Fernández doubled state-spending in only five years. That bout of free-spending populism explains her relatively high popularity.

But it also leaves behind a mess that will be politically difficult for her successor to fix, especially as austerity is associated with “neoliberal” policies that led to Argentina’s economic collapse and debt default of 2002.

Cynicism clouds the debate. In Brazil, former president Luiz Inácio Lula da Silva has criticised needed spending cuts. But his criticism may have less to do with social concerns, and more to do with rallying his political base amid the Petrobras probe. Last week, police raided the offices of one of his sons; the week before, another was accused of receiving Real2m ($518,000) in kickbacks.

In South America, popular expectations remain high. There are also fewer means to meet them. That makes for a dangerous mix. Volatile times surely lie ahead.

By Bob Van Voris and Katia Porzecanski
October 30, 2015

* Default bondholders must be paid before restructured debt
* U.S. judge has blocked payments on $28 billion in new debt

Holders of more than $6.1 billion of defaulted Argentine debt were added by a U.S. judge to a group of bondholders who must be paid before the South American country can pay its restructured debt.

The ruling Friday by U.S. District Judge Thomas Griesa in Manhattan puts additional pressure on Argentina to settle with holders of the defaulted debt, led by Paul Singer’s NML Capital. The decision means Argentina must reach a deal or pay $7.9 billion in defaulted bonds before it can resume interest payments on $28 billion of restructured debt.

Argentina claimed Griesa’s decision would make it harder to negotiate a settlement with bondholders.
At a hearing Wednesday, Carmine Boccuzzi, a lawyer for Argentina, had argued that adding to the list of investors blocking payments on the restructured debt would mean “spreading the veto power among hundreds of bondholders.”

A lawyer for NML argued that Argentina has showed no interest in discussing a possible settlement.

Record Default
Argentina defaulted on a record $95 billion in sovereign debt in 2001. It restructured most of the debt in 2005 and 2010. The holdouts, which include U.S. hedge funds, sued for full payment, citing an equal treatment — or “pari passu” — clause in the bond documents, which prevents Argentina from favoring later bondholders.

Griesa blocked Argentina from paying the restructured bondholders before holders of $1.7 billion of its defaulted debt, triggering the nation’s second default in 13 years in July 2014, when President Cristina Fernandez de Kirchner refused to comply. A group of 530 so-called me-too bondholders asked Griesa to add their claims to the group that must be paid in full.

“Today’s decision does not change the size of Argentina’s obligations,” Robert Cohen, an attorney for NML, said in a statement. “It merely confirms Argentina’s promise under the pari passu clause to treat its creditors equally.”

Argentina’s bonds have surged on the expectation that Fernandez’s successor, whose term is to begin in December, will resolve the holdout dispute and bring the country back to international capital markets.

Argentina’s presidential elections on Oct. 25 deepened investors’ optimism when Mauricio Macri, who has publicly vowed to settle the litigation, surprisingly finished in a near-tie with the ruling party candidate. The two are now slated to face each other in a runoff on Nov. 22.

The case is NML Capital v. Republic of Argentina, 14-cv-08601, U.S. District Court, Southern District of New York (Manhattan).

By Jonathan Stempel
Oct 30, 2015
The U.S. judge overseeing litigation stemming from Argentina’s $100 billion default in 2002 ordered the country to pay holders of several billion dollars of its defaulted bonds whenever it pays holders of bonds issued in two debt restructurings.

U.S. District Judge Thomas Griesa in Manhattan ruled on Friday in favor of plaintiffs in 49 lawsuits seeking the same relief as holdout bondholders, including Elliott Management Corp’s NML Capital Ltd, which won a court ruling that directed Argentina to pay it $1.33 billion plus interest.

Argentina has not complied with that ruling, and defaulted again in July 2014 as a result. The additional plaintiffs are known as “me-too” plaintiffs because their bonds are similar to those owned by the holdouts.
Carmine Boccuzzi, a lawyer for Argentina, did not immediately respond to requests for comment.

Argentina swapped 92 percent of its defaulted debt at a steep discount in 2005 and 2010 restructurings. But it has refused to pay holdout bondholders, who it calls “vultures” for seeking full payment on their unswapped bonds.
Like the holdouts, the “me-too” plaintiffs’ bonds contain a clause requiring Argentina to pay them whenever it pays investors who own bonds that were swapped.

Griesa said that clause must be enforced, saying it was in the public interest, and citing Argentina’s having “escalated its scheme” to pay holders of restructured bonds even as it refuses to pay holders of unrestructured bonds.
He also rejected Argentina’s argument that an injunction requiring equal treatment could impede settlement talks with the holdouts, overseen by court-appointed mediator Daniel Pollack.

“The Republic’s reluctance to entertain meaningful settlement discussions before the special master should not prevent plaintiffs from vindicating their rights,” Griesa wrote. “If anything, the equities cut the other way.”

Argentinians voted on Sunday to choose a successor to President Cristina Fernandez, a leading critic of the holdouts. A runoff between ruling party candidate Daniel Scioli and opposition candidate Mauricio Macri is scheduled for Nov. 22.

By Andrew Scurria
Oct 30, 2015

Argentina’s recovery from a 2001 debt default is still tangled up in court, stymied by a determined group of hedge funds who broke with other creditors and refused to take a negotiated haircut. Now, states and cities facing unsustainable pension costs across the U.S. are facing their own holdout problem.

For municipal bond issuers stretching from Chicago to Rhode Island, Atlanta to Dallas, cost-saving pension deals hammered out with public unions are in jeopardy because of legal challenges by small, dissenting employee groups.

Pensioners enjoy strong legal guarantees under many state constitutions, so prying concessions loose at the bargaining table represents the only way of getting out from under crushing retirement bills without turning to Chapter 9 bankruptcy. But legal precedent in states like Illinois and Pennsylvania make it nearly impossible to bind workers to a pension cut they don’t want.

The objectors pushing these lawsuits are drawing ire not just from their government employers but also from their fellow workers, leaving policymakers searching for a way to silence them.

Chicago became the highest-profile victim in July when a judge struck down a pension agreement forged in 2013 by Mayor Rahm Emanuel. Municipal market watchers expect more to come.

“Even if there are changes that are not wholesale diminutions of people’s pensions, but just tweaking to safeguard the financial risk or somehow make it a little more financially sound, it’s going to get challenged by someone and it’s going to end up in the courts,” said Alaine Williams, a labor attorney with Philadelphia-based Willig Williams & Davidson.

Consider Chicago. Faced with two retirement systems scheduled to go broke before 2030, the mayor convinced 28 of the city’s 31 municipal labor unions to accept benefit cuts for both midcareer and future workers; in exchange, the city took on new pension funding mandates and empowered the unions to force those payments in court.

Much to the chagrin of the proponents, three unions would not play ball. Their subsequent legal victory came in part because Chicago did not negotiate through collective bargaining, likely because city officials were not sure they would prevail on a straight worker vote, according to sources involved in the litigation.

Judge Rita Novak found “no evidence that, in reaching an agreement with the city, the union officials followed union rules and bylaws in such a way as to bind their members as true agents.” The city has since appealed to the Illinois Supreme Court.

Submitting the deal for a stakeholder vote would have made a holdout challenge harder because the holdouts may have been bound by the collective bargaining process, said Karol Denniston of Squire Patton Boggs;. The objectors theoretically could have claims against their bargaining units, but not against the city.

In Illinois, the problem has some reconsidering the very idea of negotiated pension deals. There may be ways to reduce liabilities outside of the group setting, but the parade of lawsuits has kept those ideas in their infancy. One, introduced this month by Illinois Rep. Mark Batinick, would offer a voluntary pension buyout to individuals. Those who take the up-front payment would receive less than the full present value of their accrued benefits, with the savings accruing to the state.

Making the buyout optional, not forcible, avoids some of the constitutional problems that doomed the state’s last stab at pension reform.

The next holdout fight could be in Pennsylvania, where Governor Tom Wolf (D) is furiously horse-trading with Republicans who want pension reforms baked into an overdue 2016 budget. Alas, unlike Pennsylvania cities, the state itself is barred from bargaining with its workers over pensions. Rounding up support from 100% of the affected workers is impossible, and without some binding process in place the holdouts will continue to have the upper legal hand. When the stalemate breaks, as it always seems to, it will only take one worker and one lawyer to send the state back to square one.

By Belén Marty
October 30, 2015

Mariano Obarrio: Mauricio Macri Promises Critical Boost for International Commerce

Opposition leader Mauricio Macri shocked the nation with his performance in the Argentinean presidential election this past Sunday. The days following the polls were filled with celebrations and media appearances, but now Marci must prepare to face the ruling Front for Victory coalition candidate, Daniel Scioli, in a runoff on November 22.

Scioli won the first round on October 24, but by a much narrower margin than expected. Heading into the runoff, Scioli promises to be “more Scioli than ever,” and plans to debate Macri on November 11, even though he refused to take part in the first debate prior to the initial round of voting.

As we near the final stage of the election, internal divisions threaten to undo the ruling coalition. During Sunday’s polls, the radical Kirchnerist faction of the party, La Cámpora, did not show up to Scioli’s campaign headquarters, and instead rallied behind President Cristina Kirchner’s candidate for the governorship of Buenos Aires, Aníbal Fernández. Nevertheless, Fernández lost the election to opposition candidate María Eugenia Vidal.

The PanAm Post sat down with Argentinean political journalist Mariano Obarrio to discuss the internal collapse of Kirchnerist forces, how a change in leadership may affect Argentina’s foreign relations, and the virtues and deficiencies of the two competing presidential candidates.

Why did pro-Kirchner youth group La Cámpora withdraw its support for Scioli? Will it affect his chances of winning the runoff?

Within La Cámpora, there were conflicting views. Its leader, national Congressman Andrés Larroque, and Máximo Kirchner, the president’s son, were more against Scioli than Wado De Pedro, secretary general to the presidency, and Mariano Recalde, president of state-owned Aerolíneas Argentinas.

The reasons were ideological: they don’t share Scioli’s political goals and view him as an economic-establishment figure. They didn’t like Scioli distancing himself from President Kirchner, but most importantly, they are certain that Scioli wouldn’t give them a single government position, and that he may very well fire many state employees who are members of La Cámpora.

La Cámpora won’t sway the results one way or the other; they don’t seem to hold that kind of power. Yet, they could damage Scioli by causing his supporters to withdraw financial support, as well as generating conflicts which would do nothing to help his cause. They are punishing Scioli.

If he wins, what would be the virtues and defects of a Macri administration?

As for virtues, his government would be more rational, conservative, with economic ideas more akin to capitalism with industrial development. He would negotiate with the holdout bondholders, lower government spending, let the economy adjust to reality, address inflation, and encourage investment.

As for defects, he has little political experience, lacks a majority in Congress, and has a tendency to disregard proposals or ideas not coming from his “narrow circle” of allies. He would need to come to an agreement with other parties to ensure governance, and he has very few political agents to negotiate controversial topics with the Peronists.

How would Macri shift Argentina’s foreign relations? What about Argentina’s stance regarding Venezuela and Leopoldo López’s incarceration?

Macri has been very critical of López’s arrest and conviction.

He has no allegiance to Chavismo, and is a strong critic of populist regimes in Latin America.

He would improve relations with Mercosur, the United States, and the European Union, especially Italy and Spain, since Argentina has let these relations grow cold.

How would Macri improve the economy without assuming the political cost of readjustment? Will he lift foreign-exchange controls?

As announced, he would immediately lift all foreign-exchange controls.

He would seek large sums of US dollars via reductions in export taxes and, although he hasn’t admitted it, a renewal in exchange rates, which would improve the nation’s fiscal profile.

He would also attract investors and credit using a comprehensive pro-market and pro-investment plan.

Why couldn’t Scioli win outright in the first round? Was it the internal conflict among pro-Kirchner groups, or his inability to win Buenos Airies?

It was, without a doubt, a combination of the two. However, in order of relevance, I would list the following:

1.Cristina Kirchner’s grave mistakes in appointing candidates for Congress.

2.His support for Aníbal Fernández for governor of Buenos Aires, a candidate with a bad public image who faces accusations of drug
trafficking; he’s even been questioned by the Church, and you must remember that the current pope is Argentinean.

3.Naming Carlos Zannini as his running mate, which moved him away from an independent candidacy and linked him to hard-line Kirchnerism.

4.President Kirchner’s overwhelming presence in his campaign, with dozens of national TV broadcasts that saturated the public airwaves, many of which with Scioli at her side.

5.Lack of innovation and reform in his proposals.

6.The discrepancies in political discourse between Scioli and other pro-Kirchner groups: Scioli’s image became worn out after continuously associating with Kirchner, thus making him appear as someone who bows down to the president’s wishes.

By John Hopewell
30 October 2015

MAR DEL PLATA — Opening with Arnaud Desplechin’s lauded “My Golden Years” – Variety’s Justin Chang called it “marvelously vivid” – Argentina’s 30th Mar del Plata Festival sees obvious change: A new executive management duo in artistic director Fernando Martin Peña and general producer Ignacio Catoggio. After backing on to Ventana Sur in a late November berth last year, fest runs Oct. 30-Nov. 7, to avoid a clash with potential second-round voting in Argentina’s upcoming general elections.

Overall however, the 30th edition of Latin America’s only “A”-grade fest aims for continuity, and continuity in growt, in its international interface and industrial heft.

Welcoming Johnnie To, Desplechin and Peter Sohn, in town to sneak peek extracts from “The Good Dinosaur,” at one at the same time, Mar del Plata is opening up to its own city, making use of a pristine multiplex, which looks set to boost fest attendance.

Continuity: José Martinez Suarez is now in his ninth year as Mar del Festival president. For the eighth year running, Festival is backed by Argentina’s powerful INCAA Film Institute, also partner with the Cannes Festival and Cannes Film Market in Ventana Sur, Latin America’s biggest film mart-meet. That backing dovetails Mar del Plata into INCAA bigger picture strategic international, federal and regional vision, which has helped fire up Argentine filmmaking at home and abroad.

Also still in place: Mar del Plata’s hallmark left-of-field selection. 2015’s International Competition is a case in point. Some titles are eminently known: Atom Egoyan’s road movie come suspense thriller “Remember,” a Venice competition player produced by Robert Lantos, sold by IM Global; “Starlet” Sean Baker’s “Tangerine,” set in the L.A. demi-monde; Stephane Brize’s social drama “The Measure of a Man,” which won Vincent Lindon best actor at Cannes.

But there are, as often, a clutch of lower-profile titles: Slovac Ivan Ostrorochovsky’s docu-fiction “Koza,” a boxer comeback tragicomedy that played Berlin’s Forum; Sergio Oksman’s “O Futebol,” a frustrated father-son reunion drama, in Locarno competition; above all, “The Island of Wind,” from Spaniard Manuel Menchon Romero, which recreates the last years of principled Spanish philosopher Miguel Unamuno who, in an act of notable courage, raised his voice against Francisco Franco’s murderous new regime.

Big fest laureates pack out the line-up: Pablo Larrain’s chamber drama “The Club,” about unpunished Catholic Church abuse, a Berlin 2105 Grand Jury Prize winner; Ciro Guerra’s “Embrace of the Serpent,” a testament to the West’s destruction of Amazon civilizations, which topped Cannes’ Directors’ Fortnight; “The Apostate,” from Federico Veiroj, which won a special mention at San Sebastian, a comedic drama steeped in Madrid culture about one man’s battle to find his own path to maturity.

However mainstream in some elements, they weigh in – in highly disparate ways – on the often-edgier side of arthouse. Symptomatically too, fest opens with a title not from International Competition but fest’s vast and rich Authors sidebar that features, among many others, Guy Maddin’s “The Forbidden Room,” Hou Hsiao-Hsien’s “The Assassin,” Frederick Wiseman’s “In Jackson Heights,” Miguel Gomes’ “Arabian Nights,” Jia Zhanke’s “Mountains May Depart” and Johnnie To’s own “Office.”

Fest’s International Competition also frames three Argentine titles, one Pablo Aguero’s “Eva Doesn’t Sleep,” which played at San Sebastian, a surrealistic true-fact based reimagining of the 25-year odyssey of Eva Peron’s embalmed corpse.

Set in the 60s and shot in b/w, “Incident Light,” from Ariel Rotter, (“The Other,” a Berlin Grand Jury Prize winner) pictures a young widow, already courted for second marriage. Another world premiere, and a thesping three-hander, “Popular Mechanics,” from Alejandro Agresti (“The Lake House”) pits a literary editor who’s seen it all against a young writer aiming for the literary bigtime.

This year, Mar del Plata received 2,800 film submissions for its competitions, a historical high, said Catoggio.

That is recognition of an “established festival line which is increasingly popular,” he added.

Of 2015 growth moves, the biggest is LoboLab, Mar del Plata’s first co-production forum.

Projects run the broadest of gamuts, per Catoggio. Highlights include a move into production by both celebrated auteur Lisandro Alonso (“Jauja”) with Constanza Novick’s femme friendship drama “The Future Ahead” and by Chilean helmer Dominga Sotomayer (“Thursday Through Sunday”) with Felipe Galvez’s genocide exposé “The Settlers” to “The Bums,” the potential directorial debut of Gustavo Biazzi, d.p. on Santiago Mitre’s “The Student” and Cannes Critics’ Week winner “Paulina.”

But as important is the presence of projects from lesser-known but building national cinemas, Catoggio argued. One example: Ecuador. Javier Izquierdo’s “Panama” is a LoboLab project; a 10-strong Ecuador delegation will attend. LoboLab also features Chile Factory, the Giancarlo Nasi and Dominique Welinski-produced new talent showcase from Chile, a country which punches way above its weight in cinema.

Lobolab looks set to spark synergies with INCAA/Cannes’ Ventana Sur. “We wanted the projects to be from people who normally don’t make markets. Mere attendance aids participants’ professionalization, readies them to participate in consolidated markets such as Ventana Sur,” Catoggio observed. One LoboLab prize is indeed a Ventana Sur invite.

Mar del Plata will also add six new screens, thanks to a Paseo Aldrey six-plex, opened Oct. 28, plus a screening room at the city’s Museum of Contemporary Art for retrospectives and restorations.

New sites boost Mar del Plata’s screen count from 13 to 21, allowing the programming and sessions to breath, Catoggio said. The 21st screen will be on the beach, “a model we took to a certain extent from Cannes.”

In a departure, the Intl. Federation of Film Producers Associations (FIAPF), the fest regulator, will hold its annual meeting at Mar del Plata over fest’s first weekend.

Cancelled four times from 1954, but running every year since 1996, fest can now play off the energy and exponential growth of Latin American cinema in general and Argentina’s in particular. In 2014, Argentina punched a 17.8% national film market share, a modern record, thanks to “Wild Tales.” With $17.2 million through Oct. 25, Pablo Trapero’s “The Clan,” a Venice best director winner, is another reminder that one of the biggest film phenomena of modern times is the build of national film industries around the world. Mar del Plata affords an entry to many of its Argentine and Latin American players.


“Eva Doesn’t Sleep,” (Pablo Agüero, Argentina, France, Spain)

“Incident Light,” (Ariel Rotter, Argentina, Uruguay, France)

“Popular Mechanics,” (Alejandro Agresti, Argentina)

“Remember,” (Atom Egoyan, Canada)

“The Club,” (Pablo Larraín, Chile)

“Embrace of the Serpent,” (Ciro Guerra, Colombia, Venezuela, Argentina)

“Koza,” (Ivan Ostrochovsky, Slovakia, Czech Republic)

“The Apostate,” (Federico Veiroj, Spain, France, Uruguay)

“O Futebol,” (Sergio Oksman, Spain)

“The Island of Wind,” (Manuel Menchón Romero, Spain)

“Tangerine,” (Sean Baker, United States)

“The Measure of a Man,” Stéphane Brizé, France)


“Samuray-S,” (Raúl Perrone, Argentina)

“Campo Grande,” (Sandra Kogut, Brazil, France)

“Beyond My Grandfather Allende,” (Marcia Tambutti Allende, Chile, Mexico)

“The Monument Hunter,” (Jerónimo Rodríguez, Chile)

“600 Miles,” (Gabriel Ripstein, Mexico)

“What We Never Said,” (Sebastián Sanchez Amunátegui, Mexico, Argentina)

“Evilness,” (Joshua Gil, Mexico)

“Santa Teresa & Other Stories,” (Nelson Carlo De Los Santos Arias, Mexico, Dominican Republic, United States)

“I Promise You Anarchy,” (Julio Hernández Cordón, Mexico, Germany)

“Suspended Time,” (Natalia Bruschtein, Mexico)

“From Afar,” (Lorenzo Vigas, Venezuela, Mexico)


“The Spider’s Lullaby,” (José Celestino Campusano, Argentina)

“Road To La Paz,” (Francisco Varone, Argentina, Netherlands, Germany, Qatar)

“How Most Things Work,” (Fernando Salem, Argentina)

“Docile Bodies,” (Matías Scarvaci and Diego Gachassin, Argentina)”

“Easy Ball,” (Juan Fernández Gebauer and Nicolás Suárez, Argentina)

“Hortensia,” (Diego Lublinsky and Alvaro Urtizberea, Argentina)

“Kryptonite,” (Nicanor Loreti, Argentina)

“El movimiento,” (Benjamín Naishtat, Argentina, South Korea)

“Paula,” (Eugenio Canevari, Argentina, Spain)

“Pequeño diccionario ilustrado de la electricidad,” (Carolina Rimini and Gustavo Galuppo, Argentina)

“The Football Boys,” (Jorge Leandro Colás, Argentina)

“Our Last Tango,” (Germán Kral, Argentina, Germany)

By John Hopewell and Emilio Mayorga
1 November 2015

MAR DEL PLATA: On the first leg of a jet-setting promo tour, Peter Sohn, director of “The Good Dinosaur,” unveiled a never-seen-before scene from Disney-Pixar’s big Thanksgiving Day play at a master class delivered Sunday at Argentina’s Mar del Plata Festival.

He also spoke from the heart about inspiration for his career and film – his mother, for instance – which he called “a coming of age” and “survival tale” which, when asked to sum up in one phrase, is about “overcoming one’s fears.”

The excerpt, about five minutes long, also says much about the character/background animation contrast that gives “The Good Dinosaur” much of its style.

As the first teaser for “The Good Dinosaur” made clear, Sohn’s debut feature turns on two premises: that the asteroid that wiped out the dinosaurs missed the earth; the dinosaurs evolved: Sohn’s film pictures Arlo, a talking Apatosaurus who befriends Spot, a dog-like cave boy who manages to grunt but doesn’t speak. After tragedy for Arlo, they embark on a journey. In its middle, they happen upon a family of three T-Rex ranchers who’ve had their cattle – longhorn buffalo – stolen by rustlers. Spot has a great sense of smell, which leads them to the herd, and their rustlers. The scene has Arlo terrified twice: by the T-Rex daddy, and second when the T-Rexes force him to walk down to stolen herd and holler for his life to draw out the rustlers: He can only manage a whisper until Spot bites him on the leg.

Arlo is soft-featured, leaf-green, still spindly on his legs, with pronounced eyes and knees, utterly non-threatening; the herd and the breeze-caught grassland around it, by contrast – as Peter Debruge noted when reacting to another scene from “The Good Dinosaur” at June’s Annecy Animation Fest in France – is shot with a near photo-realism, as if Pixar was producing a prehistoric documentary.

And the movie’s leitmotif – overcoming one’s fears – surfaces at two moments: Arlo is terrified first by the T-Rex family, but they turn out to be a good working family; when asked to shimmy down from a knoll to the herd and bellow, so as to bring the rustlers out of hiding, he can merely manage a gasp, until Spot helpfully bites him on the leg. Then he bellows in pain.

In its original manifestation, “Up’s” Bob Peterson had imagined Arlo as older, pictured the Arlo-Spot relationship as that of a neo-father-son. Sohn said at the Mar del Plata Fest Sunday in contrast that Arlo and Spot are like “brothers.” Voiced by child actor Raymond Ochoa, Arlo, indeed, looks younger on screen and in at least in one item of merchandising –a long-necked, clumpy-footed plant-sprout green toy Arlo plumped on the table in front of Sohn – than his 11 years, a fact which will allow him to appeal squarely to tykes.

The photo-realism of “The Good Dinosaur” is not just a stylistic flourish, however. An engaging speaker, Sohn also provided some intriguing details about the different directorial styles of Pixar icons whom he has worked with, as a scratch actor: Pete Docter on “Up,” “Inside Out,” Andrew Stanton, on “Finding Nemo.”

“Pete Docter would always hit the heart. He would always say: ‘What’s inside you? What are you feeling?’ He would always push for that.”

There’s a larger emotional dimension to “The Good Dinosaur,” indeed dinosaurs in general, Sohn argued in Argentina. “There was something kind of fun about the scale of dinosaurs, about a farming dinosaur that was very sincere,” Sohn said. “But there’s also an emotional connection. When you’re called a dinosaur, you’re old and stuck.”

Arlo suffers terrible tragedy in “The Good Dinosaur.” “So emotionally he is stuck. But with the help of his friend, he’s able to move forward.”

“The Good Dinosaur” bows Thanksgiving Day in the U.S. Being a Pixar movie, it is already being talked up as an Academy Award candidate in the animation category.

By Hugh Thomson
Oct 30, 2015

The religious settlements that once provided a utopian refuge for indigenous people are re-emerging.

Jesuit ruins at Santa Ana in Misiones, Argentina

The province of Misiones in Argentina is an anomaly — a long finger of land sneaking out from the north-east of the country between Paraguay and Brazil, covered in dense forest and far removed from the wide-open pampas roamed by gauchos and cattle. Most people come here for the Iguazu Falls, which straddle the border with Brazil and have become a stopping-off point on any fast-track gringo trail across the continent, with good flight connections to both Lima and São Paulo. Flying in, you can already see from the plane the huge spumes of spray rising above the jungle as the Iguazu river takes its dramatic plunge.

But further south lie the far less visited ruins that gave the province its name: the Jesuit missionary settlements that for 150 years provided a utopian, if controversial, alternative for native Indians to the slaughter enacted elsewhere on the continent.

Driving down from the falls to visit them, I was struck by how much better preserved the forests of this region are on the Argentine side than the Brazilian. Aside from one police patrol car — whose occupants were too busy drinking mate tea to bother with our speeding taxi — there was hardly any traffic.

Such is their worldwide influence, it is sometimes forgotten that the Jesuits were founded with the express purpose of spreading Christianity to the New World. In the mid-1530s, a young Spaniard, Ignacio de Loyola, learnt that an expedition was to be sent to colonise the lands of the river Plate, so he gathered friends and created the Society of Jesus.

When it proved difficult for the Spanish forces to hold down the area around Buenos Aires against local Indians, they moved inland towards Paraguay and the Jesuits went with them. The Guaraní tribe they found there, whose territory extended across the Atlantic forests, proved unusually susceptible to Christianity, and they made many converts. Antonio Ruiz de Montoya, one of the leading Jesuits, is said to have baptised 100,000 Indians.

There followed one of the most remarkable assisted migrations in history. Brazilian slave traders were continually trying to capture the Guaraní, so Ruiz de Montoya decided to move them south to safety in new Jesuit settlements along the river Paraná. Sailing downstream in hundreds of canoes, the men, women and children of the tribe had to bypass the great waterfalls of Guairá and escape the traders who attacked them from behind palisades.

The eminent historian of the Amazonian Indians, John Hemming, has described what a magisterial sight this must have been as they “glided down the broad grey rivers of the Paraná, each canoe filled with white-robed Indians, some with a black-gowned Jesuit under an awning amidships, with the congregation breaking into religious song to raise its spirits and inspire the rowers”.

On arriving at San Ignacio Mini, the most restored of the surviving mission settlements, I was struck by the scale and vision of the Jesuits. In addition to a central church, they built workshops and carved orchards out of the jungle. The Indians working on the plantation had relatively short working days of six to seven hours compared to the near perpetual servitude in mines and fields elsewhere on the continent. All this was done with the close co-operation of the Guaraní — indeed often there were just two Jesuit priests in a settlement of thousands of Indians and administration would take place jointly between priests and local caciques (rulers).

I wandered around the large central plaza past swallowtails and yellow flycatchers. My local guide, Marcelo Sanchez, told me that one of the most startling consequences of the Jesuit conversions was the Guaraní adoption of monogamy; although he added that the Jesuit policy of insisting on early marriages at about 15 in order, as they wrote, “to avoid many evils”, was problematic.

Sanchez and I went together to the nearby settlement of Nuestra Señora de Loreto, less restored than San Ignacio but the largest mission in the region. By 1700, Loreto had overtaken Buenos Aires in size, with a population of about 7,000. Only the three central hectares of this site that once sprawled across 72 have been recovered from the jungle, although work has picked up now thanks to renewed funding and there is a new museum. As Sanchez drily commented, it helps that the Catholic world has for the first time a Pope who is both Argentine and Jesuit.

The deserted ruins had tremendous atmosphere. When I visited it was pouring with rain, and the giant trees and lianas that had grown up over the buildings were shining. Sanchez told me that he was of mixed blood, like many in the region: mainly Guaraní but with German and Portuguese ancestry as well. “We’re like a salad in this state — all mixed up.”

He stopped to show me a small herb he called isipo growing over a set of circular steps leading up to a ruined gate. “This herb was a favourite of my grandmother’s. It was an aphrodisiac. She needed it as she was 16 when she married my 65-year-old grandfather. And it worked — they had four children.”

Were the Jesuits preserving the Guaraní or exploiting them? Many natives resisted their approaches
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I nodded politely. It was hard to know quite what to say in response.
In the grass near the ruins was a small memorial stone to Antonio Ruiz de Montoya — much loved by the Guaraní for leading them to safety and petitioning Spain for their continued legal protection. It was here at Loreto that the first printing press was established in Latin America.

The Jesuits ensured that some books were printed in Guaraní. Ruiz de Montoya himself compiled a comprehensive dictionary of the language that is still acclaimed by linguists.

When I visited a third settlement nearby, Santa Ana, the sheer ambition of the civilisation brought here by the Jesuits became apparent — each mission settlement had a huge central plaza and fine baroque architecture, often with native Guaraní elements woven into sculptures. Where else would you see a carved angel playing the maracas?

Nevertheless, the Jesuit settlements were controversial. Were they preserving the Guaraní or exploiting them? Many natives resisted the approaches of the Jesuits, preferring to take their chances in the jungle against the slave traders but keep their ancient customs.

Voltaire — a lifetime opponent of the order since his education at their hands — wrote a caustic passage in which Candide travels to the area: “It is an admirable thing, this government. The kingdom is more than 300 leagues across. It is divided into 30 provinces. Los Padres [the Jesuits] own everything in it and the people have nothing; ’tis a masterpiece of reason and justice.”

The time came when the kings of Spain and Portugal were no longer happy with what they saw as the meddling interference of the Jesuits. The Treaty of Madrid in 1750 redrew the boundaries of Brazil and the Spanish territories, effectively cutting the mission lands in half. Those Guaraní assigned to Brazil rebelled at the thought of being taken for slaves and one of the last indigenous uprisings against Europeans, the Guaraní war of 1753-56, resulted in the slaughter of the battle of Caibaté: 1,400 Guaraní died compared with only three of their Spanish and Portuguese attackers. This war was later memorialised in The Mission (1986), although the film gives a hyperbolic view of events. By 1767, the Jesuits had been expelled from Spanish and Portuguese territories and the missions fell into disrepair.

Contemporary Argentine attitudes to the Jesuits are mixed. Not until 1940 was San Ignacio Mini, the most accessible site from the river, visited by some architects from Buenos Aires who initiated the slow process of restoration. But the majority of the other settlements have either been subsumed under new towns or lost in the jungle.

When I first visited the falls of Iguazú 20 years ago, I came with a friend, John Fernandes, who had long dreamt of establishing a guesthouse there in the jungle. That dream has since come to fruition and his Secret Garden is a small, exclusive place from which to visit both the falls and the missionary settlements. John has used his time to produce a small monograph on the history of the Jesuit missions and while we celebrated our reunion in his tropical garden with champagne and pizza, he told me how strange it was that the Jesuit legacy was still so undervalued and ignored.

The story of native Indians being treated badly by Europeans is hardly novel in Latin America. From Mexico to Patagonia the same thing happened. But what makes the story of the Guaraní so peculiarly heartbreaking is that for some 150 years the process was reversed. Until the Jesuits were expelled, the Guaraní did enjoy a standard of life high enough for them to rebel at the prospect of losing it due to the arbitrary redrawing of lines on a map in Europe.

One reason the Jesuits built the missions here was to exploit the nearby wetlands in the neighbouring province of Corrientes, where they could keep cattle as it was less disease-prone than the forests. I ended my trip with a visit to those wetlands, with their fabulous wildlife: capybara, caimans and kingfishers. As I glided along the canal of San Miguel, cut by the Jesuits, I reflected on how the jungle has always had a capacity to ruthlessly obscure the best attempts of man to cultivate it, whether it be the Maya in the Yucatán or Henry Ford in his Brazilian rubber plantation. The achievements of the Jesuits have been shrouded by both vegetation and prejudice for centuries — but, slowly, they are being revealed to the light once more.

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2. MACRI-ECONOMICS (The Economist)







31 October 2015

The first round of voting shakes up the presidential race

HOURS before the official results began to circulate on October 25th, campaign workers for Daniel Scioli, the front-runner in Argentina’s presidential election, handed out orange T-shirts, baseball caps and pens emblazoned in capital letters with the legend “president”. Pollsters were not sure whether Mr Scioli, who is running as the heir of the Peronist president, Cristina Fernández de Kirchner, would win outright in the first round or move on to a run-off against Mauricio Macri, the mayor of Buenos Aires. No one doubted that he would be well ahead.

The results are therefore a shock. With 97% of the votes counted, Mr Scioli, the candidate of the Peronist Front for Victory (FPV), has 36.9% of the vote, which puts him barely in front of Mr Macri, who has 34.3%. There will be a run-off on November 22nd. Mr Macri, who is campaigning under the banner of Cambiemos (Let’s Change), an alliance of non-Peronist parties that promises to break with the divisive populism of Ms Fernández, now seems to have a good chance of winning.

If he does, he will set a different tone for the country. Unlike Ms Fernández and her late husband, Néstor Kirchner, who preceded her as president, Mr Macri favours markets instead of state controls, is friendly to the outside world and an advocate of strong institutions rather than obedient ones. Mr Macri would undo much of the Kirchners’ legacy, though he has promised to keep parts of it (see “Argentina’s elections (2): Macri-economics”). He would be the first president since Argentina returned to democracy in 1983 who is neither a Peronist nor a member of the movement’s less successful rival, the Radical Party. The financial markets cheered that prospect. The stockmarket rose by 4.4% on news of the first-round results and the peso strengthened in the unofficial “blue-dollar” market.

Although Mr Scioli is nominally ahead, the vote looks like a repudiation of his thesis that voters just want judicious modifications to Ms Fernández’s policies. Her expansion of welfare and defiance of foreign creditors were popular, but she also pushed up inflation even as the economy started to stall. The middle class is tiring of restrictions on buying dollars. A survey conducted before the election by Management and Fit, a consultancy, found that a quarter of Argentines want the next president to continue Ms Fernández’s interventionism, a third want limited changes to her approach and 40% want a radical overhaul. Voters may be eager for more change than Mr Scioli is proposing.

The setback to his candidacy is even bigger than it looks. Part of his pitch to voters had been that as a Peronist he represents Argentina’s dominant political force and would therefore guarantee stable government. “The governors are with me, the presidents of the regions are with me, the mayors are with me and the legislators are with me,” he told The Economist before the election.

That is less true than he thought. The parties that make up Cambiemos gained 29 seats in the lower house of Congress, while the FPV lost 26 (see chart). If united, the parties arrayed against the FPV and its allies can now outvote them in the lower house, though the FPV retains its ample majority in the Senate.

Cambiemos won the governorship of the Province of Buenos Aires, home to nearly 40% of the population, which had been in Peronist hands for 28 years and in Mr Scioli’s for the past eight. That may have less to do with him than with his party’s candidate, Aníbal Fernández, who was backed by the president (but is not related to her). His candidacy revived rumours (which he denies) that he had been involved in a drug-trafficking ring. Two-thirds of voters surveyed said they would never back him. Even so, the loss of the governorship, the second-most powerful elected office in the country, is a blow to Mr Scioli. Now, “whoever wins the presidency could have a governability problem,” says Joaquín Morales Solá, a columnist at La Nación, a newspaper.

Much now depends on who can win over the supporters of the third-placed candidate, Sergio Massa, a Peronist congressman who won 21.3% of the vote. Mr Massa had been Ms Fernández’s cabinet chief but struck out on his own before the legislative elections in 2013 and began criticising his old boss. He has been the law-and-order candidate, calling for a crackdown on drug trafficking and harsher penalties for corrupt public officials. On economic policy he advocates a middle way between the “gradualism” proposed by Mr Scioli and the more comprehensive changes espoused by Mr Macri.

Indications are that Mr Massa will support Mr Macri, even if he does not make a formal endorsement. The first-round results show that people “don’t want continuity”, he said in a television interview.

Mr Scioli must now distance himself from Ms Fernández without alienating Argentines who benefit from her government’s lavish spending and cheer her pugnacious attitude toward foreign creditors. If he gets the balance wrong, he may find himself stuck with a lot of useless orange merchandise.

2. MACRI-ECONOMICS (The Economist)
Oct 31, 2015

A profile of a possible president

MAURICIO MACRI’S path to politics was an unusual one. On a winter’s night in 1991, as he was walking through his posh neighbourhood in Buenos Aires, he was attacked by three men. The assailants—corrupt police officers, perhaps—punched him in the face, bound his hands with wire and shoved him into a coffin in the back of a Volkswagen van. Mr Macri was held for two weeks before his father, a prominent Argentine businessman, paid a $6m ransom.

Mr Macri says that this trauma led him to a career in public service. He gained fame by running Boca Juniors, a football team, for a dozen years until 2007, was elected to Congress and is now mayor of Buenos Aires, Argentina’s richest and most populous city. He stands a good chance of winning Argentina’s presidential election in November.

His success does not come from personal magnetism. He rarely smiles when cameras are not present. In meetings he comes across as aloof, even apathetic. His speeches lack zest and originality. Perhaps realising he will never inspire a cult of personality, he opted to be a consensus-forger and team-builder. The party he founded and leads, Republican Proposal (PRO), started out on the right but has become more inclusive. It is non-Peronist—the political current to which his presidential rival, Daniel Scioli, belongs—but is not anti-Peronist; many ex-Peronists work alongside the party’s conservative founders.

As mayor, Mr Macri improved infrastructure, especially transport, and developed poor neighbourhoods that his predecessors had ignored. Colleagues say he encouraged them to innovate. Banco Ciudad, the municipal bank, began hiring on merit rather than connections, says Federico Sturzenegger, a PRO congressman who ran the bank.

To secure the presidency, Mr Macri will need to change the perception that he is a cold-hearted capitalist, born to privilege. “He seems to favour businesses over people, whereas I want a more inclusive government,” says Mariel García, who works at a corner shop in Palermo, a leafy neighbourhood in Buenos Aires.

While promising change, Mr Macri assures voters that it will not be too abrupt. He would end exchange controls and allow the peso to float, but has promised not to undo the nationalisation of pension funds or of YPF, an oil giant. He would leave generous welfare programmes untouched. Voters want a president who will fix the economy without leaving anyone behind. Mr Macri may be the one to convince them.

By Katia Porzecanski
October 29, 2015

* Citigroup says 2033 bonds may jump 5% on Macri victory
* Macri is now favored to win presidency in election next month

A victory by Mauricio Macri in Argentina’s presidential election next month is poised to hand a big windfall to hedge funds.

After finishing in a surprising near-tie with frontrunner Daniel Scioli in first-round voting on Sunday, Macri is now the favorite to emerge victorious on Nov. 22. Citigroup Inc. has put his odds of winning the runoff at 55 percent.

For hedge funds run by the likes of George Soros and Daniel Loeb, Macri’s promises to settle Argentina’s decade-long debt dispute with creditors and jettison polices that have held back the economy may dramatically boost the value of their bond investments. For example, defaulted bonds due in 2033 may jump at least 5 percent from their current price of about 110.5 cents on the dollar if Macri prevails, according to Donato Guarino, a strategist at Citigroup.

“We’re now in a scenario where you have to have exposure to Argentina and it’s going to pay off,” said Luciano Cohan, the chief economist at Buenos Aires-based research and consulting firm Elypsis. His was the only company to correctly predict the outcome of Sunday’s elections.

A price of 116.25 cents assumes past-due interest that currently totals about 15 cents. It’s also based on an expectation that, in a Macri presidency, Argentina will trade in line with sovereign borrowers that have ratings in the B tier, Donato said in an Oct. 27 report.

Argentina’s foreign debt is currently rated Caa2 by Moody’s Investors Service, which is eight levels below investment grade. Standard & Poor’s has a SD, or selective default, grade on overseas debt.

Even though Argentina defaulted last year after President Cristina Fernandez de Kirchner refused to comply with a U.S. court order to pay holdout creditors led by billionaire Paul Singer, the country should be rated as high as BB- regardless of who becomes president, Guarino said.

He cited Argentina’s per-capita income and potential economic growth among his reasons.
Guarino said the 2033 notes may fall as low as 103.75 cents if Scioli wins. Scioli, the ruling party candidate, has pledged to make only limited changes to the polices of his predecessor.

“While Scioli is likely to attempt a rapid agreement with holdouts, we believe this would be driven by his more gradualist approach, which will require higher USD financing needs,” Guarino wrote. Argentina is likely to issue more debt under a Scioli government, “which should negatively impact prices.”

The prospect of a Macri win has already sent the nation’s bonds up an average 4.2 percent since Sunday’s election.

Robert Tancsa, a strategist at Morgan Stanley, estimates yields on the notes may fall to as low as 7.1 percent by the end of 2016 if the next president quickly adopts policies that help revive economic growth and slow inflation. The notes currently yield about 9 percent when adjusting for the past-due interest, according to Bloomberg estimates.

If Argentina continues with Fernandez’s policies, yields could go to about 12.6 percent, according to Tancsa.

“A front-loading of policy adjustments and reforms, including the settlement with the holdouts, would be welcomed by investors,” Tancsa said in an e-mail.

By Pablo Rosendo Gonzalez
October 29, 2015

* Production will be 9.5 million tons in 2015-2016, bourse says
* Farmers switch to barley to avoid government regulations

Argentina’s next wheat harvest may be the smallest in three years, according to the Buenos Aires Grain Exchange, a decline that may spur Brazilian flour mills need to import the grain from other countries.

Argentine farmers will produce 9.5 million metric tons of wheat in the 2015-2016 season, down 16 percent from a year earlier, the exchange said Thursday in its first wheat forecast.

since 2001
since 2001

Farmers are switching to unregulated crops such as barley because the government charges wheat export taxes of 23 percent and restricts shipments to other countries. Wheat exports are permitted after 6 million tons are produced for domestic consumption. There are no export taxes on barley.

“We have had more barley than expected this winter,” Diego Ubici, an agriculture engineer from Agropulso, a seed and fertilizer reseller in America City, in Buenos Aires province. “Farmers were not selling waiting for a new government.”

By Hugh Bronstein
October 29, 2015

Oct 29 Argentina’s outgoing leader Cristina Fernandez gave an emotional campaign speech on Thursday in her first public address since a surprisingly weak performance by her party’s candidate in the first-round presidential election on Sunday.

Without mentioning allied candidate Daniel Scioli by name, the leftist president implicitly backed him by calling for her progressive social policies to go on after she hands the presidency over to her successor in six weeks.

“Who is the candidate who can guarantee our policies continue?” Fernandez asked in a clear reference to Scioli.

“What’s important is that our policies are carried on. Names are not important,” she said at a televised rally before thousands of applauding and chanting supporters.

Scioli, who did not attend the event, is running against opposition leader Mauricio Macri in the Nov. 22 run-off vote.

Macri defied opinion polls on Sunday by getting enough votes to easily force a second round.

At stake is the future of Latin America’s No. 3 economy at a time of dwindling foreign reserves and high inflation left by eight years of free-spending populism under Fernandez.

“I am not a candidate for anything,” said Fernandez, who is barred by law from seeking a third consecutive term this year.

“But when I leave, please God, I don’t want to see ruined what it took us years to build!” she said, her voice breaking with emotion while some listeners at the rally wept.

Loved by many of the country’s poor for strengthening Argentina’s social safety net, Fernandez could return as a presidential candidate in 2019.

Macri promises a sharp turn toward free-market policies while Scioli vows to continue the programs that are working for the poor while gradually changing macro-economic policies where a more orthodox approach is needed.

Fernandez took a few shots that appeared to be aimed at Macri, although she did not name him, alluding to him changing his position earlier this month regarding Fernandez’s nationalization of Argentina’s main energy company YPF and airline, Aerolineas Argentinas.

“We, with all our errors and defects, are who we are. We are not one thing one day and something else another,” she said.

When first elected in 2007, Fernandez was helped by high prices for soy and corn, the country’s main cash crops, which helped her fund subsidies and generous welfare programs.

But the grains boom has ended, leaving her government short on cash and without access to the international debt market due to an ongoing sovereign bond default.

By Robie Mitchell, Research Associate at the Council on Hemispheric Affairs
October 29, 2015

Argentina’s run-off elections on November 22 will not only be a test for outgoing President Cristina Fernandez de Kirchner and her mission to see if she can successfully coronate Daniel Scioli of the Partido Justicialista (PJ) as her heir, but the elections also represent a test for the Peronist movement. Since the fall of the military junta, Peronism has dominated the political arena. Political newcomers such as the center-right Propuesta Republicana (PRO) party have begun to challenge Peronists’ historic dominance. Notably, there is a fundamental split between left-wing Peronism of the PJ and the right-wing Peronism of the Frente Renovador (FR). Regional and class divisions have long existed within the Peronist movement, but President Kirchner’s attempt to raise export tariffs in 2008 on agricultural products set the powder keg alight and made leaving the PJ a compelling move for rural Argentinians.1 The Dissident Peronist party FR was created in the still-relevant aftermath of this aborted tax hike. Preventing the Argentinian Peso from further decreasing in value, keeping foreign reserves from falling, dealing with high inflation, and making debt payments on time will keep whoever wins the presidential election well-occupied, be it Daniel Scioli of the PJ or Mauricio Macri of the PRO2 Past leaders of an ideology as inconsistent and all-encompassing as Peronism, including Juan Peron himself, have had enough trouble governing Argentina without having to worry about these heightened internal and external political threats.

Accordingly, Argentina’s need for a strong leader with a clear vision and a stable party would not have boded well for any Peronist winner, whether it had been Scioli or the farther right Sergio Massa of the FR, as the broad ideological struggles over the depth and type of proper government intervention in the market undermines their movement and serves as a distraction to actual governance. The difference of opinion between fellow Peronists is far less than that of any given Peronist and non-Peronist politicians like Macri; compromise between the PJ and FR should come naturally. However, history complicates this seemingly simple picture of an ideology that is fracturing itself.

Scioli narrowly won last Sunday on October 25. Due to a split within Peronism that divided votes between Scioli and Massa the margin of victory could have been substantially higher and sufficient to avoid a run-off election. Notwithstanding the recent victory, and Scioli’s attractive odds for winning again on November 22, staying relevant in the 21st century will require Peronists to move back towards the center of the political spectrum and start consolidating their ideology. The tightness of the race reveals the challenges faced by Peronism. In spite of Cristina Fernandez de Kirchner’s endorsement, Scioli failed to garner 45 percent of the popular vote and win the election outright.3 In a remarkably close election with 84 percent of the polling stations reporting, Scioli won 35.7 percent of the vote and Macri took 35.3 percent.4

Defining Peronism

Current Peronist leaders, who share a common political mythos, define Peronism in a variety of ways. Broadly speaking, it is the populist ideology that fought back against foreign imperialism in the mid twentieth century before its founder Juan Peron was overthrown by the military. Agreeing on its details can prove to be a contentious process. Yet, across the board some commonalities remain, including the social classes and regions that they can count on for their support. Carlos Menem’s conservative platform in 1995 and Kirchner’s liberal platform in 2011 drew heavily from the same base.5 Both Menem and Kirchner won landslide victories around the industrial belts of Rosario, Córdoba, and Buenos Aires. Poorer, conservative, and rural interior provinces have also gone for Peronists consistently for the past thirty years.6 Edward L. Gibson has described the Peronists as a “two-headed party with a progressive urban and a more conservative rural base.”7 The redistribution that has characterized Kirchner’s two terms in office, which was a carryover from her husband’s 2003 presidential term, has required high levels of public spending.8 While these policies have increased Kirchner’s popular political support, especially when they are coupled with Kirchner’s devaluation of the peso they have also brought the threat of uncontrollable inflation. Kirchner’s distinctly leftist twist on Peronism is the main source of the ongoing split between mainstream Peronism and Dissident Peronism.

If mainstream Kirchnerist Peronism and Dissident Peronism cannot reconcile their differences soon, by the next election cycle their public split could open the path for non-Peronist parties to dominate Argentinian politics. The presumption that Scioli, who Kirchner endorsed as her successor and the nominee of the PJ, will win and will preserve Peronism in the short-term is a safe one, given the lead that he enjoyed in the polls throughout the summer and his performance on Sunday.9 On the other hand, Macri (a non-Peronist) and Massa (the leader of the Dissident Peronists) have been consistently polling in second and third place, respectively, which is exactly how they performed in the election. Essentially, between polling data collected over the past year and the candidates’ actual performance in the recent election, the electoral math still favors the PJ for November 22. A broader look at Argentinian politics, however, shows that growing support for Macri and his Propuesta Republicana is correlated with intensified divisions among Peronists. Further, Scioli’s performance on Sunday does not come close to the outright victory that Kirchner had in 2011, with 54 percent of the vote.10 It is plausible that the run-off could have been avoided had Scioli and Massa not competed for support from a similar base. Any Scioli victory will almost certainly lack the popular mandate that Kirchner had in both of her elections, signifying the growing problems that both Peronist parties will have as newer parties emerge to exploit their conflicts. Governing will also prove to be more challenging without the bully pulpit that a clear victory provides. A return to the pre-2005 political order, where Peronists were united in a single party, might be too much to expect. Without some political consolidation, prospects for continued Peronist domination of Argentina are murky, but are still a possibility.

Peronism’s Historical Track Record

During a time that Peronists are experiencing historically unprecedented infighting, why should Argentinians, as well as international observers, desire continued Peronist influence? For one, there is a reason why Peronists have won nine out of eleven open Argentinian elections (which military leaders have not barred them from participating in) since 1946. Rapid changes in Argentina’s economic and social order in the aftermath of the Great Depression necessitated new political thinking. In the midst of World War II, industrial growth intensified and over a million Argentinians moved from rural areas greater Buenos Aires.11 Debates over the role of the state in the economy were a natural consequence of a mobilized labor force that drove growth in the industrial and commercial sectors.12 Peron rejected laissez-faire liberalism in the 1940s and criticized it as an outdated ideology that would leave many Argentinians out of the economic boom that was starting during World War II.13 In his first term, President Peron fought the landed elites to finance industrialization and to promote social reforms14. An essential component of Peron’s industrialization was that it was nationalist. After the coup against Peron, foreign capital came to dominate Argentina.15 The course that the military charted condemned Argentina to industrial dependency. When Peron returned from exile to serve a third term, mass mobilizations were used to carry out reforms.16 Peron led a political program supported by a diverse coalition that championed the workers, earned profits for Argentinian businesses, and combated foreign imperialism.17 Peronism faces the challenge of keeping foreign monopolistic capital from dominating the Argentinian economy as well as keeping the country’s working classes interested in a symbiotic relationship with domestic Argentinian businesses.18

Critics cast the economic state intervention that is championed by Peronists as a stepping stone towards authoritarianism, arguing that one cannot have political freedom without economic freedom.19 But whose freedom is being restrained by Peronist policies of market intervention? Corporations, more often than individuals, have been the targets for Peronists measures that limit economic freedom. Peronist ambivalence towards unrestricted capitalism is not unfounded within the context of Argentinian history. Even though Argentina opportunistically served as the breadbasket for the Allies during World War II, prosperity failed to trickle down to working class Argentinians. In Juan Peron’s first term Peronist agencies distributed millions of consumer goods, from sewing machines to toys.20 Between 1946 and 1952 the number of hospital beds in Argentina doubled and more than 100,000 units of public housing were constructed.21 Funding these welfare programs did require higher taxes on corporations. Juan Peron enacted stricter controls over freedom of expression in order to mold a consensus that these taxes were justified.22

Peron should have been able to sell his expansion of the Argentinian system of social welfare on its merits alone, without using coercive measures. If modern Peronists like Kirchner and Scioli seek to draw parallels with the benefits of their namesake leader Juan Peron, then it is only fair that they get stuck with the drawbacks of that association. It goes too far to imply that Peronism leads to authoritarian rule, but for some leaders it is a very short leap to go from reigning in corporate excess to reigning in democratic opposition. Peronist leaders have another incentive to become authoritarian in that they are sometimes tempted to control their wily coalitions with state power; Juan Peron himself was guilty of giving in to this temptation in his later years. Future Peronist leaders like Scioli, hopefully, can make that crucial distinction between appropriate constraints on corporate power and inappropriate limits on the necessary annoyances of democracy, like a tabloid media, while favoring the power of persuasion over that of decree.

Tension between different factions of Peronists is not a new phenomenon, but it is new in its scope. Despite economic progress under Peron’s first and second terms, tension between the left and right within the Peronist movement had been barely contained. It came to a boil during Peron’s third term as president when a gunfight erupted in 1973 between fellow Peronists. At least 16 people were killed by right-wing Peronists in the Ezeiza Massacre upon Juan Peron’s return from his long exile back to Argentina. The official death toll continues to be highly contentious, but there is no question that the horrific act of violence was perpetrated upon left-wing Peronists in an attempt to remove then-President Hector Campora.23 This intra-Peronist tension was arguably the inevitable result of managing what was in fact a foreign capitalist dependent economy.24 Without Peron’s magnetism, the ideological contradictions inherent in getting diverse Argentinian groups to cooperate revealed themselves. Reconciliation was possible during previous splits among Peronists and is likely possible again. Unfortunately, it was the military coup and a subsequent absence from Argentinian politics that eventually allowed Peronists to present a unified front against the Church, military, and the traditional parties that had ousted their leader from power.25 The Ezeiza Massacre shows how fragile their unified front was.

While Peronists were biding their time on the sidelines, the military mismanaged the economy. By 1970, Argentina was more fragmented socially than ever before, suffering high inflation, heavy taxation, frequent bankruptcies in the private sector, while witnessing the deterioration of health and education programs.26 A combination of Scioli’s leadership and cooperation within the Peronist movement can lead to differences being sorted out before far-right forces can take over both the legislature and the presidency. Ascension to the upper echelons of government by a far-right party would undoubtedly cause Argentina’s government to bow to foreign capital. If that happens, similar problems to those of the 1970s could arise before Peronists can remind the public of the upsides of appropriate state intervention in the economy and a developed welfare system funded by a strong export sector, key aspects of Juan Peron’s legacy.

Peron’s past management of an internal Argentinian class struggle can inform current Peronist leaders who seek party unification, or at least ideological coalescence between the PJ and the FR, what that process might look like. Indeed, Peron went beyond merely accepting the class struggle inherent in his movement, and went on to exploit it to better both his political odds and the well-being of Argentinians. When Peron was in exile, he built his new coalition from below, with recruits motivated by desperation that the military leaders that had ousted Peron had foisted on them27. Peronism ditched its former top-down recruitment strategy, which was made possible by the prosperity displayed in 1950s Argentina, and took on the tone of a liberation movement.28 The nationalist and imperialist cleavages that Juan Peron exploited to win his first two terms were replaced, in part through a changed coalition building strategy, by proletariat and bourgeois ones29. Scholars such as Alberto Ciria think that a direct focus on class might make national liberation without socialist revolution impossible, but that assertion remains to be proved. Instead of ignoring the class fight inherent in Peronism, Peronists need to embrace it. Instead of fearing that this class fight will inevitably lead to unfettered socialism, they need to keep championing a third way.

Kirchnerism, serving as a third way of sorts, still ignored fiscal realities and lacked the unifying force of Peronism in the 1950s in three ways. Firstly, the agricultural tariff debacle of 2008, where Kirchner attacked agricultural exporters and her rural constituents, exemplifies her shortcomings compared to Peron. Whereas Peron went after the rich landed aristocratic class with his agricultural reforms, Kirchner attempted tax hike would have hurt the poor. Her second economic shortcoming compared with Peron is that she turned the Argentinian economy towards extraction and away from sustainability. Europe’s devastation presented a unique opportunity to Peron to export Argentina’s wares and industrialize in his first two terms. Similarly, growing demand from Asian economies presented an opportunity for Kirchner during her two terms in office to sustainably grow Argentina’s economy. Yet, she did not take this as an opportunity to diversify the Argentinian economy. Third of Kirchner’s economic failures is her divisive programs of redistribution that are driven by inflationary monetary policies. They are not in line with the coalition building approach taken by Peron himself that took the interests of domestic producers into account. The increasingly hard line that she has used to deal with legislators and the media is also troublesome, given the history that Argentina has had with military strongmen. There is a fine line between being a strong leader and being an authoritarian that she gets dangerously close to. Kirchner did not deviate from Peron’s legacy in this regard; both leaders are equally guilty of a tendency to lean too heavily on authoritarian and unilateral action.

Applying theoretical lessons from Peron’s experience in reforming Argentine institutions to contemporary politics is paramount to the success of future Peronist leaders. After all, it was his initial reforms that allowed him to return to Argentina and secure a third term. Peron was a steward of economic growth and brought out common interests between domestic industrialists and laborers. Kirchner, while a Peronist in name, is not always a Peronist in either her governing style or her policies. Polls suggest that Scioli will win the run-off election and that he will have a majority in the legislature to help him pass his moderate agenda, which harkens back to the early days of Juan Peron, with gradual changes. In the face of problems such as social unrest and rising inflation that are similar to those of the early 1970s that unseated the military and restored Peronism, Scioli will need to lead with a large coalition and speak for competing interests, just like Juan Peron. Learning from Kirchner’s mistakes will be essential in guiding Argentina out of the choppy waters that surround it.

Scioli: Puppet or Prophet?

Barring an endorsement of Macri from Massa, a victory for Scioli seems likely. So long as a Macri-Massa alliance does not emerge in the coming weeks, Scioli is almost assured an ascent to the presidency. As president it will be up to him to be a unifying force in these divisive days within his country and his party. Eliminating the divide within the Peronist movement so that Peronist solutions can be used to tackle Argentina’s economic crises in the long-term will require political independence for Scioli, something that he might be lacking. Frequently, Argentinian voters see Scioli as Kirchner’s puppet.30 Kirchner’s backing helped Scioli secure his left flank and gain popularity among the working classes, but it could serve as a double-edged sword. Both Massa and Macri, Scioli’s main rivals for the presidency, have accused Scioli of owing a massive political debt to Kirchner that will impinge on his freedom to make his own decisions31.

Consequently, this would-be reformer of Peronism could run out of political capital quite early on in his term. And if Scioli bucks Kirchner’s control and attempts to bring Peronism back to the center by liberalizing the Argentinian economy, reduce subsidies, and reign in the heavy spending that has led to inflation, then there is a possibility that she will run for president in the next election cycle. She could legally choose to do this because Argentinian election laws only forbid holding the presidency for more than two consecutive terms, allowing her a separate third term. It is with this threat hanging over him that Scioli must make his reforms that will bring his party closer to Peron’s original political platform and away from the Kirchnerist interpretation of Peronism that has sown divisions among the PJ. The run-off could be the last electoral chance for Peronists to show the Argentinian people that they can present a unified ideological front. Without unification it will be difficult for the party to maintain the trust and confidence of the Argentinian people for elections. On top of this, the fracturing of the party will only weaken the political capital of Peronists and thus reduce their ability to effectively govern if elected. And without Peronists in power, the influence of foreign vulture funds and other forms of foreign investment capital over Argentina will continue to increase, making a resolution for Argentina’s economic malaise ever less likely.

By Belén Marty
October 29, 2015

Mauricio Macri Is No Liberal, but He’s as Close as We’re Going to Get

If last Sunday’s Argentinean presidential election was a pie, no ingredient was missing from the recipe. It had everything: uncertainty, hope, participation, disbelief, faith, and, the key to it all, surprise.

It carried the strong aroma of potential change, one that’s only made sweeter after 12 years of die-hard Kirchnerism.

With over 97 percent of the votes counted, the candidate backed by President Cristina Kirchner, Daniel Scioli, emerged in first place with 36.86 percent of the vote. A Pyrrhic victory, considering the 34.33 percent secured by his conservative rival, Mauricio Macri, of the opposition Let’s Change coalition. Macri even led in the polls for a good part of the night.

It was a huge surprise. No pollster could have imagined that Macri would only lose by two points. Only days ago, most polls showed Macri trailing by six points behind Scioli. Now the two candidates will square off in a runoff set for November 22, and Marci is in a strong position to pull ahead.

That’s the reason why, during the first few minutes of Monday, October 26, when election authorities first released preliminary results that showed Marci in the lead, euphoria overwhelmed the people of Buenos Aires.

Macri, the current mayor of the Argentinean capital, won a clear victory in the town he has governed for eight years with 50.55 percent, doubling Scioli’s 24.09 percent.
The first indications of Macri’s strong performance exhilarated the residents of various neighborhoods throughout the city, where people began making loud noises, honking their car horns, and shouting “Vamos Argentina!” (Let’s go Argentina) and “Viva la patria!” (Long live Argentina).

But why did porteños react so viscerally, as if they were experiencing great relief? Why did Macri garner such intense support?

Let’s be clear: Macri is not a liberal; never has been, and never will be. He’s a statist, just like every other Argentinean politician. As mayor of Buenos Aires, he raised taxes, created a Ministry for Modernization in order to “modernize” bureaucracy, and increased the budget for “official advertising,” which could easily be confused for political propaganda.

Beyond that, he promised to keep the state-run Aerolíneas Argentinas under government control, and pledged to not only not reduce subsidies for the airline, but expand them.

However, unlike the Kirchneristas, he is at least open to debate. He promised, if elected president, to offer press conferences and not just national broadcasts like Kirchner, and has talked about promoting entrepreneurship.

He has said that he will combat inflation, unlike the current government that denies the problem even exists and doctors the official numbers. He has vowed to bring in investment by establishing clear rules and legal security.

Without much philosophical rhetoric or ethical arguments, like the pragmatist that he is, he believes socialism doesn’t work.

By Frida Ghitis
Thursday, Oct. 29, 2015

Latin America is reaching a quiet but remarkable turning point, one that, though occurring without much fanfare, has significant historical resonance. This past weekend, voters in several Latin American countries participated in national and local elections, and the process unfolded for the most part peacefully. That in itself is an achievement. But what is most noteworthy is that the outcomes of the elections were decided by the actual votes cast, and by extension the voters, rather than by fraud or violence. That, of course, is how democracy is supposed to work, but it is not always the case.

When viewed from regions where democratic traditions have grown deep, strong roots, this hardly merits mentioning. But in Latin America, where the soil has proved unhappily fertile for dictatorships, coups and personality-driven populism, where Marxist revolutionary conflicts have outlasted the Cold War, and where opposition leaders are still imprisoned on trumped-up charges, the largely peaceful festival of democracy that just took place is a rather notable feat.

And it’s more than that. It is a warning to the many remaining demagogues in the region that the public is growing tired of the manipulations of the democratic process that entrenched political leaders and their parties have come to rely on to stay in power.

The voters spoke in Argentina, Colombia and Guatemala.

Each of the three countries is unique, facing distinct challenges and choices. But if there was a common thread running through the results, it is that voters tended to stay away from the most radical partisans on either side of the spectrum. In doing so, they at times defied the wishes of the most powerful political players and the predictions of the pollsters.

In Argentina, the main event was the first-round vote for a new president to replace Cristina Fernandez de Kirchner, who is ineligible to run for a third consecutive term. Fernandez succeeded her late husband, Nestor Kirchner, meaning that the family has governed the country for a dozen years, using a controversial and eclectic formula of leftist populism that has inflamed social divisions, among other harmful side-effects.

Fernandez anointed Daniel Scioli, a former speedboat racer and governor of Buenos Aires province, as her successor. Pollsters had predicted he would win by a landslide, saying the only question was whether he would capture victory without the need for a run-off. But voters had a different idea and shocked the experts. Scioli came out in first place, but just barely, taking a disappointing 36.9 percent, just ahead of his main rival, Buenos Aires Mayor Mauricio Macri, at 34.3 percent. It was an energizing result for Macri, who emerges with strong momentum, and a demoralizing one for Scioli, Fernandez and their supporters. Many voters said they were tired of the divisiveness of the Kirchner dynasty. Others said they worried that a Scioli victory would leave Fernandez in control behind the scenes, with the outgoing president preparing for a future return to power.

Ahead of the Nov. 22 run-off, Macri has the psychological advantage, though both candidates are vowing to move to the center where the political advantage now seems to lie.

In Colombia, voters also voted against the extremes and for the normalcy of the center. Utopian promises hold no allure in a country that has endured half a century of Cold War-style revolutionary conflicts and unceasing violence.

The local elections there came with a reminder that the fighting is not over, even if peace talks with the FARC guerrillas seem close to completion. An attack by a smaller leftist guerrilla army, the National Liberation Army (ELN), killed 12 security forces transporting ballots back to Bogota, the capital. Still, it was the most peaceful election Colombia has seen in living memory.

The most important of the more than 1,500 races for governors, mayors and city councils that took place was the contest for the new mayor of Bogota, widely seen as the second most powerful post in the country. Voters could not have spoken more clearly. They ended 12 years of ideologically infused leftist control of the city and elected Enrique Penalosa, an independent candidate who is neither an ideologue nor a populist, but a technocrat.

Penalosa’s campaign slogan was “Let’s take back Bogota,” and it was backed not just with the experience of his previous successful term at the city’s helm, but by a list of specific projects, including more public transportation to solve the city’s nightmarish traffic and transportation problems, as well as more green spaces and bicycle paths to improve the quality of life in the city. The contrast with outgoing Mayor Gustavo Petro, a former guerrilla leader whose tenure has been marked by bitter political acrimony and devastating administrative incompetence, could not be sharper.

But while voters dealt a blow to the left in Bogota, the right suffered a painful defeat of its own in the country’s second city, Medellin. There, the pollsters had predicted victory for Juan Carlos Velez, the mayoral candidate backed by former President Alvaro Uribe, who has become a vociferous opponent of the peace process and of the current government. As in Bogota, the voters ignored the polls, the pundits and the ideologues, handing a narrow victory to the centrist candidate, Federico Gutierrez.

With hundreds of seats up for election, every party had something to celebrate, and every party declared victory. But the main trend in key races was a move away from the extremes.

Elections also took place in Guatemala, where the notoriously corrupt country is in the midst of a political earthquake. Last month, former President Otto Perez Molina resigned due to corruption charges and was promptly arrested days before the first-round voting for a new president took place. This weekend’s run-off ballot pitted a former first lady, Sandra Torres, against a comedian with no political experience. The comedian, Jimmy Morales, won in a landslide. It was yet another sign of popular disgust with the political class, although the fight for a clean democracy in Guatemala is far from over, especially as plenty of questions remain about who is funding Morales.

It’s worth noting that perennially troubled Haiti, not a Latin American country but a Caribbean neighbor, also held a presidential election that was astonishingly peaceful, with 54 candidates running for president. It’s the first time in Haiti’s history that three successive elections have been held without major fraud or violence. That’s just about the best news the country has had in a long time.

And it’s one more reason to celebrate a weekend of elections that, while far from perfect, constitute a step forward for the Sisyphean labor of developing a self-sustaining democratic tradition throughout the region.

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30 octubre, 2015

BsAs — NYTimes Report on 36 Hours on the Town.. Video.. ENJOY
















By Taos Turner
28 October 2015

Dissident Peronist politician who ran third in first round withholds support for Daniel Scioli

BUENOS AIRES—Sergio Massa, Argentina’s dissident Peronist politician and a potential kingmaker in next month’s runoff vote, snubbed the favored candidate of President Cristina Kirchner on Wednesday, saying he favors politicians who seek a new path for the country.

“Argentina needs change,” Mr. Massa said.

He hasn’t officially endorsed either of the candidates who bested him and who will contest the runoff—Daniel Scioli of the ruling Peronist Victory Front Party and Buenos Aires Mayor Mauricio Macri, 56 years old, a market-friendly businessman who heads the “Let’s Change” coalition. But Mr. Massa and his top allies are making it clear that they are eager to leave behind the policies of Mrs. Kirchner, who wanted her successor to be Mr. Scioli, a 58-year-old former powerboat racing champion who is governor of Buenos Aires province.

Roberto Lavagna, one of Mr. Massa’s top aides and a former economy minister, said he favored a break from the ruling party’s policies. “Clearly, change is a No vote for the Victory Front,” he said.

Another close and influential Massa ally, Gov. José Manuel de la Sota of Córdoba province, was more emphatic: “I’m not going to vote for Scioli.”

Mr. Massa, who was Mrs. Kirchner’s cabinet chief before breaking with her, called for both candidates to commit to a series of policy proposals ahead of the Nov. 22 second round, including plans to cut income taxes and combat corruption and narco-trafficking.

In comments made Tuesday, Mr. Massa suggested that Mr. Scioli wasn’t independent of Mrs. Kirchner, who has served two terms after succeeded her husband, Néstor, in 2007. Mr. Kirchner, who served one term, died in 2010.

“As long as he is not a leader of his own political force, he cannot govern anything,” Mr. Massa said of Mr. Scioli. He added that Mr. Scioli “has to stop being Cristina’s employee.”

At play are the 5 million voters who went for Massa, a 43-year-old former mayor of the sprawling riverine city of Tigre. In Sunday’s surprising results, Mr. Scioli fell short of what he needed to win the presidency outright, getting 37% of the vote to 34% for Mr. Macri.

Mr. Massa got 21%. But the politician, who has pointedly criticized alleged corruption in Mrs. Kirchner’s government, emerged as a force within Peronism, the ideologically pliable movement to which both he and Mr. Scioli belong.

“This is not about Peronism or anti-Peronism,” Mr. Massa said. “People have to choose between continuity and change. We’re choosing change.”

Analysts say it would be a mistake for Mr. Massa to openly endorse either candidate. Mr. Scioli could lose without Mr. Massa’s endorsement and the support of his voters. But if Mr. Massa endorses Mr. Macri, he could anger followers who aren’t ready to support a non-Peronist, particularly someone like Mr. Macri, who is seen as a friend of Wall Street.

A poll released Wednesday shows Mr. Macri beating Mr. Scioli 48% to 37% next month.

“Though we think these first results will not be definitive and include a good deal of inertia from the recent election, we see the odds of a Macri victory at 75%,” said Elypsis, an economic research firm, that closely predicted the first-round election.

What seems clear is that Mr. Massa is positioned to become the next leader of the Peronist movement if Mr. Macri wins the presidency, said Ana María Mustapic, a political scientist at Torcuato Di Tella University. “For Massa, it’s better for Scioli to lose badly,” Ms. Mustapic said.

Still, both candidates are trying to lure Mr. Massa and his supporters.

“We’re willing to agree on policies and to find common ground,” Mr. Macri said on Tuesday.

Mr. Scioli has said he is eager to listen to Mr. Massa’s ideas. “If you look at Massa’s voters you see that many are Peronists,” an aide to Mr. Scioli said. “In Scioli’s mind, they will vote for him, not Macri.”

October 28, 2015

Center-right opposition leader Mauricio Macri’s outstanding performance in Argentina’s Oct. 25 first round elections was a political earthquake that — regardless of who wins the Nov. 22 runoff vote — will most likely put an end to 12 years of leftist populist rule, and may have a big impact on other South American countries.

Macri, the mayor of Buenos Aires, surprised everybody by not only forcing a runoff election against government-backed candidate Daniel Scioli, but also by winning the giant province of Buenos Aires — home to 37 percent of the country’s voters and which had been in the hands of Scioli’s Peronist party for nearly three decades — and most of the country’s biggest provinces.

In addition, Macri and fellow opposition candidate Sergio Massa won enough seats in Congress to end President Cristina Fernández de Kirchner’s followers having an absolute majority in the Chamber of Deputies.

Most importantly, by doing much better than most polls had predicted, Macri has the political momentum. He enters the race for the runoff election looking like a winner.

Polls had placed him about 10 points behind the government’s candidate, and many had predicted that Scioli would win the overall election in the first round. Instead, Macri came in a close second, almost tied with Scioli, fueling speculation that he will be able to garner enough votes from defeated opposition candidates to win the second round.

Marci and Scioli’s demeanor on the night of the first round vote said it all. A radiant Macri made what amounted to a victory speech, with a peace-and-love message calling for national reconciliation. “Gracias! Gracias! Gracias!” he kept telling the crowd. Scioli, by contrast, looked like an angry, sour man, warning the nation of dire times if the country were to change course.

Scioli now faces a formidable challenge: If he moves to the center to expand his base, he risks losing the support of Fernández’s leftist populist political machine. If he shifts to the left to secure the government’s political machine, on the other hand, he won’t win many of the moderate votes he needs to expand his base.

To make things worse, relations between the outgoing president and Scioli, which had never been good, got worse after Sunday’s vote. Both sides blame one another for the poor results. Tensions are running high in government circles, government officials concede.

“If the government candidate wants to be president, he will have to stop behaving like a Cristina [Fernández] employee,” said Massa, the No. 3 finisher in first round election.

Massa has not supported either of the final candidates, but is more critical of Scioli than of Macri. Most of Massa’s supporters are tired of the Fernández government’s rampant corruption, mismanagement and authoritarian rule.

A source close to Massa, with access to his campaign’s internal polls, tells me Massa’s supporters are government critics who are likely to vote for Macri “by a bigger than 2 to 1 margin.”

However, this does not mean that an opposition victory is a done deal because many Massa supporters are “Peronists” — followers of the late general Juan Domingo Peron, like Scioli — who could be swayed by a Scioli campaign depicting Macri as an allegedly right-wing candidate who would dismantle social programs. That’s a message that could still work with many voters in Argentina, the Massa campaign source said.

Scioli’s strategy in a planned debate with Macri will be to focus on ideology, seeking to demonize his rival and present him as the candidate of the rich. Macri’s strategy, in turn, will be to focus on the government’s record of corruption, mismanagement, abuse of power and economic downturn, and to depict Scioli as a government peon.

My opinion: Argentina’s election is coming down to a choice between continuity and change, and — in a country with zero economic growth — Macri’s message of change may have the most appeal. Scioli could still win, but only if he changes course and distances himself from the government. Either way, this looks like the end of the leftist populist cycle in Argentina.

By Benedict Mander in Buenos Aires
October 28, 2015

Mauricio Macri vows to end Argentina’s long debt stand-off and drop capital controls on his first day as president, a prospect that is a real possibility after his strong showing in presidential elections on Sunday.

Investors cheered the stunning performance of the centre-right mayor of the city of Buenos Aires in Sunday’s first round of polls, buoyed by his pledge to abandon populist policies that have left the country’s economy teetering on the brink of crisis.

“This is a problem of trust. This government has destroyed trust among Argentines and the world,” said Mr Macri in an interview with the Financial Times, referring to fears that removing capital controls could trigger a run on the currency. “We are going to put Argentina back on a path to growth and back into the world.”

Markets have rallied on the prospect of a market-friendly Macri government after the first round left the challenger almost neck and neck with Daniel Scioli, president President Cristina Fernández de Kirchner’s chosen successor.

The winner of the run-off vote on November 22 will inherit an economy with a ballooning fiscal deficit, inflation of around 20 per cent and international pariah status in global capital markets following Argentina’s 2001 default.

The former president of one of Argentina’s most popular football clubs, Boca Juniors, Mr Macri singled out inflation as one of the most urgent problems, promising to bring it down to single-digits in “a couple of years”. “We can’t continue with this level of inflation,” he said.

Mr Macri also promised to be tough with “holdout” hedge funds demanding full payment on $1.3bn of defaulted bonds. But he said it was important to fix the long-running problem, which is blocking the country’s access to the international capital markets.

“That doesn’t mean that I won’t defend the interests of my country. I will be tough and severe in negotiations, but I don’t want to have a conflict, especially when there is no need to have one,” he said.

This is a problem of trust. This government has destroyed trust between Argentines and the world
– Mauricio Macri

Mr Macri stressed the importance of strengthening the rule of law and ensuring a regulatory framework that would stimulate investment, especially in infrastructure. He also accused the Fernandez government of cheating in official statistics as he promised to restore the credibility and independence of institutions, including the statistics agency and the central bank.

First, though, the 56-year-old son of a powerful Italian-born construction magnate needs to defeat the government-backed Mr Scioli in the second round vote next month that will bring an end to 12 years of populist rule by Ms Fernández and her late husband and predecessor, Néstor Kirchner.

Mr Scioli, who is the governor of the populous province of Buenos Aires that surrounds the city, won the most votes, with 36.9 per cent compared to Mr Macri’s 34.3 per cent. But Mr Macri argues that voters for the other four candidates — including Sergio Massa, a dissident Peronist, who came third with the support of 21 per cent — will choose him in the run-off.

“Those who didn’t vote for the government are looking for a change, so it is our responsibility now to be clear with them to show them that they can rely on us, and that we want the same things,” said Mr Macri.

Argentina’s economy a poisoned chalice for president’s successor whoever wins election inherits a ballooning fiscal deficit

“We are looking forward to sitting down [with Mr Massa] and finding agreement over policies, that’s the first stage. We want to go step by step,” said Mr Macri, who did not rule out the possibility of offering ministerial positions to Mr Massa, who was briefly Ms Fernández’s cabinet chief, in exchange for his support.

Nevertheless, Mr Macri admits to being surprised by his stunning performance in Sunday’s elections that left pollsters scrambling to explain how their predictions could be so wide of the mark.

“We were sure we were going to make it to the second round, but the results were amazing, amazing,” says Mr Macri. Many expected the Peronists to win outright on Sunday and extend their 70-year domination of Argentine politics.

“The government has been very successful in spreading the idea that they were invincible, that it was their destiny to rule this country forever. But suddenly on Sunday night we all realised that we could [do it]. Yes we can!” Mr Macri said.

After eight years at the helm of “one of the most important cities in the world”, Mr Macri now wants to move on. “We’re very proud of what we have done here with a very good team. We succeeded in putting Buenos Aires back into the world right at a time when Argentina was in conflict with the rest of world,” he said. “Now we are ready to run the country.”

By Carolina Millan
October 28, 2015

* Merval benchmark index rises to highest in more than a year
* Speculation increasing opposition’s Macri could win presidency

The rally in Argentine stocks this week after the better-than-expected performance by the opposition in Sunday’s first-round election may just be the beginning, according to Banco Santander Rio SA.

Argentine stocks could rally an additional 20 to 30 percent over the next three weeks ahead of a Nov. 22 runoff vote if opposition candidate Mauricio Macri consolidates his lead in polls, according to Walter Chiarvesio, an equity analyst at Banco Santander Rio in Buenos Aires.

The Merval extended gains Wednesday to surge the most in the world as investors anticipate a possible victory for the market-friendly Macri over ruling party candidate Daniel Scioli, who has campaigned on continuity with gradual changes. The utilities and banking sectors are the most attractive in the short-term, Chiarvesio said.

“The market is reacting to Macri’s good performance on Sunday and anticipating that Macri will win the election,” Chiarvesio said.

The Merval rose 7 percent to the highest since September 2014 at 3 p.m. in Buenos Aires, led by Banco Macro, which soared 15 percent to the highest price on record. American depositary receipts of Argentine stocks also jumped more than 10 percent in New York trading, led by banks including Macro, Grupo Financiero Galicia SA and BBVA Banco Frances SA.

Macri’s policy proposals include ending capital controls on his first day in office and settling a decade-long dispute with holdout creditors from Argentina’s 2001 default. A Gonzalez y Valladares poll published in Cronista on Tuesday showed Macri with 45.6 percent support for the second round, compared with 41.5 percent for Scioli.

By Carolina Millan
October 28, 2015

* Merval benchmark index rises to highest in more than a year
* Speculation increasing opposition’s Macri could win presidency

The rally in Argentine stocks this week after the better-than-expected performance by the opposition in Sunday’s first-round election may just be the beginning, according to Banco Santander Rio SA analyst Walter Chiarvesio.

Argentine stocks could rally an additional 20 percent to 30 percent over the next three weeks ahead of a Nov. 22 runoff vote if opposition candidate Mauricio Macri consolidates his lead in polls, Chiarvesio said in an interview.

The Merval rose the most in the world Wednesday as investors anticipate a possible victory for Macri over ruling party candidate Daniel Scioli, who has campaigned on continuity with gradual changes. The utilities and banking sectors are the most attractive in the short-term, Chiarvesio said.

“The market is reacting to Macri’s good performance on Sunday and anticipating that Macri may win the election,” Chiarvesio said.

The Merval rose 5.5 percent to the highest since July in Buenos Aires, led by Banco Macro, which soared 13 percent to a record. American depositary receipts of Argentine stocks also jumped more than 10 percent in New York trading, led by banks including Grupo Financiero Galicia SA and BBVA Banco Frances SA.

Macri’s policy proposals include ending capital controls on his first day in office and settling a decade-long dispute with holdout creditors from Argentina’s 2001 default. A Gonzalez y Valladares poll published in Cronista on Tuesday showed Macri with 45.6 percent support for the second round, compared with 41.5 percent for Scioli.

By Richard Lough and Maximilian Heath
October 28, 2015

Oct 28 (Reuters) – Ruling party candidate Daniel Scioli’s hunt for swing voters in Argentina’s presidential run-off vote suffered a blow on Wednesday when two of defeated candidate Sergio Massa’s top allies said they would not vote for him.

Jose Manuel De la Sota, the governor of Cordoba province and a senior figure in Massa’s alliance, said the leftist government of outgoing leader Cristina Fernandez had been “anti-federal and authoritarian” in style. Roberto Lavagna, a former economy minister, said he wanted to see “change”.

As Scioli and his conservative challenger scramble for Massa’s 5 million voters, politicians from Massa’ New Alternative alliance are meeting in a Buenos Aires hotel to draw up a blueprint of policy priorities.

Massa allies on Monday told Reuters that the document would have more in common with pro-business Macri’s campaign platform and would be a tacit “wink” in his direction. Massa, though, may not explicitly back one candidate of the other.
“Kirchnerismo has done no good for the country,” De la Sota told reporters, referring to the name given to the leftist populism of Fernandez and her late husband and predecessor Nestor Kirchner. “It has gotten drunk on power.”

Asked if he would vote for Scioli, De la Sota gave a categoric “No”.
Macri’s unexpectedly strong showing in Sunday’s ballot shocked the ruling Front for Victory party which had expected to win the election in the first round, or at least go into the second round with a wide lead.

Fernandez, a fiery leftist who often rails against Western excess, will leave behind a divided nation. She is hailed by the poor for expanding social welfare programs and protecting local industry but loathed by others who blame her for strangling the economy.

Massa’s camp says the policy blueprint will lean heavily on his first-round campaign pledges: fighting inflation, scrapping the income tax for workers and removing hefty taxes on corn and wheat exports.
Scioli promises to maintain Fernandez’s social safety net and talks only of gradual change to her protectionist policies that include trade and capital controls.

Macri promises fast-moving reform to dismantle the controls. Massa had pitched himself as a middle-way candidate.

“Personally I am in the change camp. We need to have a clear understanding what change means. But in any case, it is not a vote for the Front for Victory,” said Lavagna, who had served under Nestor Kirchner before splitting with him. Lavagna was touted to return to the Economy Ministry had Massa won.

By Richard Lough and Maximilian Heath
October 28, 2015

Defeated Argentine presidential hopeful Sergio Massa unveiled key policy demands on Wednesday and said his 5 million supporters would vote in next month’s run-off election based on how the two remaining candidates respond.

Massa, whose plans ranged from cracking down on drug-runners to scrapping income tax for workers, stopped short of endorsing either ruling party candidate Daniel Scioli or his conservative rival Mauricio Macri.

“The stance that the two candidates take vis-a-vis these proposals will define where more than 5 million voters place their support,” he said.

Earlier, Scioli’s hunt for swing voters suffered a blow when two of Massa’s top allies said they would not vote for him.

Macri has the momentum early in the race to the Nov. 22 run-off after his strong showing in Sunday’s ballot defied polls and shocked the ruling Front for Victory party, which had eyed a win in the first round.

Jose Manuel De la Sota, the governor of Cordoba province and a senior figure in Massa’s alliance, said the leftist government of outgoing leader Cristina Fernandez had been “anti-federal and authoritarian” in style. Roberto Lavagna, a former economy minister, said he wanted to see “change”.

“Kirchnerismo has done no good for the country,” De la Sota told reporters, referring to the name given to the leftist populism of Fernandez and her late husband and predecessor Nestor Kirchner. “It has gotten drunk on power.”

The policy blueprint leaned heavily on Massa’s first-round campaign pledges and included scrapping the income tax for workers, removing hefty taxes on corn and wheat exports, tackling narco-gangs and stamping out corruption.

“Between change and continuity, change has already won,” Massa said. “Now what we need to construct is intelligent change.”

Massa allies on Monday told Reuters that Macri would find more common ground with the policy priorities than Scioli and that the document would be a tacit “wink” in Macri’s direction.


Although the lawmaker who split with the ruling party in 2013 is in a strong position to influence the outcome of the run-off, he has ducked playing kingmaker.

Doing so could risk the ambitious 43-year-old’s power base. Many of his supporters blame Fernandez for hobbling the economy but view Macri as beholden to big business. Others balk at the prospect of four more years of brazen leftist populism under Scioli.

“He can insinuate, say change is desirable and let voters chose their own path. There is no need for him so split his own force,” said political analyst Federico Thomsen.

Fernandez, a fiery leftist who often rails against Western excess, will leave behind a divided nation. She is hailed by the poor for expanding social welfare programs and protecting local industry but loathed by others who blame her for strangling the economy.

Scioli promises to maintain Fernandez’s social safety net and talks only of gradual change to her protectionist policies that include trade and capital controls.

Macri promises fast-moving reform to dismantle the controls. Massa had pitched himself as a middle-way candidate.

Massa broke from the ruling party in 2013 and is a strong critic of Fernandez. On the campaign trail, however, he also warned Macri could drive the economy into a new crisis by imposing pro-market reforms too abruptly.

“We need to have a clear understanding what change means. But in any case, it is not a vote for the Front for Victory,” said Lavagna, who was touted to return to the Economy Ministry had Massa won.

By Nate Raymond
October 28, 2015

Oct 28 Days after an election sent the Argentine presidential race into a runoff, a U.S. judge on Wednesday urged the South American nation to resume talks to settle bondholder litigation flowing from its $100 billion default in 2002.

U.S. District Judge Thomas Griesa in New York made the remarks as creditors suing over defaulted bonds urged him to expand to nearly $8 billion the amount Argentina must pay them to service its restructured debts.

Griesa did not reference Sunday’s election to replace Argentine President Cristina Kirchner Fernandez, whose administration has called the suing creditors “vultures.”

But he noted Argentina previously declined to participate in settlement negotiations and said he assumed “at this late date in this very lengthy litigation that attitude is over with.”

“The way to ultimately resolve this litigation must come through settlement,” Griesa said.

The comments came during the latest hearing litigation by creditors seeking full repayment on Argentine bonds following the country’s 2002 default.

The holdouts spurned Argentina’s 2005 and 2010 debt restructurings, which resulted in 92 percent of its defaulted debt being swapped and investors being paid less than 30 cents on the dollar.

Wednesday’s hearing concerned whether Griesa should order Argentina to pay 530 creditors seeking $6.15 billion when it services its restructured debt.

Those creditors were seeking the same treatment as several hedge funds the country was ordered to pay $1.33 billion plus interest.

That decision, which the U.S. Supreme Court declined to review, pushed Argentina into default again in July 2014 after it refused to honor Griesa’s orders and failed to settle with the holdouts, who with interest are now owed $1.76 billion.

Robert Cohen, a lawyer for Elliott Management’s NML Capital Ltd, a lead holdout, argued on Wednesday that expanding the amount of debt subject to an injunction would be a “plus not a minus” in facilitating a settlement.

Carmine Boccuzzi, Argentina’s lawyer, countered that doing so would complicate settlement talks by expanding the number of holdouts with “veto power” over a deal.

The hearing came after Sunday’s presidential election in Argentina to determine who would succeed Fernandez ended with a strong showing from a pro-business opposition candidate.

A run-off between opposition candidate Mauricio Macri and ruling party candidate Daniel Scioli is scheduled for Nov. 22.

By Hugh Bronstein
October 28, 2015

The surprisingly strong showing by Argentina’s opposition presidential candidate last weekend could prompt higher than expected corn exports at a time when U.S. farmers are already nervous about their competitiveness.

Mauricio Macri defied the opinion polls by easily forcing a run-off with ruling party candidate Daniel Scioli. Macri says he would scrap corn and wheat export curbs and eliminate export taxes on both crops while Scioli keeps his platform more vague.

Farmers say Macri’s policies would be a huge incentive for them to switch some soy fields over to corn after years of neglecting crop rotation due to interventionist government policies that have hammered down corn’s profitability.

Macri, a proponent of free markets after eight years of heavy state controls under outgoing President Cristina Fernandez, has the momentum going into the final vote on Nov. 22. But Fernandez-ally Scioli is still very much in the race.

With this season’s wheat already in the ground, Argentine growers are planting soy this month through December while late planting in the main corn belt extends into the early January dog days of the Southern Hemisphere summer.

The Buenos Aires Grains Exchange had forecast 2015/16 corn planting would fall to 2.7 million hectares from 3.4 million in the previous year — a prediction made before Macri’s pundit-defying electoral shocker on Sunday.

“If the political signals are right, we could see the same corn area planted this year that we had last year,” said Martin Fraguio, executive director of the Maizar corn industry chamber.

That would mean an increase in Argentine 2015/16 corn planting of about 25 percent over current estimates, which would add to the country’s exportable surplus.

So far in 2015, Argentina has shipped abroad 12.9 million tonnes of corn, according to official data.

Increased planting could put Argentina in contention with Ukraine, the world’s No. 3 corn exporter. It could also prompt the U.S. Department of Agriculture to reverse course on its Argentina export outlook for 2015/16, which it trimmed by 1 million tonnes earlier this month to 14.5 million.
That would be a headache for U.S. corn farmers already grappling with a strong dollar. The muscular greenback has meant that growers in main rival Brazil, where the country’s currency has weakened by nearly a third this year, can offer lower prices.

The United States and Brazil are the world’s No. 1 and 2 corn exporters, respectively, followed by Ukraine, which ships around 17 million tonnes a year, and then Argentina.

Spot U.S. corn exports are currently offered around $180 per tonne FOB at the Gulf Coast, some $10 per tonne FOB above Argentine shipments.

U.S. shipments for spring — when the potential size of the 2015/16 Argentine harvest should be known — are being offered around $182 per tonne. Argentine exports are way below.

“The market is showing us that (export quotas) won’t be disturbing the market next harvest,” Santiago del Solar, who farms thousands of hectares in Buenos Aires province, said in an email.
“$140-143 per tonne is better than $130 we had a few weeks ago for April 2016,” he added.

But Solar also cautioned the area planted with corn this season might be restricted.

“We can expect more late-planted corn area this year, but only up to a point because a lot of us already have inputs and fields already prepared for soybeans,” he said.

Soybeans are exempt from Argentina’s export curbs but carry a hefty 35 percent export tax, which Macri says he wants to cut by 5 percent per year.

If export quotas are lifted on corn, farmers’ profits could catapult higher for the 2015/16 crop year, according to industry consultancy Agritrend. A farmer who owns his land could make profits of $672 per hectare on corn, up from $350 currently.

Farmers renting land would make $548 per hectare — more than double the $225 with export curbs, the consultancy said. About 60 percent of Argentine farmland is leased.

A Macri win could also spur planting of Argentine wheat, which goes into the ground in June and July.

“We expect Macri will from day one send corn and wheat export taxes to zero. That’s a huge incentive to plant both,” Fraguio said.

Cuts in wheat taxes and quotas could prompt more sales to Brazil, displacing imports of U.S. hard red winter wheat which have been filling the gap. Concerns over that were cited for part of a pullback in HRW wheat futures on Tuesday.

By Jonathan Blitzer
October 28, 2015

Even before the returns were in on Sunday night, the three candidates in Argentina’s national elections were already making their speeches, and each one, in his way, claimed victory. It wasn’t that the results were ever in dispute, though it did take a curiously long time for them to materialize; rather, the takeaway was, like so many things in Argentina throughout the last eight years, a question of how one chose to read into the results the controversial incumbent President, Cristina Fernández de Kirchner.

The candidate Kirchner endorsed, Daniel Scioli, the governor of the province of Buenos Aires, was the front-runner, with the most to lose. “The governors are with me, the Presidents of the regions are with me, the mayors are with me, and the legislators are with me,” he told the press beforehand. He entered Sunday with an air of inevitability surrounding his candidacy, but if he failed to gain forty-five per cent of the vote, or if his opponents drew within ten per cent of his total, he would have to face a runoff on November 22nd. Almost no one predicted it, but that is exactly what happened. Scioli won Sunday’s election by a very narrow margin—taking slightly more than thirty-six per cent of the vote—and as a result he limps into the second round of voting looking jilted and precarious.

Scioli didn’t do himself any favors on election night. When, about two hours before the results were announced, he began attacking his principal rival, the conservative mayor of Buenos Aires, Mauricio Macri, he seemed to be giving a premature concession speech. Without using the word balotaje, or runoff, he began his campaign for it by rattling off Kirchner’s signal accomplishments (welfare expansion, the nationalization of an oil company), and saying that none of that would have been possible under Macri. “Argentines don’t want to go back to the economic adjustments, devaluations, and indebtedness,” he said, dredging up the catchwords of past conservative administrations. A vote for Macri, he claimed, would return the country to the nineteen-nineties, when corruption and misguided economics led to one of the largest sovereign defaults in history.

For Macri, an unrepentant conservative in a country run by an iconic left-wing populist, the bar was low: he only had to make the contest close for the night to seem to go his way. “What happened today changes the politics of this country,” he declared, on securing just thirty-four per cent of the vote. (The gubernatorial candidates on his ticket also won in the provinces of Buenos Aires and Jujuy, in the country’s north.) He’s since received an unexpected boost from the third-place finisher, Sergio Massa, Kirchner’s disgruntled former Cabinet chief, who had twenty-one per cent of the electorate behind him. Massa and Scioli belong to the same broad-based ideological movement, known as Peronism, but Massa has suggested that he might throw his support to the Macri camp. On Monday, amid speculation about what that could mean for the runoff, Scioli announced that he’d debate Macri on November 15th. With Macri gaining momentum, Scioli will try to reposition himself—not just in terms of his rival but also, crucially, in relation to Kirchner herself.

From the start of the campaign, Scioli has had to walk a fine line where Kirchner is concerned. “Continuity with some change, that’s what people want,” Maria Victoria Murillo, a political scientist at Columbia University, told me. On the one hand, Scioli has portrayed himself as a successor to Kirchner, who, while divisive, enjoys a broad base of support in the middle-class electorate. On the other, he needs to create distance because the economy is bottoming out—G.D.P. is down, inflation has soared, exports have sunk, and unemployment is up—and the public has grown restive. As the journalist Carlos Pagni put it, “the prosperity that always accompanied Kirchnerism has ended.”

Scioli has claimed that he’s for “gradualism” and moderation, at once an exponent of continuity and change. A case in point is his posture on a group of creditors who have taken Argentina to court over the repayment of old bonds in default. The hedge funds which these investors represent are known as “vultures,” for buying up distressed debt and suing for the full value of the assets. Kirchner has been sparring with them for years, refusing to pay them the more than a hundred billion dollars they claim is due and turning the battle into a populist cause célèbre. While global commodity prices were high, Kirchner could afford to be shut out of capital markets—part of the collateral damage of her hard line on the issue—but the circumstances have changed; it’s likely her successor will have to strike some sort a deal. Scioli, for his part, has sounded as bellicose as Kirchner when asked about the vultures in public. But off the record his advisers have said the candidate understands he’ll have to negotiate. “Kirchnerism is over,” one Scioli adviser reportedly said. “Soon enough, they’ll realize.”

One of the ironies of Scioli’s situation is that he’s always had a fraught relationship with Kirchner. Some of the bad blood goes back to the administration of her late husband and predecessor, Nestor. Scioli was Nestor Kirchner’s running mate in 2003, a holdover from some of the deals Kirchner had to cut in order to round up support for his Presidential bid. Once in office, he seemed to resent Scioli, whom he kept close but never really trusted. Each time Scioli veered from the Kirchner line—say, on a tax measure or some minor matter of policy—he was publicly brought to heel. “What followed were years of petty snubs and various humiliations,” Gabriel Pasquini, the author, with Graciela Mochkofsky, of a book on Kirchner, told me. Scioli endured the situation until the Kirchners nominated him for the governorship of the province of Buenos Aires, in 2007. On the surface it was a prestigious post, since forty per cent of the country lives in the province, but historically it’s been double-edged for seekers of higher office. “There’s a dictum of sorts that the governor of Buenos Aires province will never become president,” Pasquini said. Rather than a proving ground, the province, because of its size and the scope and complexity of its problems, tends to mire its leaders in controversy and overexposure.

Then there’s the question of Cristina Kirchner’s endorsement, which was only ever half-hearted. Earlier this month, at a joint campaign stop, Cristina Kirchner said, “I ask all Argentines to get beyond all the antipathies we have and to think about what we’ve done over these years. There has to be continuity.” Some interpreted the word “antipathies” as a reference to Scioli, whom she seemed willing to accept but not embrace for the sake of her legacy. Others claimed she was speaking more generally about the “antipathies” wrought by her back-to-back administrations. Whatever the case, Kirchner loyalists have been less ambiguous about their misgivings with Scioli. Last week, the leader of one influential group of Kirchnerist intellectuals said he’d be voting for Scioli but only with a “long face.“ Needless to say, this poses problems for a candidate pitching himself as Kirchner’s anointed successor. “Will the President even let herself be summoned in the form of her candidate?” Carlos Pagni asked, practically rhetorically, in La Nación.

Scioli’s careering prospects going into next month’s runoff highlight Kirchner’s weaknesses, but not for the reasons that most people think. The conventional wisdom is that if Kirchner’s candidate falters, it signals the end of her own clout. That decline has long been in motion, the result of a dwindling economy and the mere passage of time: after twelve years in power, including two terms in office, she cannot run again for the Presidency until 2019. Some analysts maintain that her objectives going into these elections were Machiavellian from the start: that she intended to hand over the Presidency to a successor who would come into office with a limited mandate with which to face an increasingly intractable economy. This does not seem unlikely after Sunday, and it could conceivably strengthen Kirchner’s hand if she ever wanted to return to office. (And a Macri win, after all, might not be the worst thing for her.) Still, her bastions of support within the Peronist party will have to adjust to life without her, whether or not she plans to run again in four years.

The real mark of Kirchner’s weakness, though, may be that she never really had a proper successor in the first place. It’s hard, even now, to define what Kirchnerism is, exactly. After the past eight years, it looks to be a mélange of populism, elements of genuine progressivism, fierce partisanship, economic nationalism, and political savvy (even if it reads as bluster abroad). Central to a lot of it was the economic boom that funded the policies for which Kirchner is most beloved. And yet these years have been marked by unremittingly severe domestic crises. The battle lines were drawn within months of Kirchner taking office, when she levied a new tax on agricultural exports that prompted national strikes and road blockages; before long, she was embroiled in an ugly and protracted fight with the media conglomerate Clarín. From the start of her first term, there were repeated calls for her resignation, and they never really went away. “People see what they want to see with Kirchner,” Murillo said.

Through it all, there were two people who kept Kirchnerism afloat as a rhetorical armature, political posture, and topsy-turvy set of policies: the Kirchners themselves. Their original plan appeared to be trading off presidential terms to elongate their time in office. Then, in 2010, Nestor Kirchner died of a heart attack, and just like that the equation diminished. The year before, he and his wife had made a pitch for a new leftist coalition, to broaden their base of support, but it never materialized. In 2011 Kirchner handpicked a Vice-President, possibly with an eye toward grooming a successor, but he was almost immediately named in a corruption scandal and spent the rest of their term in the shadows. Settling on Scioli was something of a defeat for Kirchner, since he was the only candidate who could be both nominally loyal to her and could win an election. You’d think a caudillo never has to compromise, but you’d be wrong.

By Dimitra DeFotis
October 28, 2015

Argentina’s first runoff presidential election won’t come for another month, but Raymond James analysts are positive on equities despite a runup and outperformance relative to other Latin American assets.

Analysts Federico Rey Marino, Santiago Wesenack and Fernando Suarez wrote on Tuesday:

“Argentine stocks rallied by an average of 12% in U.S.-dollar terms on Monday 26, on the back of Sunday’s presidential election results. Stocks in banks and utilities were the best performers, after gaining 15% and 13%, respectively. FPV candidate Daniel Scioli, and Cambiemos candidate, Mauricio Macri, will now compete in a presidential run-off for the first time ever on November 22. We maintain our constructive medium-term view on Argentine equites, as we believe the next administration will start making progress to put the economy back on track again sooner rather than later. Counting on normalization, we continue to favor banks, utilities, and agro/export-related companies. However, now only trading at an average of 15% below the March highs, after accumulating a 19% increase in the past three trading sessions, we consider additional support for current valuations may rely on further certainties regarding the outcome of the election, and more insight regarding future macro and sectorial policies.”

Indeed, the Global X MSCI Argentina exchange-traded fund (ARGT), which is up 2.4% today, is up 20% just in October. Still, investors should consider that the fund is up only 2.3% this year, while the iShares Latin America 40 ETF (ILF), weighed down by assets in Brazil, is down 24%.

Argentine banks with U.S.-traded shares include Banco Macro (BMA), which is up 7.5% today and up 52% this month, and Grupo Financiero Galicia (GGAL), which is up 4.5% today and up 40% this month. Argentine electricity distributor Empresa Distribuidora y Comercializadora Norte, otherwise known as Edenor (EDN), is up 2% today and up 36% this month.

In energy, oil-and-gas exploration company YPF (YPF) is up 5% today and up 27% this month, while Petrobras Argentina (PZE) is up 4% today, but up only 1.4% this month.

By Paula Diosquez-Rice, Laurence Allan, Carlos Caicedo
28 October 2015

This will be the first time in 27 years that an Argentine election goes into a second round, which will take place on 22 November.

IHS perspective


The first round of Argentina’s presidential and general elections put government candidate Daniel Scioli, Front for Victoy (Frente para la Victoria: FpV) – 36.8% and opposition candidate Mauricio Macri, Republican Proposal/Let’s Change (Pro/Cambiemos) – 34.33% – nearly neck and neck.


Pro-business Macri has the momentum, further indicated by the gains his party made in gubernatorial elections in Buenos Aires province and in national congress, but third-place candidate Sergio Massa (21% of the vote) has emerged as kingmaker.


An improved business environment is anticipated regardless of whether Scioli or Macri wins the presidency; however, the complicated balances between the president, Congress and the provinces will slow down implementation of policies.

Presidential candidate Sergio Massa talks to the press after voting in Buenos Aires, Argentina, Sunday, 25 October, 2015PA.24540672
The slim margin of Daniel Scioli’s first-round lead had not been anticipated by pollsters and the main expectation within the government camp was for Scioli to win outright in the first round. Reflecting this, Scioli went as far as naming his cabinet. IHS has consistently assessed that the election would be close and a second round between Scioli and Mauricio Macri would be necessary. Macri’s Republican Proposal (Propuesta Republicana: PRO) and centrist opposition Let’s Change (Cambiemos) electoral coalition also performed strongly in the congressional election and won gubernatorial elections in the key province of Buenos Aires.

Those two factors strongly suggest that Macri has the better momentum going into the second round. However, the potential second-round choices of voters who supported third-place Sergio Massa, with 21.34%, will be critical to the outcome.

Massa crucial for the second round

Sergio Massa is already the subject of an intense campaign of offer and counter-offer between Scioli and Macri, as they seek to get his second round support. Although Massa remains nominally a Peronist and thus from the same political background as Scioli, efforts at finding common ground for an alliance have failed so far. Likewise, aggressive Kirchnerist tactics against Massa, since he performed strongly at mid-term election in 2013, has resulted in Massa hardening his anti-government stance. The vice presidency would be an obvious offer to make to Massa, but that would mean displacing President Cristina Fernández de Kirchner’s favourite, Carlos Zannini, in that role. Sources close to Scioli have admitted that bringing Massa to their side would not be easy. Significantly, Massa has said that if Scioli remains Fernández’ “puppet” he will lose the election.

Personal atmospherics between Macri and Massa appear better. Although a proposed electoral coalition between them was rejected early in the campaign, neither side has attacked the other with the same bitterness that has been evident between Scioli’s campaign team and the other two candidates. Massa has given some hints on where his sympathies lie by noting that he was against “continuity”. However, Macri’s ability to offer attractive political posts to Massa is constrained by the political debts owed to his coalition partners, notably the Radical Civic Union (Unión Cívica Radical: UCR), without whose strong national networks he could not have reached the second round.

A deteriorating macroeconomic situation to prove major challenge for new president

Argentina’s next president will face a challenging macroeconomic environment. The fiscal deficit is expected to reach 6% of GDP in 2015. National accounts data show fiscal spending growing at double digits in real terms, while tax revenue has lagged well behind.

Meanwhile the dispute with the “holdouts” over defaulted debt shows no sign of abating. The latest ruling, by US-based judge Thomas P. Griesa, allowed for another 15 plaintiffs (the so-called “Me too’s”) to sue Argentina, increasing the amount of debt in dispute to USD10 billion. To this adds dwindling foreign-exchange reserves, declining export revenues, and forecast low commodity prices for 2016. This significantly constrains Argentina’s ability to use the central bank reserves to bail out the government as has been the case so far.

Further challenges for the central bank are how to source the US dollars needed to stabilise the peso and meet the private-business demand for hard currency. Sources in the tradeable sector have reported that the central bank is still to authorise USD9-billion requested by importers. Equally challenging for the next government would be how to manage devaluation expectations. The peso remains overvalued; unlike other emerging-market currencies it has devalued by just 11.3% against the dollar this year. This contrasts with the 62% depreciation experienced by the currency of Brazil, Argentina’s main trading partner. Both Macri and Scioli have vowed to address these imbalances, but this is likely to take months rather than weeks. A carefully managed transition process will be required in order to avoid capital flight and runaway inflation.

Outlook and implications

Markets welcome the surge of pro-business Mauricio Macri; bond prices rose on the back of the first round result. That is understandable given Macri’s public statements; he has vowed to lift currency and import controls and let an overvalued peso to find its market value straight away. However, IHS assess that the removal of such controls cannot be done overnight, given low levels of foreign reserves and high levels of inflation. Yet, we assess that the election results so far represent a marked weakening of Kirchnerism, opening the door for an improved business environment in , regardless of who wins. Even under Scioli, who has a good rapport with the private sector, progress towards a more predictable, business friendly environment is anticipated. The downside under a Scioli administration, is his close association with outgoing President Cristina Fernández, who will try to force him to maintain the state interventionist polices that have alienated investors and isolated Argentina. Scioli, as moderate politician is unlikely to heed that; however, he will be forced into complex negotiations with Kirchnerism, which will try at every step to have a say in policymaking.

The makeup of Congress will pose significant headwinds for effective governance. On 25 October, voters also elected a large chunk of National Congress and the governors in 11 of Argentina’s 25 provinces. On the first, the headline was the significant setback suffered by the Front for Victory (Frente para la Victoria: FpV) in congress, which saw its number of seats dwindle to 117, although it still remains the largest single bloc, with different opposition factions having the remainder of the 257 seats in congress. The FpV retains a majority in the Senate. A Scioli government would thus not have an easy ride in the chamber of deputies. A Macri presidency would face an FpV, diminished but still the largest single bloc in the chamber, with the Senate a clear obstacle for him. He will need to build congressional alliances to push through legislation. Although the tendency of minority parties to gravitate towards the government side remains strong, maintaining such alliances will be difficult and unpredictable. Legislative progress for either man as president is therefore going to be extremely difficult, at least until the October 2017 mid-terms. A new president will thus face high barriers to pass parameter-shifting legislation into law and any especially contentious policies – more likely from Macri than Scioli – will become diluted, unless the new president uses his wide discretionary powers. Use of those though could easily spark fierce resistance from other sectors in Congress.

By Matias Spektor
October 28, 2015

The severe tone of the U.S. National Intelligence Estimate of September 8, 1982, was worthy of the darkest moments of the Cold War. It warned that if Country A built a nuclear device, “security relationships” in the entire region “would be upset.” Furthermore, it warned Country B “could be prompted to move as quickly as possible to attain a nuclear weapons capability to buttress its own security and sense of national prestige.”

It scarcely seems possible in today’s context, but Country A was Argentina and Country B was Brazil. Indeed, in the late 1970s and early 1980s, South America’s two biggest countries were on the verge of a nuclear race. With a long-standing diplomatic rivalry, they were now bent on developing sensitive nuclear technology, including enriching and reprocessing uranium, and building ballistic missiles.

Making matters worse, military regimes governed both countries at the time, and this work took place with little if any civilian scrutiny. National security doctrines in both countries identifi ed each other as a major potential security threat, with the armed forces having contingency plans in place in the event of war.

Yet, starting in the 1980s, the two countries set out on an ambitious path of nuclear cooperation. In the process, they imposed new restraints on their nuclear programs and rewrote national security doctrines to eliminate the possibility of war. To everyone’s surprise, they also built a mechanism of mutual nuclear inspections that was unprecedented anywhere.

This set the stage for the bilateral relationship of today, which — apart from occasional skirmishes over trade, or on the soccer field — is entirely peaceful. Indeed, South America as a whole is free of interstate conflict, due in part to the two countries’ success in defusing tensions during that era.

How did it all happen?
A Common Threat

Argentina and Brazil began cooperating on nuclear matters in large part because of the policies of President Jimmy Carter’s 1977–1981 government. The White House was trying to prevent the further proliferation of nuclear technology by curtailing third-party exports of sensitive technologies, while also pushing against the human rights violations perpetrated by the military regimes.

Both Buenos Aires and Brasilia saw Carter as a threat to their national “rights” to nuclear technology development. And, crucially, they thought U.S. policies denying them technology were even more threatening than the risks emanating from the other’s nuclear program.

We now know this perception made some sense. After all, at a three-day conference in 2012 to explore this chapter in history, documents reviewed by a group of experts revealed that neither Brazil nor Argentina were anywhere close to developing full-fledged nuclear weapons programs. Foreign intelligence agencies overestimated their achievements. Documents also show that neither country built its nuclear program primarily as a response to a perceived nuclear threat from the other.
Interpersonal Trust

Previously secret documents also indicate that, due in part to the perceived threat from Washington, Argentine and Brazilian officials were able to establish a high degree of empathy and trust at the highest levels. Two episodes in particular stand out because they could have led to a serious deterioration in the relationship, but ended up leading to greater nuclear cooperation instead.

The first was in November 1983, when the Argentine government announced its mastery of the technology to enrich uranium in a pilot-scale lab at the then-secret facility of Pilcaniyeu. The announcement caught Brazilian authorities by surprise, and they doubled down on their effort to develop uranium-enrichment capacity at the Aramar facility — which they achieved in 1987.

Yet, before they went public, Argentine authorities made a point of giving their Brazilian counterparts early warning. The governing junta sent a private letter to Brazil’s military president, João Figueiredo. The gesture was welcomed in Brasilia. Brazilian authorities knew Argentina lacked the industrial capability to enrich uranium, and thereby to develop a nuclear explosive.

A month after the Pilcaniyeu announcement, civilian rule returned to Argentina and Raul Alfonsín became president. Alfonsín understood the risk of Brazil and Argentina becoming ensnared in a nuclear arms race, and recognized that diverting resources to wasteful military competition could wreck his plans for securing Argentina’s democratic transition.

In early 1984, Brazil presented through informal channels a proposal for a joint declaration renouncing nuclear tests. Argentina agreed, and soon afterwards it put forward a proposal to develop a system of bilateral safeguards and mutual inspections.

Still, there was no guarantee yet that tensions would be fully defused. So when civilian rule also returned to Brazil in 1985 and José Sarney became president, the two leaders began working quickly to build trust. When they met for the first time, Alfonsín said he wanted to visit the Itaipú Dam, which for over a decade had been at the heart of a bilateral dispute over the use of international waters in the River Plate Basin. During that same trip, Alfonsín made an additional gesture of trust by inviting Sarney to visit the Argentine nuclear facility at Pilcaniyeu. The new spirit of reciprocity required that Sarney extend the same courtesy to Alfonsín, who visited Aramar in 1986. These symbolic visits filtered down to deeper and more frequent cooperation between scientists and technicians, including visits to each other’s installations.

The second big test of the cooperative relationship came in August 1986, when the Brazilian newspaper Folha de São Paulo revealed two major shafts in the Serra do Cachimbo site in northern Brazil. According to the newspaper, the boreholes had been drilled by the air force as testing sites for nuclear explosions.

Argentine officials were taken aback by the leak, and let Brazil know. In Brasilia, the government moved quickly to inform their Argentine counterparts that the boreholes were repositories for nuclear waste similar to ones Argentina had built in Patagonia.

In a recent newspaper interview, Sarney took pride in how the relationship he achieved with Alfonsín helped avert a bigger crisis. “We established a trusting relationship between us,” the former president said. “What we see happening now with immense difficulty with Iran, we did here in South America without international mediation.”
A Concerned U.S. Congressman

It is indeed true that nuclear rapprochement in the Southern Cone did not necessitate foreign mediation. But it would be unfair not to recognize the role of a congressman from the United States.

The first proposal for an Argentine-Brazilian system of mutual nuclear inspections was developed by a U.S. congressman from Illinois, Paul Findley. In 1977, Findley traveled to Buenos Aires and Brasilia to argue that a system of bilateral inspections could help mitigate suspicions in the United States and elsewhere about the countries’ nuclear intentions. A month later, the Findley proposal appeared in The Washington Post.

The Brazilians dismissed Findley’s plan at once. Yet in subsequent years, officials in Buenos Aires came back to it time and again. Alfonsín repeatedly insisted with his Brazilian counterparts that such a mechanism would pave the way for greater stability in South America. Sarney eventually agreed to explore mutual inspections. When he did, Findley did not seek credit.

By the early 1990s, the two countries set up a binational agency to carry out inspections and controls. In 1994, Argentina and Brazil joined the Tlatelolco Treaty that established Latin America and the Caribbean as a Nuclear Weapons Free Zone. Shortly thereafter, they both joined the Nonproliferation Treaty, definitively establishing themselves as non-nuclear actors — and, above all, peaceful neighbors.

Spektor is an associate professor of international relations at Fundação Getulio Vargas in Brazil and a columnist at Folha de São Paulo, a leading newspaper. He is author of 18 Dias: quando Lula e FHC conquistaram o apoio de Bush (2014), Kissinger e o Brasil (2009) and, more recently, he coedited The Origins of Nuclear Cooperation: a Critical Oral History between Argentina and Brazil (2015) with Nicholas Wheeler and Rodrigo Mallea.

By Kamilia Lahrichi
28 October 2015

(CNN) — Think medicine tastes awful?

Maybe Fernet isn’t the drink for you.

To some palates, the incredibly bitter Italian liqour is worse than cough syrup.

Bizarrely though, in Argentina it’s so popular that the country now consumes more than 75% of all Fernet produced globally.

And since the drink is traditionally mixed with Coca-Cola in an ice-filled glass, it also contributes to making Argentina one of the planet’s highest Coke consumers.

People here knock back about four times the global Coca-Cola average.

Fernet and Coke is so popular in Argentina that the country now hosts the only Fernet production facility outside Milan — the Fratelli Branca distillery on the outskirts of Buenos Aires.

There, even marketing manager Heman Mutti acknowledges that the drink possesses a medicinal air.

“Fernet was initially sold in Italian pharmacies” as a digestive aid, he says.

The drink reached Argentinian shores in the late 19th century along with European migrants and soon became one of the country’s cultural mainstays, along with tango, barbecue, mate and dulce de leche.

Testament to its importance to the Argentinian way of life, in 2014 Fernet was added to a price-freeze program to protect it from skyrocketing inflation.

Rhubarb and roots

Fernet owes its unconventional taste to a top secret recipe that involves about 40 different herbs including saffron, rhubarb, cardamom, myrrh, chamomile, aloe and gentian root.

Juan Chico, manager of BARTOK bar and restaurant in the upscale Palermo neighborhood in Buenos Aires, says Fernet is the most widely consumed liquor in the restaurant.

Although the bar displays an array of spirit and wine bottles, Chico sells on average 70 glasses of Fernet a day.

He claims that the central Argentine city of Cordoba alone consumes more Fernet than all of Italy, largely due to its strong Italian heritage.

That’s often a surprise to Italian visitors, some of whom struggle to comprehend its popularity.

“It had been two years since I’d seen anyone drink Fernet in Italy,” says Italian nightclub promoter Giovanni Digliardi, who did a double take the first time he stepped into an Argentine bar and was immediately offered a “Fernecola” — Fernet mixed with Coke.

Digliardi, who moved to Buenos Aires in 2008, recalls his grandfather drinking Fernet as a digestif with a glass of hot water.

He’s still baffled by the fact that Argentinians pair the beverage with food at dinners and social events.

“To be honest, Fernet isn’t a proper drink like caipirinha or pisco sour,” he says.

‘A bitter kiss that makes your eyes close in disgust’

Despite it’s popularity, for many Argentinians, Fernet is an acquired taste.

When psychologist Florencia Martinez, a native of Gualeguaychu in Argentina’s Entre Rios province, first sipped it, the verdict was straightforward: she poured it away in horror.

“Totally disgusting,” she confesses, letting out a “bleargh” and lowering her eyebrows, still outraged by the memory.

After that she wouldn’t “get her nose close to a bottle of Fernet for many years,” preferring gin and tonic.

Time passed and disgust faded.

She started swallowing the liquor toward the end of nights with friends because she liked “the refreshing and sweet taste of Coke.”

“And this was the road of no return,” she says, laughing. “It became my liquor of choice.”

It’s a familiar story among Fernet aficionados.

Typically, the initial tasting is a hostile experience, but the drink eventually wins over its audience.

“We met here for the first time, the womanizer Fernet I had heard so much about,” romanticizes Yasmin Simeonova, an architect from Macedonia working in Buenos Aires.

“Trying it out was like a kiss, a bitter kiss that burns your tongue and makes your eyes close in disgust.”

Herb freshness

Simeonova says at first she questioned the sanity of those who championed the drink.

That changed.

“After three years in Buenos Aires, I now have a very strong and passionate relationship with Fernet,” she says.

“I love it and it loves me. We’re having fun times until early mornings, in plastic glasses, half-cut bottles of Coke, wandering in streets, below bridges and across borders.”

Drinking Fernet from a plastic Coke bottle is known as “viajero” (meaning “traveler” in Spanish).

At night, especially during weekends, youngsters and older people alike roam the streets with their containers of mixed drinks.

Fernet also seems to win over experienced sweet-toothed drinkers.

“I’m a product of the U.S. university system, meaning I spent the better part of four years of my life drinking nauseatingly sweet grain alcohol mixed with Kool-Aid,” says Emily Sarah, managing partner of a financial advice company in Buenos Aires.

“Needless to say, Fernet’s herby freshness was a pleasant surprise and lacked the negative associations with the unpleasant consequences of sweet drinks,” she says.

According to its makers, Fernet’s recipe has remained unchanged for 170 years.

Whatever Argentina’s drinkers are suffering from, clearly this “disgusting” Italian medicine is the cure.

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29 octubre, 2015

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15. A ‘GOLAZO’ IN ARGENTINA (American Thinker Blog)


By Mark P. Jones
October 27, 2015

On Dec. 11, for the first time in 4,582 days, Argentines will awaken with a president who is not a Kirchner. Neither Néstor Kirchner (2003-07) nor Cristina Fernández de Kirchner (2007-2015) will be running the show in the Pink House (Argentina’s White House).

Elections were held Sunday for president, half of the Chamber of Deputies, one-third of the Senate, and thousands of provincial and municipal level posts, including 11 governors.

In the marquee presidential contest, six candidates who had been successful in the Aug. 9 primaries competed. The candidate of President Fernández’s Front for Victory (FPV) alliance was Province of Buenos Aires governor Daniel Scioli, while the candidate of the centrist We Can Change (WCC) alliance was City of Buenos Aires mayor Mauricio Macri. The third principal contender was national deputy Sergio Massa of the United for a New Alternative (UNA) alliance.

Both Scioli and Massa belong to Argentina’s large Peronist movement, with Scioli aligned with the movement’s pro-Kirchner wing and Massa the leading figure in its anti-Kirchner wing. Three minor candidates also were on the ballot: Margarita Stolbizer (Progressives, center-left), Nicolás del Caño (Left Front, far-left), and Adolfo Rodríguez Saá (Federal Commitment, anti-Kirchner Peronist).

1. A Nov. 22 runoff will select the next president

In Argentina, a presidential candidate can obtain a first-round victory either by winning more than 45 percent of the valid vote or by winning between 40 and 45 percent and simultaneously besting the first runner-up by at least 10 percent.

Neither of those happened. Scioli, the pro-Kirchner candidate, was the plurality winner with 36.9 percent — but failed to reach that 40 percent threshold. Close behind was the opposition’s Macri, who garnered 34.3 percent. Massa finished third with 21.3 percent. The three remaining candidates were all in the low single digits.

2. The Peronist movement is alive and well — and won three-fifths of the presidential vote.

The election showed that Argentina’s large and diverse Peronist movement remains popular and vital. Three of the six presidential candidates were Peronists: Scioli, Massa and Rodríguez Saá. Together, they received 60 percent of the valid vote, on par with the 62 percent average won by Peronist presidential candidates in the three most recent (2003, 2007, 2011) elections.

3. Kirchner’s FPV won a majority in the Senate and a near-majority in the Chamber.

All 24 provinces voted for half of their seats in the Chamber of Deputies. One-third of the provinces voted for all three of their senators.

In the preliminary tally, the FPV and its allies won 61 of the 130 Chamber seats and 14 of the 24 Senate seats that were in play. Combine those with the seats occupied by the FPV or FPV allies among the 127 deputies and 48 senators who were not up for election this round, and the FPV and its allies will control three-fifths of the Senate seats and a little less than half of the Chamber.

The opposition party We Can Change and its allies won 47 seats in the Chamber and nine in the Senate. When added to the deputies and senators whose seats were not up for renewal this cycle, We Can Change and its allies will on December 10 control slightly more than one-third of the Chamber’s seats and about one-quarter of the Senate.

UNA and its allies gained 16 deputies and one senator. Come Dec. 10, the alliance’s members will occupy one out of 10 spots in the Chamber. If Macri wins on Nov. 22, the UNA delegation could be pivotal in determining whether the speaker of the Argentine Chamber will be a member of Macri’s We Can Change or of the FPV.

4. The province of Buenos Aires will have a governor who isn’t a Peronist.

Two out of every five Argentines live in the province of Buenos Aires. For the first time since the return to democracy in 1983, the Province of Buenos Aires elected a non-Peronist governor, We Can Change’s María Eugenia Vidal.

Voters really disapproved of Vidal’s FPV rival, Cabinet Chief Aníbal Fernández, viewed by many as authoritarian, corrupt and with alleged ties to drug traffickers. Anibal Fernández’s presence on the FPV ballot probably cut Scioli’s national share of the vote by a couple of points. Vidal won 39.5 percent to Anibal Fernández’s 35.2 percent, with UNA’s Felipe Solá in third, with 19.2 percent.

5. The second-place Macri might make an alliance with Massa to improve his chances of winning the presidency.

While UNA’s Macri has some very good reasons to celebrate his success in forcing the FPV’s Scioli into a runoff, he is still confronted by two facts.

First, Scioli is closer than Macri to the popular majority needed to triumph on Nov. 22.

Second, between now and Nov. 22, the Scioli campaign and its supporters will inundate Argentines with dire warnings about a Macri presidency. They will ask Argentines to recall the devastating economic, political and social crisis of 2001 that saw President Fernando de la Rúa (1999-2001) of the UCR (Radical Civic Union) resign.

The Scioli camp will then further remind voters that De la Rúa assumed office amid growing economic and fiscal problems, was the leader of a diverse and untested opposition alliance, lacked a congressional majority, faced a league of primarily Peronist governors, and was not a Peronist himself — all five of which would apply to a ‘President Macri’ as well.

And they will attempt to paint Macri as a neo-liberal who wants to return Argentina to the now relatively unpopular Washington Consensus-driven policies of the 1990s, particularly those policies associated with the privatization of state-owned companies, fiscal austerity and trade liberalization.

If We Can Change’s Macri were to ally with UNA’s Massa, it would help him in two related ways: in closing the vote gap between now and Nov. 22, and in partially ameliorating swing voters’ fears about all those potential problems. In Argentine lexicon, Massa would be the ‘Peronist leg’ offering needed strength and stability to a Macri presidency.

Without an explicit alliance and Massa’s endorsement, a majority of Massa supporters will probably back Scioli in the runoff. Some would do so for reasons of affinity or self-interested strategic behavior. Others would because they are risk averse and fear a potential repeat of 2001.

6. The world’s second-longest-serving federal executive was re-elected.

In the northern province of Formosa, Gildo Insfrán was re-elected to his sixth consecutive four-year term with 73.3 percent of the vote (with 98.3 percent of precincts reporting). Among all sub-national executives in the world’s federal democracies, Insfrán is the second longest consecutively serving state/provincial governor/premier, bested only by Lower Austria governor Erwin Pröll.

7. The Kirchners aren’t gone yet.

The Patagonian province of Santa Cruz is the Kirchner clan’s home. Before becoming president, Néstor Kirchner was Santa Cruz’s governor from 1991 to 2003 and Cristina Fernández represented Santa Cruz in both houses of congress.

Santa Cruz governor Daniel Peralta (2007-15) rebelled against President Fernández during this past term. To retake control of their turf, Cristina Fernández had her sister-in-law, Minister of Social Development Alicia Kirchner, run for governor.

The only problem was that Peralta insisted on running for re-election. If both Kirchner and Peralta ran, they would split the Peronist vote and potentially open the door (under the province’s existing simple plurality electoral formula) to a victory by the province’s most popular opposition figure, the UCR’s Eduardo Costa.

President Fernández’s solution was, with the assistance of her loyal supporters in the Santa Cruz legislature and Peralta’s acquiescence, to bring back the double-simultaneous vote (DSV), which was in vogue during the 1990s but had been eliminated for gubernatorial elections. Under the DSV, the votes of candidates running under the same banner are pooled together to determine the election’s winner.

In Santa Cruz, bitter rivals Alicia Kirchner and Daniel Peralta were the gubernatorial candidates of the Santa Cruzan Front for Victory (FPV-SC). Eduardo Costa and Osvaldo Pérez both ran for the anti-Kirchner Union to Live Better (UVM). While Costa (41.0 percent) won a higher percentage of the vote than either Kirchner (34.8 percent) or Peralta (16.8 percent), the combined FPV-SC vote (51.6 percent) was greater than that of the UVM (45.8 percent). Three left wing parties with solo candidates won 2.6 percent (all with 96.7 percent of precincts reporting).

Since Kirchner was the plurality winner within the FPV-SC, which in turn was the plurality winner among the alliances/parties, she becomes governor on Dec. 10.

Mark P. Jones is the Joseph D. Jamail Chair in Latin American Studies and the James A. Baker III Institute for Public Policy’s Political Science Fellow at Rice University.

October 27, 2015

BUENOS AIRES, Argentina — The third-place finisher in Argentina’s presidential election hinted Tuesday that he will support opposition candidate Mauricio Macri in the runoff vote.

Sergio Massa got 21 percent of the votes in Sunday’s election, turning him into a key player in the Nov. 22 runoff. Macri got 34 percent, while governing party candidate Daniel Scioli garnered 37 percent of the vote.

Both Macri and Scioli are courting Argentines who voted for Massa. On Tuesday, Massa said that “people voted against continuity.” That suggested he was closer to the changes being promised by Macri.

Massa said he would release his position Wednesday through a policy proposal manifesto, though it was uncertain if he planned to go a step further and make an endorsement.

It was also not clear how many supporters Massa might sway now that he is out of the race.

Many of his backers are, like Massa and Scioli, adherents of Peronism, a divided movement aligned with the working class founded by the late three-time president Juan Peron.

Macri shook up Sunday’s vote with surprisingly strong numbers. Polls had projected that Scioli would win the election by around 10 points.

Scioli, the governor of the Buenos Aires province, had been viewed as an easy front-runner thanks to the support of President Cristina Fernandez.

Since the tight vote Sunday, Scioli has intensified his warnings to Argentines that Macri would undo popular state programs.

Still, many in the country of 41 million have grown frustrated with high inflation, strict currency controls and allegations of corruption within Fernandez’s inner circle.

Macri, the Buenos Aires mayor, has branded himself as the overhaul candidate who will put Argentina’s economy back on track by lifting currency controls and attracting foreign investment. He also says he will reach a deal with creditors in the U.S. whose long-running court fight with the government has made it difficult for Argentina to borrow on international credit markets.

By Mac Margolis
October 27, 2015

The results of Argentina’s presidential election were still rolling in Sunday night when opposition candidate Mauricio Macri raised his hands through a cloud of confetti. “What happened today shows that the politics of this country have already changed,” said the Buenos Aires mayor, whose strong second-place finish surprised pollsters and pundits, and was a sharp rebuke to President Cristina Fernandez de Kirchner. “Kirchnerismo,” he said, referring to the outgoing leader’s erratic brand of rule, “is history.”

Not quite yet. Macri must still win a Nov. 22 runoff against Fernandez’s chosen successor, governor of Buenos Aires province Daniel Scioli. Still, the fact that Macri earned enough of the vote to force a runoff — and that Fernandez’s Victory Front alliance lost both its congressional majority and the key race for Buenos Aires governor — suggests that after 12 years under one of the hemisphere’s most caustic political dynasties, Argentines are anxious for something new.

Whether they’ll get it is another question. What’s important is not the name of Argentina’s next president, but whether Fernandez’s exit will mean the end of Kirchnerismo — a vertiginous blend of ultra-nationalism, economic dirigisme and populist promises flung from the balcony, with which not even Scioli wishes to be fully associated.

On the Kirchner family’s watch, Argentina went from a recovering emerging market to an international pariah. After taking office in 2003, Nestor Kirchner set the tone, blasting big business and stiffing creditors. When Fernandez took over in 2007, instead of conciliating, she doubled down on her husband’s quarrels, adding big agriculture to the foes.

Shaken, but unbowed, by Nestor’s death in 2010, Fernandez clashed with farmers again, nationalized foreign companies, bullied critical journalists and invoked a contentious law to push for the break-up of media group Grupo Clarin. When the country’s fortunes plunged, she turned on enemies, at home and abroad. Honors to “debt vultures,” holdout creditors who refused to swallow severe write-downs on their loans, have tied Argentina up in international courts for the last decade.

Aggressive social spending may have helped offset Kirchnerismo’s abrasiveness. With a lift from the global commodities bonanza, Argentina’s economy grew an average of almost 8 percent a year between 2003 and 2012. Fernandez poured that windfall into lavish consumer subsidies and wage increases, in a spending drive that continued even as the economy began to tank in 2014.

Whichever candidate takes office on Dec. 10 will have to deal with an economy tumbling into recession, 25 percent inflation, a spiking public deficit and hard currency reserves down to a nine-year low. Almost 29 percent of Argentines lived in poverty last year, up from 25 percent in 2011, according to a study by the Catholic University of Argentina.

It’s therefore no surprise that all the top contenders in Sunday’s election took care to distance themselves to varying degrees from Kirchnerismo’s profligacy. That includes Scioli, who signaled that he would rein in spending and sit down with the litigious bond holders.

The country could use some parsimony. Unsustainable spending and bottomless subsidies became the norm under the Kirchners: An estimated 12 million consumers pay just 35 pesos a month for electricity — the price of a double espresso with milk — said Scioli’s top economic adviser, Miguel Bein.

People also didn’t truly know how badly the economy was faring, given that fudging statistics was a regular practice. Macri spent much of his campaign focusing on how to rescue the national statistics bureau, Indec, where inaccurate inflation and growth data earned the Fernandez government a rebuke by the International Monetary Fund.

Still, getting Argentines to accept that the days of generous social spending may need to be numbered won’t be easy. A recent poll found that although half of Argentines disapproved of Fernandez’s government, 35 percent favored “change with continuity” and another 27 percent wanted more of the same.

Such is the challenge facing Argentina’s next leader, caught between economic emergency and populist temptation. Macri may be the best bet the country has had in years to change the Kirchnerist script. But first he must convince voters that he will end the costly stalemate with creditors, and that promising Argentines benefits the country can’t afford is no way to return to solvency and growth — it’s just talk from a balcony.

By Charlie Devereux
October 27, 2015

* Sergio Massa, a conservative Peronist, may play king maker
* Can he deliver? Analysts are studying his voters for clues

After Argentina’s presidential election stunned the nation by turning an expected shoo-in into a neck-and-neck contest, the two front-runners are preparing for a bruising four-week campaign. But the candidate attracting most of the attention right now is the one who was eliminated: Sergio Massa.

Massa drew 21 percent of the vote, or 5 million people, and they now have the chance to pick the next president. The question is whom Massa will favor and whether he will — or can — bring his voters with him.

“He can be the arbiter and that gives him a lot of scope for negotiation,” said Lorena Moscovich, a professor in political science at the University of San Andres in Buenos Aires.

Massa is a charismatic 43-year-old lawmaker and former mayor who has made tough-on-crime policies a signature issue. On Wednesday he plans to unveil a policy paper aimed at influencing the Nov. 22 run-off. And while most analysts suspect he will remain studiously uncommitted at least for a while, he’s given some signs of his inclination.

Fernandez’s ‘Employee’
“People don’t want continuity,” he said Tuesday, an unmistakable jab at Daniel Scioli, the top vote-getter who is allied with outgoing President Cristina Fernandez de Kirchner. He has also accused Scioli of being Fernandez’s “employee.” Opposition candidate Mauricio Macri has wasted no time and said he’s in talks with Massa.

What he can offer Massa is unclear, perhaps a leading role in Congress. Moscovich argues that Massa may or may not make a deal with Macri but is unlikely to make an alliance with Scioli. A Macri victory would probably suit Massa since it would position him as the de facto leader of Peronism, the shifting political ideology named after former President Juan Domingo Peron, that has ruled Argentina for decades.

Conversely, aligning himself too closely with Macri would make it difficult for him to later break away and lead the opposition, she said.

Scioli has made his own attempts to woo Massa, saying that, as Peronists, they share priorities and the “typical Massa voter is much further from Macri than from us.”

Macri is the more market-friendly, conservative candidate who promises a set of economic shifts that worry the lower classes who rely on government subsidies.

It is far from clear how much influence Massa has over his own followers.

“He’s very influential, but you have to bear in mind that votes in Argentina don’t belong to the candidates, they belong to the voters,” said Sergio Berensztein, president of a political consulting firm that bears his name.

This is particularly true of Massa, Berensztein said. A relatively new force in Argentine politics, he was the youngest ever cabinet chief under Fernandez, before breaking with her and forming his own dissident Peronist movement.

Sense of Allegiance
Given that his political alliance is only a few years old, his voters are less likely to have a strong sense of allegiance to him and will be less influenced by whom he chooses to back, Berensztein said.

Scioli and Macri may therefore profit more from studying the profile of Massa’s voters. They can be divided into two categories, according to Ernesto Calvo, a professor in government and politics at the University of Maryland.

The first are conservative Peronists opposed to Fernandez’s blend of left-leaning Peronism but aren’t necessarily repulsed by Scioli himself. The second category is comprised of middle-class voters likely either to abstain or vote for Macri.

Calculating the likely votes of Massa followers is therefore complex; they may end up splitting evenly, especially if Scioli turns toward the center over the next weeks of campaigning, according to Calvo. Scioli will likely tread a fine line between retaining the core of voters who support Fernandez and fishing for the Peronists who went with Massa.

Search for Insight
The thirst to understand Massa voters is sufficiently intense that an experiment conducted two weeks ago on Massa supporters is gaining the attention of columnists and political analysts grasping at any straw of insight. In that study, carried out by a Dutch company, 24 Massa backers were shown images of the three candidates followed by video clips while their brain activity was measured.

Marc Rothuizen of Neurensics, said that the Massa voters showed strong emotional attachment to Macri’s message of change.

Scioli is making overtures to Massa voters by warning that a Macri presidency would plunge Argentina into a chaos of currency devaluation and debt crisis such as the one that engulfed the country in 2001.
But he’ll also have to appeal to pro-change conservatives without alienating Fernandez’s followers, said Berensztein. What seems clear is that if he only promises continuity, he’ll lose, he said.

By Daniel Cancel
October 27, 2015

* Rule change follows new regulations on pension-fund assets
* New regulation could prompt sale of some dollar assets

Argentina’s insurance regulator changed the rules governing the amount of foreign currency holdings the companies can keep, which could prompt the firms to sell assets to meet a year-end deadline.

Insurance companies must adjust their foreign-currency security holdings to match the amount of foreign-currency contracts they have with clients, according to a resolution published Tuesday in the official gazette. The regulator said that both dollar assets and dollar-denominated assets payable in pesos are considered as foreign currency.

President Cristina Fernandez de Kirchner’s government, which leaves office on Dec. 10 after a Nov. 22 run-off election between the ruling party’s Daniel Scioli and the opposition’s Mauricio Macri, has in the past ordered insurance companies to repatriate foreign holdings and forced them to fill a certain portion of investment portfolios with bonds of companies deemed to be productive or dedicated to infrastructure projects. Multi-national firms in Argentina include ACE Ltd., Allianz SE and Zurich Insurance Group AG, according to the regulator’s website.

With the second-round election approaching, the government, which closely controls the official rate of the peso, is keen to keep parallel exchange rates from weakening further. The measure could also increase the number of dollar-denominated assets circulating in the local market and allow government entities to acquire them as central bank reserves sink toward a nine-year low.

Firms must reach 50 percent compliance with the rules by Nov. 3, 75 percent compliance by Nov. 30 and be in full compliance by Dec. 31.

Last month, the securities regulator ordered mutual funds to change the way they value foreign-currency holdings, sparking a rout in dollar-denominated bonds traded in the local market as firms rushed to sell rather than have to book a loss. The measure temporarily strengthened the exchange rate in a financial transactions market known as the blue-chip swap and prompted funds to stop taking on new client money for a brief period.

By Carolina Millan
October 27, 2015

* 3 percentage-point increase represents biggest in 18 months
* Move seeks to tame dollar demand following first-round vote

Argentina’s central bank sold 11.3 billion pesos in weekly notes, 5 percent less than at the previous weekly auction, even after raising interest rates by 3 percentage points Tuesday as the government tries to tame dollar demand ahead of a presidential election runoff.
The central bank on Tuesday raised interest rates by the most in more than 18 months, lifting rates on its fixed-rate notes at its weekly debt auction to 28.93 percent and 29.35 percent, for 91 and 119-day securities, respectively. The bank had first set the weekly guidance late Monday with rates unchanged.

The move comes as the country’s foreign-currency reserves are near a nine-year low and the nation struggles to maintain an overvalued exchange rate. Due to restrictions on purchasing dollars at the official rate, Argentines buy greenbacks on the street for as much as 15.81 pesos per dollar compared to the official spot rate of 9.53. The last time the monetary authority took such a bold move to raise rates was February 2014 on the heels of a 20 percent devaluation when the guidance jumped 9 percentage points.

“This is trying to combat the rise of the dollar by making rates more attractive,” said Leonardo Chialva, a partner at Delphos Investment in Buenos Aires.

The central bank announced later Tuesday that banks must pass on the increase in rates to savers. The bank ordered financial institutions to pay a minimum of 26.3 percent on 30- to 44-day deposits, rising to as much as 29.1 percent for deposits of more than 180 days.

“Peso savings are growing steadily, showing the trust of those who save money in our national currency instead of options in foreign currency,” central bank President Alejandro Vanoli said in a statement.

The measure follows an upset in presidential elections on Sunday where the opposition fared much better than expected and forced a second round on Nov. 22. To tame dollar demand, the government’s options include raising rates or cutting dollars sold to individuals for savings, which would be unpopular and could hurt the ruling party’s electoral chances, according to Puente strategist Alejo Costa.

“There’s a feeling that it’s not going to be enough,” Costa said. “The rate would have to be way higher to contain the difference in the exchange rates now. This measure is a drop in the sea.”

By Jorge Otaola
27 October 2015

BUENOS AIRES, Oct 27 (Reuters) – Argentina on Tuesday halved the daily amount of dollars companies can transfer abroad without authorization, currency traders said, while the country’s insurance regulator put new limits on the amount of hard currency assets insurers can hold.

The moves appeared to stem from the opposition’s success in forcing Sunday’s presidential election to a run-off vote, which could add to pressure on the central bank to shore up the peso currency as net foreign reserves run precariously low.

A central bank spokesman said he was not aware of the new curb on dollar transfers. But four currency market traders said the central bank had called commercial banks with a verbal directive to slash the daily limit on dollars that a single company can transfer outside Argentina to $75,000 without previous authorization.

“It’s a new move that intensifies state controls on the currency. It will have an impact, in particular on importers,” said one of the traders, declining to named because he is not authorized to talk to the media.

It was not clear how long the measure would remain in place.

Argentina’s dollar crunch has its roots in a legal battle with U.S. creditors over unpaid debt stemming back to its 2002 default on $100 billion dollars that left the country all but locked out of global debt markets.

Outgoing President Cristina Fernandez’s government has increasingly had to rely on its reserves to prop up the peso currency, pay for energy imports and meet debt obligations.

In 2011 she imposed capital controls and her leftist government has incrementally turned the screws as reserves run lower.

Argentina’s gross foreign reserves stand at $27.1 billion but economists estimate that net reserves amount to about half that.

In a resolution published in the government gazette, meanwhile, Argentina’s insurance regulator ordered insurers to adjust their foreign currency security holdings to equal the value of foreign currency contracts they hold.

Insurance companies tend to hold dollar-denominated or dollar-linked bonds. By forcing the adjustment, the regulator is requiring them to sell at least some of those bonds and hold pesos instead, putting the dollars back into the system.

Last month, in a similar move, Argentina’s market watchdog ordered mutual funds to value their holdings of dollar-denominated bonds at the inflated official exchange rate, rather than against the so-called “blue-chip” swap rate.

That led to a sell-off in securities, temporarily helping to stabilize the black market rate.

Currency traders on Tuesday quoted the black market rate at 15.800 per dollar compared with the official rate of 9.530.

By Nicolas Misculin
27 October 2015

BUENOS AIRES, Oct 27 (Reuters) – Mauricio Macri, Argentina’s opposition challenger in next month’s presidential run-off vote, said on Tuesday he wanted to find common ground with defeated candidate Sergio Massa and that talks had begun between the two camps.

Massa placed third in Sunday’s first round vote with 21.3 percent of support, and both Macri and ruling party candidate Daniel Scioli will need to court the 43-year-old lawmaker and his voters to win the Nov. 22 second round.

Massa is drawing up a policy blueprint to be discussed with either of his rivals still in the presidential race. On Monday, a Massa camp insider told Reuters that while Massa would not explicitly endorse Macri, the document would be a “wink” in his direction.

Asked if messages were being sent between the two campaign teams, the pro-business Macri told local TV channel Telefe: “Yes, we’re talking. There’s a willingness to agree on policies, a willingness to find common ground.”

Outgoing President Cristina Fernandez’s eight years in power have been deeply divisive. The fiery leftist is loved by the lower-class for expanding social welfare programs and protecting Argentine industry but reviled by others for suffocating the economy.

Scioli, a moderate within the broad Peronist movement that dominates Argentine politics, campaigned on a platform of “gradual change” to Fernandez’s model of leftist populism. Macri promises to quickly dismantle her trade and currency controls.

In the run-up to Sunday, centrist Massa said Scioli stood for a continuation of policies that had stunted economic growth, fueled inflation and drained central bank reserves. But he also said Macri could drive the economy into a new crisis by imposing pro-market policies too quickly.

Since the ballot, Scioli has launched a wave of attacks on Macri, branding his policy platform a throwback to neoliberal policies of the 1990s in the run-up to a devastating 2001-2002 depression.

On Tuesday, as he and Macri scrambled for middle-ground voters, Scioli said he was open to hearing Massa’s proposals.

“I will listen to ideas that are good for Argentina, whoever they come from,” Scioli told TV channel TN.

Massa served as Fernandez’ cabinet chief during her first term in office but broke away from the ruling party in 2013. He has accused Scioli of letting Fernandez dictate his campaign, playing on the fears that Scioli would be a Fernandez puppet.

“The people want change,” Massa told Radio Mitre on Tuesday. “If Scioli doesn’t start taking his own decisions then it’s better he is not president.”

27 October 2015

After Sunday’s big surprise in the Argentine presidential election, when the challenging center-right candidate Mauricio Macri finished only two percentage points behind pro-government favorite Daniel Scioli, triggering a runoff on November 22, a closer look at each candidate’s economic plan is in order.

The two candidates’ plans mostly coincide in their diagnosis of the situation but differ in their proposed solutions. Both candidates agree on proposals for taxes but disagree on how to tackle inflation and on dealing with the bond holdout funds, according to local media outlet Cronista.

So what do they propose?


Exchange rate: Scioli’s plan rules out accelerating the devaluation of the peso.

Foreign reserves: In order to boost rapidly dwindling foreign reserves, Silvina Batakis, who would be finance minister in a Scioli government, thinks it is fundamental to free up capital outflows, and the idea is to issue US$10bn in US-denominated bonds to allow firms to repatriate earnings.

Holdout funds: Instead of negotiating with the holdout funds, Scioli proposes gaining time by issuing debt with multilateral organizations such as the World Bank and in the meantime provide legal authorization for the repatriation of funds held abroad by Argentines – estimated at US$5bn-8bn – in order to boost reserves.

Inflation: This is not a priority for Scioli who aims for a reduction only in the longer term. The central aspect of the plan is to recover economic activity levels.

Taxes: He proposes eliminating taxes on agro exports with the exception of soy and to increase the tax-exempt amount on income for people earning between 25,000 (US$2,600) and 30,000 pesos a month.

Subsidies: Scioli proposes financing the end of agro taxes by reducing badly allocated subsidies, but maintaining those for oil producing provinces.


Exchange rate: Macri wants to end foreign exchange restrictions from day one, although his economic team concedes that is impossible without some previous measures. He proposes the devaluation of the peso to take the US dollar closer to 14 pesos, which would be the market value, rather than the official 9.6 pesos.

Holdout funds: He wants to regain access to international debt markets, and Macri’s plan includes an arrangement with the holdout funds with a 30% discount over the debt to be paid with a long-term bond issuance but without a cash disbursement. Access to capital markets would allow Argentina to raise cheaper debt: at a rate of 6%. This solution would cost US$19bn.

Inflation: This would be reduced in a sequential way. “The first step is to clarify the real rate of inflation. Then the president of the central bank and ministers would agree on a way to reduce it to two digits within three years,” said Hernán Lacunza, a member of Macri’s economic team, according to Cronista.

Taxes: Like Scioli, Macri proposes eliminating taxes on agro exports with the exception of soy and to increase the tax-exempt amount on income tax for those earning between 25,000 and 30,000 pesos a month.

Subsidies: Macri proposes gradually eliminating oil subsidies while maintaining subsidies for 2mn lower-income families.

By Charles Newbery
27 October 2015

Buenos Aires (Platts)–27Oct2015/1036 am EDT/1436 GMT Argentine oil production rose 0.1% in August compared with the year-earlier period, and gas output increased 4.4% over the same period, according to national Energy Secretariat data released Tuesday.

Crude production averaged 529,159 b/d in August, up 0.1% compared with 528,883 b/d in August 2014 and 0.6% lower than 532,187 b/d in July, the department said in a data report that did not specify reasons for the changes.

State-run YPF, which produces nearly 43% of the nation’s crude, led the year-on-year increase by boosting production 1.2% to 224,895 b/d in August compared with 222,269 b/d in the year-earlier month, the report showed.

YPF is helping to offset a national decline since a record 847,000 b/d in 1998 by ramping up the development of maturing fields with enhanced recovery techniques and by developing huge resources in the Vaca Muerta shale play. It is producing an average of 52,000 b/d of oil equivalent from Vaca Muerta, according to the company’s latest numbers released this month. YPF has set a target of increasing crude production by 5% this year compared with 2014, after ramping it up 5.3% in 2014 on the year.

Other leading producers are BP-controlled Pan American Energy, Argentina’s Pluspetrol, China’s Sinopec, Brazil’s Petrobras, Chevron and Argentina’s Tecpetrol.

Meanwhile, gas production rose 4.4% to 119.9 million cu m/d in August, compared with 114.8 million cu m/d in the year-earlier period, and was up 2.2% compared with 117.3 million cu m/d in July, the secretariat said. Of the output in August, YPF produced an average of 35.9 million cu m/d, or a 30% share. Argentina petroleum Oil production (b/d)

By Jonathan Wolfe
28 October 2015

The Argentine cartoonist Ricardo Siri, better known by his middle name, Liniers, was flipping through some of his work, which was projected on a screen for a small but rapt audience at the Society of Illustrators in New York a few days ago. When he landed on a comic strip that begins in black and white but explodes into color after a man gets a kiss from a passing woman, sighs erupted from the crowd.

”A lot of my strips make women, mainly, go ‘awww’ ” Liniers said. ”That’s my superpower.”

Over the last few years, Liniers, a big name in cartooning in Latin America, has been attracting fans in the United States — a rarity for a foreign cartoonist. He has drawn three covers for The New Yorker since last year — the most recent one, a spoof on hipsters, depicts a young woman using her partner’s beard as a scarf — and has had two books published in the United States during the past month: ”Written and Drawn by Henrietta” (Toon Books), a children’s book released in English and Spanish; and ”Macanudo #3” (Enchanted Lion), a compilation of his comic strip ”Macanudo,” which has run for 13 years in the newspaper La Nación. (Macanudo is a vintage Argentine word that roughly means ”cool” or ”everything’s fine.”)

”When I started the comic everything was horrible,” Liniers, 41, said in a recent interview at his publisher’s office in SoHo at the start of an East Coast book tour. ”The towers fell here,” he said, ”and in Argentina there was a huge economic tailspin and we had five presidents in a week. So I wanted to create something optimistic as an act of resistance, like a positive revolution.”

In ”Macanudo,” plotlines usually do not extend past the punch line, if one exists at all, and the characters and type of humor can change daily. Penguins, gnomes and an olive named Oliverio are only a handful of the creatures that float in and out of ”Macanudo.”

”I like to surprise,” Liniers said. ”When readers open up the paper, I don’t want them to know what to expect.”

Graphically, the strip’s style was influenced by Art Spiegelman’s ”Maus” and Matt Groening’s ”Life in Hell.” (Liniers himself appears in ”Macanudo” as a white rabbit with features borrowed from art both Mr. Spiegelman and Mr. Groening.) The strip’s humor, Liniers says, was influenced by ”The Far Side,” ”Calvin and Hobbes” and Argentine comics.

He comes out of the vibrant tradition of cartooning in Argentina, where comic art boomed in humor magazines after World War II and is still popular today. The most famous comic strip in Argentina, ”Mafalda” by Joaquín Salvador Lavado, can still be found in kiosks across Latin America (and Europe) more than 40 years after the strip ended.

Though popular, ”Macanudo” is somewhat unusual; its gonzo humor and intent can be elusive. ”At first the papers didn’t want it,” said Angie Erhart Del Campo, Liniers’s wife and the co-founder of La Editorial Común, which publishes his books and those by other graphic artists in Argentina. ”It’s not a comic strip like ‘Peanuts’ or ‘Calvin and Hobbes’ that has all regular characters. A lot of older people still don’t get it. Friends of Ricardo’s parents will come up to me and say, ‘I know he’s famous, but I still don’t get them.’ ”

Part of the first generation that came of age in post-dictatorship Argentina, Liniers grew up in Buenos Aires, where he was sent to an English-language school by his father, a lawyer and an Anglophile. As a young man, Liniers traveled to North America and read American literature and comics in English.

Argentine comics tend to offer biting social commentary or jabs at the political establishment. Juan Sasturain, a writer, humorist and co-host of the television show ”Plop!: Caete de Risa,” about Argentine humor, said that comics have always been a diversion. But since the 1970s, he added, the comics page ”has spoken about the same things as the front page.”

And yet, ”Macanudo” bucks this trend too.

”Liniers,” said Mr. Sasturain, who has collaborated on a book with him, ”has gone way beyond the Argentine tradition. He has adopted graphic culture and he likes contemporary culture, and he’s created a huge world where not even politics or strict sociological points exist.”

Françoise Mouly, art editor at The New Yorker and the founder of Toon Books, first came across Liniers’s work in Paris around six years ago. Ms. Mouly said she thought children’s books would be a natural extension of his frequently intimate style, and she has commissioned two from Liniers for Toon Books: ”The Big Wet Balloon” (2013) and now ”Written and Drawn by Henrietta.” As for ”Macanudo,” Ms. Mouly said it was a coup for a foreign cartoonist to be published in the United States, where ”almost nothing ever gets in” because there is already so much comic art available.

Liniers understands; after more than a decade of cartooning, he is finally publishing books in the United States, fulfilling his dream of working alongside the North American cartoonists he adores.</
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By Simon Romero and Jonathan Gilbert
27 October 2015

BUENOS AIRES — With a largely noncombative campaign that stunned Argentina by pushing the presidential race into a tightly contested runoff, Mauricio Macri, the mayor of Buenos Aires, also achieved another surprise, driving a wedge into the dominating political movement led by President Cristina Fernández de Kirchner.

In the race to succeed Mrs. Kirchner, both Mr. Macri, who is proposing economic shifts to reduce protectionism, and Daniel Scioli, a former speedboat racer endorsed by the president, scrambled on Monday to reposition their campaigns. Both need voters who opted for other candidates, opening a frenetic new phase in Argentine politics before the runoff election on Nov. 22.

Pollsters had cast Mr. Scioli as the front-runner, but momentum appeared to be shifting to Mr. Macri, especially after a rising star in his party, María Eugenia Vidal, the deputy mayor of Buenos Aires, defeated Aníbal Fernández, Mrs. Kirchner’s cabinet chief, in the governor’s race in Buenos Aires Province.

In obtaining control of the province, a coveted stronghold, Mr. Macri’s party, called Let’s Change, not only defeated one of Mrs. Kirchner’s top supporters. The result was also seen as a referendum on Mr. Scioli, the governor of Buenos Aires Province since 2007.

Political analysts paid particular attention because voting preferences in the province have historically foretold important shifts in Argentine politics.

”The candidate who has best interpreted the moment is Macri,” said Carlos Germano, an independent analyst. ”He needs to keep pointing toward dialogue and harmony,” he said, predicting that Mr. Macri would meet with leaders of the other opposition parties to solicit their support.

Mr. Scioli took 36.9 percent of the vote, compared with 34.3 percent for Mr. Macri in the first round — an unexpectedly slim margin that astounded many Argentines. Mr. Macri ran a largely nonconfrontational campaign in which he obtained high levels of support in Córdoba, Argentina’s second-largest city.

”It utterly surprised me,” Jorge Vargas, 65, who polishes floors for a living in Buenos Aires, said of the results. ”I voted for Scioli because I don’t like Macri’s background. He’s completely bourgeois.”

Still, political analysts lauded Mr. Macri’s attempts to soften his patrician image by trying to appeal to some in Peronism, the ideologically flexible political movement that has held sway in Argentina for decades. Governing Argentina for the last eight years, Mrs. Kirchner repositioned her faction of Peronism to enhance the role of the state in the economy and increase antipoverty spending, while stepping up attacks on critics.

But with his strong showing, attention shifted on Monday to Mr. Macri, 56, who was raised in one of Argentina’s wealthiest families and gained prominence as the president of Boca Juniors, one of Argentina’s most popular soccer clubs. He is running to the right of Mr. Scioli, but he has emphasized that he would seek to maintain some of Mrs. Kirchner’s policies on social spending.

Reacting to the runoff outcome, Agustín Rossi, Mrs. Kirchner’s defense minister, told reporters that the president’s supporters needed to ”be humble” in mobilizing a response to Mr. Macri’s rise. Mr. Rossi conceded that Mr. Macri had run a smooth campaign, highlighted by alluring ”sound bites,” but he said Mr. Macri could end up eroding social welfare benefits.

Mr. Macri entered politics after a harrowing episode in 1991 in which he was kidnapped by police officers and transported to a hiding place inside a coffin. Twelve days later, he was freed after his father, an Italian-born magnate, paid a multimillion-dollar ransom.

His father, Franco Macri, 85, assembled a business empire involved in construction and car manufacturing. Sometimes openly dismissive of his son’s political ambitions, Franco Macri said last year that his son had ”the brain to be president, but not the heart,” explaining that he believed Argentina’s next president had to come from the radical wing of Mrs. Kirchner’s political movement.

As mayor of Buenos Aires, Mr. Macri has remodeled public spaces, including plazas and the riverfront, and built bus lanes along major thoroughfares — achievements welcomed by voters. He has also sought to develop the poor south side of the city by encouraging technology businesses, as well as municipal government offices, to set up in the area.

Both Mr. Macri and Mr. Scioli must attract more voters, especially those who opted for Sergio Massa, a former ally of Mrs. Kirchner who took 21.3 percent of the vote, and those who supported small leftist parties.

After avoiding a debate before the first round of voting, Mr. Scioli said on Monday that he would accept a debate with Mr. Macri, reflecting how the candidate endorsed by Mrs. Kirchner now finds himself on the defensive. Both candidates have avoided the president’s belligerent tone in favor of a more mollifying approach.

In reaction to a potential shift if Mr. Macri’s momentum builds, Argentine stocks surged on Monday. But analysts said such sentiment failed to reflect the possibility of a bruising runoff campaign. Moreover, Mr. Macri recognizes that he must attract supporters of Mr. Scioli, a challenging aim in what remains a highly polarized society.

”For days, Macri has been working on this fissure, probing the Peronists from within,” Carlos Pagni, a political columnist, wrote in the newspaper La Nación.

Some voters were perplexed by the runoff. ”Scioli’s no good; he’s under Cristina’s thumb,” said Mary Dany Correa, 82, a retired civil servant who voted for Mr. Massa. ”Macri’s done good things in the city, but I don’t see him as capable of running the whole country. There are a lot of things to fix.”

But Mr. Macri’s showing uplifted many supporters who want a change after 12 years of Mrs. Kirchner and her predecessor, her late husband, Nestor Kirchner.

Santiago Elizalde, 27, an information technology salesman who voted for Mr. Macri, said that while he was ecstatic that his candidate had upended the race, ”it’s a match he still has to play.”

27 October 2015

Argentina voters are tired of sinking living standards and shrinking freedoms. At least that’s the hopeful reading of Sunday’s presidential election in which more than 60% of voters failed to pull the lever for the candidate backed by President Cristina Kirchner.

Mrs. Kirchner is barred from running for a third four-year term, so her Peronist Front for Victory party backed Buenos Aires province governor Daniel Scioli. He won only 36.5% of the vote while Buenos Aires city mayor Mauricio Macri surprised pollsters with 34.7%. Sergio Massa, a Peronist member of the lower house, finished third with 21%. Mr. Massa hasn’t said who he will back in the Nov. 22 runoff, but he also campaigned on the need for a change.

Argentina is a mess. The Kirchners — Cristina for eight years and her late husband Nestor for four before that — have promoted socialist economics and protectionism. They politicized the judiciary, seized private property and stiffed international creditors. Inflation is running at 25% by private estimates, and capital is fleeing the country. The central bank may run out of reserves by the end of the year. Mr. Macri has said he’ll lift exchange controls while ending the country’s trade and financial isolation.

The clearest sign that more Argentines are coming out of their populist trance was the result in the race for governor in the wealthy province of Buenos Aires, a Kirchner stronghold where one in every four Argentines lives. Peronists have held the province for 28 years. But on Sunday 42-year-old Maria Eugenia Vidal, a member of Mr. Macri’s Cambiemos coalition, handily defeated Mrs. Kirchner’s candidate.

That bodes well for Mr. Macri if the presidential runoff is fair, which is never a sure thing in Peronist Argentina.

By Taos Turner and Juan Forero
27 October 2015

BUENOS AIRES — Until Mauricio Macri stunned Argentina’s political establishment on Sunday by triggering a second round of presidential voting, many of his compatriots saw him as a wealthy heir unconnected to the problems of ordinary Argentines.

But as the votes were tallied on Monday, it emerged that the 56-year-old mayor of Buenos Aires had marshaled a far larger percentage of votes than polls had forecast for Sunday’s first round. Now Mr. Macri, the son of an Italian immigrant who grew rich and influential here, will challenge the ruling Peronist movement’s candidate, Daniel Scioli, in a runoff that could truncate the populist party’s plans to extend its 12-year rule.

“The truth is that Macri rules,” said Leon Luna, 37, who as a municipal truck driver is the kind of voter Peronists have wooed for decades.

Polls ahead of Sunday’s vote suggested that Mr. Scioli, a 58-year-old ally of President Cristina Kirchner and the governor of Buenos Aires province, would come close to achieving the result needed to win outright: 40% of the vote and a 10-point lead over Mr. Macri. But by Monday, with 97% of the votes counted, Mr. Macri had 34.3% of the vote, and Mr. Scioli getting just over two points more than that.

Observers say Mr. Macri upended the race by highlighting what his campaign called his efficiency in running this vast city, rather than focusing on his personality. Mr. Scioli, who was vague about how he would govern and didn’t attend a presidential debate, was rejected by 63% of voters.

“Macri has created a party infrastructure with a diverse membership base that tried to get out of the center-right corset,” said Juan Cruz Diaz, managing director of Cefeidas, a risk advisory firm. “He was able to capture the imagination of Argentines this way.”

Many people who voted for Mr. Macri said they believed him to be the best candidate to undertake the overhauls economists say are needed to correct an economy whipsawed by high inflation and fast-depleting foreign-currency reserves.

“Argentina needs change and we’re going to bring change,” Mr. Macri told supporters on Monday morning.

Between now and Nov. 22, Mr. Macri and Mr. Scioli will be vying for the 21% of the vote that went to third-place Sergio Massa, a dissident Peronist now thrust into the role of kingmaker.

Mr. Massa, 43 years old, was once cabinet chief to Mrs. Kirchner but hasn’t said whom he would support. A spokesman said senior members of his coalition would meet this week to discuss a strategy.

A poll conducted a month ago by Consultora Wonder showed that 71% of Mr. Massa’s voters would go for Mr. Macri. A key reason, said Carolina Yellati, the firm’s director, is that Mr. Massa’s supporters generally oppose Mrs. Kirchner’s government.

On Monday, Mr. Scioli, who ran a cautious and civil campaign, came out aggressively, telling prospective voters that Mr. Macri would end the country’s bountiful social programs if elected. “I know very well what we want to care for, what we want to protect,” he told supporters Monday.

Leandro Maturana, a unionized government worker and die-hard Peronist, believes the message. “Macri is a businessman who will take away the subsidies and cut the budget, to make an adjustment against Peronist people,” he said.

Mr. Macri has spent much of his life in the boardroom, moving up in his father’s construction company before becoming an executive at a car manufacturer.

Before becoming mayor of Buenos Aires, he was president of Boca Juniors, a beloved soccer club that plays in a working-class district long home to immigrants.

By Andres D’Alessandro, Chris Kraul
27 October 2015

The presidential race is surprisingly close as Buenos Aires’ mayor forces next round with ruling party candidate.

In a much-closer first round of presidential voting than expected, the mayor of Buenos Aires, Mauricio Macri, forced a Nov. 22 runoff with Daniel Scioli, the ruling party candidate who has been favored to become Argentina’s next president.

With nearly all votes counted, Scioli, who is governor of Buenos Aires state and a former vice president, tallied 36.9% of the ballots cast. Macri was close behind with 34.3%.

Scioli, the handpicked choice of outgoing President Cristina Fernandez de Kirchner, needed at least 40% and a 10-percentage-point advantage to avoid a second round of voting.

When it became clear he would not win outright, Scioli emerged from his campaign headquarters in Buenos Aires on Sunday night to ask for independent voters’ support.

Macri was euphoric. “What happened today has changed the political history of the country,” he told supporters.

An engineer by training, Macri is a centrist technocrat who has promised to make Argentina function more efficiently by building better public transportation, schools and hospitals. He said he would digitize the bureaucracy and bring down costs.

The two will face off in the first presidential runoff in Argentine history. The third-place finisher, congressman Sergio Massa, who garnered 21.3% of votes, could play kingmaker if he throws his support behind either candidate.

Massa gave no indication of whether he would endorse either candidate, saying only that he would release a document in the coming days with his proposals for the next president.

One reflection of the disappointing results for the president was that Anibal Fernandez, her Cabinet chief and handpicked candidate to replace Scioli as Buenos Aires state governor, lost by 5 percentage points to Macri ally Maria Eugenia Vidal.

The loss marks the first election since 1987 that a Peronist — the name given to followers of late Argentine President Juan Peron and his second wife, Eva Peron — has not won the governorship of the country’s most populous state.

Argentines turned out in big numbers — 79% of the 32 million eligible voters cast ballots — to decide Sunday’s election. The voting was widely seen as a referendum on the presidencies of Fernandez and her late husband, Nestor Kirchner. Between them, they have led Argentina since 2003.

Although many young and lower-middle-class voters favor the president’s support for human rights and a social safety net, others expressed dissatisfaction with a 28% inflation rate and a stagnant economy that last year shrank 2% in terms of the value of total goods and services produced.

Cold but mostly sunny weather nationwide boosted the turnout, election officials said. Many voters cast their ballots early Sunday to return home in time to watch Argentina’s national rugby team lose to Australia in the televised semifinals game of the world championship in London.

Scioli, who ran on the Victory Front ticket, promised to continue the president’s social welfare policies with some changes, including a harder line on rising crime. He also called for economic reforms, including the settling of a decade-old bond default.

“I voted for Scioli because I understand he will maintain the project that Nestor and Cristina began,” 30-year-old graphic designer Emilio Ferreyra said after voting in the capital. “It’s a way of staving off the right wing.”

After voting in Dique Lujan in Buenos Aires state, Scioli had declined to predict an outcome.

The election may mark the end of national power of “Kirchnerismo,” but the family will remain a local force at least. The couple’s son, Maximo, was elected to a national congressional seat for Santa Cruz state, and Nestor Kirchner’s sister, Alicia, was elected Santa Cruz governor.

Though many voters expressed support for Fernandez’s wealth-redistribution programs and prosecution of those implicated in atrocities committed during the 1976-83 dictatorship, it was clear many were tired of her heavy hand in the nation’s economy.

“I voted for Macri because in the last few years the country hasn’t grown economically or socially,” said Karina Cunibertti, 46, an insurance company employee in Buenos Aires. “Macri represents the possibility of change. I hope he wins the runoff and reestablishes the good functioning of the government and brings about real opportunity for all.”

By Andre F. Radzischewski
27 October 2015

BUENOS AIRES — The stunning virtual tie in Sunday’s presidential election here suggests the populist ruling coalition founded by Cristina Kirchner and her late husband and predecessor, Nestor Kirchner, may see its long grip on power crumble when the term-limited incumbent leaves the Casa Rosada, Argentina’s White House, on Dec. 10.

Pollsters had widely expected Argentines to hand the presidency to Daniel Scioli, the governor of Buenos Aires province and Ms. Fernandez’s handpicked heir, effectively extending the Kirchners’ 12-year reign. Instead, the unexpectedly strong showing of their longtime nemesis, pro-business Buenos Aires Mayor Mauricio Macri, has forced a runoff and fueled what one commentator called a “social revolution against Kirchnerism” that could well lead to a long, unheard-of center-right victory in South America.

“These results are a very positive outcome for Macri and a big disappointment for Scioli,” Credit Suisse economist Casey Reckman wrote in a note to clients Monday. Given the way he won the expectations game, Mr. Macri “will likely have stronger momentum going in to the next month of campaigning thanks to yesterday’s outcome.”

Sunday’s result may even reverberate beyond Argentina’s borders as other leftist leaders in the hemisphere, such as Brazilian President Dilma Rousseff and Venezuela’s President Eduardo Maduro, are increasingly coming under fire and seeing their power threatened for the first time in years.

“People are tired of this kind of populism” often linked to a high level of corruption, said Marcelo Camusso, who heads the political science department at the Catholic University of Argentina.

The most important figure in Argentina’s Nov. 22 runoff, though, may not be Mr. Macri nor Mr. Scioli, but Sergio Massa — Sunday’s third-place finisher — who for now seems to hold the keys to the presidential palace.

Like Mr. Scioli, Mr. Massa forms part of the larger Peronist movement and once served as Cabinet chief early on in Ms. Fernandez’ administration. But the mayor of a Buenos Aires suburb has since turned into a vociferous critic of the incumbent, accusing her of unjust tax policies, widespread corruption and a failure to rein in violent crime and drug traffickers.

Wooing Massa

That mixed political heritage meant that both Mr. Macri and Mr. Scioli on Monday immediately laid claim to the 21 percent of votes Mr. Massa had captured in Sunday’s first round. “I feel that they think the same as us here,” Mr. Macri said about Mr. Massa’s supporters. “He also took a position for change.”

Massa backers were “much farther away from Macri than from us,” Mr. Scioli countered hours later. But for the Fernandez heir, reaching out too far to the Peronist “dissident” would invariably force a break with the Kirchnerist orthodoxy, a dangerous game that cuts into his own base, said Mariano de Vedia, a political commentator for the La Nacion daily.

“Scioli appears very weakened. It is unlikely that he can improve his performance” Mr. de Vedia said. “He faces a dilemma; I do not think he is capable” of breaking with Ms. Fernandez.

The governor himself seemed to acknowledge his conundrum Monday as he tried to shift attention to a proposed televised debate with Mr. Macri, an encounter he had previously ruled out by arguing that his positions were well known. The Buenos Aires mayor almost immediately took his rival up on the challenge, and his Cambiemos (“Let’s Change”) coalition said Mr. Macri had never shied away from such a debate.

Mr. Scioli’s change of heart, meanwhile, came after Vice Mayor Maria Eugenia Vidal, Mr. Macri’s second in command in the capital, was confirmed to have won the gubernatorial election in Buenos Aires to succeed Mr. Scioli — the first non-Peronist governor there since 1987.

“This was a truly historic event [that] will produce an enormous change in Argentine politics,” Mr. Camusso predicted.

Critics had repeatedly accused Ms. Vidal’s challenger, none other than Ms. Fernandez’s Cabinet chief, Anibal Fernandez, of ties to organized crime, and the unpopular hard-liner’s nomination may have been too much even for the president’s backers. Mr. Camusso said the message to Ms. Fernandez was: “We follow you, but we are not going to follow you anywhere.”

Mr. Massa, meanwhile, has so far kept mum on which candidate — if any — he might endorse in the coming runoff.

“In three weeks Argentines will have to choose a new path,” he told the crowd at his election night rally. “We know the role we play. In the next hours we will get together [to announce] what we are going to do.”

But how he aligns his loyalties may depend less on ideology and more on his personal ambitions, said Joaquin Morales Sola, a prominent columnist with La Nacion. Mr. Massa stands to emerge as the unchallenged leader of the Peronist movement if Mr. Scioli — and, by extension, Ms. Fernandez — were to lose in November.

“It is in Massa’s interest that Macri be president,” Mr. Morales Sola said.

“Massa can be an important guide for a disoriented and beaten Peronism,” Mr. Camusso agreed.

Not all of his backers may comply with a likely Massa endorsement, Mr. Morales Sola said. Still, the vast majority of Argentines, who in 2011 reelected Ms. Fernandez with 54 percent of votes, this time preferred opposition candidates. “I don’t know where [Mr. Scioli] is going to get [that] 15 percent he needs to win the runoff,” he said. “To me, he is in a very complicated situation.”

Argentina’s long-suffering investors, meanwhile, seemed delighted with the prospect of a Macri victory. The Argentine Business Association praised the vote and — in thinly veiled criticism of Ms. Fernandez’ autocratic style — called on leaders to “deepen the dialogue between all stakeholders” so as to propel “the social and economic development of our country.”

By Peter Prengaman
October 26, 2015

BUENOS AIRES, Argentina — The top two presidential candidates in Argentina reset their campaigns on Monday after a razor-close election vote forced a runoff and cast doubt on the legacy of President Cristina Fernandez, a polarizing leader who spent heavily on programs for the poor but made enemies with her brash style and failure to solve economic ills.

Sunday’s presidential election shook up the political landscape. Numerous polls in recent months had projected that ruling party candidate Daniel Scioli would win by 10 percent or more.

Scioli, the governor of the Buenos Aires province, had been viewed as an easy front-runner thanks to the support of Fernandez, a charismatic two-term president. Fernandez won admirers for rewriting the South American country’s social contract but also drew sharp criticism for widespread allegations of corruption in her administration and for fights with political opponents and other nations that many Argentines found tiresome.

With 97 percent of polling places reporting Monday, Scioli had 36.9 percent of the vote, while opposition candidate Mauricio Macri had 34.3 percent.

That forces a second round, since to win in the first round a candidate needs 45 percent or 40 percent and a 10-point advantage over the nearest competitor.

“A runoff will be like reshuffling the cards and dealing again,” said Mariel Fornoni, director of consulting firm Management & Fit. “The political landscape will be very different on Nov. 22”

Scioli reminded supporters on Monday that he captured the most votes, and warned that Macri would undo popular state programs.

“Sometimes the word ‘change’ can be attractive in politics,” said Scioli, arguing that the state should continue to have a strong hand in Argentine society.

Scioli also invited Macri to a debate, an about-face after refusing to debate the other five candidates a few weeks ago.

Macri called the vote “transformative,” and promised to convince voters who didn’t choose him on Sunday.

“We will correct the abuses and the fraud of inflation,” Macri said, reiterating one of his common themes.

Many Argentines are worried about high government spending and inflation around 30 percent. Many have also grown tired of a legal fight with creditors in the U.S. that has kept the country out of international credit markets.

Macri presented himself as the man to put Argentina’s economy in order, promising to resolve the debt fight and lift unpopular currency restrictions.

But he also tailored his campaign to the millions who receive some form of government support. He promised to maintain popular programs for the poor and increase spending in some areas.

He even inaugurated a statue of Juan Peron, a three-time former president who founded the ideological movement to which Fernandez adheres.

Scioli, a former boat racer who lost his right arm in an accident, presented himself as the continuation of Fernandez’s policies but who would also fix anything broken.

Both candidates’ decision to straddle the center also led to many questions about what they would really do in office.

“I think this election was an expression of widespread fatigue” with the current government, said Jorge Neimark, an 85-year-old retired lawyer. “Even if Macri didn’t represent any ideology, he does represent a change.”

Over the next month, both candidates will be heavily courting Sergio Massa. The former Fernandez loyalist came in third on Sunday, garnering 21.3 percent of the vote.

On Monday, analysts, pundits and ordinary Argentines were debating theories on why the polls were so far off. A popular mashup video on Twitter showed reality television personality and U.S. presidential candidate Donald Trump in the board room of his show “The Apprentice.”

With a headline addressed to Argentine pollsters, Trump is seen doing his signature “You are fired!”

By Benedict Mander
October 26, 2015

Argentine assets rallied strongly on Monday after Mauricio Macri, the reformist mayor of Buenos Aires, raised investor hopes that the ruling Peronist party would soon be ousted from power after an unexpectedly strong showing in presidential elections on Sunday.

With an end in sight for 12 years of populist rule by President Cristina Fernández de Kirchner and her late husband and predecessor Néstor Kirchner, optimism is running high that centre-right Mr Macri could beat Daniel Scioli, the government-backed candidate, in a run-off vote next month.

Polls in the run-up to the vote had shown Ms Fernández’s anointed successor with as much as a 10-point lead over his more market-friendly rival; however Mr Scioli only won 36.9 per cent of the vote, while Mr Macri gained 34.3 per cent, with 97 per cent of votes counted.

Because of Argentina’s unique electoral rules, Mr Scioli needed 45 per cent of the vote, or 40 per cent plus a 10-point lead over Mr Macri, to win outright. The two contestants will now face off in a second vote on November 22.

Mr Macri’s stunning performance has boosted investor hopes that Argentina will break from Peronism, whose dominance of Argentine politics over the last 70 years has coincided with the nation’s downfall from one of the richest in the world to one of Latin America’s most troubled economies.

Prices for Argentina’s dollar bonds due 2017 jumped more than 10 per cent to 111.50 cents on the dollar on Monday. Yields on the bonds plummeted from 7.46 per cent to just under 1 per cent, before rising to 1.83 per cent. Investors also bid up the bonds due 2033 to an eight-year high of 110 cents on the dollar.

Andrew Stanners, an investment manager at Aberdeen Asset Management, described the result as “a welcome surprise”. “Macri is the candidate who is most keen to get on and reform Argentina’s economy. Those reforms will be pretty painful but it’s encouraging that the country seems to be realising that they are desperately needed by voting for him,” he said.

Mr Macri would move fast to fix serious macroeconomic imbalances, which include a ballooning fiscal deficit financed by the central bank, precariously low foreign exchange reserves and one of the highest inflation rates in the world.

The former president of the Boca Juniors football club has pledged to remove strict capital controls immediately and allow the overvalued peso currency to float freely. He would also tighten fiscal policy by cutting back on costly subsidies and attempt to resolve a long-running creditor dispute that has blocked Argentina’s access to the international capital markets since a $100bn sovereign debt default in 2001.

By Benedict Mander
October 26, 2015

Branded an international financial pariah since what was then the biggest sovereign debt default in history in 2001, investors are optimistic that Argentina will soon come in from the cold.

A stunning performance in presidential elections on Sunday by Mauricio Macri, the centre-right mayor of Buenos Aires who campaigned for change, has raised hopes that he could clinch a victory in a run-off vote on November 22. The prospect of a break from rule by Argentina’s dominant Peronist party sent bond prices soaring on Monday.

“‘Macrinomics’ is now a distinct possibility. This would be a positive for the country,” said Edward Glossop, emerging markets economist at Capital Economics in London. “It’s clear that the tide is turning in Argentina and disillusionment with interventionist and populist policies is growing,” he added.

Markets see whoever wins the run-off vote — Mr Macri is set to face off against the government-backed Daniel Scioli, the moderate Peronist governor of the province of Buenos Aires — as an improvement on the last 12 years of rule by President Cristina Fernández and her late husband and predecessor, Néstor Kirchner.

But Mr Macri, who some pollsters had predicted would not win enough votes to make it to the second round, has promised to move much faster to fix serious macroeconomic imbalances, which include a ballooning fiscal deficit financed by the central bank, precariously low foreign exchange reserves and one of the highest inflation rates in the world.

“A Scioli victory in the first round would not have been bad, but a Macri victory in the second round would make this an economic normalisation trade, not just an ‘anybody but Cristina’ trade,” says Daniel Freifeld, principal of Callaway Capital Management, an investment firm.

“Equity valuations and yields should converge with regional averages, which will translate into significant gains,” he added.

Mr Macri has pledged to remove strict capital controls immediately and allow the overvalued peso to float freely. The former president of the Boca Juniors football club would also tighten fiscal policy by cutting back on costly subsidies and attempt to resolve a long-running creditor dispute that has blocked Argentina’s access to the international capital markets since its $100bn sovereign debt default.

Meanwhile Mr Scioli has promised to implement more “gradual” reforms, and warns that Mr Macri would represent a return to the neoliberal economic policies of the 1
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