Archive for the ‘ARGENTINE UPDATE’ Category


26 enero, 2017







By Nicholas Nehamas and Kyra Gurney
January 24, 2017

A luxury condo tied to a top aide of Argentina’s former president sold for $10.7 million earlier this month. The deal is part of a fire sale of related U.S. properties under investigation in Argentina.

The real estate empire — ranging from a strip mall bank branch in Kendall to a high-rise condo in Manhattan — was valued at nearly $65 million.

A federal prosecutor in Argentina began looking into the mysterious properties after they were linked to a maze-like offshore corporate structure controlled by Héctor Daniel Muñoz, the right-hand man of former president Néstor Kirchner.

The true owners of the properties have not been identified. But they could be feeling the heat: The condo at the Regalia tower in Sunny Isles Beach is the fifth property sold since the prosecutor opened an investigation last year.

Also sold: A CVS pharmacy building in Little Havana that traded for $13.1 million in July; bank branches in Pompano Beach and Kendall that sold for $5.8 million in August and $6.5 million in November, respectively; and a small unit at luxury tower Icon Brickell that sold for $320,000 in November.

Muñoz’s role was revealed in April thanks to the trove of offshore corporate files known as the Panama Papers. The investigation followed.
But the inquiry now appears to be fizzling after the prosecutor, Juan Manuel Pettigiani, handed it to another government agency for further analysis in June, as required by Argentine law. Little progress has been made since then, Pettigiani said Monday.

“It’s very sad that in my country activity that could be tied to public corruption is not of public interest,” he wrote in an email to the Miami Herald. “It is sad to see the truth escaping.”

Both Muñoz and Kirchner are dead. Kirchner’s wife, Cristina Fernández de Kirchner, who succeeded him as president, was recently indicted for corruption in Argentina. The name of current president Mauricio Macri also surfaced in the Panama Papers; he has denied any wrongdoing.

In the past, drug dealers and corrupt foreign officials have been busted buying expensive homes in the United States, leading to new federal regulations on money laundering in real estate.

Making a profit

The four-bedroom unit at the Regalia sold for the same price paid in 2014, when a company controlled by Muñoz associate Sergio Todisco bought the brand-new condo.

Breaking even on a luxe Miami condo might seem like a bad deal. But if Argentine pesos were changed into dollars and used to buy the condo in 2014, the math changes. The dollar has boomed in value against the peso since then. If the proceeds from the 2016 sale were converted back to pesos, the investment would have roughly doubled in value. Foreign investors routinely take advantage of such currency fluctuations to turn a profit.

The buyer of the Regalia unit is listed in Miami-Dade County property records as a company managed by Sean Sullivan of Boca Raton.
Three of the other properties also sold for an apparent loss — in dollars, at least. The Regalia sale, first reported by the Real Deal, comes six months after a Little Havana pharmacy building also owned by the Argentine network sold for $13.1 million.

A lawsuit filed in Miami-Dade County accused the seller — Elizabeth Ortiz Municoy, Todisco’s ex-wife — of trying to hush up the pharmacy deal. Municoy didn’t want “the CVS property listed for sale … [and] … and wanted to keep the sale of the CVS property confidential,” according to a civil complaint filed by another broker. In a legal response, Municoy’s attorney denied the charges and counter-sued for breach of contract. Her Surfside-based realty firm also marketed the unit at the Regalia for sale, according to a Realtor’s database, asking $12.5 million in 2015 and $10.95 million last year.

Municoy’s involvement in that deal contradicts statements she previously made to the Herald. She consistently has denied playing a role in the real estate deals drawing scrutiny in Argentina. A voice message left at her office Tuesday morning was not returned.

The properties still owned by the Argentine network include a bank branch in Miami Shores and luxury condo units in Brickell, Hollywood and Sunny Isles Beach. Their total value? Nearly $10.3 million.

By Caroline Stauffer
Jan 24, 2017

Argentina this week will sell up to 12.5 billion pesos ($782 million) worth of reopened inflation-adjusted peso bonds maturing in 2021, the Finance Ministry said on Tuesday. The sale will take place between Wednesday and Thursday, a week after the country sold $7 billion of dollar bonds.

The bond will yield 2.5 percent above a reference coefficient linked to the inflation rate. Argentina’s government sees inflation at 17 percent this year, though economists see it exceeding 20 percent. “The bonds will accrue interest over adjusted balances as of the issue date at a rate of 2.5 percent per year, which will be payable per semester due on January 22 and July 22 of each year until maturity,” the statement said.

By Maximilian Heath
Jan 24, 2017

PERGAMINO, Argentina (Reuters) – Soy grower Carlos Zucarelli looks over his farm in Argentina’s bread-basket province of Buenos Aires, watching ducks float around on a shallow lake covering much of what was meant to be this year’s crop area. His and other farms in the area of Pergamino in northern Buenos Aires are still suffering from the effects of heavy December and January rains that flooded about 20 percent of their fields. Of Zucarelli’s 70 hectares, 40 percent is underwater.

“It’s irrecoverable because there’s no time left to replant soy. It’s still going to take time for this part of the farm to dry out,” he said, the ducks quacking in the background. Elsewhere in Buenos Aires province and the southern part of the neighboring province of Santa Fe, flood-related losses are estimated by the Rosario grains exchange at 660,000 hectares.

The exchange sees Argentina’s soy harvest at 52.9 million tonnes, under the 55.3 million tonnes produces in 2015-16. The flooding in the world’s No. 3 soybean exporter caused soybean and soymeal prices on the Chicago Board of Trade to hit six-month highs last week.

In Pergamino as a whole, farmers say about 20 percent of seeded crop land has been overcome by excessive moisture. Another farmer down the road is Ariel Pizi, who says about 12 percent of his planting area has been lost. Close to the flooded parts of his farm, soy leaves are turning yellow rather than the usual green, meaning they are also suffering from too much rain. “The losses are just enough to wipe out our profit margin,” he said. The water on his and other farms has turned what should be green fields into a range of yellowish colors punctuated by black splotches of land that will not be replanted this year.

Some 500 millimeters of water have fallen in this area since late December, said Luis Crosetti, advisor to the Pergamino chapter of the AFA (Federation of Argentina Farmers). “If the rains continue the production losses will be … bigger,” Crosetti said.

The agriculture minister has not yet issued a soy harvest estimate but he told local media that he expected the December and January rains to have “a strong effect on production.”

By Luke Patey
January 24, 2017

Argentina’s president promised to separate his country’s economy from Beijing. That was before Beijing had its say.

BuENOS AIRES, Argentina — One of the most noticeable features of China’s engagement in Argentina over the past two decades has been the rapid growth of small Chinese-run supermarkets across the large South American country. In the wake of a devastating financial crisis at the turn of the century, many Argentines have come to rely on low-cost supermarkets manned by Chinese immigrants to buy their everyday stables.

But in Palermo Hollywood, a leafy neighborhood in Buenos Aires populated by hipster cafes and boutique hotels, a new side of China’s presence in Argentina can be found. The neon lights of a redbrick building marked Restaurante Beijing, a fine-dining establishment catering largely to the city’s affluent Asian residents and, increasingly, to satisfying the appetites of a growing Chinese business community.

Moving beyond the ubiquitous Chinese-run supermarket, China’s economic partnership with Argentina has soared to new heights. In recent years, China Inc. has been busy buying up large stakes in Argentina’s energy, mining, and banking sectors. Taking its engagement a great leap forward in 2014, China agreed to provide Argentina with over $20 billion in loans to finance numerous infrastructure projects, including new railway lines and hydropower dams.

But the rush of Chinese investment and finance into Argentina has produced new tensions in the relationship. Sitting down to dinner with a Chinese diplomat at Restaurante Beijing early last year, I had hoped to hear more about the latest wave of Chinese money flowing into the country, and how Beijing was coping with the potential destabilizing impact of the recent national election.

Just months earlier, Mauricio Macri, the former mayor of Buenos Aires, had won a runoff election to become Argentina’s new president. Macri promised to take the country in a new direction: away from the populist policies and fiery anti-American rhetoric of his long-serving predecessor, Cristina Fernández de Kirchner, and toward a center-right agenda of liberalizing the economy and restoring relations with the United States and Europe.

The changing of the political guard threatened to upset Argentina’s budding relations with China. During the final 18 months of her presidency, Kirchner agreed to take on huge new debt from China. Now Macri, questioning the lack of transparency in the agreements, which were not released publicly, and the possible negative environmental footprint of the planned construction projects, vowed to review and potentially cancel China’s mega-deals.

At Restaurante Beijing, the Chinese diplomat brushed aside the incoming government’s concerns over transparency: “I say to our new Argentine friends, ‘Go take a look at the agreements, we’ll wait.’ And if they find nothing wrong, they should respect the contracts.”

He maintained an air of certainty that Macri would not overturn the deals. China’s offer of billions in loans was too large to turn down, a simple rule of thumb that helps explain China’s quietly growing power in Argentina and beyond. “Let me put it this way,” he said blankly, “nobody hates money.”

Mauricio Macri was trying to do something few world leaders had dared: Say no to China.

Macri’s agenda was an affront to the role of China in underpinning Argentina’s economic revival over the past decade. China had not only become a new and large trading partner, buying the majority of Argentina’s soybean exports, but also a critical financial backer when the country was unable to borrow from international markets due to its massive debt default in 2001.

With Argentina’s economy floundering after the 2014 commodity bust, spurning the world’s eminent global economic power hardly seemed a wise move. Beijing’s reaction to the threat from Argentina’s new president offered a microcosm of how China, a one-party state, is reacting to democratic political change endangering its interests overseas.

Saying no to China was also an antithetical position for Macri. The son of a prominent business tycoon, and a former boss of the Boca Juniors, one of Argentina’s most successful football clubs, Macri was staunchly pro-business. After he was elected president, he promoted banking and energy executives to key cabinet roles and moved forward with pro-market reforms.

But Macri’s personality is more nuanced than his stiff businessman-turned-politician background portrays. He is not a man fearful of change or taking risks. A 12-day kidnapping ordeal at the hands of rogue police officers in 1991 compelled Macri to start his political career. Changing course on relations with China was another bold move.

Under Kirchner, Argentina fostered close ties with Beijing, while maintaining an acrimonious relationship with the United States and Europe. Kirchner blamed Washington for how Manhattan-based hedge funds, which she commonly referred to as “vulture banks,” profited from buying Argentine debt at distressed prices, and flatly refused to negotiate with many of the debt holders.

But Macri wanted to make amends and rekindle ties with the West. “If everything comes from China, this will be an imbalance,” Macri told a reporter at a 2015 investment conference in California. “We are mainly descendants of Europeans,” he said, “so it’s easier to deal with Europe than Asia.”

Months after coming to power, Macri welcomed a line of Western leaders to Buenos Aires, capped off with the arrival of U.S. President Barack Obama in March 2016. The U.S. president’s high-profile visit was a testament to Macri’s skill in steering Argentina’s new foreign policy forward. “No one thought he would move so fast,” a senior Western diplomat told me. “Who else can get Obama after only a few months in office?”

Pictures of Obama meeting cordially with Macri, and later locking arms with renowned Argentine tango dancer Mora Godoy in a short strut at a state dinner, stood in contrast to the more formal proceedings between China’s President Xi Jinping and Kirchner in previous years.

“China is still a very important partner to Argentina, and I expect it to be very active in the future,” Diego Guelar, Argentina’s ambassador to China, told me. “But the relationship was based on Argentina’s isolation. There is a new environment now. China is not going to be alone.”

And Macri’s new outreach to the West was paying dividends. A few months after being elected, he was able to settle Argentina’s long-standing debt problems by offering a repayment deal to hedge fund holdouts. The conciliatory move warmed relations with the United States and ushered Argentina back into global financial markets with a $16.5 billion bond sale, a record amount for an emerging market.

Macri also quickly gathered pledges for new foreign investment worth over $30 billion. Although not entering the country as quickly as hoped, it was a vast improvement from the previous year. And American blue chips, including General Motors and Dow Chemical, were at the front of the queue. “I’m optimistic about the changes that have happened in Argentina with the new government,” said Rex Tillerson, outgoing ExxonMobil CEO and U.S. President-elect Donald Trump’s nominee for secretary of state.

It is still the early days, but by forging closer ties with the United States and Europe, and implementing market-friendly policies, Macri was introducing competition to Chinese companies, which had been reaping the rewards of favorable treatment offered by his predecessor. “Macri hasn’t cut off China, but he wants to lower Argentina’s dependency on it,” a senior Western diplomat told me in Buenos Aires. “Now the Chinese need to get in line like everyone else.”

While so many world leaders were looking to China for new trade and investment opportunities, Argentina’s new president was succeeding in drawing interest from the West’s stagnating economies. It was in the ornate reception hall of Casa Rosada, the presidential palace in Buenos Aires, that Kirchner christened billions in new loan-for-infrastructure agreements with China’s President Xi Jinping. The move locked Argentina into a generation of debt payments, but in return, among other projects, China agreed to bankroll and build a major upgrade to Argentina’s ailing railway network as well as two large hydropower dams in the far south of the country. But when Macri swept into power in late 2015, he immediately put the projects on hold and placed a microscope on their financial and environmental consequences.

In hopes of finding out whether China’s mega-deals were really in jeopardy, I spoke with Juan Uriburu Quintana at the offices of Electroingenieria, an Argentine construction company and one of China’s main domestic partners in the country. Quintana was responsible for the company’s legal and institutional affairs with China. It was easy to see why he was a well-suited interlocutor. For nearly a decade, Quintana had lived and worked in China and Taiwan and could switch almost effortlessly among Spanish, English, and Mandarin.

Quintana also had experience with the Argentine national railways company, the key domestic partner in a $2.4 billion project financed by China to rehabilitate a fleet of trains and 930 miles of railway line in the Belgrano network, a main artery in Argentina’s railway system.
“We call it ‘Train to the Clouds,’” Quintana told me. Ascending into the towering Andes, the popular passenger train was one of the highest railways in the world. In passing through Argentina’s agricultural heartland and onward to Chile’s Pacific coastline, the Belgrano network had the potential to be much more than a tourist attraction. In particular, by linking the Argentine heartland with the Pacific coast of South America, the train line offers agricultural goods a quicker route to China.

China’s loan to improve the railway network promised to substantially increase freight cargo size and double speeds, enhancing the competitiveness of Argentina’s agriculture industry. But Beijing was not offering billions of dollars in loans for altruistic reasons. “China is interested in the railway because it gives faster and cheaper access to our raw materials,” Quintana said.

With benefits ironed out for both sides in the railway project, Macri’s critique fell squarely on his predecessor’s agreement to borrow $4.7 billion from Chinese banks to build two hydropower dams on the Santa Cruz River. Some 1,550 miles south of Buenos Aires, Santa Cruz province is part of the larger Patagonia region, known for its breathtaking natural beauty and iconic glaciers. Preparatory work had already begun on the hydropower dams when Macri suspended construction in late 2015.

Although the dams would diversify Argentina’s energy sources and bring thousands of new jobs to Santa Cruz, they would leave a deep scar on its landscape. Over 116,000 acres were to be flooded, and altering the watercourse of the glacial river would ravage the region’s pristine ecosystem. When completed in 2020, the sparsely populated Santa Cruz would not even have the transmission capacity to handle the 1,740 megawatts of electricity produced. In a December 2015 meeting with prominent environmentalists, Macri reportedly said that he favored other viable and cleaner energy projects over the hydropower dams in Santa Cruz. “Let’s try to stop them,” he said.

There were also political reasons for Macri’s opposition to the dams. Santa Cruz is the political backyard of the Kirchner family. The larger of the two dams was to be named after Néstor Kirchner, Cristina’s late husband, who was also a former president. Although China’s mega-deals have steered clear of any allegations, the former President Cristina Kirchner is facing corruption charges for dealings with business partners in Santa Cruz.

But Juan Quintana believed the delay to the dams would be short-lived. Electroingeneria and its partners implored the Macri government to move forward in order to protect the jobs created by the project as well as Argentina’s strategic relationship with China. This reflected the broader rift of public opinion toward the dams: Argentina needed to find energy alternatives beyond oil and gas but still protect its environment. It was a fine line for Macri to walk. “Macri inherited the situation of being very linked with China. We cannot afford to upset one of our biggest trading partners,” Quintana told me. “Otherwise, there are going to be consequences.”

In April 2016, Macri was set for his first encounter as president with China’s leader Xi Jinping. On the sidelines of a global summit in Washington, the two men met to discuss the fate of China’s mega-deals. The meeting did not last long. After sitting with Xi for only a half hour, Macri later told the Argentine press that Beijing was “willing to revisit agreements” in order “to deepen the relationship instead of reducing it.” His tone toward China was far more conciliatory than it had been earlier.

But Macri’s hands were tied in the negotiations. Some weeks earlier, Zhang Zhijie, president of the China Development Bank, had paid a visit to Buenos Aires to give a polite warning to Argentina’s new government. As leader of the world’s largest development bank, and the main lender to Argentina’s infrastructure projects, Zhang wanted to remind Argentine officials to read the fine print of their loan agreement.

Gaining access to the official documents only after coming to power, the incoming government was told by China’s top banker that the hydropower dams agreement contained a cross-default clause: In the event it was canceled, China’s loan for the Belgrano railway project would be stopped. The Santa Cruz hydropower dams were to be the largest ever built by a Chinese company overseas, and personally endorsed by Xi. Chinese officials were not about to let their leader lose face from a potential cancellation. They set conditions in the loan to help ensure its survival in the face of any political turbulence.

China bet correctly that Macri was not about to sacrifice the important railway project, and upend Argentina’s broader relations with China, in order to stop construction of the dams. Shortly after the meeting between Macri and Xi, Argentine officials gave the go-ahead for construction to continue. The outcome in Argentina was not unlike others in the world where domestic political change has threatened major Chinese investments. From Zambia to the United Kingdom, China has been a political punching bag for opposition figures and incoming leaders to scrutinize the initiatives of their predecessors. Once settled in power, however, new leaders tend to roll back the tough talk, realizing the nearly irreplaceable importance of China as a trading partner and investor. Yet despite often wielding asymmetric economic power in its foreign relations, China can be a negotiable global power. If the business bottom line is respected, and political embarrassment avoided, Beijing is not above accommodating the objectives of new leaders.

Saying no to China’s mega-deals was not possible for Argentina’s new president. But Macri did manage to bend the terms of the hydropower dams agreement to fit his objectives. To avoid going over cost, and to dampen the negative environmental impact, China agreed to lower the capacity of dams by including fewer turbines and adding another transmission line. Conservation groups were also successful in forcing a new environmental assessment through the Argentine Supreme Court. But ultimately Macri did not stop the project altogether.

It was a clear demonstration that Chinese finance is becoming a potent tool of coercion in global affairs. From thousands of Chinese-run supermarkets to multibillion-dollar infrastructure projects, Beijing managed to exploit its significant economic influence in Argentina to rebuff the agenda of its duly elected president. And while Mauricio Macri is the latest global leader to feel the political power of Chinese trade and investment, he is certain not to be the last.

By Brendan O’boyle And Rachelle Krygier
January 24, 2017

Populists on both left and right have found common cause with the U.S.’ new president, even if their view appears to be a minority in the region. At least one group is giving Donald Trump’s presidency rave reviews so far: Latin American populists.

Whether they see shadows of their own nationalist views in Trump’s “America First” agenda, or merely sense an opportunity for improved diplomatic ties with Washington, high-profile populist figures on both the left and right have taken to Twitter and other media to express their support.

In Argentina, Trump fever has been especially high among politicians close to former President Cristina Fernández de Kirchner, who from 2007 to 2015 slapped high tariffs on imports, manipulated economic data and vilified the country’s traditional economic and political elite. Trump “is doing everything we did,” Fernández’s former trade secretary, Guillermo Moreno, said in an interview with MDZ radio. Moreno even said he believes Trump “is a Peronist” – a reference to the nationalist, union-dominated movement that has dominated Argentine politics since the 1940s.

Daniel Scioli, who narrowly lost a bid to succeed Fernández as president in 2015, likewise commended Trump’s emphasis on national industry in a Facebook post, echoing the new president’s #AmericaFirst hashtag with his own #PrimeroArgentina.

Venezuelan President Nicolás Maduro, currently besieged by a catastrophic recession and shortages of food, medical supplies and other basic goods, told reporters the new occupant of the White House had been a victim of a “brutal hate campaign” by the media. “He won’t be worse than Obama,” Maduro added.

These sympathetic views appear to be a minority among Latin American leaders – at least so far. The region is dominated by presidents such as Peru’s Pedro Pablo Kuczynski, Argentina’s Mauricio Macri and Chile’s Michelle Bachelet, all of whom are committed to trade and the prevailing globalism of recent years. Latin America’s own bouts with populist protectionism in the 2000s in Brazil and Argentina, for example, ended in recession.

Some analysts also question how sincere some of the support for Trump is – especially from the ideological left. With such statements, Maduro may be motivated less by common cause and more by a desire to seek better diplomatic ties at a time of national crisis, according to Venezuelan political analyst and consultant John Magdaleno. “Given what Trump has said and his choices for cabinet members, Maduro can presume that Trump won’t be as diplomatic as Obama and that there may be the possibility of an economic or more severe diplomatic intervention. So he’s just trying to open a space for dialogue in this moment of vulnerability,” Magdaleno told AQ.

Similar thinking may have motivated Bolivian President Evo Morales, who on inauguration day tweeted his hopes that his country could restore diplomatic relations with the U.S. by exchanging ambassadors, which they haven’t had since 2008. “We hope that with the new president of the U.S., interventions and military bases in the world end,” Morales wrote in another tweet.

One figure whose affinity for Trump is based more on shared values is Brazil’s Jair Bolsonaro, a right-wing former army officer who has placed as high as fourth in nationwide polls for the 2018 presidential race. He has been the leading candidate among wealthy Brazilians, and tapped into a nationwide anger with the political establishment amid unprecedented recession and corruption scandals.

Bolsonaro posted a video congratulating Trump on his inauguration. He had hoped to travel to Washington to attend, but said in an interview that aired the next day that it wasn’t possible. “I always rooted for Trump … I think (his victory) can help us,” he said.
Like Trump, Bolsonaro has publicly voiced support for torture and blamed the media for distorting his views. “At the end of the day, Trump stood up to the politically correct, stood up to the polling firms, stood up to the big rotten media,” Bolsonaro said admiringly in the interview.

It’s not just national politicians climbing on board. Two city council members from southern Brazil signed a letter to Trump asking to attend the inauguration, and congratulating him for winning with an agenda that “criticized the invasion of immigrants.”

Some analysts have expressed alarm over the rising Trump-ism. Prominent Brazilian economist Ricardo Amorim wrote on Facebook on Jan. 22 that Trump’s economic agenda was starkly similar to that of former President Dilma Rousseff, a leftist leader whom most blamed for leading Brazil into its recession before she was impeached in 2016.

“Protectionism to defend the interests of the country and our jobs. Exponential increase of public deficit through government spending and tax cuts. A worse than distorted relationship between the government and the private sector … Dilma called it a ‘new economic matrix’ and Trump calls it ‘make America great again,” Amorim wrote.

Unlike many other populists in the region, Mexico’s Andrés Manuel Lopez Obrador has not welcomed the Trump presidency – but he may stand to benefit from it. The former mayor of Mexico City, who is gearing up for a third presidential run, has presented himself as someone who will stand up against Trump – and in favor of Mexico’s interests. He saw his popularity spike after Trump’s victory in November. A poll from Mexican newspaper El Financiero found that López Obrador was believed by Mexicans to be the most apt to take on the likely challenges of a Trump presidency.

Indeed, while recent election results in Argentina, Bolivia, and Peru indicate that Latin America’s populist wave is in decline, many leaders believe they stand to see their political fortunes rise as a result of Trump’s victory.

As Argentina’s Moreno remarked: “Now, when we return, we won’t have the world against us.”

By Daniele Siqueira, AgRural Commodities Agrícolas
January 25, 2017


The Brazilian soybean harvest was 2.2% complete as of Jan. 19, up from 1.5% a year ago and 1.2% on the five-year average. Mato Grosso leads, with 7.5% (about 2.2 million tons), but the return of widespread rains to the state has slowed down the harvest in several areas. More rains are forecasted for the state and will probably prevent farmers from harvesting a total of 7 million tons until the end of January, as forecasted by AgRural in early December.

Mato Grosso do Sul and Goiás, also in central Brazil, had harvested 1% and 0.2% of their soybean area by Jan. 19, respectively. In Paraná (south), Brazil’s second largest soybean producing state, harvest has had a slow start. Despite the good shape of the crop, some areas planted earlier are not ready for harvest yet because they had a slower development due to lower-than-normal temperatures in October and November.

On Jan. 9, AgRural forecasted the Brazilian soybean production at 103.1 million metric tons (mmt), up 7.7 million metric tons from last year. But the soybean crop still has a long way to go in states that plant later, such as the southernmost state of Rio Grande do Sul and states in the north/northeast of the country, where farmers start harvesting only in late February or early March. Rio Grande is in good shape so far, but more rain would be welcome in the northeast, especially in Bahia. Isolated areas in Paraná, Mato Grosso do Sul and Goiás also have had some troubles due to irregular rainfall.

Summer corn harvest (35% of the Brazilian total corn production) is also beginning in Brazil (0.5% by Jan 19), but it’s behind schedule due to excessive moisture in the south. Winter corn planting (65% of the Brazilian total corn production), which is planted right after the soybean harvest, is underway in central states. Delays are expected due to rains in Mato Grosso. By Jan. 19, 2.8% of the total area estimated for south-central Brazil was planted, ahead of 0.8% a year before.

AgRural forecasts the Brazilian total corn production at 88.6 mmt, compared to 66.6 mmt last year, when the winter crop was damaged by a severe drought in central states.


The country has a good soybean crop on its way and some farmers are already harvesting their first areas. Yield reports are good and our clients there believe that the total production will surpass the USDA forecast of 9.17 mmt. Some areas planted later, however, have been struggling with lack of moisture and high temperatures.


What’s the real damage caused by excessive rains in Argentina? That’s the billion dollar question right now. In mid-January, Rosario Grains Exchange said that, at that moment, the soybean production could reach 52.9 mmt, compared to an initial forecast of 56 mmt (the USDA forecasts 57 mmt). But they admitted that the number was preliminary and unofficial, since their researchers still have much field work to do in order to assess the damage caused by floods. Also, Buenos Aires Cereals Exchange said that 770 thousand hectares of soybeans (1.903 million acres) were impacted by above-than-normal rains in December and January. Plus, 400 thousand hectares (988 thousand acres) will not be planted due to drought in the south of the grain belt and flood in central areas. Buenos Aires Cereals Exchange doesn’t have a production forecast yet. But, although those acreage numbers look pretty bad (the total soybean area initially estimated was 19.6 million hectares, or 48.4 million acres), the exchange said that several areas beaten by above-than-normal rains still have soybeans in good shape. The problem is that more rains are forecasted for central Argentina over the next two weeks. By Jan. 19, 99% of the soybean area was planted.

They’re not too concerned about corn, which has a record planted area this year (4.9 million hectares, or 12.1 million acres). According to Buenos Aires Cereals Exchange, 95% of that area was planted by Jan. 19 and about 290 thousand hectares (717 thousand acres) had been impacted by above-than-normal rains.

We don’t have clients in Argentina and we don’t go there often (we’re neighbors, but very different countries). We just track their most reliable sources, such as the exchanges. The problem with Argentina is that it’s really hard to forecast their production. They have a very wide planting window even within the same province. Example of their complex calendar: they start planting corn in late August, take a break of three to four weeks in November (for weather reasons), resume in early December and finish planting in late January. Then, they harvest from mid-February until early September. It’s an eternal loop. And no, they don’t grow two corn crops a year, like Brazil. It’s all summer corn. Crazy, right? It is very hard is to estimate corn and soybean production in Argentina.

To make a long story short, I would say that Argentina is in trouble for sure, but it’s not as bad as the market was saying until last week, at least so far. If excessive rainfall continues, however, their losses can be really big, especially because some of the flooded areas are among their best, with excellent soils and high yield potential.

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ARGENTINE UPDATE – Jan 19 & 20, 2017 News Clips

24 enero, 2017

Friday, January 19th, and Saturday, January 20th News Clips













January 19, 2017
In this Jan. 13, 2017 photo, volunteers walk with shovels on the way to help clear clear the mud and help locals the town of Volcan, Jujuy province, Argentina. The mudslide was caused by the Intense rains that hit the area one week ago, flooding the town with mud, killing several and causing the evacuation of thousands. (Gianni Bulacio/Infoto via AP) (Associated Press)

VOLCAN, Argentina — People in this small town in northern Jujuy province are scrambling to rescue what’s left of their belongings a week after torrential rains unleashed a devastating mudslide that buried most of the homes.

Volcan was the worst-hit by the heavy rains that swelled rivers in the region about 1,000 miles (1,600 kilometers) north of Argentina’s capital.

The mudslide killed two people and forced the evacuation of more than 1,000 in several communities in an area frequented by tourists known as the Quebrada de Humahuaca.

Residents have dug out jars, furniture, even religious icons and statues and carted them to rooftops for safekeeping, though rescue teams fear that the roofs will cave in.

Using shovels and buckets, some people are still cleaning out mud, while hundreds more remain in shelters waiting for help promised by the provincial government to rebuild their homes.

President Mauricio Macri said Tuesday that climate change is to blame for the heavy rains and that the government will take on infrastructure work to prepare for destructive flooding.

By: Benedict Mander on King George Island
January 20, 2017

Climate change unleashes growing international and commercial interest.

Surveying the landscape surrounding the desolate bay on King George Island, 75 miles north of the Antarctic peninsula, Argentina’s foreign minister Susana Malcorra gestures towards jagged outcrops of rock protruding from the snowy expanse.

“It used to be much whiter at this time of year,” she said on a recent visit to the largest of the South Shetland Islands, warning that climate change had unleashed growing international and commercial interest in the Antarctic.

“As Antarctica becomes more relevant for the world, we have to strengthen our presence to protect our interests,” she told accompanying journalists. “What happens to Antarctica happens to Argentina.”

Argentina first established a permanently inhabited base in Antarctica in 1904, almost a decade before Captain Robert Scott’s fateful South Pole expedition. Its main foothold today is the Carlini research station, which undertakes scientific work including the effects of climate change on the region.

Visiting Carlini, Ms Malcorra said the work of the base was vital to enforcing the 1959 Antarctic Treaty, which enshrined the vast territory as a scientific preserve. Argentina was one of the founding signatories of the treaty, penned at the height of the cold war as a conflict prevention tool, suspending all territorial claims and banning military activity.

For now, commercial activity in the Antarctic is limited mainly to fishing and tourism — enforcement largely involves the use of satellites and naval patrols to keep poaching of the rich fishery stocks in check.

But there are increasing concerns that nations such as Russia and China are looking at opportunities to exploit Antarctica’s mineral riches, mirroring fears over the Arctic as melting sea ice opens up the historic Northern Sea Route between Europe and Asia and the possibility of oil exploration.

“Who is to say what countries like Russia and China will do in 30 years’ time? They might say ‘we need these resources’ [that are] in the Antarctic,” said one diplomatic source.

But Ms Malcorra’s visit, the first to the Southern Ocean island by an Argentine foreign minister, was also aimed at assuring Argentines that the year-old government of Mauricio Macri, president, was serious about defending overseas territorial claims.

The Macri administration has come under fire — even from influential members of his own governing coalition — for seeking to mend relations with the UK which have suffered from a dispute over the Falkland Islands, a British overseas territory invaded by Argentina in 1982.

Indeed, Argentina’s claims in the Antarctic over a wedge-shaped chunk of land almost as large as Egypt fall, within a slightly larger area that is claimed by the UK. They also overlap with Chilean claims. King George Island is known to Argentines as Isla 25 de Mayo (May 25 Island), after their independence day.

As a result of the Antarctic Treaty, the region has for decades been held up as a unique example in global co-operation. King George Island is home to a dozen international research stations, including China’s Great Wall base and a Russian outpost with an ornate miniature Orthodox church, continually manned by a priest.

Many would like matters to stay the way they are and ensure the region’s resources are protected. Last year, for instance, the Antarctic region’s Ross Sea was declared the world’s largest marine protected area.

Máximo Gowland, head of Antarctic affairs at Argentina’s foreign ministry, says science is “the paramount issue” in Antarctica. “Everything that is going on in Antarctica has to have a scientific basis to it, so all countries are basically revamping their Antarctic science,” he says, adding that Argentina is keen to boost scientific investment.

Nevertheless, the researchers working at the Carlini station are acutely aware of the geopolitical tensions that serve as a backdrop to their work.

“Antarctica brings [science and politics] together, so that we do scientific research thinking also about politics,” says Lucas Ruberto, who leads the team. “They are two different paths that find their common point in what we do here.”

The wealth of the Antarctic belongs to everyone, but an important part of it is ours
Susana Malcorra, Argentine foreign minister

Ms Malcorra insists her government is strengthening sovereignty in a “modern” way by defending the integrity of the polar region and of Argentine territory. She points out that while many Argentines think their country ends at Tierra del Fuego — which they call the “end of the world” — its southernmost province includes the Antarctic claims.

To emphasize this, the previous government decreed that official maps show Argentina’s Antarctic claims on the same scale as the rest of the country, rather than in a smaller-sized inset.

“We have to preserve [Antarctic resources] and ensure they are managed in a way that does not affect the ecosystem,” Ms Malcorra says, adding: “The wealth belongs to everyone, but an important part of it is ours.”

By: Benedict Mander
January 19, 2017

Just in the nick of time.

Argentina has issued $7bn of international debt, taking advantage of calmer conditions across bond markets before the inauguration of Donald Trump as US president on Friday.

Amid strong demand, with orders for around $22bn, Argentina’s finance ministry said that it sold the bonds at 200 basis points lower than its bumper $16.5bn issue last April that marked its return to the international capital markets after a protracted absence since a 2001 debt default.

“This confirms investors’ trust in the capacity of this government to control inflation and stimulate economic growth,” said the finance ministry in a statement — even though economic growth so far remains elusive more than a year into President Mauricio Macri’s term.

BBVA, Citi, Deutsche Bank, HSBC, JP Morgan and Banco Santander managed the bond sale, which saw Argentina issue $3.25bn of 5-year bonds at 5.625 per cent, and $3.75bn of 10-year bonds at 7 per cent. The average interest rate of 6.3 per cent compares to 7.2 per cent last year.

By Carolina Millan
‎January‎ ‎19‎, ‎2017‎ ‎

* Country plans to sell $10 billion of overseas bonds in 2017
* Government still facing growth, inflation challenges

Argentina’s borrowing costs have tumbled since Mauricio Macri was inaugurated as president in December 2015.

In the past year, he’s dismantled most of the country’s currency controls and, crucially, ended a feud with bondholders, allowing Argentina to access to global debt markets after more than a decade in the wilderness.

But even as the government prepares another sale of dollar debt this week, Macri is still grappling with an economy in the doldrums, stubborn inflation — starting to slow from a peak of as high as 47 percent in Buenos Aires — and a crippling budget deficit.

Capital Markets

•Argentina is looking to sell $10 billion of foreign debt in 2017 after issuing $19 billion last year, when it ended a 15-year hiatus following its historic default on $95 billion of debt.
•Yields on Argentina’s notes due in 2024 have tumbled 2 percentage points since Macri’s inauguration in December 2015.

•To capitalize on soaring investor demand, Argentina started issuing fixed-rate peso bonds for the first time in nine years in August. JPMorgan Chase & Co. also said Jan. 5 that Argentina’s local government bonds were eligible for its index and may be added as soon as late February.


•On Jan. 5, the government removed a rule requiring financial portfolio investments remain in the country for at least 120 days, part of an ongoing effort to jettison the nation’s capital controls. The move may lead to a reclassification of Argentina’s stocks by MSCI Inc. to emerging markets in June.
•In one of his first moves as president, Macri lifted a crawling peg on the peso and allowed it to trade freely. The currency weakened 38 percent since the move, but remains stronger than most analysts had forecast.


•Macri has said Argentina is on the verge of exiting a year-long recession and should grow more than the 2.7 percent forecast by the International Monetary Fund in 2017. Still, the government last year had to revise down its projections for a recovery as the reforms Macri implemented damped demand.
•The central bank has managed to slow inflation after ratcheting up a key interest rate last year. But core inflation has remained unchanged in the past few months.

•The government expects to post a 4.2 percent deficit in 2017 as spending remains high to pull the economy out of its slump.


•“We’re still holders, we’re still buyers of Argentine debt,” said Jim Dondero, the president and co-founder of Dallas-based Highland Capital Management LP, which oversees $15 billion. “We’re optimistic. We characterize Argentina as ‘exceeded expectations’ on the regulatory and reform side. We continue to be optimistic overall for spread compression on the debt side.”
•“The fast pace at which they took financial and political action has already brought huge gains to the country,” said Gerardo Rodriguez, a former Mexico Deputy Finance Minister who now manages emerging-market funds for BlackRock Inc. in New York. “Now, the next stage of changes will be harder because making changes on the margin is always more complicated. Especially in a context of slow economic growth.”
•“I’m cautiously optimistic, on concerns that the government might not be able to achieve its targets for growth and inflation,” said Sean Newman, who helps manage $1.4 billion in emerging markets debt at Invesco Advisers Inc. “Their expectations are a bit more optimistic than what might actually occur.”

By Nicolás Misculin
Jan 19, 2017
Argentina’s Foreign Minister Susana Malcorra shakes hands with a crew member of the Islas Malvinas ship as they approach Argentina’s Carlini Base in Antarctica, January 12, 2017. Picture taken January 12, 2017. REUTERS/Nicolas Misculin

On King George Island in Antarctica, the thunderous sound of ice sliding off the Fourcade Glacier and crashing into the icy water bordering Argentina’s Carlini research base serves as a daily reminder of a warming climate.

The glacier has retreated 500 meters (1,640 feet) over 25 years, scientists working on this island just north of the Antarctica Peninsula say, affecting an entire ecosystem of algae, sea lions and penguins, as well as raising sea levels.

“This glacial retreat at Potter Cove releases a mass of fresh water that alters salinity levels and unleashes sediment … changing the abundance and diversity of wildlife,” said Rodolfo Sanchez, director of Argentina’s Antarctic Institute.

The Antarctic Peninsula suffered the most severe temperature variation in the world, with average temperatures rising 2.5 degrees Celsius in 100 years, according to Sanchez, who accompanied Argentina’s Foreign Minister Susana Malcorra and journalists to Carlini.

The European Union’s Copernicus Climate Change Service said 2016 was the hottest on record by a wide margin.

An iceberg the size of the U.S. state of Delaware is poised to break off from the Larsen C ice shelf, an event that will fundamentally change the peninsula’s landscape, Welsh scientists said earlier this month.

Scientists at Carlini, the largest research center of Argentina’s 13 Antarctica bases, refer to ice blocks covering the base’s beach in white before they melt as “debris” because of their role in transforming the region’s fauna.

Widespread deaths of shrimp-like krill have jeopardized the food supply for mammals and birds at a protected wildlife reserve on King George Island, known in Argentina as May 25 Island.

Javier Negrete, a marine mammal specialist, said the colony of female elephant seals that normally come to the base between September and November to give birth was reduced by some 30 percent since 1995 to 320 last year.

“It’s not clear if the animals are disappearing or relocating,” he said.

Meanwhile, habitat for Emperor and Adelie penguins is shrinking while King penguins and other species that are common in warmer climates are traveling farther south.

For human visitors, the changes observed over a quarter of a century at the Carlini base have been abrupt.

“I started coming here in 1990. It snowed, but it did not rain… now in the summer it is raining all the time,” said Sanchez.

By Eliana Raszewski
Jan 19, 2017

A Jewish community center in Buenos Aires was briefly evacuated after a false bomb threat on Thursday, Argentina’s Jewish community association AMIA said in a statement, a day after dozens of similar episodes were reported in the United States.

The threat also came a day after the two-year anniversary of the mysterious death of prosecutor Alberto Nisman, who had been investigating whether former President Christina Fernandez tried to cover up Iran’s alleged role in a 1994 attack on another AMIA building in Buenos Aires that killed 85 people.

The AMIA statement said police had received an anonymous phone call threatening a center for senior citizens near the AMIA building that was attacked nearly 23 years ago.

The history of the attack “obliges this institution to demand the highest levels of security and prevention, and to pay the utmost attention to this type of provocation,” the statement said.

Iran denies any role in the 1994 attack. Nisman’s death is still being investigated, and an appeals court revived his case against Fernandez last month.

Twenty-seven Jewish community centers in 17 U.S. states reported receiving false telephone threats on Wednesday, prompting evacuations and an FBI probe into the second wave of hoax attacks to target such facilities this month.

By Fabian Cambero
Jan 19, 2017

Chile is looking at boosting energy exports to Argentina and connecting with electricity grids in neighboring countries, as it seeks to capitalize on friendly relations to drive down prices, the energy minister said Thursday.

Chile, which has almost no hydrocarbons of its own and an energy-intensive copper mining industry, has struggled for years with high power prices.

But a shift towards renewables and warming relations with neighboring countries is starting to take some of the pressure off.

Last year, Chile began exporting gas to Argentina for the first time in order to meet elevated winter demand, sending 361 cubic meters.

It also supplied 101 gigawatt hours of electricity.

“The company that exported electricity has already asked permission to export again and (state energy firm) ENAP is finalizing negotiations to sell gas again to Argentina,” Energy Minister Andres Rebolledo told journalists at a briefing on Thursday.

In coming weeks, Chile will suggest a program of energy swaps with Argentina, allowing for energy exports in both directions in relevant areas along the countries’ shared 5,200 kilometer (3,230 miles) border, Rebolledo said.

Argentina used to be an important supplier of gas to Chile, but cut off exports in the mid-2000s after its own supply faltered.

Chile and Peru are also looking at connecting border towns on the same electric grid, in a possible first step towards greater electricity integration, said Rebolledo.

“Today, there is a favorable political-economic context to build the bases for what could be a regional electric connection,” he said.

By Tracy Rucinski
Jan 19, 2017

A U.S. bankruptcy judge denied on Thursday a request by Peabody Energy Corp (BTUUQ.PK) shareholders to order the appointment of an official equity committee in the coal miner’s Chapter 11 restructuring, crushing hopes of a recovery for investors.

Shareholders led by hedge fund Mangrove Partners had urged the creation of an official committee, which would receive money from Peabody for lawyers and advisers and could help craft a reorganization plan.

At a hearing in St. Louis, Mangrove cited several paths for a potential recovery for Peabody shareholders given a rise in coal prices.

In rejecting the request, U.S. Bankruptcy Judge Barry Schermer asked why more money should be spent on legal fees when unsecured creditors such as Aurelius Capital Management and Elliott Management accept that they will not be paid in full.

The two funds, among the most litigious on Wall Street, spent years battling Argentina in U.S. courts over the country’s 2001 default.

“Aurelius and Elliot are not used to leaving money on the table,” Schermer said. “Look at Argentina.”

In a bankruptcy, unsecured creditors are the last on the totem pole for recovery. They would have to be repaid in full for anything to be left for shareholders, who generally lose their entire investment.

In the case of Peabody, unsecured creditors will recover about 30 cents on the dollar.

The coal industry has been recovering from weak prices that pushed three of the four largest U.S. producers into bankruptcy over the past two years.

Many of the dozens of bankruptcies filed by energy companies in the past year have involved similar campaigns by shareholders who have pointed to rising commodity prices to justify the appointment of an official equity committee.

Few, however, have won court approval.

Peabody hopes to exit bankruptcy in April, a year after filing for bankruptcy, with a plan to cut $5 billion of debt and raise capital from creditors with a $750 million private placement and a $750 million rights offering.

Peabody shares will be canceled and replaced with new stock which will be owned by creditors, the majority of which support the reorganization plan.

The shares closed up 2.8 percent at $3.98 in over-the-counter trading on Thursday, well off session highs.

21 January 2017

The flat-footed economy is pulling dancers off the floor

WHEN couples tango outdoors in Buenos Aires, it is usually to cadge coins from tourists. A recent display, outside the city hall, had a new purpose: to draw attention to the plight of the city’s milongas, tango events where the dancers’ only audience is other dancers.

Perhaps 150 milongas take place weekly in dance halls and community centres across the capital, either in the afternoons or after midnight. “They are the heart of the tango,” says Julio Bassan, president of the Association of Milonga Organisers (AOM). And they are in trouble.

With a weak economy and high inflation cutting into incomes, attendance fell by as much as half last year, Mr Bassan reckons; 17 milongas closed. “When there’s so much uncertainty, the first thing that people cut back on is recreation,” says Jimena Salzman, who runs the Milonga de las Morochas (“Milonga of the Dark-Haired Women”). She charges an entrance fee of 100 pesos ($6.25), the cost of a cinema ticket. That puts some people off. “I love to dance, but I need to eat,” says Augustín Rodrigo, a teacher, who has reduced his daily tangoing to twice a week.

A milonga is a dance as well as an event, a forerunner to the tango that mixes Cuban, African and European influences. In tango’s heyday, some 70 years ago, milongas attracted thousands of dancers. Club Huracán in the city’s south had seven dance floors. Some cling to tradition. A man must invite a woman to dance with a cabeceo (nod). If she accepts, the pair will dance anti-clockwise to a tanda, or set of three or four songs. A cortina, a few seconds of music, signals the end of a set, during which the man escorts his partner back to her seat.

Few milongas are so conservative now. Young milongueros prefer modern tango, which mixes the music of classical composers like Carlos Gardel, who died in 1935, with electronic beats. But the young come less often. In an age of dating apps, fewer find mates in milongas.

Tango itself is in no danger. Glitzy shows are a daily event in Buenos Aires. But campaigners say neighbourhood milongas are tango’s spiritual home. On December 7th the city council passed a “milonga promotion law”. It sets up a registry and offers tax exemptions and 9m pesos a year of financial aid from the budget. Like it or not, taxpayers will help keep milongas alive.

By Tom Azzopardi
19 Jan 2017

Chile and Argentina are advancing in talks to agree on reciprocal exchanges of electricity and natural gas between the two countries, Chilean Energy Minister Andres Rebolledo said Thursday.

Speaking to correspondents in Santiago, the minister said he will present Argentine counterpart Juan Jose Aranguren next week with a draft proposal for regulations allowing such swaps.

“It would be very interesting to have a model that would allow you to sell electrons or molecules of electricity or gas at one point and import them at another,” Rebolledo said.

A decade ago, Chile was a major importer of natural gas from its neighbor, but flows along the pipelines were reversed last year as Argentina struggles with a lack of capacity in its energy infrastructure.

Between May and August last year, Chile exported 361 million cu m of natural gas to Argentina, which had been imported as LNG from Trinidad and Tobago and the US.

State energy firm ENAP is currently in talks with its Argentine counterpart ENARSA to repeat the exports this year.

Chile also exported 101 GWh of electricity to its neighbor along an existing line to northwest Argentina.

But greater synergies could be gained by balancing imports and exports at different points along the border.

“This is super attractive as our country breaks up in the south we are not physically integrated,” Rebolledo said.

ENAP has discovered significant reserves of unconventional gas in Chile’s southernmost Magallanes region, which is much closer to Argentina’s Patagonia than the Chilean capital Santiago, 2,000 km to the north.

Argentina could export gas from its Neuquen field to southern Chile via the Gas del Pacifico pipeline as it lacks sufficient internal domestic capacity to move that gas to Buenos Aires.

Chile is also keen on developing an interconnection between its northernmost city Arica and the Peruvian city of Tacna, 50 km away. The line would also allow Chile to export excess solar power to its neighbor during the day, receiving electricity generated from Peruvian natural gas at night.

Broader energy integration across the region would require the development of a lateral regulatory framework. But Rebolledo said recent economic and political developments made it a favorable time for such a deal.

Argentina, Brazil and Peru have also gained new pro-business presidents since the end of 2015.

January 20, 2017

LONDON, Jan 20 – Argentina is on track to meet its 3.5 percent growth target this year, and should remain immune to the rising tide of protectionism in the United States, Treasury Minister Nicolas Dujovne told Bloomberg TV on Friday. “We are pretty confident that the economy will grow in 2017 close to 3.5 percent, that’s the figure that was included in the budget, with 17 percent inflation, and we are on track to achieve those two objectives,” Dujovne said from the World Economic Forum in Davos.

He added that there were likely to be some moves towards protectionism under incoming U.S. President Donald Trump but the impact on Argentina would be marginal because it remains a relatively closed economy. Dujovne also expects Argentina’s bond yield spreads to compress further, citing the country’s fiscal consolidation as the government’s reforms gain traction. “The economy is showing signs of recovery,” he said.

By Brendan O’boyle
January 19, 2017

Activists say recurring shortages of crucial drugs are partly due to administrative struggles at the national health ministry.

For nearly a year, HIV positive Argentines have endured what advocates call a “crisis” and a “national emergency.” Shortages and delays in the delivery of antiretroviral drugs have beleaguered many who depend on them to stay healthy, sparking public outcry and a protest outside the Health Ministry in Buenos Aires in December.

Since then, officials from the ministry have met with representatives from groups at the front lines of the fight against HIV, and promised that the shortages have been addressed. However, reports of missing medication persist. On Jan. 17, the health minister of Chubut province, in southern Argentina, said in an interview that the national Health Ministry had not sent shipments of drugs for HIV, cancer and tuberculosis. While Argentina has received due applause for providing universal free HIV treatment, advocates of citizens living with the virus are wary of the ministry’s continued assurances in light of the recurrent crisis, which they say is evidence of burdensome bureaucracy and poor leadership.

“We’ve had shortages in the past, but never of this magnitude,” said Lucas Gutiérrez, a member of the National Front for the Health of People with HIV, a coalition of five HIV, women’s and LGBT advocacy groups that formed in response to the lack of medication, which has primarily affected those who aren’t covered by private insurance. “We want solutions.”

After meeting with the National Front group on Jan. 10, Dr. Carlos Zala, the Health Ministry’s AIDS program director, told AQ that there were no actual shortages of HIV drugs in the country. He said reports of missing medication were due to supplier delays and bureaucratic roadblocks, such as shipments of drugs to government pharmacies falling behind as they await various signatures of government officials.

“There isn’t a lack of economic means or political will to purchase the medication,” Zala told AQ. “There have been some administrative delays in its purchase, with some of that responsibility being ours and some not.”

For Marcela Romero, a regional coordinator for the Latin American and Caribbean Network of Transgender People, such delays can be dangerous. Romero told AQ that delays result in patients receiving only a fraction of their prescribed dosage at a time. This heightens the risk of an interrupted dose, which diminishes the drug’s effectiveness.

Romero and other HIV advocates say much of the problem is administrative. Kurt Frieder, executive director of Fundación Huesped, a human rights group focused on HIV/AIDS prevention, told AQ that shortages were partly due to disorganization at the health ministry, noting that the purchase of necessary drugs had “not been made in due time.” Others say the government’s response once shortages have become apparent has been too slow. Matías Muñoz, a national coordinator for the Argentine Network of Positive Young People (RAJAP), said that it took months – and eventually the December protest – for the ministry to respond to their complaints of shortages that they began seeing in March 2016.

While not without its challenges, Zala told AQ that the Health Ministry has been able to provide regular treatment for more than 95 percent of the some 55,000 Argentines with HIV who don’t get treatment through private insurance or social security. The ministry was “very satisfied” with that percentage, Zala said.

For Muñoz, from RAJAP, the goal should be 100 percent.

“Whether it’s one person or a million, Zala’s responsibility is to make sure we all have our treatment,” Muñoz told AQ.

HIV advocates aren’t the only ones to suggest missteps at the Health Ministry in light of recurring scarcity. Dr. Daniel Gollán, the health minister under former President Cristina Fernández de Kirchner, recently called the current ministry the “worst in the country’s history,” criticizing what he said were steps to “shrink and privatize” the country’s healthcare system.

Zala, meanwhile, attributed some of those complaints in part to the country’s political polarization and attempts to discredit the Macri administration.

Most Argentines living with HIV, meanwhile, are probably more concerned with getting their medicine than politics. There may be reason to believe that a recent restructuring at the Health Ministry could help reverse the trend of medicine delays. The resignation of deputy health minister Néstor Pérez Baliño was officially announced on Jan. 9. According to Argentine newspaper Página 12, the departing official said his resignation was part of a division of his Community Health department, which he oversaw and manages 70 percent of the ministry’s budget, into two smaller units. Time will tell whether this will decreases the kind of bureaucracy observers say has hindered the provision of medicine. If not, shortages may keep returning, which could prove a tough pill for everyone to swallow.

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18 junio, 2016

• 21/05/2016 |

Fearless in the face of Massera

• By Santiago Del Carril

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

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

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

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

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


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

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

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

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

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

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


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

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

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

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

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


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

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

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


— ———————-








By Taos Turner and Santiago Perez
8 June 2016

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Roula Khalaf
June 8, 2016

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

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

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

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

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

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

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

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

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

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

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By Robin Wigglesworth and Elaine Moore
June 7, 2016

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

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

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

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

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

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

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

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

Dealing with creditors

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

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

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

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

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

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

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

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

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

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

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

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

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

Group action

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

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

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

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

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

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

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

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

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

Voluntary adoption

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

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

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

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

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

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

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

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

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

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

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By Eliana Raszewski and Nicolas Misculin
June 7, 2016

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

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

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

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

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

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

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

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7 June 2016

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

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

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

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

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

Building trade bridges with the EU

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

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

New governments, new relationship between Argentina and Brazil

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

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

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

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

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

By Charles Newbery
7 June 2016

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

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

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

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

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

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

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

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

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

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By Andrés Oppenheimer
27 May 2016

When Argentine President Mauricio Macri recently blessed his foreign minister Susana Malcorra’s candidacy for secretary general of the United Nations, the joke in Argentina was that the country already has a Pope (Francis) and the world’s best soccer player (Lionel Messi) so it was only natural that it should seek the top U.N. job.

But judging from what Malcorra told me in an interview earlier this week, her candidacy for the top U.S. job is a serious matter.

It means that a highly qualified and well liked Latin American woman will join more than half a dozen other candidates for the U.N. job scheduled to be left vacant by Ban Ki-Moon at the end of the year. But it also raises possible conflict-of-interest questions regarding Malcorra’s stands on the Venezuelan crisis at a time when she needs Venezuela’s support to get the U.N. job.

Granted, right now Malcorra is not a front-runner for the job because, under the U.N. practice of granting the secretary general’s position to every region of the world on a rotating basis, it’s Eastern Europe’s turn to occupy the top U.N. position.

Malcorra’s candidacy would have a chance if Eastern European countries can’t reach a consensus to propose a candidate from their own region, diplomats say. Latin America is one of the few regions that has had only one U.N. secretary general, Peru’s Javier Perez de Cuellar, in the 1980s.

Malcorra has great credentials for the top U.N. job: An electrical engineer by training, she worked for many years as an IBM executive in Argentina, then joined the United Nations 12 years ago and became Ban Ki-Moon’s chief of staff in 2008. She was appointed Argentina’s foreign minister in December.

But critics say Malcorra has a conflict of interest in her current U.N. campaign, because she needs the support of Venezuela — a member of the U.N. Security Council — at a time when Argentina is a key player in the Organization of American States’ discussions to press the Venezuelan regime to comply with regional democratic agreements.

Human Rights Watch director Jose Miguel Vivanco has said that Malcorra’s participation in a recent OAS debate about Venezuela was “very disappointing.” Others say she has softened her stance because she needs Venezuela’s support at the U.N. Security Council.

Asked about that criticism, Malcorra told me: “I continue to have a very firm position” on Venezuela. She added: “We do not think that Venezuela’s crisis can be solved without the two sides [the government and the opposition] sitting at the table and finding a common way out.”

I asked her whether she supports the Venezuelan opposition’s plan to convene a recall referendum to oust President Nicolás Maduro, and whether she will back the opposition’s petition that the OAS apply its democratic charter on Venezuela, a measure that could lead to Venezuela’s suspension from the organization.

“On the recall referendum, it’s part of the democratic instruments that are part of the Venezuelan Constitution,” she said. “So we think that this process must go forward, with all guarantees provided for by the [Venezuelan] institutions.”

As for the OAS applying its democratic charter on the Venezuelan regime, Malcorra said the focus right now should be on the recall referendum. “We believe that the OAS Democratic Charter is an instrument that should be used if there are certain conditions, and from our perspective, these conditions are not there,” she said.

Asked whether she shouldn’t step aside temporarily as foreign minister while she campaigns for the U.N. job, Malcorra said her rivals have not taken a leave from their respective jobs either.

My opinion: Malcorra would make a superb U.N. secretary general, but it’s hard to believe that she can follow Argentine President Marci’s campaign vows to support democracy in Venezuela while she seeks the support of the Venezuelan regime and its allies for her U.N. candidacy.

Malcorra is right in pointing out that other candidates have not taken a leave of absence, and that it would be unfair to ask that only she do that. But perhaps all U.N. candidates should step aside, because there are legitimate questions on whether they can conduct their countries’ foreign affairs or U.N. responsibilities fairly without trying to woo the countries whose votes they need to win.

By Steve Johnson
May 27, 2016

Revision of figures from Fernández administration suggests 40% chasm in GDP per head

Commiserations Argentines. You are now poorer than the Chinese, Bulgarians, Azerbaijanis, Belarusians, Turkmen, Mexicans, Malaysians and Gabonese, not to mention your beloved neighbours in Brazil.

All is not lost, though. You are still a smidgen better off than those in Botswana and war-torn Libya.

Argentina’s statistics agency, Indec, will next month publish revised gross domestic product data as a part of an overhaul of official figures produced under the reign of Cristina Fernández de Kirchner, the former president, which are widely perceived as cooked.

The revised data will tell Argentines how wealthy their country really is, rather than how rich the previous regime, in power for eight years until December, claimed it was.

If a joint project between Harvard University and the University of Buenos Aires is correct, the difference is large.

“We are less rich than the former administration tried to show,” says Ariel Coremberg, director of the project, known as Arklems+Land, and an adviser to the new government of president Mauricio Macri. “Since 2007, official economic statistics in Argentina, particularly on consumer inflation and GDP, have been subject to political manipulation.”

Exactly how bad the news is depends on one’s preferred measure. Based on GDP at constant prices, the Arklems team calculates that output was about 12.5 per cent lower in 2015 than the official data suggest, as the first chart shows.

This would reduce GDP from $586bn to around $513bn, based on data from the International Monetary Fund.

However, the previous government did not just manipulate the raw GDP data itself, but also the exchange rate it was measured at, preferring the official pegged rate (9.8 pesos to the dollar in 2015) to the real black-market foreign exchange rate (14.5 just before the currency was freed by Mr Macri in December. A dollar buys 14 pesos now).

Using the real exchange rate, Mr Coremberg and his team calculate that Argentina’s GDP per capita in 2014 was just $7,399, rather than the $12,510 the World Bank says it was that year, based on official Argentine data, a gulf of 40.9 per cent.

This would be enough to send the country spiralling from 56th in the global rankings to 78th, placing it below the countries mentioned above as well as the likes of Suriname, St Lucia and Grenada and the global average GDP per head of $10,739.

Worse still, by this measure Argentines are now poorer than they were in 1998, before the start of the country’s economic downturn that led to its 2001 default, when income per head was $8,303, as the second chart shows.

Factoring in Arklem’s data also throws up a number of other nasty surprises.

According to Indec, the country’s poverty rate fell seamlessly from 50.9 per cent in 2003 to 29.2 per cent in 2006 and 4.7 per cent by 2013.

The Arklems data suggest the initial stage of the decline, to 29.2 per cent in 2006, is correct, but that the real poverty rate has flatlined since then, sitting at 29 per cent as of 2015.

“The real poverty rate is nearly 30 per cent. The official figures show 4.7 per cent, nearly the level of Sweden and Norway,” says Mr Coremberg.

The idea fostered by the Fernández government that Argentina was Latin America’s “growth champion”, expanding at Chinese-style rates, also looks a little hollow.

The Indec figures suggest Argentina’s GDP expanded at a compound rate of 99.1 per cent between 2002 and 2012, the fastest rate in Latin America, ahead of Peru at 87.2 per cent and a continental average of 46 per cent.

To be fair the Arklems database does still show decent growth of 71.1 per cent over this period, but that is only enough to place the country third in the region, behind Peru and Uruguay.

Over the period 1998 to 2012, though, the picture looks very different. Rather than expanding at a compound rate of 62.5 per cent, Arklems thinks Argentina really grew by just 42.1 per cent, placing it rock bottom in Latin America, as the final chart shows.

“Argentina had an impressive recovery from 1998 to 2002 but when you compare peak 2015 to 1998, the last maximum, it grew at only 2 per cent a year instead of Chinese rates of 8 per cent,” says Mr Coremberg.

“Official GDP growth between 2007 and 2015 was nearly 30 per cent [over the eight-year period], but following traditional methods and sources it was 15 per cent.

“The last decade did not show the highest GDP growth in the country’s history. Argentina was not Latin America’s growth champion,” adds Mr Coremberg.

According to Arklems, the prime driver of the overstated GDP data was not the country’s widely derided official inflation data, even though Arklems calculates that inflation between December 2006 and December 2015 was 506 per cent, somewhat higher than Indec’s 133 per cent figure.

Instead, the Arklems team suggest that official growth figures were calculated using erroneous volume figures for indicators such as manufacturing production and trade flows.

“The difference [between the data sets] is not a random event. It’s due to manipulation in every industry,” Mr Coremberg says.

May 28th 2016

A new start for an old relationship

Don’t chime for me, Argentina

WITH its green bell tower and royal coat of arms, the Torre Monumental in Buenos Aires would not look out of place in a British market town. The 60-metre (200-foot) Palladian clock tower was a gift from the city’s British community to mark the centenary of Argentina’s 1810 revolution (though it was completed in 1916). On May 24th this year around 200 people gathered to commemorate its centenary.

The celebration comes at a rare moment of warmth in Anglo-Argentine relations. Argentina’s newish president, Mauricio Macri, has reasserted his country’s claim to the Falkland Islands (known in Argentina as the Malvinas), which belong to Britain. But, unlike his pugilistic predecessor, Cristina Fernández de Kirchner, he wants to co-operate with Britain on such areas as trade and fighting drug-trafficking. Argentina’s foreign minister, Susana Malcorra, met her counterpart in London on May 12th, the first such meeting since 2002. Flights to the Falklands may resume after a 13-year interruption.

A hundred years ago Britain and Argentina were complementary economic superpowers. Britain built Argentina’s railway, which helped make Argentina one of the world’s ten richest countries, and bought 40% of its exports, mainly beef and grain. In 1914 Harrods, a fancy department store, opened its first overseas branch in Buenos Aires.

Signs of this former commercial camaraderie are everywhere. Red post boxes appear on street corners. Football, the national sport, is an English invention, as are some Argentine teams. The original Newell’s Old Boys, Lionel Messi’s first club, were the pupils of a Kent-born teacher. Posh porteños (Buenos Aires residents) play cricket at the Hurlingham Club.

The Falklands war, triggered by Argentina’s invasion of the islands in 1982, ended the bonhomie. Signs of Britishness were expunged. Bar Británico, once frequented by British railway workers, changed its sign to read Bar tánico. The Torre de los Ingleses became the Torre Monumental.

Diplomatic relations were restored in 1989 but Ms Fernández and her late husband, Néstor Kirchner, who was president before her, interrupted the rapprochement. In 2012 Argentine veterans broke into the tower. Now the city government wants to repair the damage. Mr Macri hopes to do the same for Argentina’s battered relationship with Britain.

By Marianna Parraga
May 26, 2016

May 26 Argentina aims to eliminate its need for crude imports while usincreasing domestic oil output to 653,000 barrels per day (bpd) in 2025, a 23 percent increase from 2015, an official from the Energy Ministry said on Thursday.

The South American country is working to cover its energy needs after becoming a net importer three years ago due to falling crude and gas output amid a low investment environment.

To achieve that, it needs to boost local output to cut crude imports and start reducing costly purchases of liquefied natural gas (LNG) currently made through tenders on the open market and from neighboring Chile.

“We don’t believe in self sufficiency. We believe in supplying the country’s needs,” said Daniel Redondo, Energy Planning Secretary from the Energy Ministry, at a conference in La Jolla, California. “Self sufficiency would imply to have an exportable surplus and that is not going to happen soon.”

At the end of 2015, Argentina’s energy imports surpassed exports by $6.5 billion, Redondo said.
The ministry expects Argentina will be forced to keep buying costly LNG for at least five years. It offered to buy some 47 cargoes so far this year and it could buy up to 80 cargoes depending on the demand, also adding extra imports of gas oil in the coming weeks.

But incentives given to Argentine producers to enable them to sell their crudes domestically at a price of $55 to $67.50 per barrel would help reduce oil imports.

Redondo said this incentive will exist until the international benchmark, Brent crude which settled at $49.59 on Thursday, surpasses some $55 per barrel. Companies operating in Argentina, including Pan American Energy LLC, consider these domestic purchase prices attractive enough, the firm said.
Refining firms have imported 2 million barrels of African crudes this year to feed plants with light crude grades that are not abundant in Argentina, and they plan to import at least 1 million barrels more in the second half of the year.

Talks between producers and refiners are being held under the Energy Ministry’s supervision to ensure all light oil produced domestically will be processed in the country. And new deep conversion units are being installed at local refineries to process more domestic heavy crude.

The new government of Mauricio Macri is trying to attract foreign capital to the oil industry after a decade of low investment and the nationalization of its main producer, YPF.

It also wants to limit purchases of foreign petroleum to gas imports from Bolivia, considered cheap at a price of $3.2 per million BTU, and gasoil imports for winter.

The Energy Ministry estimates that some $50 billion will be needed until 2025 to develop upstream, downstream and electricity projects, including a 200,000-bpd expansion to the country’s refining network and new thermal generation plants that were recently offered.

Argentina this month received 60 proposals from firms interested in installing power plants with a joint capacity of 6,000 megawatts, compared with 1,000 megawatts originally offered, the secretary said.

“In the energy sector we inherited a legal, institutional and functional disorder. Roles and responsibilities are not clear, decisions are discretionary and there’s a lack of transparency,” Redondo said. “We are trying to go back to normal.”

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By Nicolas Misculin
May 26, 2016

May 26 Argentina’s central bank announced it would boost banks’ reserve requirements in a bid to cut sky-high inflation in Latin America’s third-largest economy.

The central bank said it would raise reserve requirements for in-demand deposits by 2.5 percentage points in June and again in July from its current 17 percent level.

Requirements for fixed-term deposits will increase 1.5 percentage points next month, and again the following month, from 13 percent currently, the bank said in a statement.
Center-right President Mauricio Macri took office in December promising to tackle a yawning fiscal deficit and dizzying inflation.
Finance Minister Alfonso Prat-Gay has said the pace of consumer price gains should fall to just over 1 percent by the end of the year.
But private data this month showed monthly inflation in Argentina’s main population center of Buenos Aires approached 7 percent in April.

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By Charlie Devereux
May 26, 2016

* Amount banks must keep on deposit raised by up to 2.5 ppts
* Measure aimed at soaking up excess pesos to curb inflation

Argentina’s central bank raised reserve requirements by as much as 2.5 percentage points as it seeks soak up excess pesos and rein in inflation of about 40 percent.

The amount banks must keep on deposit at the central bank was raised 1.5 percentage from about 13 percent for time deposits and 2.5 percentage points from about 17 percent for current accounts, the central bank said in an e-mailed statement. Banks will need to make a similar increase in July, the bank said.

Central bank President Federico Sturzenegger began lowering benchmark interest rates that went as high as 38 percent in March as concern of an economic contraction grows amid companies’ investment cuts. Raising reserve requirements would allow the bank to continue reducing rates without abandoning its monetary contraction plan, said Maximiliano Castillo, director of Buenos Aires-based consultancy ACM

“It’s another way of sterilizing pesos without having to raise rates so high,” Castillo said by phone from Buenos Aires. “It complements the high rates.”

Argentina’s central bank cut interest rates in its weekly note sale by the most this year as it said that several indicators showed that underlying inflation continues to slow. The bank excluded foreign investors from participating in the auction as a surge in dollar inflows causes the peso to gain, dimming the outlook for exports.

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By Carolina Millan
May 26, 2016

* Swaps were last triggered in July 2014 after second default
* At least two entities are selling the CDS, according to CMA

Argentina is now creditworthy enough that investors are willing to sell insurance on its debt.

The country’s return to global capital markets took another step forward this week when credit-default swaps, which investors use to speculate on a borrower’s ability to repay debt and hedge against losses, were quoted Wednesday for the first time since they were settled in September 2014 following the country’s second default in 13 years.

The contracts were quoted at 435 basis points as of 1:21 p.m. in Buenos Aires, according to prices compiled by CMA, meaning a buyer would pay about $435,000 to insure bonds with a face value of $10 million. The price is in line with the cost of insuring debt from El Salvador, which is rated two steps higher by S&P Global Ratings, and compared with 354 basis points for Brazil, the region’s largest economy.

“Going forward, Argentina spreads should fall and approach those of Brazil,” said Joaquin Almeyra, a fixed-income trader at Bulltick LLC. “There’s plenty of room for spreads to compress further.”

Argentina sold $16.5 billion of overseas bonds last month, a record for a developing nation, returning to the international market for the first time in 15 years after reaching a settlement with creditors the country defaulted in 2001. Argentina’s CDS were last triggered almost two years ago when a U.S. judge’s ruling barred it from servicing its debt without resolving the dispute, and sellers of the contracts had to pay $532 million.

CMA started quoting prices for the credit-default swaps on Wednesday after receiving data from at least two sellers, according to Jav Bose, the head of CMA content and analytics. Argentina is not among the top 1,000 entities captured by the Depository Trust & Clearing Corp.’s central registry for the default swaps market.

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22 mayo, 2016


2. ARGENTINA: Opposition Bill Marks Challenge to Macri (The Wall Street Journal)













By Benedict Mander in Buenos Aires
May 19, 2016

Former president Fernández faces allegations of embezzlement, bribery and money laundering

Across Latin America, powerful political figures are falling foul of a renewed zeal for attacking corruption. Politicians are under fire from Mexico to Chile, with the downfall of Dilma Rousseff in Brazil this month over accusations she fiddled national budget figures only the latest example.

Now Cristina Fernández de Kirchner, who ruled Argentina for eight years until last December, and several former associates, face allegations that include embezzlement, bribery and money laundering.

The first formal charges against Ms Fernández last week over the sale of future dollar contracts by the Central Bank below the market price are just the beginning of legal complications for officials of the former administration.

“She will end up in prison,” said Elisa Carrió, a key figure in the coalition of the new government of President Mauricio Macri, and an outspoken crusader against corruption.

“She is involved in almost all the lawsuits” connected to the previous government, Ms Carrió added, arguing that it was ultimately Ms Fernández who awarded all the public works contracts where corruption is suspected.

Indeed, a legal noose is tightening around Ms Fernández, who is implicated in several other cases as well as the Central Bank’s controversial derivatives trading, which incurred losses for the state of at least $5bn in a bid to prop up the currency in the final months of her government.

The fiery populist says the allegations against her are designed to smear her legacy and distract attention from soaring inflation, lay-offs and rising poverty, as market-oriented reforms including a sharp devaluation and subsidy cuts take their toll.

Meanwhile, Ms Fernández and her supporters point to Mr Macri’s involvement in the so-called Panama Papers scandal, with Argentina’s new business-friendly leader under investigation for alleged ties to offshore companies. The prosecutor in the case said this week that he will open up a new line of investigation after media reports that the companies are still active, despite Mr Macri’s claims that they were closed down years ago.

Observers point to parallels with the situation in Brazil, where Ms Rousseff has described her impeachment as a “coup”, while several cabinet members in the new administration of Michel Temer face corruption accusations even as they seek to cure the country’s economic woes.

“These investigations will extend to other officials close to the former president but fall short of a serious and extensive investigation such as the lava jato case in Brazil since judges are politically motivated and not fully independent,” said Daniel Kerner at Eurasia Group, a political risk consultancy in New York, referring to the various different corruption investigations under way.

Other influential former officials that are being investigated over corruption accusations include the Kirchners’ longtime planning minister Julio de Vido, cabinet minister Aníbal Fernández and the vice-president Amado Boudou.

Among the most damaging of the accusations against Ms Fernández relate to alleged money laundering through hotels owned by the Kirchner family. She is also accused of bribery, together with her son Máximo Kirchner, in connection with the case.

“The Kirchners stole in two ways: either keeping a significant percentage of bribes or setting up their own companies that [nominally] belonged to Lázaro Báez,” claims Ms Carrió.

Mr Báez, a close associate of the Kirchner family and a leading government contractor, is in prison awaiting trial after his arrest last month when he landed in Buenos Aires in his private jet to face questioning over accusations of money laundering and overcharging billions of dollars in public works contracts by an average of 20 per cent.

Leonardo Fariña, who claims to have helped Mr Báez launder millions of dollars and whose testimony led to his release from prison in April, told local journalists last month that Ms Fernández was well aware of the scheme that he says was masterminded by her husband and predecessor as president, Néstor Kirchner, whose mausoleum was built by Mr Báez.

Mr Fariña’s testimony led to a series of raids being carried out across Argentina to recover stolen assets, which also revealed that Mr Báez could own as many as 150 undeclared properties.

Ms Fernández has reacted furiously to the allegations leveled against her.

Last month she told a crowd of supporters outside the courts in Buenos Aires after giving evidence: “Every time a popular political movement leaves office or is thrown out of power, the authorities that succeed it systematically discredit its leaders, accusing them of grave crimes that are always linked to corruption, abuse of power and ill-obtained assets.”

2. ARGENTINA: Opposition Bill Marks Challenge to Macri (The Wall Street Journal)
By Taos Turner
20 May 2016

The opposition-dominated Congress approved legislation that would double the cost of laying off private and public employees, handing President Mauricio Macri his first legislative setback since taking office in December.

Mr. Macri, who said the law would spook investors and destroy jobs, is expected to veto it. But the bill’s passage raises questions about whether he will be able to persuade opposition lawmakers in the Peronist political movement to back his initiatives.

In his first months in office, Mr. Macri quickly reversed the nationalistic and interventionist policies of his predecessor, Cristina Kirchner. He was able to do much of that on his own, without the need for Congress.

But since April, Mr. Macri has pushed through unpopular price increases around the capital, making it harder for Peronists to support Mr. Macri. Members of Mrs. Kirchner’s opposition party have claimed his business-friendly policies have created a massive wave of layoffs.

By Carolina Millan
May 19, 2016

* IPO marks first equity offering since Globant SA’s sale
* Financial group raises $280 million in stock offering

Argentina’s Grupo Supervielle SA, controller of lender Banco Supervielle SA, rallied in its trading debut after raising $280 million in the country’s first initial public offering in two years. It sold the shares at the low end of its projected range.

The American depositary receipts climbed 3.6 percent to $11.40 at 12:08 p.m. in New York after the bank sold them for $11 each and issued common shares in Argentina for $2.20 on Wednesday. The bank had aimed to raise as much as $311 million by selling the ADRs for as much as $13 and local shares for as much as $2.60, according to a U.S. filing.

Supervielle’s sale marks Argentina’s first foreign equity offering since Globant SA in 2014 and its first local equity offering since Petrolera Pampa SA in 2013. The company is controlled by the Supervielle family, which entered the Argentine banking sector in 1887. Controlling shareholder Julio Patricio Supervielle will own 62 percent of total capital stock and 85 percent of voting rights after the global offering, according to a May 10 filing.

“We saw enormous interest,” Supervielle said in an interview with El Financiero Bloomberg TV’s Karla Palomo. “The Argentina story is fantastic. The recent regulatory changes have awakened the interest from investors, and we’ve also seen growing interest in our company.”

President Mauricio Macri has overturned several of his predecessors policies in an effort to jumpstart the economy and promote foreign investment. Since taking over in December his government has removed most export tariffs, reduced subsidies on utilities and ended a 15-year standoff with bondholders.

Another financial institution, brokerage Puente, has announced it also plans to do an IPO in 2017 in either London or New York.

Bank of America Corp. and Morgan Stanley organized the sale. Raymond James Financial Inc. was co-manager.

By Anthony Esposito
May 19, 2016

The International Finance Corporation, the private-sector lending arm of the World Bank, expects to make investments of around $800 million in Argentina through December, citing particular investor interest in the country’s renewable energy sector.

“The renewable energy agenda in Argentina is probably the most interesting in the world at the moment,” Lizabeth Bronder, director, Latin America and the Caribbean for the IFC, told Reuters in an interview on Thursday.

Argentina invited bids for projects aimed at creating 1,000 megawatts of alternative energy on Wednesday in the country’s first push toward wind and solar power production needed to help narrow its energy deficit.

Business-friendly President Mauricio Macri, who took the reins of Latin America’s third largest economy in December, implemented a law mandating that renewable energy as a share of power consumption rise to 8 percent by 2018 from 1.8 percent currently.

“What we’re hearing from our clients is that they are very encouraged by the recent move into renewables. There is a lot of biomass available, solar and even wind in the country,” said Alzbeta Klein, global head of agribusiness, manufacturing and services at the IFC.
Macri has sought to do away with the interventionist policies of his leftist predecessor, Cristina Fernandez, and has already lifted capital controls, spurred a devaluation of the peso and cut export taxes.

Between 2012 and 2014 the IFC made no new investments in Argentina.

“So far in our fiscal year, which started in July, it’s been $1.6 billion, including the syndications that we’ve done. We expect probably through the end of the year another $800 million or so in new investment,” Bronder said.
“We are expecting to be able to finance some of the renewable energy that is coming,” she added.

Last month, Argentina returned to global debt markets and paid off ‘holdout’ creditors, 14 years after a massive sovereign debt default that triggered an exit of investors and a wave of litigation.
“The immediate attention to paying out the holdouts and listing in the bond markets has really created a channel for private investment in Argentina, that obviously didn’t exist before,” Bronder said .

Macri has promised that a deal with holdouts will help unleash a wave of foreign investment to revive the stagnant economy

“We are seeing investor interest, and we are seeing them coming in carefully and cautiously but they’re not sitting on the sidelines,” said Klein.

By Taos Turner
19 May 2016

BUENOS AIRES — Argentina’s opposition-dominated Congress on Thursday approved legislation that would double the cost of laying off private and public employees over the next six months, handing President Mauricio Macri his first legislative setback since taking office.

Mr. Macri, who said the law would spook investors and destroy jobs, is expected to veto it on Friday. The setback for Mr. Macri comes as pollsters say Argentines are increasingly worried about the prospect of losing their jobs.

Passage of the jobs bill, dubbed the “anti-layoffs law,” raises questions about Mr. Macri’s ability to pass key economic and political initiatives in a Congress dominated by the opposition Peronist political movement. Mr. Macri’s “Let’s Change” coalition is a minority in both houses of Congress.

“What this shows is that in some ways the government has lost control of the political agenda,” said Nicolás Solari, an analyst at pollster Poliarquía. “Now it’s the opposition that is setting the agenda.”

More than 57% of Argentines supported the legislation while 52% said they fear that a family member’s job was at risk, according to a recent survey by pollster Raúl Aragón.

Later Thursday, the president moved to regain the political initiative, announcing increases in the minimum wage that will raise it 33% by January.

Mr. Macri took office in December after narrowly defeating his Peronist opponent in last year’s presidential election. He quickly reversed the nationalistic and interventionist policies of his populist predecessor, Cristina Kirchner, who nationalized companies and heavily regulated the economy. Mr. Macri eliminated taxes on most farm exports, ended currency controls and replaced Argentina’s central bank president.

But Mr. Macri did much of that on his own, without need for Congress, and his ability to govern smoothly during the remainder of his term will depend on support from Peronist leaders — particularly governors who heavily influence how Peronist legislators vote.

Until now, Mr. Macri has successfully wooed those governors, winning their backing in exchange for promises to improve the economy and invest billions in infrastructure projects across the country. In return, the governors backed a plan by Mr. Macri to settle Argentina’s long-standing conflict with a group of bondholders in the U.S.

But after settling that dispute in April, Mr. Macri slashed subsidies on utility rates, leading to higher gas, electricity, water and transportation prices for millions of people in and around this capital city.

Economists said the move was necessary to reduce Argentina’s budget deficit, but the price increases were unpopular and made it harder for Peronist politicians to support Mr. Macri in public.

“Sales have fallen 20% since Macri became president and we’re afraid of getting laid off,” said Liliana Bartes, 33 years old, who works at a bakery. “I have two kids and if I get laid off I’d end up in the street. I think it’s a good idea to pass the anti-layoffs law.”

“There is not a wave of layoffs in Argentina,” Argentina’s Labor Minister Jorge Triaca said at a congressional hearing last week, adding that private sector job creation has been stagnant for the past five years. “This is the situation we’re in. It’s worrisome because it’s structural but it’s not different today than it was five years ago.”

Argentina’s Modernization Ministry, which is charged with updating the state bureaucracy, hasn’t renewed the contracts of almost 11,000 temporary state workers. Those job cuts augmented concerns about broader job losses in both the private and public sectors.

Debate over the layoffs bill has raised concerns among some investors about political stability in a country where several non-Peronist presidents have been forced out of office early because of virulent opposition from Peronist politicians and allied unions.

But analysts say that isn’t the case and that the administration simply needs to adjust to working with an opposition-controlled Congress and a Peronist movement that is trying to regroup after its defeat in the election.

“This is not a governability crisis, but rather an important sign that the government faces a learning process and needs to learn from it,” said Mr. Solari, the pollster.

The push to pass the bill came largely from members of former President Kirchner’s opposition Victory Front Party, which has loudly criticized what they claim is a massive wave of layoffs caused by Mr. Macri’s business-friendly economic policies.

“We are seeing a lot of layoffs. It’s hard to know how many there are because a lot of companies are getting workers to sign confidentiality agreements when they are let go, so government data do not reflect what is really happening in the job market,” said Victory Front Congressman Héctor Recalde.

Mr. Recalde said price increases are hitting workers and the companies that employ them.

Some business chambers are backing that up, saying that a combination of roughly 40% annual inflation, declining purchasing power and an anemic economy is hurting sales and leading companies to consider layoffs. Last month, retail sells fell 6.6% on the year, according to CAME, a confederation of medium-size companies.

“The decline in purchasing power was felt more than ever,” CAME said earlier this month, citing “numerous layoffs” in both the private and public sectors. “Businesses could not do anything about this at a time when people stopped window shopping.”

In an interview earlier this year, Mr. Macri said he was obsessed about creating jobs. Administration officials have acknowledged laying off thousands of federal workers — who Mr. Macri and most of his ministers have said were paid political activists instead of qualified civil servants — but Mr. Macri has said there is no jobs crisis.

Over the past year, Argentina had a net gain of 60,000 jobs, he said recently. Still, he said such a small increase in jobs for a country of more than 40 million people “is nothing,” but promised that the economy will rebound later this year.

“We’re going through a tough transition,” Mr. Macri said after announcing the minimum wage increase, “but people have faith and are expecting a lot of us.”

19 May 2016

Argentina’s corporate executives, unions and government reached a deal to increase the minimum wage 33% to 8,060 pesos (US$570) per month starting in January, Clarín newspaper is reporting.

Until then, there will be partial increases to 6,810 pesos starting in June, and 7,560 in September, from the current 6,060.

Inflation in Buenos Aires reached 6.5% in April, the biggest monthly increase since 2002 – when the country was going through a political and economic crisis – as President Mauricio Macri’s administration lifted transportation and energy subsidies in the capital’s metropolitan region.

Meanwhile, Macri is expected on Friday to announce his veto to the so-called anti-layoff bill approved on Wednesday by Congress. The law would freeze layoffs for 180 days and require companies to pay double compensation for dismissals.

As if inflation and the general perception of increased layoffs weren’t enough problems for the government, the industrial production indicator sank 6.1% year-on-year last month, hit by the crisis in Brazil (the main market for Argentina’s auto sector), a public works freeze, declining household consumption, and higher energy rates. The four-month accumulated indicator fell 2.1%.

“Argentina’s long-overdue policy tightening – needed to address the country’s entrenched inflation problem – is finally underway, but with the fiscal deficit still large and inflation in excess of 40% y/y, most of the hard work for policymakers is still to do,” UK-based research firm Capital Economics said of Macri’s economic reform.

The firm said that while the president has managed to cut subsidies, end FX controls and the legal battle with holdout funds, reduce taxes on agro exports, and lift imports restrictions in his first six months in office, he has yet to lift price controls on products, rein in social spending, give the central bank an employment and inflation mandate, and release more accurate GDP and inflation data.

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19 May 2016

Argentina’s government will continue to guarantee a wellhead price of US$7.50/MMBtu for natural gas extracted from shale or tight formations, as part of a production stimulus program announced Thursday.

The energy and mines ministry published resolution 74/2016 in the official gazette, guaranteeing the price for any unconventional gas, as well as conventional gas from discoveries made after January 2013.

Drafted by the government of President Mauricio Macri, the measure replaces a similar program implemented under his predecessor, Cristina Fernández de Kirchner.

Amid a global supply glut of natural gas, the idea is to incentivize domestic production – particularly from the Vaca Muerta shale and other unconventional formations – so that Argentina can reduce its hefty natural gas import bill and return to energy self-sufficiency.

Producers will be able to lock in the US$7.50/MMBtu price for new projects until December 31, 2018.

Under the program, the national treasury will cover the difference between prices obtained on the domestic market and the US$7.50/MMBtu price.

The difference between the Macri and Kirchner governments, in terms of natural gas pricing, is that Kirchner subsidized consumption as well as production of the hydrocarbon.

Since taking office, Macri has dramatically scaled back subsidies for residential gas consumers, citing that rates paid by consumers should more closely reflect real production costs.

National oil company YPF reported its first-ever sequential decline in shale hydrocarbon output during the first quarter, but said that tight gas now accounts for 20% of its total gas production.

By Charles Newbery
19 May 2016

Buenos Aires (Platts)–19May2016/241 pm EDT/1841 GMT Argentina’s YPF expects to be able sustain pump prices for fuel at current levels for the rest of the year after large hikes in the first half, as inflation is poised to slow in the second half of 2016.

“We foresee a scenario of slower inflation, and so there will be less necessity for us to raise our prices,” YPF interim CEO and CFO Daniel Gonzalez said at LatinFinance’s Argentina Finance Summit in Buenos Aires.

State-led YPF, which has a more than 55% share of diesel and gasoline sales, raised its pump prices by around 30% in the first five months of this year, along with its competitors such as Axion and Shell.

The right-of-center government of President Mauricio Macri, who took office in December, authorized the hikes to help sustain profits for refiners and service stations after a 45% depreciation of the local currency against the dollar since late last year.

Earlier this month, Energy Minister Juan Jose Aranguren said diesel and gasoline prices could go up further this year if the local currency depreciates more or global oil prices increase.

However, with expectations growing of currency stability, there is optimism that inflation could start slowing in the second half of the year after accelerating to nearly 40% in the first half from 26% in 2015. The speed-up came largely in April and May when the government implemented long-overdue hikes in utility rates, including for electricity and natural gas.

“We don’t see an inflation rate of one digit in the near term, but we expect a decrease in inflation in the next few months,” Gonzalez said.

The price hikes are designed to spur the development of energy resources after years of under-investment during the previous populist-left government, which kept energy priced below international levels between 2003 and 2015.

YPF has been funding most of its capital expenditures out of cash flow, including from its sales at the pump, which has helped it to increase production over the past few years. This year it has held output flat, despite a 20%-25% cut in capital spending.

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By Charles Newbery
19 May 2016

Buenos Aires (Platts)–19May2016/143 pm EDT/1743 GMT Argentina’s Mendoza province, once one of the country’s biggest sources of oil, is seeking to rebuild production by capitalizing on a recovery in investor confidence to offer 50 exploration and production licenses this year.

“We will hold the tenders for around 50 oil and natural gas blocks over the year,” Mendoza Governor Alfredo Cornejo said Thursday on the sidelines of LatinFinance’s Argentina Finance Summit in Buenos Aires. “The idea is that the exploration starts in 2017.”

Of the blocks, some are held under license currently but the operators have not invested in exploration according to the terms of their contracts on the guise of selling them off for a profit. The blocks will be offered to new operators in the tenders, Cornejo said.

“We want to stop the holding of licenses as a real estate business,” he said.

The goal is to rebuild oil and gas production to meet national demand, helping to reduce energy imports, he said.

“We want to supply more oil to the nation,” the governor said.

Argentina has been ramping up energy imports over the past decade, led by diesel and gas, and more recently of light crude from Nigeria.

Mendoza was the biggest source of oil 40 years ago, but it has sagged along with national production since the late 1990s and early 2000s on few finds, limited exploration and maturing reserves. In addition, a populist-left government, which ruled from 2003 to 2015, capped energy prices and restricted the movement of capital and trade, curbing profits and pushing oil companies to invest in countries with better potential.

While production has declined, there is processing and transport capacity available to handle additional supplies, plus human resources, Cornejo said.

While low global oil prices could put a damper on investment, there are expectations of a recovery in prices in the next two years, he said.

“That is why we need to hold the tenders now, so that when prices recover we are going to have more production,” he said.

Argentina is propping up local oil prices at between $54.90/b and $67.50/b, but the lower international prices are limiting the cash for capital expenditures.

In the meantime, there is potential for gas production to rise, given that domestic prices are averaging $5.20/MMBTu, up to $7.50/MMBTu with incentives.

Cornejo said gas production has gone up over the past three years in Mendoza.

“We expect it to go up more,” he said. “There is a market for the gas. Argentina has a gas deficit and we need to cover it.”

Argentina is running a 30% gas deficit that it is plugging by importing about 30 million cu m/d from Bolivia, Chile and off the global LNG market.

Cornejo said he expects the first investments through the tenders to be more speculative, as companies get a foothold in the country or expand acreage. But as the economy recovers from a recession, as is expected next year, and there is more confidence of the sustainability of the policies of the new right-of-center government of President Mauricio Macri, then larger and more long-term investment will come, he said.

“We have hopes that investments will grow over time,” he said.

Mendoza produces 15% of the country’s 520,000 b/d of crude and 5.5% of the 120 million cu m/d of gas, according to the Argentine Oil and Gas Institute, an industry group.

19 May 2016

Argentina’s education and sports ministry has closed a partnership with US IT company Cisco Systems to use ICT resources in technical education institutes in the country.

The deal was signed May 18 by minister Esteban Bullrich and Cisco Argentina president, Carlos Sakata during the opening of the federal education council in the city of La Rioja.

The partnership also comes after US and Argentina resumed their bilateral ties with the visit of US President Barack Obama to the country in March. On that occasion, the US chamber of commerce in Argentina said that US enterprises would invest US$2.3bn in the country over the following 18 months.

Argentina’s federal institutes will join the Cisco Networking Academy, gaining access to the ICT tools and e-learning platforms offered under the program. The country’s national tech education institute (INET) will be in charge of overseeing implementation.

The values involved and specific terms of the contract were not disclosed.

The ministry expects the deal to help reduce the IT talent gap in the country.

Citing data from consultancy and research firm IDC, Cisco said the gap between supply and demand of skilled ICT workers in Argentina reached 31% in 2015, compared to 27% in 2011.

Cisco’s program was created in 1997 and has reportedly benefited more than 6mn people via partnerships with educational institutes.

In March, Cisco announced it would be taking its Networking Academy initiative to Cuba, virtually the last country in Latin America to receive the program, via the island’s Universidad de las Ciencias Informáticas.

19 May 2016

BUENOS AIRES, May 19 (Reuters) – Argentine farmers began planting wheat for the 2016-17 season over the last week and should plant 4.5 million hectares, in line with forecasts despite heavy rains that damaged cropland last month, the Buenos Aires Grain Exchange said on Thursday.

That means Argentina, a major global exporter of wheat, will dedicate 25 percent more land to the grain this year than last, when 3.6 million hectares of land were planted with wheat.

Argentine agriculture has seen a boost since President Mauricio Macri, who took office in December, eliminated taxes and export caps.

The exchange said wheat farmers had planted 1.7 percent of the total area to be cultivated.

In April, heavy rains pounded much of Argentina’s central agricultural region, causing a loss of 785,000 hectares planted with 2015-16 season soybeans, according to the Exchange.

The harvest of soybeans, Argentina’s main crop, whose production should reach 56 million tonnes in the 2015-16 cycle, has advanced steadily in recent days, although it is still far slower than last year’s pace, the exchange said.

As of Thursday, farmers had harvested 61.1 percent of land dedicated to soybean cultivation, 9.8 percentage points up from the prior week. However, compared with the 2014-15 season, it is 26.4 points behind progress seen then.

By Marc Rogers
Thursday, May 19, 2016

Argentina’s new president, Mauricio Macri, is creating a buzz on the international circuit, but he won’t have an easy time installing a new paradigm in a deeply divided society.

On March 24, Argentina marked the 40th anniversary of the military coup that ushered in a brutal seven-year dictatorship in 1976. As has become customary, tens of thousands marched on Plaza de Mayo, in central Buenos Aires, to remember the atrocities of that era and chant the universal slogan, Nunca Mas—Never Again.

But this year, the march was different. Just 24 hours earlier, the same historic square had been adorned with the stars and stripes to welcome U.S. President Barack Obama on his first visit to Argentina. Obama’s presence did not sit well with those who remembered U.S. backing for the 1976 coup; an American president’s visit would have been unthinkable at any of the previous gatherings since the day of memorial was made a public holiday in 2005.

Obama’s attendance was a clear symbol of the radical change underway in Argentina. Four months earlier, the country had voted Macri into the Casa Rosada—the Argentine president’s executive office and mansion—breaking with 12 years of the Kirchnerismo ideology practiced by former Presidents Nestor and Cristina Fernandez de Kirchner. Since taking office in December 2015, businessman-turned-politician Macri has set about hastily redefining Argentina’s political, economic and cultural landscape. In his whirlwind first 100 days, he dismantled currency and capital controls, slashed export taxes, and settled a 15-year dispute with holders of defaulted debt. Gone is the fiery anti-imperialist rhetoric of the Kirchner administration; Obama’s visit and endorsement was a triumphant showcase for Macri’s campaign to “bring Argentina back into the world.”

Macri and his supporters claim this is the beginning of a bright new era for Argentina, in which the country is no longer held back by ideological struggles and can finally reach its potential as a regional or even global power. Macri has the backing of the local business community and is building cross-party political alliances. He has been a star figure at international summits and, until his name appeared in the Panama Papers leaks in April 2016, was showered in accolades by the world’s media.

However, this wave of positivism cannot disguise the challenges Macri still faces at home, where he must convince a deeply divided society to support a painful transition. As international headlines celebrated Argentina’s record-breaking return to global bond markets on April 19, public mood was turning as rampant inflation and a wave of job cuts led to a series of strikes and protests. Despite his electoral victory, the president’s orthodox economic policies and his background as part of the Argentine business elite still bristle with many in a broadly progressive population that has long suffered from inequality. Rather than embracing Macri’s promise of a new dawn, some fear a return to the darker days, with a rollback of the social gains made in recent years.

With the traditional honeymoon period for a new government now over, a fundamental question emerges: Can Macri succeed where no other conservative Argentine leader has before, and implement a modern, market-friendly paradigm in a country still traumatized by its late 20th-century experience with neoliberalism?

A “Miracle” Campaign: The Rise of Macri

“It was a miracle that Macri won,” admitted the president’s long-time political adviser and campaign strategist, Juan Duran Barba, in a recent interview with El Pais.

Winding the clock back 12 months, it was inconceivable to many that Macri would be the one to defeat the seemingly invincible Kirchnerist movement. In a country that had never democratically elected a conservative president, the son of a business magnate at the head of a relatively young center-right party seemed like a difficult sell.

Macri’s Republican Proposal party, known as Pro, was one of several that emerged from the rubble of Argentina’s 2001 economic and political crisis. The Kirchnerist Victory Front (FpV) was another product of that era, but was firmly rooted in Peronist thinking. Pro was different: It drew together dissident politicians from diverse backgrounds, but its core personnel and identity, like that of its leader, were drawn from outside the traditional political sphere—businesses, think tanks and nongovernmental organizations.

After failing at his first attempt in 2003, Macri was elected mayor of Buenos Aires in 2007, and over two terms nurtured a solid support base among the predominately urban middle class voters of the capital. Yet it still looked like too big a step to launch a national campaign without the established political structures and mobilization capacity of the country’s traditional parties. Though Cristina Fernandez could not run for a third term, her preferred candidate and FpV nominee, Daniel Scioli, a two-time governor of the crucial province of Buenos Aires, held a double-digit lead in opinion polls going into the electoral season.

There are many factors that could explain the turnaround, but it’s clear now that at least three things were not fully appreciated at the time: the degree of simmering discontent with the ruling administration; the failure of the FpV to find a suitable successor to Fernandez; and the ability of Macri’s campaign to exploit both.

Rather than attempt to construct his own party structure across Argentina’s vast territory, Macri wisely formed an alliance with the Radical Civic Union (UCR), the country’s oldest political party that boasts a solid, if depleted, national base. The new coalition sought to capitalize on social frustrations after more than a decade of the same leadership—with its inevitable shortcomings—and named itself Cambiemos, or “Let’s Change.”

However, the key turning point came in the Buenos Aires mayoral election in July 2015, less than a month before the national presidential primary, after Macri’s candidate, Horacio Rodriguez Larreta, narrowly won the race to succeed him in the post. Speaking at the celebration that night, Macri wrong-footed many by declaring that, as president, he would not reverse flagship Kirchnerist social policies such as the Universal Child Allowance or privatize state-run airline Aerolineas Argentinas and oil company YPF.

While risking a backlash from his conservative base and exposing himself to accusations of flip-flopping, Macri set up a contest in which he could sidestep attempts to typecast him as a member of the traditional elite and avoid being drawn into a traditional battle of left-versus-right politics.

“Kirchnerism has tried to sketch a caricature of ‘who Macri is,’ but it’s not real,” read a missive released by Pro to justify the change in discourse. “They are going to end up fighting against a caricature that doesn’t exist.”

This suited Pro’s modern ethos, inspired more by the entrepreneurs of Silicon Valley than Chicago School academics. “Our ideology is to solve, to act, to build concrete things,” Macri said on the campaign trail. Unattached to a rigid doctrine, he could present himself as a business-friendly candidate who would make ending poverty in Argentina his No. 1 priority. By annexing certain Kirchnerist policies into his manifesto, always with the caveat that he would administer them more effectively, Macri could reassure voters that they would keep their basic social rights and focus his promise of change on less-daunting issues of style. He pledged to replace the self-eulogizing and confrontational ticks of Kirchnerism with a government of unity, transparency and dialogue. The message was always positive and aspirational; together, he said, Argentines could create a “happiness revolution.”

Tardy efforts by Scioli to pin Macri down on the specifics of his economic plan or highlight flaws in his track record as city mayor were brushed aside as part of a fear campaign. Macri became the only option for voters wanting something different, whatever that might be. “You don’t represent change,” Macri said to Scioli during the final presidential debate. “You decided to represent continuity.”

On Nov. 22, 2015, the miracle was confirmed: Macri was narrowly elected Argentina’s new president, and his party would also control the city and province of Buenos Aires, a nucleus containing more than a third of the country’s total population.


However impressive Macri’s electoral victory was, he faces the formidable task of implementing a radical paradigm shift toward his vision of a 21st-century Argentina, where politics takes a backseat to problem-solving. The president took office with a divided electorate—49 percent voted against him in the electoral run-off—and a minority in both houses of Congress; over half the provinces around the country are run by opposition governors. He probably doesn’t need reminding that the last non-Peronist president to serve a full term was Marcelo T. Alvear in 1928.

The key battleground, as ever, is the troublesome economy, which wary locals will tell you is doomed to suffer “a crisis every 10 years.” Here, Macri has an advantage rare for a new president since the return to democracy three decades ago. The country he inherited is a long way from the hyperinflation of 1989 or mega-default of 2001, which both prompted a break in constitutional order. At the same time, few would argue that the economy was in good health when the presidential baton changed hands.

Macri took over an economy shaped, and contorted, by 12 years of Kirchnerismo, a broadly Keynesian model with heavy state intervention to redistribute wealth and protect domestic industry. In the early years after his election in 2003, Nestor Kirchner oversaw a rapid recovery from the debt default, the country’s worst-ever crisis. He used revenues from a commodity-led export boom to stimulate domestic demand, rebuild local industry, and tackle critical social problems. Confidence in the economy returned as the government maintained twin budget and trade surpluses, a stable exchange rate and a relatively orthodox monetary policy. International reserves built up quickly, and a restructuring of most of Argentina’s defaulted debt relieved pressure on the external accounts.

Sidelined from the global financial system and with the help of aggressive fiscal expansion, the country navigated the credit crunch comparatively well. But by then, domestic capacity constraints were beginning to manifest themselves in the form of soaring inflation and infrastructure bottlenecks. As export demand waned and capital flight accelerated, evidence mounted of a recurring structural problem in the Argentine economy: a shortage of dollars to cover import needs and service foreign debt.

The key battleground, as ever, is the troublesome economy, which wary locals will tell you is doomed to suffer “a crisis every 10 years.”

Immediately after winning a landslide re-election in 2011, Cristina Fernandez—who had succeeded Nestor, her husband, in 2007—tried to stave off an inflationary devaluation by introducing strict currency controls and import restrictions. This set the tone for a difficult second term, characterized by anemic growth, entrenched double-digit inflation and increasingly heavy-handed economic management. Political meddling in data collection, particularly regarding inflation, shattered the credibility of official statistics and deepened suspicions of trouble. The Central Bank was hemorrhaging reserves to prop up the currency, while a parallel “blue dollar” market, running at a premium of more than 50 percent over the official rate, only added another layer of distortion. While external demand floundered, the government doubled down on efforts to stimulate the internal market, and shore up political support, by adding new social programs for housing and education to existing energy and transport subsidies and above-inflation hikes for pensions and welfare. Price controls were expanded to soften the impact of inflation on low-income households.

Though this battery of measures helped avert a deep recession, they did little to restore confidence in the government’s handling of the economy, and became increasingly unsustainable as the budget deficit widened. The government couldn’t seek international financing to stabilize the situation without first reaching an agreement to settle with the “holdout” creditors who had refused to accept the debt restructuring on Argentina’s defaulted debt from 2001 and continued to demand full payment. Fernandez refused to cave, leading a campaign against the so-called vulture funds that were challenging the country’s sovereignty. The message resonated among her core supporters, but by the time of the 2015 presidential election, there was broad consensus that something had to give. The public decided it would be the Kirchnerismo model.

Macri arrived at the Casa Rosada with a promise to swiftly remove the straitjacket that had made the Argentine economy one of the least free in the world. Within a week of taking office, his financial team had lifted all currency and capital controls and removed export taxes for agricultural and industrial goods; levies on the mining sector were eliminated shortly afterward. The Central Bank returned to a more orthodox approach, making inflation control its main priority, hiking interest rates, and ending monetary emission to finance the Treasury. To tackle the fiscal deficit, the government began rolling back subsidies for utility tariffs and public transport, which had reached nearly 4 percent of GDP, and streamlining the public sector. Macri declared a statistical emergency, replaced the leadership at Argentina’s statistics office, INDEC, and invited the International Monetary Fund to renew its annual review of the economy. And at the end of February, the government announced that it had reached an agreement with the holdout creditors to settle the 15-year debt conflict and regain access to international credit markets.

The main thrust of Macri’s plan—grounded, so far, in fairly textbook neoliberal thinking—is to open up Argentina to the global economy and encourage foreign investment. While his economic team cleared the playing field at home, the president was busy forming new diplomatic and commercial relationships abroad, returning to Western allies that the Kirchners had frequently criticized. In the month before Obama’s historic visit, Macri welcomed French President Francois Hollande and Italian Prime Minister Matteo Renzi to Buenos Aires. In January, despite suffering from a cracked rib, he traveled to Davos to become the first Argentine leader in 12 years to visit the World Economic Forum, holding meetings with several Western leaders and CEOs of multinationals such as Coca-Cola, Facebook and Total.

Macri’s charm offensive and the urgency of his reform charge have impressed many in international circles. “I can tell you President Macri is a man in a hurry,” said Obama after their bilateral meeting in Buenos Aires. “I’m impressed because he has moved rapidly on so many of the reforms that he promised, to create more sustainable and inclusive economic growth, to reconnect Argentina with the global economy and the world community.” IMF chief Christine Lagarde also heaped praise, saying, “Macri’s economic policies are very encouraging. We hope they will stabilize the Argentine economy.”

Macri is confident that his plan will work, claiming that inflows could reach $20 billion in 2016, more than 10 times the preliminary 2015 figure. “Opening up to the world will bring enormous investments,” he remarked after another series of bilateral meetings on the sidelines of the recent Nuclear Security Summit in Washington. The president has highlighted the massive potential that Argentina offers investors in the agricultural, mining, tourism and renewable energy sectors. And he says the settlement with the holdouts—full payment was completed through a successful international bond offering in mid-April—will send a powerful signal to potential investors.

Yet this 180-degree shift inevitably comes with short-term consequences, which in turn could undermine Macri’s ambitious economic plans. Headline indicators today do not make for pretty reading. The Argentine peso has lost more than 50 percent of its value since controls were lifted, and has suffered from wild daily swings. This stark devaluation has fed through to local consumer prices, which rose by an estimated 19.2 percent in the first four months of the year. Forecasts for annual inflation now oscillate around 35-40 percent, but could edge even higher. Higher input costs have squeezed local business margins, and unions registered over 140,000 jobs lost between January and April.

Macri’s charm offensive and the urgency of his reform charge have impressed many in international circles.
The government puts this down as the necessary cost of “normalizing” an economy in disarray, and says it expects the numbers to start improving in the second half of 2016. However, the lessons of prolonged austerity in Europe show that the recessionary effects of fiscal and monetary tightening can undermine efforts to redress economic imbalances. With consumer spending squeezed and the government committed to bringing down the budget deficit it inherited—estimated at 7.1 percent in 2015—the short-term outlook for domestic demand is not promising. The devaluation may have provided a boost to the trade balance, but the deep recession in Brazil and slowdown in China, Argentina’s two main trading partners, will weigh on export demand. That leaves the government’s plan dependent almost entirely on foreign investment to pull the economy quickly out of a recession that is expected to hit at least 1 percent in 2016.

In this climate there are reasons to be skeptical of the government’s claim that it will soon be “raining dollars” in Argentina. Macri’s reforms have been well-received by the investment community, but that doesn’t guarantee that businesses will get off the sidelines before the economy has passed through the worst of the turbulence. According to one recent survey, 60 percent of local directors said that they would hold back new investments until inflation was brought under control. Other demands include a more detailed plan from the Finance Ministry on exactly how it plans to balance the budget and cut inflation to single digits by 2019.

Though too soon to draw any conclusions, there have been signs that the results don’t match the initial enthusiasm for the government’s new economic agenda. Finance Minister Alfonso Prat-Gay promised an influx of $20 billion in the first four weeks after currency controls were lifted, including some $6 billion from soy exporters who had been hoarding grains precisely so as to benefit from lower taxes and a market-driven exchange rate. But the farmers delivered less than half that pledge, and discounting a $5 billion one-year loan from a group of international banks, the Central Bank’s reserves actually fell in the first three months of 2016. The bank was also forced to jack up interest rates to a punitive 38 percent to stabilize the peso, and had to divert 10.6 billion pesos, roughly $715 million, to finance the Treasury.

The government does have the advantage of a relatively low debt pile—a positive legacy of the Kirchner era. Now that the holdouts have been paid off, there will be considerable room to borrow to cover immediate financing needs and allow Macri to kickstart his pledge to launch “the largest infrastructure plan this country has ever seen.” But unless interest rates charged on new debt fall from the 7.1 percent average yield offered in the first bond issuance, this source of finance also has clear limitations.

This all leaves key questions that can only be answered with time: What will the government have to do to win the confidence of global investors? And what political and social costs will that have at home?

Resistance to Change

When asked in March if he had a plan B in case foreign investment is not forthcoming, Macri simply replied, “Why do we need one if plan A is working?”

The president may not want to talk about it, but if direct investment is slow to materialize, or if it does not translate into growth and jobs quickly enough, the government will be forced to make difficult political decisions, balancing the demands of foreign creditors with the tolerance levels of the local population.

There are reasons to be skeptical of the government’s claim that it will soon be “raining dollars” in Argentina.
Some market analysts are already saying the government needs to accelerate drastic reforms to convince investors still unsure about Finance Minister Prat-Gay’s gradualist approach to bringing down inflation and the budget deficit. It is a view shared by the more hawkish figures within the ruling party. But this may underestimate the challenge Macri faces in maintaining popular support for his transformation in a country that has painful memories of previous attempts at economic liberalization.

Argentina’s two periods of neoliberal reforms—the 1976-1983 military dictatorship and the 1990s under then-President Carlos Menem—both ended in debt and currency crises, and left a legacy of poverty and inequality. Times have changed since then, and Macri, whose family name is synonymous with the business elite that profited most in these periods, has rebranded himself in the mold of “compassionate conservatism.” But he will still face an uphill battle in convincing voters that this time will be different when the early policy mix has such a similar flavor; the public voted for change, not a return to those darker days.

Opinion polls show that Macri still enjoys support from a majority of the population, though his approval ratings have fallen since the start of his presidency. Even though people are increasingly worried about the country’s economic situation, they attribute most of the blame to the previous government and are prepared to give Macri’s government time to correct the situation. This fits into Macri’s official plan to front-load painful reforms while he has political capital to spare, and can still point to the “difficult inheritance” left by the previous government. That said, this strategy wasn’t helped by recent figures showing that the economy actually grew by a respectable 2.1 percent in 2015.

The question is how long society’s hunger for change will last once households really start to feel the pinch. The reaction to a 300 percent hike in gas and water tariffs and the doubling of public transport fares, delivered by a government oozing confidence following Obama’s visit and key victories in Congress, suggests appetite is on the wane. The move fueled criticism that Macri’s administration, led by a Cabinet loaded with former CEOs, is pandering to business interests while making ordinary households and workers shoulder the costs of austerity. While tax cuts were rushed through, measures to soften the impact on consumers have been minimal, and funding for a number of social programs has been slashed. The Catholic University of Argentina reported that 1.4 million people fell into poverty in the first quarter of 2016 alone, taking the national rate up to 32.5 percent. In this climate, even one of Macri’s political allies and a leader in the Cambiemos coalition balked at the latest utility hikes, taking to Twitter to say “you can’t suffocate the society that is supporting our change.”

Macri has now announced several measures to counterbalance the impact on consumers, including an increase in the threshold for income tax and the elimination of the value-added tax on basic food items. He also confirmed an expansion of the Universal Child/Pregnancy Allowance welfare program, which distributes a fixed income to unemployed or low-income families. “I work every day to find ways to make this re-ordering of the economy as painless as it can be,” said a defensive Macri in a recent TV interview.

He might have to try even harder if he wants to avoid more social unrest. Argentina’s powerful labor unions are becoming agitated as job losses mount and inflation erodes purchasing power. On April 29, five central labor unions came together in a massive march in protest at the recent wave of layoffs, estimated to be reaching nearly 150,000 across the public and private sectors. The Argentine Industrial Union warned that the sector would have to trim up to 200,000 jobs this year as higher utility costs exacerbate problems caused by the slump in neighboring Brazil. Hugo Moyano, the long-time head of the umbrella General Workers Confederation who appeared alongside Macri during the election campaign, said there would be actions if the government continued to implement “perverse policies.” His son Pablo, leader of the powerful truck-drivers union, recently warned the government that “the honeymoon period is over.”

The question is how long society’s hunger for change will last once households really start to feel the pinch.
The government, perhaps aware of the potential for disruption, has introduced a new protocol for public demonstrations, requiring prior notice and authorizing police to use force to disperse protesters blocking streets. That may not sound particularly draconian, but it has rung alarm bells over the potential criminalization of social protests. The United Nations and Amnesty International have expressed concern over the “arbitrary detention” of political and social leader Milagro Sala in the northwestern province of Jujuy, now governed by Macri ally Gerardo Morales. Sala, a polemic figure with close ties to Kirchnerismo, was arrested for staging a sit-in in the provincial capital. She was later charged with embezzling state funds and remains in custody, but some fear the questionable judicial process could set a dangerous precedent.

At least two rallies staged by dismissed workers have also been violently dispersed by police using tear gas and rubber bullets. In early January, photos circulated of a female protester in La Plata, her back riddled with bullet wounds after police fired on a demonstration organized by state workers that had been laid off. Security is another area in which Macri will have to tread carefully: Though there are calls from some sectors to take a tougher stance against those protesters who regularly cause traffic chaos by blocking streets in Buenos Aires, there is little tolerance for police repression in a country that has a long history of institutional violence. After all, it was the killing of two protesters by police at a rally in 2002 that forced then-President Eduardo Duhalde to call the early elections that ushered in the Kirchner years.

Hearts and Minds

Of course, the battle for hearts and minds extends beyond the economy, though here the government’s policy approach has been less clear and consistent so far. If Macri delivers on other plans that are backed by much of society—creating a more open and transparent state, weeding out corruption, and improving institutional quality—he could regain at least some of the political capital lost in the downturn.

This is especially true given Macri’s sophisticated public relations team, which has become adept at using social media to engage directly with the electorate and carefully sculpt the president’s image. The government has also backtracked on or modified some policy announcements that provoked a hostile reaction from the public, demonstrating that it is not oblivious to the national mood. With some shrewd diplomacy, it softened the domestic controversy over the timing of Obama’s visit with the announcement that the U.S. had agreed to declassify military and intelligence records from the dictatorship era, a long-held demand of human rights groups. It was a savvy political move with a key message to the skeptics: We can achieve much more by engaging with, rather than lambasting, the U.S.

Macri, who so far has received mostly favorable treatment from Argentina’s biggest private media outlets, will hope attention is focused on issues other than the economy. He will undoubtedly be pleased that corruption investigations against several high-ranking members of the previous government, including Cristina Fernandez herself, have started to advance quickly in the judiciary. The state, via its Anti-Corruption Office, has requested to be a plaintiff in multiple cases, and Macri is preparing to table a new Repentant Law to reduce or dismiss punishments for those who provide “precise, verifiable, and useful” information about a corruption investigation. Though Macri says the executive is not interfering in the judiciary, any convictions of ex-officials will inevitably provide him with a popularity boost among voters.

There is widespread support for combating the graft and abuse of power that has permeated the Argentine state for so long. However, an anti-corruption drive that is perceived as partisan will only exacerbate existing divisions. Macri’s own image has been tarnished globally after his name appeared in the Panama Papers leaks as director of an offshore company set up in the Bahamas in 1998. The president quickly denied any wrongdoing and explained that he had no active role or shares in the family company, which he said was set up legally; rather, he said, he was simply listed as an “occasional director.” He is now being investigated, but even if his explanation is valid, the revelation, coming as Macri crusades against corruption and tries to sell his vision of Argentina to the world, was damaging. The head of the Anti-Corruption Office, Pro member Laura Alonso, came to his swift defense, raising questions about her ability to impartially investigate her own party leader.

It was a savvy political move with a key message to the skeptics: We can achieve much more by engaging with, rather than lambasting, the United States.

Macri’s popular campaign promise to improve institutional quality in Argentina after the encroaching executive under Kirchnerismo is another area that will be closely scrutinized. In his first 100 days, the president issued 11 emergency decrees, including the controversial designation of two Supreme Court judges. The profiles of his two nominated candidates were widely praised, but the president could offer no real justification for bypassing the standard congressional route. Under pressure, Macri reversed his decision, later claiming that he was “over eager” to fix problems.

Another polemic decree changed the country’s Media Law, which had received cross-party approval when it was passed in 2009 and was later backed by the Supreme Court after a series of legal challenges. The law ostensibly sought to break down corporate monopolies and support alternative outlets in the broadcast-media sector. While there were widespread complaints over how the previous government implemented the law— primarily as a weapon in a drawn-out conflict with the country’s largest media group, Clarin—Macri’s unilateral decision to scrap the bill led to street protests and a hearing at the Inter-American Court of Human Rights. Critics say the president is cozying up to Argentina’s powerful private media groups, which in return shelter him from unfavorable coverage. Furthermore, some journalists say that the new government is gradually crowding out dissident voices in public-sector television and radio, undermining talk of pluralism and exposing Macri to accusations that his promise of change was really about substituting Kirchnerist sympathizers with his own allies.

Eyes on 2017

An area in which Macri has enjoyed considerable success so far is in fostering working relationships with opposition parties. On his first day in office, the president met with each of the five candidates he had defeated to discuss common areas of interest. The day after, he shared a lunch with all the provincial governors, and has maintained a fluid dialogue since, using the carrot of federal funds to negotiate with those from opposition parties. He also took the unusual step of inviting Sergio Massa, a Peronist opposition leader who broke away from Kirchnerism in 2013, to join him at Davos, drawing explicit praise from U.S. Vice President Joe Biden. So far, the strategy has paid dividends at home too, underscored by the government’s biggest political victory to date in securing broad cross-party approval in Congress for its plan to repay bond holdouts. As a bonus, the bill split votes within the Kirchnerist FpV party, the biggest opposition block in both houses.

Macri’s 2015 victory represented the biggest win yet for Latin America’s resurgent “new right.”
The government will aim to keep the Peronists divided and seek dissident support for its policy proposals. However, opposition legislators will want to distance themselves from the unpopular social consequences of Macri’s economic policies, and are just as capable of cobbling together a majority to block government bills or push through alternative legislation. As the unpopular utility hikes were being announced, opposition parties met with union leaders to discuss alternative proposals for raising the income-tax threshold, while a bill to prohibit further layoffs for at least 180 days was approved by the Senate. “I think the government is abusing the people’s hope and patience,” said Macri’s erstwhile ally Massa. “They went into the operating room with a chainsaw instead of a scalpel.”

Strategies are being formed with the 2017 mid-term congressional elections already on the horizon. The vote will have a significant impact on the political landscape, whatever the result. On the one hand, there is an opportunity for the Cambiemos alliance to consolidate the impressive political gains it made last year and, more importantly, move toward a majority in the lower house of Congress—it currently occupies 89 out of 257 seats. On the other, a poor performance would signal a rejection of Macri’s reforms to date and provide a springboard for opposition candidates with an eye on the presidency in 2019.

Regional Spillover

Whatever happens in Argentina in the next few years, the impact will likely be felt around Latin America. Macri’s 2015 victory represented the biggest win yet for Latin America’s resurgent “new right,” represented by the likes of Henrique Capriles in Venezuela, Aecio Neves in Brazil and Sebastian Pinera in Chile. Political scientist and journalist Jose Natanson says this “post-neoliberal” right is novel in the region in three key ways: It is democratic; it does not champion a return to the Washington Consensus-style policies of the 1990s; and it is clever enough to complement its economic policies with social sensibilities, promising macroeconomic reforms while preserving the welfare systems developed by leftist governments over the past decade.

This more-moderate conservatism is a product of the huge improvements in social equality and inclusion across South America during the so-called Pink Tide of leftist leaders, even though progress has stagnated in recent years as the region’s commodity-dependent economies slowed. In this period, countries like Argentina and Uruguay have also set global precedents for socially progressive policies in gender equality, abortion and the legalization of drugs.

As Venezuela and Brazil continue to navigate epic economic and political crises, and in the aftermath of a recent referendum defeat suffered by the seemingly invincible Bolivian President Evo Morales, opposition leaders across the region will be following Macri’s progress closely. Developing an innovative election and public relations campaign is one thing, but to become a lasting movement, the new right must build on recent social advances, rather than simply dismantle them and return power and wealth to a tiny elite. Macri has an opportunity to set the example and become a regional leader in the process. The world is watching to see if he’ll seize it.

May 19, 2016

Plans to increase the minimum wage will not offset concerns over rising unemployment

The Lower House this morning approved the ‘employment emergency’ bill presented by the opposition Frente para la Victoria. The bill, already approved by the Senate, would impose a 180-day moratorium on new redundancies and double indemnity payments for dismissed workers. The bill was passed by 145-3 votes, with 90 abstentions, after the Cambiemos coalition of President Mauricio Macri decided to abstain rather than vote against in order to facilitate a presidential veto. It is not yet certain whether Macri will veto the whole bill or only the double indemnity provision, although business concerns over both elements suggest that he will veto the bill in its entirety. The legislation was prompted by the sharp rise in job losses since Macri took office, estimated to reach at least 120,000. Separately, the government has convened the salaries council for today, where the monthly minimum wage is to be raised from 6,060 pesos (429 dollars) to 8,000 and unemployment benefits from 400 to 3,000-3,500 pesos.

Our judgement

Despite a long-awaited rise in the minimum wage, austerity measures and rising unemployment will put the government at odds with both trade unions and other sectors of society.

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By John Hopewell
19 May 2016

La Union de los Rios, Maneki, Mod, Telefe-Telefonica Studios also back a big-canvas swing from Cannes’ 2015 Critics’ Week winner

CANNES — Ricardo Darin, one of Latin America’s biggest marquee draws, will play the president of Argentina in “La Cordillera,” directed by Cannes 2015 Critics’ Week winner Santiago Mitre (“Paulina”), and uniting “Paulina’s” producers with much of the production-sales team behind “Wild Tales” and “The Clan,” two Argentine B.O. milestones.

Vicente Canales’ Film Factory Ent. will represent world sales rights. “La Cordillera” won the Prix Arte International for the best feature film project at the Cannes Festival’s Cinefondation L’Atelier, Cannes’ development-co-production workshop, on Thursday, May 19, as its co-pro structures fell into final place over the festival.

Described by producer Matias Mosteirin as a big step up in scale for Mitre, “La Cordillera” is set at a three-day leaders summit in the Andes attended by Hernan Blanco, Argentina’s head of state. As regional alliances and strategies are forged, speeches, made and political intrigues, pacts and deals advanced behind closed doors, Hernán Blanco struggle with personal drama. Ultimately, he will have to choose between his closest family and political career.

“La Cordillera” is scheduled to go into production second semester 2016, shooting on locations in Argentina and Chile.

K&S Films has boarded “La Cordillera” as its lead producer. It will produce with La Unión de los Ríos, Mitre’s own label, Telefe/Telefonica Studios, and France’s Maneki Films and Spain’s Mod Producciones.

“Paulina” producers Agustina Llambi Campbell, Fernando Brom, and Mitre himself at La Unión de los Ríos, Didar Domehri Maneki Films and Axel Kuschevtazky at Telefe-Telefonica Studios developed the project. K&S, Telefe-Telefonica Studios and Film Factory all teamed on “Wild Tales” and “The Clan.” Madrid and Barcelona-based Mod, headed by Fernando Bovaira and Simon de Santiago, have produced Alejandro Amenabar’s recent films as well as Alejandro G. Inarritu’s “Biutiful.”

Dolores Fonzi will also be feature in “La Cordillera,” after her internationally acclaimed performance in “Paulina.”

Exploring, as in Mitre’s debut “The Student”, the disfunctionality of contemporary politics through its potential personal cost to its practitioners, “La cordillera” is Mitre’s follow-up to “Paulina” which obtained the Nespresso Grand Prix and the FIPRESCI award at La Semaine de la Critique, where Mitre serves this year as a jury.

The star of Juan Jose Campanella’s Oscar-winning “The Secret of Their Eyes,” which earned $6.4 million for Sony Pictures Classics in 2010 and “Euros6.3 million ($8.25 million) for indie distrib Alta Films in Spain in 2009, Darin also toplined Damian Szifron’s Cannes hit “Wild Tales,” another Sony Pictures Classics U.S. pickup which grossed €38.9 million ($44.1 million) worldwide.

He is one of the only actors in Latin America who can help spark pre-sales and open a film theatrically abroad. Following a strategy developed with “Wild Tales” but seen this year at Cannes with “Neruda,” the robust international co-production structure of “La Cordillera” multiplies the producer expertise on “La Cordillera,” and gives it the budgetary muscle to allow the director to make the film he wants with the VFX, crowd scenes and stars it requires. The presence of TV network Telefe among producers guarantees “La Cordillera” a muscular marketing platform in its native Argentina.

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15 mayo, 2016

THURSDAY, MAY 12, 2016















By Benedict Mander in Buenos Aires
May 12, 2016

When Argentina splashed back into the international capital markets last month with the largest emerging market bond sale ever, Jamie Dimon, chief executive of JPMorgan, made a point of personally congratulating his staff on a job well done.

But in Buenos Aires the $16.5bn debt issue, led by JPMorgan and three other global banks, conjured up more mixed feelings — especially as Argentina has long had a turbulent relationship with Wall Street that is now being rekindled after a series of high-profile appointments in the new government of Mauricio Macri.

No bank is better represented than JPMorgan, with former employees including Alfonso Prat-Gay, the finance minister; Luis Caputo, the finance secretary; and Miguel Gutiérrez, the chairman of YPF, the state-controlled energy company. Others like Deutsche Bank, Goldman Sachs, Barclays and Morgan Stanley all boast former employees in high places in Mr Macri’s government, in stark contrast to an openly hostile attitude towards global finance under the previous populist administration of Cristina Fernández de Kirchner.

“It feels a bit like an old boy’s club here right now. There are a lot of Wall Street alumni running around,” said Walter Molano, chief economist at BCP Securities, an emerging markets broker, during a recent visit to Buenos Aires.

The proliferation of financially savvy officials in Mr Macri’s government lends it more credibility with bankers, a vital element in luring money back into an economy starved of investment after a decade of interventionist policies. For Mr Macri, investment is the key to unlocking the potential in Argentina’s economy, which is expected to contract this year.

“The market has been giving us a lot of credibility,” says one senior official in Mr Macri’s administration. “Everyone knows us, we are already a part of the community. So they listen to you, and understand you — many even agree with you. They couldn’t even understand the guys who came before us,” he said.

Wall Street became the nexus of an Argentine diaspora after the country became the most active emerging market in the capital markets during the 1990s. Other Argentines moved abroad after investment banks shut local offices following the country’s financial crash in 2001. Many went on to develop successful careers at banks such as JPMorgan, where several Argentines today hold key positions, such as Daniel Pinto, the head of its investment banking arm who is tipped as a possible successor to Mr Dimon.

“A lot of Argentines working abroad have decided to come back to do their bit to support this moment of change,” said an official who worked for a big US bank for many years.

It feels a bit like an old boy’s club here right now. There are a lot of Wall Street alumni running around

– Walter Molano, chief economist at BCP Securities

Like many of their peers in Latin America and beyond who have returned to work in booming home countries, Argentina’s incipient economic recovery has prompted many to come back to participate in the turnround of their country that was long branded as a pariah — just as the previous administration viewed “savage capitalism” with deep suspicion.

Indeed, writing earlier this year in Página 12, a newspaper that supported the previous government, Alfredo Zaiat ridiculed comparisons of Mr Macri’s cabinet with the all-star players of Spain’s Barcelona football club, in contrast with what many saw as a dearth of competent officials in the outgoing administration.

“Rather than Barcelona, they are demonstrating themselves to be a bunch of amateur players whose knowledge of financial affairs only serves the interests of their former employers,” Mr Zaiat wrote in a column entitled “JP to power”, referring to the US bank.

“You could write a book about Argentina’s relationship with Wall Street,” said Agustin Honig, managing director at AdCap, an investment bank in Buenos Aires. He recalls the 2001 crisis that brought down the government of Fernando de la Rúa, who was forced to flee the presidential palace by helicopter in the days before what was then the biggest sovereign debt default in history.

“De la Rúa’s government did whatever Wall Street told them to do and the country blew up. Over the last five years, they didn’t do anything that Wall Street recommended, but investors have been piling into Argentine assets,” he added.

The animosity between Argentina’s government and Wall Street may have subsided, but some observers worry that Mr Macri’s banker-heavy cabinet may not be so well equipped to cope with some of the real-world problems he faces. That includes unruly trade unions fighting to defend Argentines fearful of losing their jobs and struggling to pay their monthly bills as double-digit inflation bites.

“Markets are more rational and have been rooting for Argentina,” says Diego Ferro, an Argentine portfolio manager at Greylock Capital Management in New York. “So far things have been working out for the government, but they have been dealing with issues that come within their area of expertise — the financial markets. The real challenge starts now,” he says.

By Hudson Lockett
May 12, 2016

Brevan Howard is shutting its Argentina-focused fund and returning money to investors after returning about 18 per cent since its inception at the start of last year.

The fund’s bets on Argentina’s political future have ended since the South American nation settled a long-running legal battle and paid its holdout creditors $9.3bn last month over a sovereign debt triggered by the country’s 2001 default.

“We launched the fund as a limited-life SPV to position in front of the Argentine elections in order to take advantage of anticipated political change and a subsequent resolution of the bond hold-out dispute,” said a spokesman for Brevan Howard, which manages about $20bn across all of its funds.

“Events unfolded as we had expected. Consequently we are winding down the fund and returning capital, as we had promised, to investors.”

By Katia Porzecanski
May 11, 2016

* Fund was started in 2014, had more than $500 million assets
* Fund winding down after Argentina resolved creditor dispute

Brevan Howard Asset Management LLP is closing down its dedicated Argentina fund after the country resolved a legal dispute with creditors that had pushed the nation into default.

The Argentina Master Fund produced net returns of 18 percent since it was opened to outside investors in January 2015, when the nation was in the midst of its second default in less than two decades, according to people with knowledge of the matter. The fund was designed to profit from a political transition and close once Argentina implemented market-friendly policies including allowing its currency to float and curing the default, said one of the people, who asked not to be named because the matter is private.

A spokesman for Brevan Howard declined to comment.

Brevan Howard, which oversaw about $18 billion in assets as of the end of March, was among a slew of hedge fund firms that bet Argentina would eventually overcome its dispute with creditors and return to international bond markets. Their hopes were realized after President Mauricio Macri came to power late last year and immediately began to unwind his predecessor’s policies. The nation struck a deal with the holdout creditors in February, returned to global bond markets in April, and cured the latest default this month.

Brevan Howard’s fund had more than $500 million in assets including Argentine stocks, bonds, and warrants tied to economic growth. It was run Brevan Howard partner Ben Melkman, said one of the people.

Brevan Howard will finish returning cash to investors in coming weeks.

The fund’s returns are a bright spot for the firm, whose flagship fund is down 1.8 percent for the year after losing 2 percent last year, according to people familiar with the matter.

Argentina’s holdout creditors, led by Paul Singer’s Elliott Management, held bonds left over from the nation’s $95 billion default in 2001 and persuaded U.S. courts to block payments on debt issued in the nation’s two debt restructurings until their notes were repaid. Macri struck a deal to pay the holdouts in February for $4.65 billion, allowing for the nation to resume making bond payments.

By Dion Rabouin
May 11, 2016

May 11 Argentina’s credit rating has been upgraded to a ‘B’ or stable, Fitch announced on Wednesday, due in part to the country’s resumption of debt payments to restructured bondholders.

Fitch upgraded the country’s long-term and short-term foreign currency issuer default rating to ‘B’/stable from ‘restricted default’ or ‘RD.’

The country last month held a $16.5 billion bond auction, the largest emerging markets bond deal ever, to end its long-running legal battle with creditors.
With its first bond deal in 15 years, Argentina raised enough to pay the $9.3 billion owed to holdout investors with additional funds left over.
“In addition, Argentina’s ratings reflect the improved consistency and sustainability of Argentina’s policy framework, reduced external vulnerability, and the easing of external and fiscal financing constraints,” Fitch said in a statement.

“The Stable Outlook balances these improvements against risks related to relatively weak external liquidity, continued macroeconomic underperformance compared with peers, and deterioration of public finances in recent years.”

Argentine officials have said the country will stay out of the international markets for the rest of this year and fully fund the targeted 2016 deficit of 4.8 percent of gross domestic product.

11 May 2016

BUENOS AIRES, May 11 (Reuters) – Opposition lawmakers in Argentina could start debating as soon as Thursday a bill that would put a moratorium on job cuts for 180 days and guarantee generous redundancy payments for workers that are laid off, likely setting up a confrontation with President Mauricio Macri.

Free-markets proponent Macri has pushed through a string of painful reforms since taking the reins of Latin America’s third largest economy in December, aiming to close a gaping fiscal deficit and revive a stagnant economy, but fueling the ire of public sector unions. Macri has warned that he could veto the bill.

“We don’t have to wait for the problem to keep growing … If it’s not tomorrow, it’ll be Monday or Tuesday that the bill is sent to the floor (for debating and a vote),” said Marco Lavagna, lawmaker of the Frente Renovador opposition party.

Peronist opposition lawmakers, including former President Cristina Fernandez’s Frente para la Victoria party, have put forward different proposals that are being debated so that a unified bill can be voted on.

Bill proposals include plans to put a halt to private and public sector job cuts for six months and double redundancy payments for those workers that are actually laid off, a copy of the one of the bills seen by Reuters showed.

“I’m confident that we’re going to bring a bill to the floor (for voting) and are going to generate a consensus that results in a comprehensive bill,” said Lavagna.

As of mid-April, Macri’s efforts to trim government payrolls had closed a net 10,000 public sector jobs, while the private sector had also lost around 15,000 informal jobs and about 30,000 formal jobs.

Opposition lawmakers have warned that up to 150,000 jobs could be lost this year.

Macri asked business and union leaders on Monday to avoid layoffs for 90 days, as the center-right leader faces heat for thousands of jobs lost under his watch.

12 May 2016

WASHINGTON, May 12 — U.S. Department of Labor-Employment and Training Administration-ILAB issues a grants notice (NOI-ILAB-16-04) titled “Country Projects to Promote Workplace-Based Training for Vulnerable Youth in Argentina, Costa Rica, and Kenya” on May 11.

Award Ceiling: $3,000,000

Original Closing Date for Applications: June 30

Opportunity Category: Discretionary

Funding Instrument Type: Cooperative Agreement

Expected Number of Awards: 3

Category of Funding Activity: Other (see text field entitled “Explanation of Other Category of Funding Activity” for clarification)

Eligible Applicants: Others

Funding Opportunity Description: NOTE: This is a Notice of Intent. There is not an announcement related to this notice. We are not accepting applications at this time. Subject to the availability of funds, USDOL’s Bureau of International Labor Affairs (ILAB) intends to award, through a competitive process, up to three cooperative agreements of up to $3 million each to organizations to improve country capacity to provide workplace-based training programs with a focus on vulnerable and marginalized youth, in particular adolescents at or above the legal working age who are engaged in or at risk of engaging in the worst forms of child labor. One cooperative agreement will fund a technical assistance project in Argentina, one cooperative agreement will fund a technical assistance project in Costa Rica, and one cooperative agreement will fund a technical assistance project in Kenya. In each country, the objective of the project is to improve the capacity of government, employers, workers’ organizations, and civil society to establish and expand such workplace-based training. Project outcomes include: 1) laws or policies supporting quality workplace-based training opportunities for youth, including vulnerable and marginalized youth, are improved and/or implemented by key stakeholders; 2) employers, workers’ organizations, and other stakeholders implement best practices related to workplace-based training for youth, with a focus on vulnerable and marginalized youth; and 3) the quality of existing public and private programs that provide vulnerable and marginalized youth with prerequisite skills to enter workplace-based training programs is improved. The Employment and Training Administration (ETA)’s Office of Grants Management anticipates publishing the Funding Opportunity Announcement (FOA) before the end of June 2016 (this date is subject to change). Please refer to: and for general guidelines and examples of previous cooperative agreement applications. This NOI does not include an FOA or any attachments. It only constitutes a notice of USDOL’s intent to publish an FOA at a later date. Interested applicants are encouraged to monitor for the FOA because this is the method by which it will be made available to the public. No email or paper copies will be provided.

11 May 2016

Argentina’s mining industry expects US$20bn in new investment over the next five years thanks to a series of measures being implemented by the government of President Mauricio Macri to attract private sector investment in the country.

“The mining sector will invest US$20bn in the regional economies through 2021, thanks to improvements in our competitiveness due to tax changes and the expectations that we’re creating the necessary certainties that the mining sector needs,” Marcelo Álvarez, president of Argentina’s mining chamber (Caem), was quoted as saying by state news agency Télam.

Macri took office in December and, since then, has taken steps to foster private sector investment. Within weeks the government abolished export duties and trade controls, eliminated the fixed exchange and capital controls and most recently settled the 2003 default with bondholders and returned to global debt markets.

Most of the investment is expected to be made between 2018 and 2020. Some of the projects that are due to come online include Glencore’s El Pachón, First Quantum’s Taca-Taca, Yamana Gold’s Agua Rica and McEwen Mining’s Los Azules, Caem said.

During the five-year period, the industry expects exports to reach US$25bn, and generate 40,000 new jobs, on top of the existing 90,000 jobs in the mining industry.

12 May 2016

Moody’s Latin America Agente de Calificación de Riesgo (Moody’s) has repositioned the national scale ratings of 40 Argentine structured transactions in conjunction with the recalibration of the Argentine national rating scale. At the same time, Moody’s has taken selective rating actions on the global scale based on updated performance data.

National scale ratings (NSRs), which provide a measure of relative creditworthiness within a single country, are derived from global scale ratings (GSRs) using country-specific maps. The adoption of a revised correspondence between Moody’s global scale ratings and the Argentine national scale follows the publication of Moody’s updated methodology “Mapping National Scale Ratings from Global Scale Ratings” . For more information, please see “Moody’s publishes updated methodology for national scale ratings”–PR_348579 .

With nearly 100 rated fundamental issuers in Argentina, the new map has been designed using the modified approach, whereby the map design is adjusted to reflect the distribution of fundamental ratings in the country in order to ensure adequate opportunity for differentiation where ratings are most highly concentrated. Because more than 10% of fundamental issuers are rated above Argentina’s B3 sovereign rating, as well as the previous anchor point of B1, the anchor point, or the lowest global scale rating that can map to a, has been raised to Ba3, the level of the local currency country ceiling. All GSRs from B1 to Caa3 now map to three NSRs each. This provides adequate opportunity for differentiation on the national scale among the more than 50% of Argentine fundamental issuers rated B3 on the global scale.

As a result of these changes, GSRs will generally correspond to lower NSRs on the Argentine national scale than they did previously. Consequently, the majority of Argentine NSRs that are currently under review direction uncertain are being confirmed at their current levels notwithstanding the recent upgrades of their corresponding GSRs. However, a number of fundamental issuers’ primary local currency NSRs are being raised, while the NSRs of those issuers whose GSRs were not upgraded following the recent sovereign upgrade are in most cases being lowered, reflecting their relatively weaker creditworthiness compared to the majority of domestic peers, whose GSRs were raised. In total, slightly more than 10% of Argentine fundamental issuers’ primary NSRs are being repositioned an average of 1,3 notches higher, while 20% are being repositioned 2,3 notches lower. Other NSRs may be raised or lowered for some additional issuers. In addition, approximately 20% of the NSRs assigned to Argentine structured finance transactions are being repositioned an average of 1.8 notches lower. The repositioned national scale ratings of individual issuers do not signify a change in credit risk, since the global scale ratings (GSRs) for these issuers remain unchanged.

In addition, the level of risk associated with particular Argentine NSRs has changed in many cases. NSRs have no inherent absolute meaning in terms of default risk or expected loss; they are ordinal rankings of creditworthiness relative to other domestic issuers within a given country. A historical probability of default and/or expected loss consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. However, both the probability of default and the expected loss of an NSR may change if and when a country’s national scale is remapped.

Moody’s also took selective rating actions on global scale for some transactions based on updated performance data and cash flow analysis. Moody’s considered the credit enhancement provided in each transaction through the subordination levels over the current pool of assets (less than 30 days of delinquency) and ran simulations with original assumptions regarding prepayment and losses rates, as well as specific factors related to the Argentine market.


Please click on this link for the List of Affected Credit Ratings. This list is an integral part of this Press Release and identifies each affected issuer


Please click on this link for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody’s disclosures on the following items:

• Principal Methodology

• Loss and Cash Flow Analysis, if applicable

• (sf) indicator

National scale ratings are assigned by applying the published correspondence from global scale ratings. Where a single global scale rating maps to multiple global scale ratings, rating committees assigned higher or lower national scale ratings to individual issuers and debts depending on their relative credit position within the same global scale rating category, using the same methodologies as were used to determine the GSRs themselves.


Moody’s upgraded the global scale rating of Class A (VDF A) debt securities issued by Fideicomiso Financiero Chubut Regalias Hidrocarburiferas I to Ba3 (sf) from B2 (sf) and the national scale rating to (sf) from (sf). The upgrade follows the upgrade of Argentina’s foreign currency bond ceiling to B2 from Caa1. Class A debt securities are denominated in US dollars. Moody’s notes that the Class A ratings continue to pierce the Argentine foreign currency bond ceiling by two notches based on structural protections, including: (i) an offshore reserve account with The Bank of New York Mellon (Aa1) for the benefit of investors that covers five quarterly interest payments on the Class A notes, (ii) provisions that allow Banco de Valores S.A. as the Argentine trustee, in case of a convertibility or transferability event, to purchase an amount of Argentine government or corporate bonds denominated in US dollars to be sold in the New York, Zurich or Montevideo market, so that the amount in US dollars resulting from the bond sale, net of expenses and taxes, equals the debt service to be paid to note holders, and (iii) payment-in-kind provisions.

Moody’s upgraded the global scale rating of Class B (VDF B) debt securities issued by Fideicomiso Financiero Chubut Regalias Hidrocarburiferas I to Ba3 (sf) from B1 (sf). Class VDF B debt securities are payable in local currency. The upgrade follows the upgrade of Argentina’s local currency country ceiling to Ba3 from B1 as the credit profile of these securities was constrained by Argentina’s previous local currency country ceiling at B1.

Additionally, the deal’s credit profile was also strengthened by the fact that the ratings of key counterparties in the transaction have been upgraded following the upgrade of the sovereign rating. The rating of the Province of Chubut, the seller of the receivables in the transaction, was upgraded to B3 from Caa1, while the rating of Pan American Energy LLC, Argentine branch (the operator of the concession generating the cash flows) was upgraded to B1 from B2.

Factors that would lead to an upgrade or downgrade of the ratings:

The NSRs would face upward or downward pressure if their corresponding GSRs are upgraded or downgraded, unless this is in conjunction with a sovereign rating action that results in another recalibration of the Argentine national scale with an offsetting impact on NSRs. In addition, the NSRs may face upward (downward) pressure if Argentina’s sovereign is downgraded (upgraded) and the map is revised accordingly, but the corresponding GSRs have not changed as a result of the sovereign action. Because of the higher granularity of national scales, NSRs may also face pressure due to changes in creditworthiness that are not sufficient to cause a change in the corresponding GSR, measured using the same methodologies used to determine the GSR.

Moreover, changes in the credit profile of key counterparties in the transaction could also have a rating impact.


Please refer to the following Excel file for further references regarding the applicable rating methodology for each transaction .

Moody’s National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody’s global scale credit ratings in that they are not globally comparable with the full universe of Moody’s rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a “.nn” country modifier signifying the relevant country, as in “.za” for South Africa. For further information on Moody’s approach to national scale credit ratings, please refer to Moody’s Credit rating Methodology published in May 2016 entitled “Mapping National Scale Ratings from Global Scale Ratings”. While NSRs have no inherent absolute meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default rates associated with different global scale rating categories over different investment horizons, please see


Please click on this link for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody’s disclosures on the following items:

• Loss and Cash Flow Analysis, if applicable

For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

Moody’s did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

For issuers domiciled in Argentina, the regulatory report related to this rating action is available on

By Charles Newbery
11 May 2016

Buenos Aires (Platts)–11May2016/1222 pm EDT/1622 GMT Argentina’s state-run energy company YPF said Wednesday its oil and natural gas production from unconventional plays is on track to increase this year, as it removes facility bottlenecks and improves drilling efficiency and productivity.

YPF is shooting for “10% to 15% growth” in shale oil and gas production this year, as it continues to develop the Vaca Muerta play, interim CEO Daniel Gonzalez said during a conference call with investors.

YPF, the busiest shale developer in Argentina, boosted its output from Vaca Muerta by 19% year on year to 49,800 b/d of oil equivalent in the first quarter of 2016. Of that Q1 output, 24,100 b/d was crude, 11,600 b/d was NGLs and 2.2 million cu m/d was gas, the company said.

While shale production was down from 50,600 boe/d in the fourth quarter of 2015, Gonzalez said this was because the company reined in some of its hydraulic fracturing in Q1 as part of an expected 20% to 25% reduction in capital expenditures for 2016.

The spending cut is expected to leave the company’s overall production flat this year.

YPF’s oil production rose 0.8% to 249,000 b/d in Q1 from 246,800 b/d in Q1 2015, while gas output increased 1.1% year on year to 44 million cu m/d. The company’s total hydrocarbon production rose 0.3% year on year in Q1, compared with a 3% year-on-year increase in 2015 and a 13.5% year-on-year increase in 2014.

Even so, production from shale and tight-sand formations is poised to increase and help offset dwindling output from conventional fields, many of which are maturing.

In April, the company put a compression system at its Rincon del Mangrullo block targeting the Mulichinco tight formation online. This made it possible to increase production there to 4 million cu m/d in April from an average of 1.4 million cu m/d in Q1.

“Tight gas is one of the drivers of our production growth,” Gonzalez said.

YPF plans to remove a facility restriction this year at its Estacion Fernandez Oro tight gas development to add more production, Gonzalez said.

Tight gas production from the Aguada Toledo and Sierra Barrosa blocks, where the company is targeting the Lajas formation, is poised to increase thanks to surplus processing capacity. This is because the blocks lie close to Loma La Lata, Argentina’s biggest conventional gas block over the past two decades. Loma La Lata is now maturing.

“There is plenty of idle capacity there,” Gonzalez said

YPF’s tight gas production rose 23% year on year to 9 million cu m/d in Q1, and now accounts for 20% of its total gas production.


Helping to fuel the drive to boost gas output has been a steady increase in wellhead prices, which is helping to offset the decline in crude prices.

While the company’s average crude price dropped 10% year on year to $61.90/b in Q1 from $68.80/b in the year-ago period, its average gas price rose 4.1% to $4.71/MMBtu from $4.53/MMBtu.

Gonzalez said the energy ministry is considering further hikes in gas wellhead prices, which will probably take the average price to a stable $5.50-$6.00/MMBtu by the end of 2017.


To help cut shale drilling costs and boost productivity, YPF is putting more focus on horizontal wells. Some 23 out of 34 of its shale wells connected in Q1 were horizontal wells, Gonzalez said.

This is helping to cut drilling and completion costs, which are now “consistently below $12 million per well in Loma Campana,” the biggest shale development in Vaca Muerta, which is a partnership with Chevron, he said.

YPF is aiming to cut the drilling cost to $10 million per well by the end of the year, he added.

In the cost-cutting drive, YPF also has started to drill four aligned wells per pad to reduce drilling times, and plans to increase the number of frac stages drilled per day to six from four per bundle.

Most horizontal wells are now being drilled with 18 frac stages, and one recently was drilled on the El Orejano block with 27 stages, Gonzalez said.


YPF also is looking to reduce its labor, supplier and transport costs, with salary discussions due to start this month.

“We do expect the unions to act rationally because if we are not able to reduce upstream costs in dollar terms to a sustainable level then it will be very difficult to keep the level of activity that we have today,” Gonzalez said.

11 May 2016

WASHINGTON, May 11 — Animal and Plant Health Inspection Service, Department Of Agriculture (USDA), has issued a proposed rule called: Importation of Lemons From Northwest Argentina.

The proposed rule, published in the Federal Register on May 10 by Michael L. Gregoire, Acting Administrator, Animal and Plant Health Inspection Service, states: “We are proposing to amend the fruits and vegetables regulations to allow the importation of lemons from northwest Argentina into the continental United States. As a condition of entry, lemons from northwest Argentina would have to be produced in accordance with a systems approach that would include requirements for importation in commercial consignments; registration and monitoring of places of production and packinghouses; pest-free places of production; grove sanitation, monitoring, and pest control practices; treatment with a surface disinfectant; lot identification; and inspection for quarantine pests by the Argentine national plant protection organization. Additionally, lemons from northwest Argentina would have to be harvested green and within a certain time period, or treated for Medfly in accordance with an approved treatment schedule. Lemons from northwest Argentina would also be required to be accompanied by a phytosanitary certificate with an additional declaration stating that the lemons have been inspected and found to be free of quarantine pests and were produced in accordance with the proposed requirements. This action would allow for the importation of lemons from northwest Argentina into the United States while continuing to provide protection against the introduction of quarantine pests.”

For more information, contact Juan A. (Tony) Roman, Senior Regulatory Policy Specialist, PPQ, APHIS, 4700 River Road Unit 133, Riverdale, MD 20737-1236; 301-851-2242.

11 May 2016

Argentina-focused junior Crown Point Energy said it expects to receive an oil price of US$61.10/b in 2016 for crude produced at the firm’s acreage in southernmost Tierra del Fuego province.

Argentine crude trades domestically at a premium to international benchmarks amid the current global commodities downturn.

The discrepancy is a legacy of price controls enforced under the previous government that were originally meant to keep local prices in check when global benchmarks soared above US$100/b.

“The intent of the [new] Argentine government is to allow domestic pricing to be coupled with international benchmarks,” Calgary-based Crown Point said in an update, “however it is evident that the government is reluctant to allow domestic pricing to fall precipitously as this could result in a severe downturn in the industry, which in turn could trigger extensive layoffs, social unrest and disruptions.”

Crown Point’s assessment corroborates public statements from new President Mauricio Macri’s energy and mines minister Juan José Aranguren, who said this month in a radio interview that “once [oil] prices in the world begin to recover, which has already begun… we must never again decouple ourselves from the world.”

For natural gas, Crown Point said it expects to receive a price between US$2.66-US$4.25 per thousand cubic feet under the government’s new gas pricing scheme.

Macri’s administration, Crown Point CEO Murray McCartney said, “is methodically bringing responsible government to Argentina, providing the country with an opportunity to realize its full economic potential.”

First quarter hydrocarbon production from the Tierra del Fuego licenses averaged 1,421boe/d, down 7% year-on-year, which Crown Point attributed to “the natural decline of wells combined with restricted production from some existing wells during the last three days of March due to a fire in the San Martín main gas line in Santa Cruz province.”

Crown Point posted a net loss of US$1.34mn for the period, compared to a year-ago loss of US$1.65mn.

11 May 2016

SAO PAULO, May 11 (Reuters) – Corn shipments from neighboring Argentina have dominated imports into Brazil since the country was forced to import larger amounts of the grain in March, including into the distant Northeast where some analysts thought U.S. corn could arrive.

Data from the Brazilian agriculture ministry showed this week that no U.S. corn arrived in Brazil in the last three months, even after the government eliminated an import tax on shipments from countries outside the Mercosur trade bloc in April.

Brazil imported 106,000 tonnes of corn last month, the most imports of the grain since October 2014. Around 58 percent of that volume came from Argentina and the rest from Paraguay.

In the northeastern state of Ceara, for example, the poultry industry formed a group to acquire imported corn. One ship already landed and two others are scheduled, all with corn from Argentina.

The association’s vice president said they had studied offers from the United States but that Argentine venders had made an effort to keep their prices competitive. U.S. corn would have cost 1 real per 60-kg bag more.

Pork and poultry producers throughout Brazil have counted on imported corn to keep their operations going, after stocks were depleted by strong demand for and exports of Brazil’s summer corn harvest, which is winding down.

Traders said the window for significant volumes of imported corn will likely close in the second half of the year, when a second, larger annual crop is harvested.

One reason for the lack of U.S. corn could be the quality of grain offered, said one broker in Ceara.

“The deals are not occurring because the U.S. corn is from 2010,” said Emilio Geleilate, director of the Geleilate brokerage.

12 May 2016

LIBERTY LAKE, WASHINGTON–(Marketwired – May 12, 2016) – Hunt Mining Corp. (the “Corporation” or “Hunt”) (TSX VENTURE:HMX) is pleased to announce the closing on the purchase of the Martha Mine, located in the Santa Cruz Province, Argentina and 50 kilometres northeast of the town of Gobernador Gregores, Argentina. The Martha Mine has year round access, contains a flotation mill, equipment and buildings and commenced silver production in 2008. Additional information including photos of the Martha Mine are available on the Corporation’s website at: The Corporation’s acquisition of the Martha Mine will further the transition from an exploration entity to a mining entity. Hunt has one of the largest land packages in Santa Cruz and plans to use its acquired flotation mill and infrastructure for mineral exploitation.

Hunt has been an active exploration and development entity in the Santa Cruz Province, Argentina since 2006. Since 2006, the Corporation has invested a total of CDN $40,000,000 in its Santa Cruz properties which includes the flagship La Josefina Gold/Silver Project (“La Josefina”) and La Valenciana Gold/Silver Project (“La Valenciana”). Both La Josefina and La Valenciana are located within 120 kilometres of the Martha Mine.

Chairman and CEO Tim Hunt states: “We are extremely pleased with the purchase of the Martha Mine, and look forward to initiating production in 2016. The Martha Mine is a state of the art facility, with the capacity to process localized ore from regions surrounding the Martha Mine mill, which includes our La Josefina and La Valenciana projects. We look forward to working with the Argentine government and local work force for continued exploration and future mining.”

The parties involved include an Argentine subsidiary of the Corporation and an Argentine subsidiary of Coeur Mining, Inc. The purchase price for the Martha mine, flotation mill, equipment and buildings is US$2.7 million plus applicable taxes.

The terms for payment were US $1.2 million, plus approximately US $400,000 in taxes paid at closing, with the balance of US $1.5 million due 365 days after the closing (the “Balance Payment”). The financing for this acquisition came from a related party with 8% interest per annum and is reviewable and renewable on a month to month basis.

The Corporation will retain an independent qualified person to prepare a technical report for the Martha mine in compliance with National Instrument 43-101-Standards of Disclosure for Mineral Projects (the “Report”), which Report is expected to be received on or about 120 days from the initial closing. A further news release will be issued by the Corporation when the Report is available, providing further details about the Martha Mine.

About Hunt Mining

Hunt Mining Corp. has continued to develop its properties as an active and aggressive explorer in Santa Cruz since 2006. During that time, Hunt’s wholly owned subsidiary, Cerro Cazador S.A., has completed exploration activity including approximately 64,000 meters of HQ core drilling, 416 line kilometers of Induced Polarization geophysical surveys and more than 20,000 surface soil, sediment, channel, chip, and trench samples, beyond the historical work previous to the same properties. The Corporation also holds a 100% interest in the Martha Mine through an Argentina subsidiary.

By The Editors
May 11, 2016

Last week, a prosecutor in Argentina asked for an investigation into illegal enrichment allegations against former President Cristina Fernandez de Kirchner and her son. In an email interview, Manuel Balán, an assistant professor at McGill University, discussed Argentina’s fight against corruption.

WPR: How big a problem is corruption, both low- and government-level, in Argentina, and to the degree it is one, how does it manifest itself in daily life?

Manuel Balán: There is generally a great deal of public concern over corruption in Argentina, but it is affected by the country’s economy. In good economic times there is less of a sense of urgency and anger about corruption than when the economy is not doing well. In terms of how it manifests itself in daily life, I would distinguish three different levels.

First, “pocketbook” corruption, or direct personal experience with corruption, is somewhat prevalent in everyday dealings with the state, including the police and low-level bureaucrats, as well as in the education and health sectors. This is especially the case for the lower classes. However, and although available data is far from perfect, Argentina does not exhibit particularly high levels of personal experience with corruption when compared with other countries in the region.

Second, the perception of corruption in the upper echelons of government is quite high, in both absolute and comparative terms. Overall, there is a sense that politics does not always work for the public interest and that politicians get rich on the job. The media, which has become increasingly polarized in recent years, often serves a specific political agenda.

Third, corruption negatively affects the efficacy and delivery of public services. Corruption diverts state resources away from their stated goals, so that funds and services often never make it to their intended recipients. Furthermore, corruption makes it so the allocation of resources does not always favor public interests, but instead benefits private interests that are willing to bribe their way into government contracts.

WPR: What steps has Argentina taken against corruption, how effective have they been, and what more needs to be done to tackle the problem?

Balán: Argentina has signed the United Nations International Convention Against Corruption and the Inter-American Convention Against Corruption, and has adjusted parts of its legislation to comply with their transnational bribery and illicit enrichment provisions. Argentina created an Anti-Corruption Office in 1999 that is in charge of investigating allegations of corruption and presenting charges to the judiciary. The office also has some preventive mechanisms, such as identifying and addressing conflicts of interest and administering an electronic financial disclosure system, which is applicable to high- and mid-level members of the executive, but not the legislature or judiciary.

In 2003, then-President Nestor Kirchner issued a decree regulating access to public information, which partially improved transparency in the executive branch. These and other measures have been effective at the margins, but they were never able to tackle structural issues that make corruption prevalent in Argentina.

A few of weeks ago, in response to the news about his implication in the Panama Papers, President Mauricio Macri presented a freedom of information bill to Congress, which is currently under debate, and announced he was setting up a blind trust for his funds. The blind trust is a valuable first step, but is little more than political posturing. As for the bill, it is quite weak in terms of providing access to information, and in any case it is not enough to tackle corruption. The problem is systemic. Lasting solutions require a mid- to long-term commitment to change practices, the enforcement of legal provisions, and investment in judicial independence and investigative capacity.

WPR: How big a priority has anti-corruption been to date for Macri as a candidate and as president, and how will his implication in the Panama Papers leak affect his administration’s anti-corruption efforts?

Balán: Macri campaigned, at least partly, on an anti-corruption platform. His Cambiemos, or Let’s Change, coalition made this anti-corruption message central to its identity. The coalition catered to voters looking for a change from Kirchnerism and the corrupt practices that had been associated with the previous government.

Since the start of his presidency last December, Macri has faced a number of challenges, of which his involvement in the Panama Papers is just one. In terms of his commitment to fighting corruption, he started things on a negative note when he appointed Laura Alonso, a close ally and a main political figure of his own political party, the Republican Proposal (PRO), to the anti-corruption office. Regardless of Alonso’s credentials, her partisanship makes her a poor choice for the position, as it signals a will to make political use of the Anti-Corruption Office.

On the judicial front, there are a number of open investigations against former President Kirchner and a few of her close associates. These probes are ongoing and might uncover corrupt acts. However, the political use of government agencies such as the Anti-Corruption Office, along with biased media coverage from major outlets, unfortunately calls into question the motivations behind these investigations. Moreover, Macri’s involvement in the Panama Papers raises doubts about his private business transactions, and highlights the fact that he is the heir to one of the richest families in the country, which he tried to downplay during the campaign.



2. A BILLION PRICES CAN’T BE WRONG (Financial Times (FT.Com))










By Debora Rey
May 12, 2016

BUENOS AIRES, Argentina — Inflation in the capital’s metropolitan area reached 6.5 percent in April, the biggest monthly price jump since Argentina’s worst economic crisis 14 years ago, the Buenos Aires statistics agency reported Thursday.

The rise in consumer prices was mainly due to the government’s recent elimination of utilities subsidies in the country’s main population center that has led to sharp increases in everything from bus rides to light bills. The city says inflation in the first quarter was 19.2 percent and it reached 40.5 percent year-on-year.

The Buenos Aires inflation rate is being used as a reference while the new government of President Mauricio Macri revamps the questioned national statistics agency. Argentina’s inflation numbers have been in doubt since 2007, when President Cristina Fernandez’s late husband and predecessor, Nestor Kirchner, had political appointees change the agency’s methodology.

Macri came to power in December with promises to cut bloated spending, curb government deficits and tame one of the world’s highest inflation rates. But Argentines have taken to the streets in big protests against his unpopular decisions to eliminate subsidies and cut thousands of state jobs, while still failing to curb soaring prices.

About two dozen people gathered this week at a soup kitchen set up in front of the presidential palace. It was originally intended to feed the homeless. But increasingly poorer Argentines who have lost their jobs or who are being forced to cut back due to rising food prices are commuting long distances in the hopes of a warm free meal.

“I can’t buy clothes, I can’t buy food. I’m pregnant and I can hardly survive,” Claudia Valenzuela said as she waited for stew served in a plastic plate.

Valenzuela, an unemployed mother of a 3-year-old, said she recently stopped eating lunch despite being four months pregnant as the only way to cope with high prices.

2. A BILLION PRICES CAN’T BE WRONG (Financial Times (FT.Com))
By Tim Harford
13 May 2016

In the dying days of 2015 came news to set any geek’s pulse racing: the declaration of a “statistical emergency” by Mauricio Macri, the new president of Argentina. Macri’s move enabled Jorge Todesca, head of the statistics bureau, to suspend publication of some basic economic data. That might seem extreme but Argentina’s inflation numbers were widely discredited.

The International Monetary Fund censured Argentina in 2013 for its implausible numbers under previous president Cristina Fernández de Kirchner. Government statisticians say they were leaned on by her administration to report low inflation. Todesca himself used to be a private-sector economist, and, in 2011, his firm was fined half a million pesos for publishing numbers that contradicted the official version. (Half a million pesos was about $125,000 at the time; it is $35,000 these days, which rather proves the point.)

But one economist found a way to publish plausible inflation statistics without being prosecuted. His name is Alberto Cavallo, and he realised that by gathering price data published by online retailers, he could produce a credible estimate of Argentine inflation from the safety of Massachusetts. Cavallo’s estimate averaged more than 20 per cent a year between 2007 and 2011; the official figure was 8 per cent.

So began the Billion Prices Project and its commercial arm PriceStats, both collaborations between Cavallo and fellow MIT economics professor Roberto Rigobon. “Billion Prices” sounds hyperbolic but that is the number of prices collected each week by the project, from hundreds of retailers in more than 60 countries.

While the project confirmed that Argentina’s inflation numbers could not be trusted, it also showed that the US inflation numbers published by the US Bureau of Labor Statistics could be. Several maverick commentators had argued that hyperinflation would be the inevitable consequence of money printing at the Federal Reserve. When hyperinflation plainly failed to materialise, some critics suggested the BLS was hiding it — as if nobody would notice.

A second advantage, swiftly noted, was that the daily flow of data from PriceStats was a good predictor of official inflation statistics, which are typically published once a month. Cavallo and Rigobon like to point out that their US online price index started to fall the day after Lehman Brothers declared bankruptcy; the official Consumer Price Index took a month to respond at all, and two months to respond fully.

The BPP is also shedding light on some old economic mysteries. One is the problem of adjusting inflation for changes in quality. To some extent this is an intractable problem. The Edison phonograph cost $20 at the end of the 19th century; an iPod Nano costs about $145 today. What inflation rate does that imply over the past 117 years? There is simply no good answer to that question.

But statistical agencies are always wrestling with smaller slices of the same problem. A new model of washing machine is introduced at a premium price, gradually discounted over the years and eventually sold at clearance prices and replaced with a swankier model. The same thing is happening over differing timescales with computers, summer dresses and cars. If the economic statisticians mishandle these cases, they will get their measure of inflation badly wrong; usually they rely on careful substitutes and clever theory, but success can never be assured.

Cavallo and Rigobon argue that the sheer volume of prices collected by the BPP helps resolve the problem. Every day, the project gathers the prices of hundreds of washing machines. By observing that the availability of the Scrub-O-Mat 9000 overlaps with that of the Cleanado XYZ, it’s possible to adjust as new products are introduced and old products discounted and then phased out.

This “big data” approach to inflation is also helping us to understand the fundamental question of why recessions happen. Without opening a big bag of macroeconomics at this stage in the column, one influential school of thought is that recessions happen (in part) because prices don’t adjust smoothly in the face of a slowdown. Like a small rock that starts an avalanche, this price rigidity causes big trouble. Unsold inventory builds up, retailers slash their orders, and manufacturers go bankrupt.

The trouble with the idea that price stickiness causes recessions is that, according to official inflation statistics, prices routinely change by amounts large or small, which suggests no price rigidity.

But it turns out that many small price changes are statistical illusions. For example, if a product is missing from four monthly inflation surveys and is 1 per cent more expensive when it returns in the fifth month, official statisticians will quite rightly smooth over the gap by imputing a 0.2 per cent rise per month. But it would be a mistake to take this as evidence that retailers did, in fact, repeatedly raise prices by 0.2 per cent. Collecting billions of prices removes the need to fill in these gaps, and in the BPP data very small price changes are rare. Prices will move by several per cent if they move at all. One might guess that in physical stores the cost of relabelling products is higher, and small price changes are even rarer.

The BPP’s big data approach has rescued the important macroeconomic idea of price stickiness. It is a reminder that we often gain from having a second opinion — or a billion of them.

Tim Harford is the author of ‘The Undercover Economist Strikes Back’.

14 May 2016

Can a new attempt to strike a deal with Europe revive a moribund trading block?

AT A meeting in Brussels this week, officials from the European Union (EU) and Mercosur exchanged offers to cut tariffs and expand market access for each other’s’ goods and services. This is their second attempt to begin serious negotiations on a free-trade agreement–a mere 16 years after the idea was first mooted.

The first effort collapsed in 2004, when both sides judged the other’s offer to be insufficiently ambitious. Even now, nobody should count on success. The core Mercosur countries–Argentina, Brazil, Paraguay and Uruguay–are keener. But 13 European countries, led by France, want to scupper the talks because their farmers are scared of Mercosur, the world’s most competitive producer of grains and meat. They forced the EU to withdraw, at the last minute, proposed tariffs cuts on beef.

A trade pact between the blocks would make shopping cheaper for 750m consumers. The EU wants accords on services and government procurement. Brazil’s law firms are notorious for protecting their home market, while its construction and engineering companies used corrupt practices to win contracts from Petrobras, the state-controlled oil company. As for Mercosur, Europe is potentially a big market for some of its manufactures as well as its grains and soyabeans.

If the talks prosper, the biggest benefit for Mercosur could be the reviving of its original mission of boosting trade and investment. Over the past dozen years, left-wing governments in Brazil, Argentina and Uruguay have turned Mercosur into a political club. They invited Hugo Chávez’s Venezuela to join; Bolivia, under Evo Morales, followed (neither is part of the EU talks). Buoyed by high prices for their commodities, they proclaimed their commitment to “south-south” economic ties.

They did strike useful agreements on migration, pensions and tourism. But they lost interest in trade deals with rich countries and in deepening economic integration in Mercosur itself. Although Mercosur claims to be a customs union (like the EU) with a common tariff and foreign-trade policy, in practice it is not even a proper free-trade area. Cristina Fernández de Kirchner, Argentina’s former president, imposed quotas and licences on imports from Brazil. Uruguayan truckers face harassment in Brazil, says Luis Alberto Lacalle Pou, a Uruguayan senator. Intra-Mercosur trade was only 14% of its members’ total trade in 2014, down from 19.5% in 1995. Mercosur thus excluded itself from regional value chains in which much production is now organised–as well as from new trans-regional trade and investment agreements, such as the Trans-Pacific Partnership.

A light breeze of change is now in the air. Argentina’s new president, Mauricio Macri, is opening up his country after Ms Fernández tried to shut it off from the world. Tabaré Vázquez, Uruguay’s president, recognises that Mercosur is suffering from “fatigue”. The impeachment of Dilma Rousseff, Brazil’s president, would bring to power people who are more open to trade talks with Europe and the United States, and who are “very critical of the south-south strategy”, says Alfredo Valladão, a Brazilian political scientist at Sciences Po, a French university.

The obstacles to renewal in Mercosur remain large. In the short term Brazil’s political upheaval divides the group. At a meeting last month to mark the 25th anniversary of the Treaty of Asunción, Mercosur’s founding document, most of the Brazilian parliamentary delegation walked out in protest when Jorge Taiana, who was once Ms Fernández’s foreign minister and now chairs the block’s parliament, called Ms Rousseff’s impeachment “a coup”. Many in Uruguay’s left-wing government are wary of collaborating with Michel Temer, who is poised to replace Ms Rousseff as Brazil’s president. Argentina is cautious about freeing trade in cars within Mercosur, fearing that Brazil’s currently idle factories will flood its market. Most Brazilian industry lives on “protection and subsidies”, says Mr Valladão.

But some Brazilian industrialists are starting to realise that the state has run out of money to prop them up and that protectionism has weakened them. China has wrested markets from Brazilian manufacturers across Latin America. Chile, Colombia, Peru and Mexico formed the Pacific Alliance of free-trading economies; on May 1st they eliminated tariffs on 92% of their trade with each other and will phase out the rest over 17 years.

Brazil’s industry lobbies, like its probable new president, now want to talk trade with the United States as well as the EU. But free trade has become politically toxic in the north. While they were indulging ideological dreams, Mercosur’s governments were also missing the trade boat.

By Maximilian Heath
May 12, 2016

May 12 Workers at the Rosario grains export hub in Argentina will go ahead with plans to start a strike on Friday to demand higher salaries, a union leader said late on Thursday.

Reuters has seen a copy of a letter written by the country’s labor ministry asking workers at the port, the largest in one of the world’s top grains producers, to call off the strike.

However, Edgardo Quiroga of the local San Lorenzo branch of the CGT union said the group had not heard from the government and would begin striking for an indefinite period from Friday.

“We still haven’t received anything. The strike will start at midnight and tomorrow we will hold an assembly meeting,” Quiroga said, adding that the situation could change after discussions during the union meeting.

Rosario handles about 80 percent of Argentina’s grains exports. San Lorenzo covers the northern districts of the Rosario hub where multinational companies like Bunge Ltd, Cargill and Louis Dreyfus Commodities BV have crushing plants and ports.

The CGT counts quality control inspectors and dock workers among its members in Rosario.
According to Quiroga, the union is seeking a 45-percent increase in the minimum regional wage, to 20,015 Argentine pesos ($1,410.40) per month.

Wage negotiations are tough in Argentina because of soaring inflation.
Argentina’s government is targeting an inflation rate no higher than 25 percent this year. Private economists expect consumer prices will rise 35 percent this year.

Argentina is the world’s top exporter of soymeal livestock feed and the third-biggest exporter of raw soybeans, the fourth biggest provider of corn and a leading wheat supplier.

By Nicolas Misculin
May 12, 2016

May 12 Argentina’s Pampa Energia SA said on Thursday it planned to invest $400 million in thermal and wind energy projects if it wins a tender process for renewable power projects that the government will hold next week.

In April, the government of business-friendly President Mauricio Macri implemented a law mandating that renewable energy as a share of power consumption rise to 8 percent by 2018 from 1.8 percent currently.

“In thermal and wind energy it is an investment of 400 million between both of them,” said Pampa Energia head Marcelo Mindlin.

The energy projects are expected to total 320 megawatts in installed capacity.

Pampa Energia plans to invest between $100 million and $120 million in a thermal energy project in the Neuquen province and a total of $300 million in two wind energy projects in the south of the Buenos Aires province.
Argentina will hold a tender next week for 1,000 megawatts of renewable energy, part of the plan to install 10,000 megawatts of new cleaner power capacity by 2025, Energy Minister Juan Jose Aranguren said on Thursday. He expects investment of some $2.1 billion for the first phase.

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By Marianna Parraga
May 12, 2016

Argentina aims to stop importing light crude this year and improve domestic refining operations as it moves further down the road toward energy self-sufficiency, Energy Minister Juan Jose Aranguren said on Thursday.

Operators working in Argentina will continue to export oil, mostly Escalante heavy crude, he told reporters on the sidelines of an industry conference in Houston.

But more refining of domestic light crudes and larger and more regular gas supplies from Bolivia would help the South American country cut imports of costly liquified natural gas (LNG), gasoil and crude.

The Argentine government is in talks with local refineries, encouraging them to buy more domestic light crude and import less, after a 200,000-barrel cargo of a rare light crude was exported last month to drain inventories that were not bought by state-run oil firm YPF, he said.

“Locally produced crude should be given priority in order to avoid a reduction in jobs and tax revenue,” Aranguren said. “The domestic price goes from $55 to $67.50 per barrel depending on the crude type, which means it would be convenient to sell production in the domestic market.”

President Mauricio Macri promises to increase investment in the oil sector, particularly in renewable energy and the sprawling Vaca Muerta shale formation in Patagonia, as part of his campaign to reverse Argentina’s status as a net oil importer.

Argentina has been running an energy deficit since 2011, draining foreign exchange reserves.
But in a low oil price environment, foreign companies are uncertain that Vaca Muerta will be profitable and have been focusing on reducing drilling costs, executives said.

Macri was elected in November on a platform of eliminating currency and trade controls in a bid to increase investment. His election followed eight years of interventionist policies under previous leader Cristina Fernandez, who nationalized YPF in 2012.

“The country disconnected itself from the international market and lost its competitiveness,” the minister said.
In five or six years, Aranguren said, Argentina should be able to stop importing liquefied natural gas, only preserving gas imports from Bolivia contracted to 2027, while limiting gasoil purchases for the winter season.

Argentina will hold a tender next week for 1,000 megawatts of renewable energy, part of the plan to install 10,000 megawatts of new cleaner power capacity by 2025, Aranguren said. He expects investment of some $2.1 billion for the first phase.

By Juliette Kerr
12 May 2016

The government of President Mauricio Macri has used the proceeds of a USD16.5-billion bond issuance to repay the majority of holdout bondholders, leading to a lifting of the court injunction that had prevented Argentina from paying interest on restructured bonds and forced it to default on its sovereign debt for the second time in 13 years on 31 July 2014. Local upstream investors will welcome Argentina’s return to the international capital markets and exit from selective default, as limited access to external financing and relatively high borrowing costs have impeded greater investment in the sector. However, financing challenges for Argentina’s hydrocarbons sector will likely remain due to continuing low international oil prices, a relatively small number of operators, and the heavy capital costs involved in developing Argentina’s unconventional hydrocarbon resources.

Significance: The national oil company (NOC) YPF will be the main beneficiary of Argentina’s formal exit from default as its credit rating is closely tied to that of the sovereign. Corporate bond spreads will likely fall gradually as the sovereign is still regarded as a high payment risk by credit rating agencies, but the 7.14% average yield on last month’s sovereign debt placement was lower than for a YPF bond issue earlier this year. The risks of partnering YPF will also likely fall following the settlement reached with litigating holdout bondholders. YPF’s revenues and assets were previously at potential risk of seizure, given attempts by holdout bondholders to obtain payment from Argentina by claiming that state-owned companies like YPF were an extension of the government. Without renewed access to credit, Argentina had insufficient international reserves to settle its debt obligations and finance its import bill (Argentina’s international reserves (excluding gold) stood at ~USD23 billion as of end-2015, providing around four months of import cover).

The government hopes that ending the long-running legal dispute with holdout bondholders will boost investor confidence, although Macri’s claim that the new government’s policies will attract USD20 billion in foreign investment in 2016 remains optimistic (foreign direct investment inflows last year totalled ~USD6.5 billion). In the hydrocarbons sector, international oil company (IOC) capital expenditure budget cuts in response to continuing low international oil prices will likely limit any upsurge in investment in response to the perception of increased legal stability.

Several provincial governments, encouraged by strong investor demand for sovereign bonds (and the prospect of more favourable terms following Argentina’s exit from default), are planning to tap international bond markets. The first oil-producing province to follow the federal government’s lead, Neuquén, has already raised USD235 million in a hydrocarbon royalty-backed bond issue; another producer, Mendoza, plans to issue up to USD500 million worth of debt. The use of royalties as collateral for provincial bonds will exert pressure on the government to maintain favourable domestic prices to safeguard production volumes. Several Argentine oil companies may also issue new debt, though in the case of YPF, the Macri government will likely limit any increase in borrowing. YPF objectives include maintaining a net-debt-to-EBITDA ratio of 1.5, although YPF did approve a motion to raise the ceiling of its medium-term global debt issue programme from USD8 billion to USD10 billion at its annual shareholders’ assembly in late April. This modest increase in borrowing and insufficient cash flow mean that YPF’s ability to tap its significant resource potential as the largest acreage holder in the Vaca Muerta shale play (it controls around 40% of the 30,000 square kilometre area) will continue to depend on partnership deals with foreign and domestic entities.

OGRS risk impact: Argentina’s return to the international capital markets after a 15-year absence will allow the country to finance its debt commitments without resorting to further drawdowns of its depleted foreign-exchange reserves. This will ease pressure on the Transfer Risk score, which has been raised to “D” (3), from “F” (2). Argentina’s Sanctity of Contract score has been raised to “D” (3), from “F” (2) to reflect the country’s formal exit from technical debt default. The five-year outlook Rule of Law score will be lifted a notch to “D” (4) following the settlement of legal disputes with holdout bondholders, but judicial reforms to strengthen the independence and efficacy of the domestic court system are still needed to improve the current score, “D” (3).

By Paula Diosquez-Rice
12 May 2016

Following Argentina’s return to the external market for financing, ratings agency Fitch upgraded Argentina’s short- and long-term foreign currency issuer default rating to B, with a Stable outlook.

IHS perspective


Fitch has upgraded the rating for Argentina’s sovereign risk rating to B, from RD.


Fitch cited that Argentina resuming debt service disbursements also supported the change in the rating.


The expectation is that the new government will continue working towards increasing credibility and macroeconomic stability.

Risk ratings

Fitch’s decision to upgrade Argentina’s risk rating brings it half a notch above the same level of IHS (60 points, B-, very high payment risk), and that of Moody’s and Standard & Poor’s, all of which deem Argentina slightly more risky.

Fitch upgraded its short- and long-term foreign currency issuer default rating for Argentina from RD to B. The outlook on the rating was set at Stable. According to its press release, Fitch based its move on the end of the legal blockade on debt servicing set by the New York City court system; indeed, Argentina was able to restart interest payments for bonds that had previously been exchanged and were in default since July 2014. Argentina’s ratings mirror the enhanced uniformity and coherence of Argentina’s policy structure, reduced external weakness, and the reduction of fiscal financing limitations. The Stable outlook balances Argentina’s economic policy improvements with the still-weak external environment, the deteriorated fiscal accounts, and macroeconomic underperformance when compared to its peers. The agency highlighted the political brokerage that enabled the Macri administration to obtain congressional approval to negotiate with the holdouts and ultimately exit default. The successful return to the global stage (Argentina issued some USD16.5 billion in April 2016) will increase the government’s financing sources and will reduce the pressure on the country’s foreign-exchange reserves; however, the inadequate access to finance increased inflationary pressure through monetising fiscal deficits. The rating agency highlighted President Mauricio Macri’s government’s work on changing economic policies, such as the elimination of currency controls and the reduction of utility subsidies, which show a commitment to reduce economic distortions and eventually restore macroeconomic balance. Fitch estimates that gross public-sector debt increased to 59% of GDP in 2015, above the median of the B peers; meanwhile, the majority of Argentina’s public-sector debt is held by public-sector entities such as the country’s social security agency (ANSES). At the same time, the fiscal deficit widened in 2015 and it is expected to gradually decline with the fiscal consolidation stance of the current administration.

Outlook and implications

The decision by Fitch to upgrade its risk rating brings it half a notch higher than the level of IHS (60 points, B-, very high payment risk) and that of Moody’s and Standard & Poor’s, all of which deem Argentina more risky. The outlook on the IHS rating is Stable and recent developments are being monitored very closely and could eventually lead to an upgrade. However, unlike the rating agencies that rate individual bonds, IHS does not convert a rating that only affects a legally limited minority of the total external debt; therefore, IHS’s sovereign risk rating was not downgraded when the New York City court system placed the injunction that blocked payments to previously exchanged bond holders. Normalising the country’s stance in the international finance market was a first step towards improving its credit rating. However, in order to move up from the very high payment risk Argentina would need to show improvement in its solvency metrics; indeed, among the main problems to tackle are the country’s inflation rate and the steep fiscal deficit.

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By Stephanie Brinley
12 May 2016

General Motors CEO Mary Barra visited the company’s Argentine production plant in Rosario to inaugurate production of the new Cruze, according to a GM press release. Production of the second-generation Cruze, and a new engine plant that will go online in 2017 supporting the model, stems from a USD740 million investment begun in 2014 (see Argentina: 10 July 2014: ). Argentine president Mauricio Macri also attended the ceremony. Barra told reporters after the event that the Brazilian market’s decline from last year is creating very difficult conditions for companies such as GM but the group is betting on a recovery. Barra said Brazilian employees are “responding incredibly well to the challenges in the marketplace and also making the right investments for the future because I do believe the market will recover.

Chevrolet is an incredibly strong brand in Brazil, and as the market starts to rebound we want to participate very strongly in that recovery”, according to the Wall Street Journal.

Significance: Through April 2016, Brazil auto sales have dropped by 27.6% to 623,333 units and GM sales by 30.4% to 101,609. IHS Automotive forecasts Brazilian sales will slide until 2018, with a 24% drop in 2016. In early 2016, GM president Dan Ammann indicated that the company might revisit its investment plans if the market continued to deteriorate (see Brazil: 22 February 2016: ). Yet Barra’s remarks do not suggest changes in GM’s plans are imminent. In July 2015, GM announced plans to double Brazilian investment (see Brazil: 29 July 2015: ). Production of the Cruze in Argentina replaces the Agile and Corsa and IHS forecasts the plant’s output will reach 41,000 units in 2018, then pull back in subsequent years, serving Argentina and Brazil. The compact car is also built in China, Mexico, South Korea, and the United States.

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By Jeff Fick
12 May 2016

Rio de Janeiro (Platts)–12May2016/1012 pm EDT/212 GMT The board of Brazilian state-led oil company Petrobras has approved the sale of the company’s Argentina subsidiary and exclusive talks to sell a pipeline unit, as divestment plans gain momentum, the company said late Thursday.

Petrobras agreed in early May to sell its 67.29% stake in Petrobras Argentina to Pampa Energia for $892 million, but the deal was still subject to board approval. The deal values the full company, which trades on the Buenos Aires Stock Exchange, at $1.327 billion.

Petrobras and Pampa also agreed to subsequent operations that will see Petrobras retain a 33.6% stake in the Rio Neuquen concession in Argentina and 100% of the Colpa Caranda field in Bolivia for $52 million, Petrobras said in a regulatory filing.

“The Rio Neuquen and Colpa Caranda assets have strategic value for Petrobras because they hold large potential for natural gas production, especially Neuquen, where Petrobras estimates there are large reserves of tight gas,” Petrobras said.

The two subsequent deals must be approved by the board of Petrobras Argentina and local regulators, the company said.

In a separate filing with stock regulators, Petrobras also said that it would enter into exclusive talks for 60 days to sell its Nova Transportadora do Sudeste, or NTS, to Brookfield. The talks can be extended for an additional 30 days, Petrobras said.

Petrobras had previously said it was reorganizing its natural gas pipeline unit into two distinct companies for the purpose of divesting the business unit. NTS operates about 2,500 km of natural gas pipelines in the industrialized south and southeast of Brazil. The second subsidiary, Transportadora Associada de Gas, or TAG, operates pipelines in the north and northeast of Brazil.

Analysts have said the sale of NTS could fetch more than $5 billion for Petrobras. The deal is still subject to approval by the boards of Petrobras and Brookfield, as well as relevant regulatory authorities, Petrobras said.

The sales are the first this year in a divestment program that is targeting asset sales of $14.4 billion by the end of 2016. So far, the company has made deals totaling about $1.4 billion through the Petrobras Argentina sale and the sale of a fuel-distribution business, called Petrobras Chile Distribucion, in Chile.

The slow pace of the sales has caused many analysts to question whether the company will be able to meet its target. Petrobras needs to raise the cash to pay down debt that topped $125 billion at the end of the first quarter, so a series of large-scale deals could provide quick relief for the cash-strapped company.

The company also continues to hold talks with interested parties on the potential sale of oil and gas fields and non-core business units in fuel distribution, logistics and transportation. In March, the company said it was putting 98 production concessions and six exploration blocks in the Brazilian states of Bahia, Ceara, Espirito Santo, Rio Grande do Norte and Sergipe on the auction block. The fields account for about 35,000 b/d of onshore oil output.

But Petrobras has also faced some resistance to its plan.

Local judges have handed down injunctions blocking the sale of Petrobras’ 49% stake in its Gaspetro unit to Mitsui & Co. for $501 million, which generated the largest portion of the $700 million in asset sales made in 2015. Workers also walked off the job for 19 days in November, the longest strike at Petrobras since 1997, to protest the company’s asset sales.

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By Franklin Templeton Investments
May 12, 2016

My colleagues and I recently visited Argentina, which is undergoing a transformation after last year’s election ousted President Cristina Fernández de Kirchner, the wife of the previous President Nestor Kirchner. The center-right opposition candidate Mauricio Macri’s win with his “Let’s Change” slogan ended a regime that brought high inflation, dollar shortages, an erosion of foreign reserves, and government actions that undermined business confidence and limited access to international capital markets. Taking office in December, President Macri appointed a skilled technocratic team promising to improve the economic situation in the country, which the financial markets have welcomed.

Soon after the new government took office, rating agencies upgraded their outlook for the country from negative to stable as a result of the swift changes from the previous government’s economic policies, including the elimination of currency controls and the reduction of exporting tariffs. These actions indicated the new government was rejecting the public-sector interventionism that hurt exports and reduced foreign-exchange earnings. Even more important than this vote of confidence was the ability of the new government to reach agreement on defaulted foreign debt the prior administration had refused to pay and had locked the country out of the international debt markets.

In March 2016, Macri was able to obtain approval from Argentina’s Congress to reach an agreement settling a 15-year dispute with “holdout” hedge funds that owned substantial amounts of the debt. The Argentinian government issued US$16.5 billion in debt, with US$9.3 billion allocated to settle with holdouts, US$2.5 billion to pay blocked restructured debt which was performing until 2014, and the remainder to be used to finance part of the fiscal imbalance during the 2016 fiscal year. Argentina’s return to the international capital markets should be considered a major triumph and was extremely well received by investors; its bonds were oversubscribed.

It was remarkable that congressional approval was obtained, since Macri had won the presidential election by a margin of less than 3% nationally. Thankfully, Macri moved fast and immediately lifted capital controls, raised interest rates, liberalized the foreign-exchange market and cut export taxes. He still faced the problems of small and falling international foreign reserves, a bloated public sector, a fiscal deficit of 7% of gross domestic product (GDP) and a wage price spiral, but the global community has by and large welcomed Macri’s policies. The Chinese had previously engaged in a currency-swap deal with the cash-strapped Argentinian government, giving them renminbi in exchange for Argentine pesos so the country would have Chinese currency to pay for Chinese imports, while the Chinese could use pesos to import the raw materials that Argentina produces. Under the new administration, the People’s Bank of China stated that the swap could be converted into US dollars, which would add US$11 billion to Argentina’s central bank assets.

Signaling another boost of confidence in Argentina, US President Barack Obama made an official visit to the country in March after Macri took office. Obama praised the speed at which reforms were being made and signed a trade and investment framework agreement to cooperate in a number of areas, with the hope that US companies would add billions in investment dollars to Argentina’s economy.

Short-Term Pain for Longer-Term Gain

When a populist, high-spending government leaves office, the need for reform results in short-term pain, since the debts generated by the previous government have to be paid. It’s like a hangover after a big party. So it was no surprise to me that when we arrived in Argentina this spring that the English-language Buenos Aires Herald newspaper had the headline: “Electricity rates may jump by 300%.” The article said that President Macri’s administration had paved the way for increases in the wholesale prices of power nationwide that would mean a cut in subsidies for users, particularly in the Buenos Aires area, who had enjoyed the lowest electricity rates in the country. This would be positive for the government’s budget, which has been drained by those subsidies, but also for electric power companies that had to share in the pain. This reform should enable power companies to increase capital spending and enable a reduction or even elimination of blackouts and brownouts, which have been experienced in recent years. We witnessed one case of a brownout when we traveled to the outskirts of Buenos Aires to visit one of the new shopping malls. On the way there, one whole section of the city was dark because of a cut in power for that area.

When I first visited Buenos Aires in the 1990s, the Puerto Madero area was a rundown collection of derelict warehouses along the canal connected to the Rio de la Plata (Silver River). In 1989, city and federal governments formed a joint stock company to urbanize the area, which led to a major restoration and conversion program, which included transforming the old warehouses into trendy restaurants, offices and apartments. The place blossomed, further resulting in entirely new developments of high-rise apartments and office buildings along the river canal. With good city planning, a network of wide roads and picturesque riverside walkways was developed. A number of architects were involved in creating beautiful structures, including my favorite architect, Santiago Calatrava, who designed an ultramodern pedestrian bridge, the Puente de la Mujer (Women’s Bridge), which swings to the side allowing ships to pass. In 2008, the heir to a cement fortune and reputedly Argentina’s richest women, Amalia Lacroze de Fortabat, financed the construction along the canal of a beautiful museum housing her extensive art collection. When I visited, I found it to be quite an impressive collection, particularly of Latin American art. More international hotels are currently planned for the area.

On my most recent trip, the first thing I noticed when driving from the Buenos Aires airport to the Puerto Madero area was a tall, modern skyscraper at the end of the port channel with large logo initials of a Chinese bank at the top. The influence of China has been growing in Latin America and globally. Argentina has imported substantial amounts of telecommunications equipment from the likes of Huawei, China’s electronics equipment giant. Discussing this with the Argentinian telecom companies during our recent visit, we heard that the Chinese payment terms and conditions were very generous and that large teams of Chinese technicians were brought in to do the maintenance, which was deemed as superb.

A Legacy of Mismanagement

In our view, one of the key reforms going forward for Argentina will need to come from the country’s statistical agency. The Kirchner government had fired the head of the agency when she issued (accurate) inflation numbers of over 20% and installed a new agency head to issue false inflation numbers and other inaccurate information. The Kirchnerist policy mismanagement also banned the export of meat in an attempt to protect domestic consumers and keep prices down, but this policy forced many companies that had lost overseas profits to close. At the same time, since it was not profitable to invest in new cattle, the stock of cattlehead declined from 60 million heads in 2006 to 52 million by 2012. This Kirchnerist policy actually created the opposite effect that it originally intended, and prices skyrocketed.

Labor, an issue deeply related to inflation, remains a challenge for Macri’s administration today. The new government wanted to make the 2016 inflation target of 25% the benchmark for wage negotiations, but leaders of the powerful General Confederation of Labor warned that they expected wage increases in 2016 to be at least 30%, the number that they considered the real inflation rate. This put the Macri government in a bind, since wage restrictions were part of the administration’s promise to rein in inflation. The labor unions were concerned about the surge in inflation coming from the peso depreciation in addition to job losses in the oil industry. Ever since the Kirchner administration forced the government statistical agency to issue false inflation data, there has been mistrust in the official numbers. Another problem facing Macri is that traditionally, labor unions were aligned with the opposition Peronists instead of Macri’s center-right Republican Proposal Party. Additionally, thousands of public employees hired by the previous administration have been dismissed, but many are still receiving salaries without having to show up for work.

Taking a walk from our hotel to the business district, we saw signs of the Kirchner heritage’s ability to survive even though she is no longer in power. At the time when Argentina was one of the world’s wealthiest countries, construction started in 1908 on an elegant French Second Empire-style building designed by a French architect as a post office. At the time of its dedication, the huge eight-story building with a floor area of 88,050 square meters (947,800 square feet) was considered the largest in Latin America. The building is lavish with marble all over, stained-glass windows, many bronze sculptures and a four-story-high domed ceiling. The grand setting led President Juan Perón to move his offices into the building during the early years of his 1946-1955 reign, and his First Lady, Eva Perón (remember “Don’t Cry for Me, Argentina”), assigned one wing as the first headquarters of the so-called charitable Eva Perón Foundation. Former President Cristina Kirchner had the building fully restored and renamed it the “Kirchner Centro Cultural,” which is carved in stone at the top. It includes a concert hall, five other auditoriums for theater and concerts, 18 halls for other performances and events, 40 rooms of art and history galleries, 16 rehearsal rooms and two rooftop terraces. When I entered the building and went to the counter where a young man and woman were sitting, I said what I wanted to see, but the man answered that it was closed. When I asked why, he said matter-of-factly: “There has been a change in the government.” Nevertheless, outside on the curb were painted stenciled signs with a profile of Mrs. Kirchner and the words in Spanish translating in English as, “I will be back.”

A New Era for Argentina

In an effort to dismantle the structure of corruption left over from the Kirchner era, the new government took action to block money allocated for infrastructure projects in a number of provinces due to the lack of transparency on contracts signed by the previous government. Audits showed that in some cases 80% of the payments for some projects were made despite the fact that only 10% of the work was completed. The audits would impact major projects such as two hydroelectric dams being built by Chinese companies at an estimated US$5 billion in a Kirchner stronghold province.

Besides demystifying the Kirchner heritage, another challenge is the issue of tax sharing between the federal government and the provinces. After the election, Argentina’s Supreme Court ruled it was unconstitutional for the federal government to take a 15% greater share of its tax-sharing agreement with the provinces, a practice in place since 1992. This meant that the federal government would have additional budget constraints and would be liable to repay billions that had been withheld in previous years.

The issue of law and order is another legacy of the Kirchner administration that the new government has to grapple with. In December 2015, three convicted murderers in a high-profile case escaped a Buenos Aires province prison. That, along with a rising crime wave, resulted in criticism of the Ministry of Security and the police in general, and the rising belief that there were direct links between criminal networks, the police and politicians. Since Argentina has good ports and infrastructure, drug traffickers were relocating from Colombia and Mexico using Argentina as a transit point for trafficking cocaine to consumer markets in North America and Europe. When he entered office, President Macri declared a 365-day nationwide state of emergency and outlined a new security policy, including increased control at entry points to prevent transport of drugs, and renewed international cooperative efforts (specifically with Israel) on security and defense technology.

On a more positive note, the change in government was good news for Argentina’s major media group, which had been battling with the Kirchner administration and had been subject to laws and regulations designed to break it up. Now the group has the ability to expand and consolidate its media empire to offer a full range of so-called “quad play” services (wireless, TV, Internet and home phone services), newspapers and magazines, free-to-air television, Internet broadband, telecommunications and cable). We had visited the group in the dark days, when the Kirchner administration was attacking it and even going as far as sending gangs of political agitators to break into their offices and disrupt their operations. This time when we arrived at their offices, the executives were in much better spirits, and the company is a strong political and social force.

We also visited a steel producer located in Argentina. The officials there mentioned that Mexico was a particularly important market because of its large manufacturing base for automobiles—which has been increasing. In 2015, Mexico’s production of vehicles reached 3 million units and is expected to reach more than 5 million units by 2020.1 The challenge, of course, was coming from China where steel was being sold at a far lower price than US steel. They said that it was important to protect local markets with anti-dumping duties which were being put into effect, although lower steel prices weren’t negatively impacting all of their operations. We discussed the situation of China’s steel industry; roughly half of the world’s output of steel comes from China, and issues of excess capacity have caused some plants there to close, but there has been tremendous resistance to putting people out of work. I had to laugh when one of the officials at the steel company told me he heard in one case, the Chinese government sent an executive to close down a plant in one of the provinces and the workers threw him out of the window, a story which I certainly can’t verify!

Visiting a company that makes seamless steel pipes mainly used in the oil industry, it was not a surprise to hear of a decline in demand in the United States and Canada and subsequent increase in inventory amid the oil price drop in 2014-2015. While they felt certain a large part of production would be taken out of the market with continued low prices, they believed their business would recover as oil prices recovered.

Experiencing Nearby Sights – and Currency Challenges

Over the weekend, my colleagues and I took a short ferry trip to Colonia del Sacramento, Uruguay, right across the Rio de la Plata. When we went to buy tickets for the Buquebus (the Argentinian ferry operator), the teller said they would not accept local peso currency—only US dollars. After discussing some other exchange-related anomalies, we proceeded to Colonia, one of the oldest towns in Uruguay developed on a peninsula that protrudes into the river. It is renowned for its historic quarter, a UNESCO World Heritage Site. It’s a popular tourist attraction for visitors from Buenos Aires, and there is frequent ferry service between the two cities, with fast ferries completing the journey in less than an hour. The historical section of Colonia, which has some cobblestone streets built by the Portuguese in the 17th century, is within walking distance of the ferry terminal. The ferry company operates services from Buenos Aires not only to Colonia but to Montevideo, Uruguay’s capital, entry to the famous summer resort area of Punta del Este.

Renting a bicycle, I enjoyed the opportunity to soak up some sun and local sights along the coast. We were encouraged to see many vacationers and bustling traffic. Overall, our visit to Argentina confirmed our views that its economy was gradually on the recovery path—and I believe if the pace of reforms continues there, Argentina’s turnaround could be even faster than expected.

The comments, opinions and analyses presented herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Because market and economic conditions are subject to rapid change, comments, opinions and analyses are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy.

Important Legal Information

All investments involve risks, including the possible loss of principal. Investments in foreign securities involve special risks including currency fluctuations, economic instability and political developments. Investments in emerging markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with emerging markets are magnified in frontier markets. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions.

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Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other.
~Oscar Ameringer~

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11 mayo, 2016








May 9, 2016

BUENOS AIRES, Argentina — Argentine President Mauricio Macri has struck a deal with local businessmen to suspend layoffs for 90 days.

Macri’s announcement of the deal Monday comes as job cuts and high inflation rate are worrying many Argentines.

Tens thousands of state and private employees have been fired since he came to power in December promising to cut bloated government spending and tame high inflation.

Macri has said measures are needed to jump start Argentina’s stagnant economy and end economic distortions that have led to years of high inflation.

His government says the layoffs are justified because many employees hired during previous administrations never showed up for work. Unions representing workers say they are being indiscriminately fired.

Argentina’s opposition has proposed a bill that would ban laying off workers “without just cause.”

By Charlie Devereux and Pablo Rosendo Gonzalez
May 9, 2016

* Fernandez’s Science Minister Baranao kept on by Macri
* Country in transitory crisis but long-term prospects are good

The only Argentine minister to survive the chopping block when President Mauricio Macri took over from Cristina Fernandez de Kirchner in December has spoken of the contrast between the two styles of government. For a start, Macri holds cabinet meetings.

Lino Baranao, who was appointed science and technology minister by Fernandez at the beginning of her first term in 2007 and was surprisingly kept on by Macri, said the new cabinet works as a team whereas before the orders tended to come from on high.

“The previous team was dominated by the direct impact of the president – she was the one who took the decisions,” Baranao said in a phone interview. “There wasn’t so much horizontal interaction. In fact, there were no cabinet meetings.”

Argentina is experiencing a “transitory economic crisis” as Macri seeks to close a 7 percent fiscal deficit that he inherited from Fernandez, Baranao said. But the country’s long-term prospects are promising and while the new government’s operating style is very different, it has maintained investment in science and technology, he said.

“This government wants to first of all reduce the fiscal deficit and it is more open to foreign investment which is different from the previous government,” Baranao said. “There is a lot of emphasis on teamwork, something that didn’t happen before. The atmosphere is very cordial – they are different styles.”

By Nicolás Misculin
May 9, 2016

A judicial probe of possible corruption during Argentina’s last government is also threatening the new administration as some of President Mauricio Macri’s own allies face investigation.

Macri, a center-rightist, took over as president in December from outgoing leftist Cristina Fernandez, pledging to root out corruption as well as implement sweeping market-friendly economic reforms.

Investigations have already led to the arrest of a Fernandez ally and landed the ex-president in court for questioning. But now questions are also being asked of some close to Macri, threatening to taint his image.

Iecsa, a construction firm that is part of the Macri family empire and controlled by his cousin Angel Calcaterra, is one of nearly 100 companies in Argentina being investigated as part of Brazil’s growing “Car Wash” scandal, an Argentine judicial source close to the case told Reuters.

The source did not provide specifics of the Iecsa case, but the “Car Wash” probe has focused on kickbacks and other irregularities in bloated contracts at state oil firm Petrobras.

A source close to Iecsa said the company “has never been notified of any investigation”.

Government anti-money laundering and anti-corruption officials, newly appointed by Macri, are pushing to investigate corruption under Fernandez’s administration.

They have encouraged whistleblowers to come forward and offered lighter punishments for wrongdoers in exchange for information.

Macri has kept his distance from the probes.

“I will permit, stand back and work with it when needed, but justice has to work independently,” said Macri this week.

Still, Fernandez is portraying herself as the victim of persecution.

“They can call me to testify 20 times. They can imprison me. But they will not be able to silence me,” she told cheering supporters after testifying about charges against the central bank for selling U.S. dollar futures at below-market rates during her presidency.

Daniel Scioli, the opposition leader and Fernandez ally who lost to Macri in the presidential election, has warned against a witch-hunt.

“We hope politics does not become judicialised and that the justice system does not become politicized,” he told Reuters.

Argentine media are closely following the twists and turns of the corruption allegations that have become known as the ‘K money road’, an allusion to Fernandez’s deceased husband and ex-president Nestor Kirchner and their ‘Kirchnerista’ movement.

Prosecutors are probing a complex web of cases linked to property entrepreneur Lazaro Baez, a close ally of both Fernandez and Kirchner.

He was arrested last month for questioning after some $5 million was allegedly deposited in a bank account in his son’s name.

Fernandez denies any wrongdoing.

Associates of Macri, including Iecsa, also have Baez connections. Iecsa joined forces in recent years with Baez’s Austral Construcciones in a failed attempt to compete for public works projects.
Iecsa is not part of the judicial probe into Baez and the source close to the company said it was not a partner of Austral, but “just worked with it on two bids, as it has with many other companies”.

The source added that Macri’s cousin Calcaterra is trying to sell Iecsa to avoid possible conflicts of interest.

Also caught in the probe of Baez is a federal intelligence official, Silvia Majdalani, who was appointed by Macri and is now being investigated for money laundering. Other officials in Macri’s government are also being questioned in the dollar futures case.

A spokesman for the government said: “The government isn’t worried because it is allowing justice to act freely.”

The Supreme Court has asked judges to push ahead with corruption and drug trafficking cases and legal sources say judges who may have faced stonewalling from security forces or the civil service under Fernandez’s government can now count on more collaboration.

“There are judges that now feel empowered to investigate the last administration. Before, they couldn’t get access to information,” a federal court source told Reuters.

Yet, there are political risks. When Fernandez went to court to answer questions in the central bank case, huge crowds filled the streets of Buenos Aires in a show of support as she railed against Macri.

“They went looking for the K money road,” she cried. “They found the M money road.”

9 May 2016

The new government has been unveiling an ambitious series of infrastructure projects, designed both to facilitate trade as it seeks to drive GDP growth and to fulfil its campaign promise to work towards “zero poverty” with, for instance, water and sewage works. But the announcements come as the president, Mauricio Macri is trying to cut the fiscal deficit and rein in inflation, so the government is courting foreign investors-and reportedly considering public-private partnerships-as well as leaning on international capital markets and multilateral lending institutions to, in large part, fund the projects.

The government is targeting average annual GDP growth of 4.5% in 2017-19 (we expect adjustment policies this year to result in a recession, with GDP contracting by 0.8%). To achieve this, it has made upgrading infrastructure a pillar of its economic plans. In the short term, investment in infrastructure projects will provide employment at a time when Mr Macri is under pressure over layoffs in both the public and private sectors. In the medium and long term, better transport links will help to reduce logistical bottlenecks and help farmers and manufacturers, whose products often travel huge distances to ports for export.

Provinces look to finance infrastructure upgrades

Mr Macri has been announcing a host of infrastructure projects over the past few weeks. But as his administration wants to reduce the fiscal deficit, it must find ways to finance these projects without eating into tax revenue. After US$16.5bn in issuance in global bond markets last month, a record for an emerging-market creditor, the economy minister, Alfonso Prat-Gay, said that much of the money not used to pay holdout creditors and exchange bondholders (approaching US$5bn) will be destined for public works at the federal level. The high demand for the bonds also augurs well for the provinces, which will now turn to capital markets to fund their own infrastructure upgrade programmes. Neuquén was the first province to tap international capital markets following the sovereign’s landmark deal, selling US$235m in early May at a yield of 8.625% in an issue that was subscribed six times over.

Buenos Aires province, Argentina’s largest and most populous, is likely to lead the way in provincial infrastructure development. Mr Macri and María Eugenia Vidal, the governor of the province, have unveiled a wide-ranging, Ps150bn (around US$10bn) plan for the province. It includes adding flood defences; extending sewage systems; building or upgrading nearly 1,300 miles of roads; modernising train lines between the capital city, Buenos Aires, and Rosario, a strategic port city, and Mar del Plata, on the Atlantic coast; and improving Ezeiza international airport.

Multilateral loans to boost transport infrastructure

Mr Macri’s administration has been meeting with foreign leaders and businesses in Asia and Europe as it looks for investment in national road, rail and port networks. The government has also received funding from the Inter-American Development Bank (IDB), the Development Bank of Latin America (CAF), and the World Bank-after the US stopped opposing the latter’s loans to Argentina. The IDB will finance a total of US$5bn of government spending until 2019, according to the Ministry of Finance, including US$815m this year that is destined for infrastructure and social policies. IDB financing includes a plan to press ahead with the US$1.6bn Agua Negra road tunnel, an idea first floated in 1996 to link San Juan Province in Argentina to the Coquimbo region on the other side of the Andes in Chile. Last month the two countries also agreed to progress with the Las Leñas crossing to the South, connecting Mendoza province with the O’Higgins region of Chile (although, for now, there appears to be no third-party financing).

The World Bank agreed in March to lend Argentina US$3.5bn over the next three years, with US$1.4bn destined this year and next, in part, to infrastructure. Part of these funds, along with a US$2bn loan from CAF agreed at the start of May, will go towards the Plan Belgrano. The plan, a campaign pledge, involves spending US$16bn to improve transport links and water and sewage works across ten provinces in the north of the country, and build 150,000 homes. According to Mr Macri, this will include the construction beginning in June of a water-treatment plant and pipeline in Formosa province.

PPPs on the cards?

On a similar note, Mr Macri, who campaigned on a promise of “zero poverty”, is pushing ahead with a National Water Plan, announced on April 29th, which will require investment of Ps200bn over the next four years and Ps80bn this year, according to the government. The goal is that by the end of this government’s term all Argentinians will have access to drinking water and three-quarters will be connected to a sewage system. On April 22nd the government also set up a fund to shore up flood defences in the Northeast, which has been hit badly by rains in recent weeks and months. Finally, on April 28th Mr Macri unveiled a housing plan for which US$100bn will be needed this presidential term. In addition to the homes to be constructed under the Plan Belgrano scheme, it aims to ease access for hundreds of thousands of Argentinians to mortgage loans and financing to build or repair homes.

Even with recently announced multilateral loans and an expectation that provincial debt issuance will help finance infrastructure works, announcements of this scale raise big questions over financing. The government has not officially announced the introduction of a public-private partnership (PPP) framework for investment, but it seems clear that Mr Macri is keen on the participation of the local and foreign private sector in the infrastructure drive, and this is most likely to take place under the auspices of such legislation. Local news reports have suggested in fact that the government is currently preparing a bill on PPP framework legislation to present to Congress in the coming weeks. Such arrangements can take on different forms and they have been successful in other Latin American countries. It remains unclear for now what the government’s approach to PPPs would be, but it seems likely to be a crucial element of any plan to improve infrastructure under the Macri administration.

By Charles Newbery
9 May 2016

Buenos Aires (Platts)–9May2016/226 pm EDT/1826 GMT Argentina has the potential to become a net exporter of oil and natural gas from its huge shale resources, a task that will require large investments not just by majors but also a lot of junior players, executives said Monday.

“If Argentina does things right, it could become a big exporter of oil and gas,” Arturo Vilas, general manager of Canada’s Miramar Hydrocarbons, said at the Argentina Shale Gas and Oil Summit in Buenos Aires.

Argentina has among the world’s largest shale oil and gas resources, and big companies like the country’s state-run YPF, Chevron and Dow Chemical have started to put them into production, while ExxonMobil, Shell and Total are pursuing production pilots.

The investments have achieved stable production, but it is still “very little,” Vilas said.

The country is producing about 50,000 b/d of oil equivalent in shale oil, gas and liquids, according to Neuquen government data. Neuquen is a southwestern province that is home to the giant Vaca Muerta play and most of the country’s shale drilling.

There could be an increase in investment this year thanks to improved conditions for doing business in the country. The new right-of-center government of President Mauricio Macri, who took office in December, has returned the country to global financial markets by ending a 15-year sovereign debt default, expanding financing opportunities for companies. His administration has also raised most energy prices, lifted capital controls and scrapped trade restrictions.

“Investment conditions have improved,” Vilas said.

What is more, he said the investments over the past few years have reduced operational risks and proven that Vaca Muerta can extract oil and gas.

To expand production, Argentina needs an influx of junior companies, Vilas said, drawing a comparison to their role in the shale boom in Canada and the United States.

A longer-term necessity is to integrate the region so that the future surplus in Argentine oil and gas production can be sold to neighboring countries, he added.

If Argentina can bring in the investments needed to develop Vaca Muerta and other shale and tight plays, then it could become a net exporter in the nearly 15 years it took the US to go from a big energy importer to a “potentially big exporter,” Vilas said.

However, to attract investment, Argentina faces competition from other shale plays in Latin America, including in Brazil, Colombia and Mexico, as well as the offshore subsalt resources in Brazil, he said.

Hermann Steinbuch, the manager of production and operations in Argentina for Canada’s Madalena Energy, also said that more companies are needed in the plays to achieve explosive growth.

“We need small companies to work in the formations, to take on the risks,” he said.

With more operators as well as services companies, this will help to cut cost and improve profit potential, he said.

YPF produces 44% of the country’s 520,000 b/d of oil and one-third of the 120 million cu m/d of gas, trailed by BP-backed Pan American Energy, France’s Total, Argentina’s Pluspetrol and Tecpetrol, China’s Sipetrol and Chevron. Most of the juniors produce less than 1% of national oil and gas and have little acreage.

9 May 2016

Considering the Argentine government’s commitment to fiscal and structural adjustments, ratings agency S&P Global Ratings raised its long and short-term foreign currency ratings on the South American country to ‘B-/B’ from ‘SD/D’ with a stable outlook.

The ratings rationale reflects “Argentina’s curing of the default on its foreign currency bonds that had started in July 2014,” said the agency in a release.

In a historic return to international markets, Argentina issued US$16.5bn bonds on April 10 in its first such issue since 2005.

Of the total, US$9.3bn were used to settle the longstanding legal battle with holdout bondholders and more than 220 extra judiciary arrangements with creditors who did not participate in the 2005 and 2010 debt restructurings.

The cut in fiscal subsidies, the unifying of exchange rates, the elimination of capital controls, the reduction of some export duties, and the beginning of the restructuring of the national statistics agency, are listed by S&P as economic reform advances made by the government in its first five months in office.

Among the challenges faced by the administration of President Mauricio Macri, S&P points to substantial economic imbalances, high inflation and a large fiscal deficit “in a context of a still-polarized society and an unfavorable external environment.”

The agency expects Argentina’s GDP to contract this year and it estimates that the 12-month inflation rate is likely running above 40%.

S&P also affirmed Argentina’s ‘B-/B’ local currency ratings and the ‘B-‘ transfer and convertibility assessment.

By Orlando Avendaño
May 9, 2016

“Price Protection” Program Targets 400 Products to Curb Inflation

Argentina President Mauricio Macri announced through his Twitter account Friday, May 6 that the country will be reimplementing the Price Protection Program that allows the government to temporarily control the price of certain products sold at supermarkets.

The program was also announced by Secretary of Commerce Miguel Braun. He said the government plans to increase the number of products in the program from 317 to 400. The rise in prices will be 4.8 percent on average, La Nación predicted last month.

Price controls will start this Saturday, May 7 and last for at least four months. The program will include fresh produce and other perishables like fruits, vegetables, bread and certain meats.

Convenience stores will not be included in the program.

The Price Protection Program was an initiative that arose during former President Cristina Fernández de Kirchner’s administration, which established price controls in January 2014 as part of an attempt to reduce the level of inflation to below 28 percent.

At first, the program only covered 194 different products, but that increased to 500 under Kirchner’s watch.

Macri’s administration also announced the “Precios Cuales” Program starting May 13, which will allow people to monitor supermarket prices via the internet. On the site, users can compare constantly updated prices from different chains.

May 9, 2016

BUENOS AIRES, Argentina — The director of the Mendoza zoo in western Argentina says she has concerns about the health of the country’s last captive polar bear.

Zoo director Mariana Caram said Monday that the bear named Arturo is losing his appetite and is showing signs of decline.

Animal rights activists circulated a petition in 2014 that was signed by more than a half million people asking that Arturo be moved to Canada. Caram said then that the bear was too old to be safely relocated.

Activists say Arturo paces nervously in his concrete enclosure and suggest the animal suffers from depression. Arturo’s partner, a polar bear named Pelusa or Fuzz, died of cancer in 2012.

The last polar bear at the Buenos Aires zoo died in late December 2012 amid a heat wave.

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By Debora Rey and Luis Andres Henao
April 30, 2016

BUENOS AIRES, Argentina — Argentina’s strongest unions brought thousands of people into the streets Friday to protest high inflation and job cuts in the biggest demonstrations against President Mauricio Macri since he took office in December.

Demonstrators waving blue and white Argentine flags flooded the main avenues of Buenos Aires, blocking traffic in a protest that brought together rival unions that put aside differences to protest Macri’s policies.

“This is a historic gathering … We understand that the interests of the workers come before the interests of the union leaders,” said Hugo Moyano, who heads the truckers union and a branch of the influential CGT labor federation. “Macri is against the workers.”

Thousands of state employees have been fired since Macri came to power in December promising to cut bloated spending, curb government deficits and tame one of the world’s highest inflation rates.

The job cuts and the recent elimination of subsidies, which have led to sharp increases in everything from bus rides to light bills, have stoked unrest in a nation with a long tradition of providing generous state jobs and benefits.

Pro-business Macri has said measures are needed to revive Argentina’s stagnant economy, attract foreign investment and end economic distortions that have led to years of consistently high inflation.

His government says the layoffs are justified because many employees hired during previous administrations never showed up for work. The unions say workers are being indiscriminately fired.

Argentines continue to lose purchasing power to an inflation rate estimated at 30 percent.

“There’s a critical situation in Argentina and we’re not seeing a solution ahead,” said Pablo Micheli, leader of the Central Workers Union, which includes many public sector employees.

A recent report by an opposition think tank, the Argentine Center for Economic Policy, said 141,542 workers lost jobs between December and March, most in the private sector.

The labor secretary has contested those figures, but the government acknowledges that about 10,000 state workers have been laid off.

Maia Goldin is one of them. The 28-year-old chemical engineer recently showed up to work at a government arms company to find her building closed and being guarded by police.

“Nobody ever gave me a reason,” Goldin said. This administration is “losing its humanity, its ability to think and care about others, because when you leave someone without work, you leave them without a reason to be.”

Layoffs have hit particularly hard in Argentina’s oil-rich south as companies try to stay afloat despite low oil prices. About 40,000 workers in the construction sector were laid off from January to March, Argentina’s Construction Workers Union says.

Labor unrest could continue to grow if Argentina’s top trading partner, Brazil, plunges even deeper into its worst recession in decades. Argentine exports to Brazil fell more than 50 percent last year and the forecast for 2016 is similar, said Patricio Giusto, an analyst at the Political Diagnostics consulting firm.

“It’s not like Argentina can say: ‘Brazil is falling apart so we’ll sell to another country.’ We don’t have an alternative market,” Giusto said. “It’s a problem that Macri can’t solve. It’s an external issue that’s out of his hands.”

Argentina’s opposition has proposed a bill that would ban laying off workers “without just cause” and that would allow those who lose their jobs to get double compensation.

Macri has said the plan would scare off badly needed investment.

The measure has been approved by the Senate and is to be debated by the lower house of Congress, where Macri lacks a majority.

April 29, 2016

VILLA PARANACITO, Argentina — Water levels in the flooded town of Villa Paranacito have risen so much that the best way for residents to commute is by boat.

The town in eastern Argentina is one of the worst-struck by weeks of heavy rains stemming from the El Nino weather phenomenon. With streets covered by several feet of water from swollen rivers, residents are getting to schools, banks and other town services on boats, the only means of transportation.

Authorities have evacuated thousands of people across Argentina. Flood waters have reached grazing grounds, drowning livestock in the leading meat producing country. They have also swamped about a third of Argentina’s soy farms, causing big losses to one of the world’s top grains suppliers.

Argentina’s Rural Society said Thursday that about 4 million metric tons of soy had been ruined. The losses are estimated at up to $1.3 billion.

Soybean prices at the Chicago Board of Trade fell Friday, after rising for weeks to nearly a one year-high on growing concerns about the damaged crops in Argentina, which is the world’s No. 3 soy exporter.

By Mary Anastasia O’Grady
2 May 2016

Wealth-creating economies welcome innovation. And then there’s Buenos Aires, where Uber says it has been waiting more than four months for a tax-identification number. Now the company is under investigation for operating its ride-sharing business illegally.

Uber’s difficulty with the city government is good news for taxicab owners and union bosses who want to keep the company out of the market. But it is bad news for Argentina, a nation hungering for jobs and the productivity gains necessary for higher living standards.

Center-right President Mauricio Macri, of the Republican Proposal Party (PRO), who was inaugurated in December, has promised an economic revival. But if entrenched interests win protection from the technological revolution, he isn’t likely to deliver.

On April 12, Uber ran out of patience and began offering its ride-sharing services in Buenos Aires without a permit or a tax-identification number. A group of taxi unions immediately filed a lawsuit demanding that the city prohibit Uber. The city responded with a legal action against the company for the misdemeanor of “improper use of public space for profit.”

Uber spokeswoman Niki Christoff says that on April 15 police raided the offices of its lawyers, “taking all Uber files and information they found.” Ms. Christoff says that the next day police broke the lock on the door of the home of the local Uber general manager, raiding the premises and taking some electronic equipment and documents.

From April 15 to April 20, Uber offered free rides in Buenos Aires, hoping to create demand for its service and counter the taxi union, which has used roadblocks and protests to pressure city regulators to ban the company. Uber says it is now operating normally and believes its business is constitutionally protected. It emphasizes that it is neither a car service nor a taxi business and says Argentina needs a new regulatory regime for companies that provide a ride-sharing platform.

Jill Hazelbaker, Uber’s vice president of public policy and communications says that “the resistance in Buenos Aires has become among the fiercest that we have experienced anywhere in the world.” But consumers are eager to give it a try. The company says there have been 250,000 downloads of its app in Argentina, while 120,000 riders have opened accounts and there were around 175,000 trip requests during the first week of operation.

Uber will also bring jobs. According to Ms. Christoff, in Mexico City about half of its drivers were previously unemployed. In Argentina, she says that there were 10,000 sign-ups in the first 36 hours of driver enrollment, a record for any Uber launch in Latin America. In all, some 35,000 Argentines have enrolled as Uber drivers, the company says. The job also provides flexibility to the underemployed who are looking for a second source of income.

Other platforms that match buyers and sellers are already changing the Argentine economy. Airbnb, for example, makes every property owner into a potential innkeeper.

Uber says Latin America is its fastest-growing market. It also has competition. The Spanish company Cabify — which is also an app-based mobility service — already operates in Peru, Chile and Colombia. Its director for Latin America, Ricardo Weder, told the Argentine daily La Nacion in April that Cabify will launch in May in Buenos Aires and in the city of Rosario.

Ms. Christoff says the company requested a meeting with Buenos Aires’s chief of government more than a week ago but has not heard back. In a written response to my request for comment on the Uber case, the city’s transportation department told me Thursday that the company has not filed the proper documentation to operate in Buenos Aires. City Secretary of Transportation Juan Jose Mendez said “Uber knows the law but decided to ignore it.”

But there may be something else at work. Argentine unions are powerful, and taxi syndicates in Buenos Aires are no exception. Taxi-union boss Omar Viviani has said that under “no circumstances” should Uber be allowed to operate in the country.

President Macri subtly recognized union power at an April 14 public event in the province of Buenos Aires: “I appreciate the position of the government of the city in defending our taxi drivers, which are a symbol of Argentina, but we also have the problem of the advancement of technology, which we must traverse as gradually as possible to take care of all Argentines.”

Mr. Macri is in a tight spot. His PRO party doesn’t control Congress. To govern, he needs the support of moderate Peronists, and Peronism is built on organized labor.

Yet indulging the archaic taxi network is defeatist. The president would do better to frame the issue as an opportunity to advance the interests of the millions of portenos, as the capital’s residents are known, who will be beneficiaries of greater competition and more investment. Argentina badly needs the creative destruction of the disrupter class and that includes Uber.

By Benedict Mander in Buenos Aires
May 1, 2016

Argentina could issue $30bn in debt this year, as other issuers seek to mimic the government’s success in returning to international capital markets with a blockbuster bond sale last month.

First out of the gates will be Argentina’s provincial governments, expected to issue at least $4bn this year. They hope to take advantage of rekindled investor interest in a country isolated from bond markets by a protracted creditor dispute, which was triggered by a 2001 default on almost $100bn of debt.

“Argentine debt represents an extraordinary opportunity. These yields don’t exist anywhere else in the world in countries with such low levels of debt,” said Facundo Gómez Minujín, managing director at JPMorgan’s Argentina unit.

Yields on Argentina’s $16.5bn debt issue, finalised on April 19, averaged 7.2 per cent. Meanwhile, government debt is 44 per cent of GDP, of which 17 per cent is debt with the private sector, according to officials.

“It may be a complicated moment globally but the search for yield will always continue to exist,” said Mr Gómez Minujín, who estimates that between the central and provincial governments and the corporate sector, Argentina could issue about $30bn in debt this year.

The provinces of Neuquén, Mendoza and Córdoba are expected to come to the market in the next month, with the city of Buenos Aires likely to follow shortly afterwards, according to finance secretary Luis Caputo.

The surge of debt issuance by Argentina’s provinces is explained by the government’s drive to lower inflation, currently about 34 per cent. Inflation is high partly because of the previous government’s willingness to finance provincial debt by printing money — a policy that the market-friendly government of President Mauricio Macri, who took office in December, wants to stop.

Mr Gómez Minujín also expects Argentine companies to issue about $4bn this year. Analysts name major companies such as Pampa Energia, Arcor and several local banks as interested in raising debt.

Walter Stoeppelwerth, head of research at Balanz Capital, an investment bank in Buenos Aires, said raising capital abroad was cheaper for Argentine companies than funding themselves in the domestic bond market, where they had to pay interest rates well over 30 per cent. “There’s also a lot of appetite for corporate debt on the buy side. You just can’t find the liquidity,” he added.

Government officials were nevertheless concerned that too many companies were adopting a wait-and-see approach, despite many projects in the pipeline, said Alejo Costa, chief economist at Puente, an investment bank in Buenos Aires. “This is a historic opportunity, but it looks like the majority are willing to wait until the economy starts to pick up,” he said.

By Nicolas Misculin
April 29, 2016

Thousands of Argentines took to the streets of the capital on Friday to protest the policies of President Mauricio Macri, a taste of the backlash he faces for economic reforms that have swelled the ranks of the poor.

Protesters, waving flags and chanting anti-government slogans, demanded an end to public sector job cuts and plummeting buying power in a demonstration called by the country’s biggest unions.

“We are losing buying power in a significant way,” Pablo Micheli, the secretary general of the Argentine Workers’ Union, told Reuters.

“We are hoping that the government will come to the table to talk. If not, we could call a general strike for the end of May or the first half of June.”
By sharply devaluing the peso, loosening price controls and ending utility subsidies since taking office in December, Macri has sent inflation surging, leaving those at the bottom of the economic heap scrambling to pay food and gas bills.

At the same time, the business-friendly leader’s efforts to trim government payrolls have eliminated thousands of public sector jobs. The opposition estimates that up to 150,000 people could lose their jobs this year.
In an attempt to stem the job losses, the opposition is trying to push a law through Congress that would guarantee generous redundancy payments. Macri has said he would veto it.
Although Wall Street has praised Macri’s policies as a long-needed correction to years of government intervention and idiosyncratic economic policy under his leftist predecessors, the opposition retains strong support in the country.

29 April 2016


Recently released first-quarter data show a sharp narrowing of the trade deficit in year-on-year terms, from US$1.2bn to US$380m, as export earnings grew mildly while imports continued to fall.

Impact on the forecast

A pick-up in export earnings in the first quarter came on the heels of a sharp decline in 2015, which showed no signs of let-up as recently as the fourth quarter, when total earnings fell by almost 20%. A major driver of the recovery (earnings rose by 3% in the quarter) was the sale of grain stockpiles built up by agricultural exporters once export taxes were dramatically reduced by the new government in mid-December. As a result, export earnings from cereals rose by more than 50% in the quarter, while exports of oilseeds (which includes Argentina’s main export crop, soybeans) rose by almost 40%.

Offsetting this good performance, industrial goods exports continued to fall, by just over 20% year on year. Weakness in the key Brazilian market, the destination of most of Argentina’s automotive exports, is continuing to hurt manufactured goods exports. Notwithstanding December’s 30% currency devaluation, the accumulated real appreciation of the peso over recent years is also damaging the sector, offsetting positive steps by the new government to encourage production by eliminating foreign-exchange and import controls, which should in theory facilitate the import of much-needed intermediate inputs.

First-quarter data on intermediate and capital goods imports suggest that a recovery in industrial activity remains some way off. Intermediate imports fell by 12% in the quarter, while capital goods imports fell by 1%. Fuel and energy imports also fell, by 17%, although this will reflect price rather than volume trends. The only category of imports to register a rise in the first quarter was consumer goods imports, which rose by 5%. This is a somewhat surprising result, given the decline of real wages in the quarter and negative domestic retail sales indicators, but appears to reflect pent-up demand for semi-durable goods, along with the extension of a government-sponsored 12-month interest-free credit plan by banks.

By Michael Granberry
30 April 2016

Fabiana Elisa Martínez is living proof that the Dallas of the 21st century is so much different than it used to be. She hails from Buenos Aires, Argentina, which she left for Dallas in 2002. Fourteen years later, she’s a published author – in two languages.

Martínez, 45, recently released her first book, 12 Random Words, which was published simultaneously in Spanish and English. Future editions, she vows, will appear in French, Portuguese and Italian.

“The book is a collection of short stories,” she says in perfect English. “Twelve short stories. It’s really 13, so let’s call it a baker’s dozen. Each story is based on a random word that I was given each month. So, I composed a story, in English, based on each of the 12 words.”

She chose to write in English, she says, because it’s now her “language of love.” The stories, she says with a rare enthusiasm, are “full of life, passion, love, struggle, unexpected turns and introspective thought.” Her characters carry with them “endearing, idiosyncratic and, at times, dark qualities.”

She arrived in Dallas in November 2002 and nine years later to the day was interpreting Spanish into English for former President George W. Bush. “Had someone told me I would be doing that in 2002,” she says, “I would not have believed it – at all.”

Martínez loves the story as an illustration of how “wonderful” life can be for those who emigrate from their native land to the U.S., which she idealizes as much as any immigrant ever has. For her, it has been “a truly wonderful journey.”

She runs her own company, Top-Active LLC, which teaches Spanish and other languages to all sorts of people. Her clients include Erin Cluley, who will host a reception for Martínez from 6 to 8 Saturday night at Erin Cluley Gallery, 414 Fabrication St. in Dallas, near the Margaret Hunt Hill Bridge.

Another client is filmmaker Quin Mathews, who edited the book and sings its praises, saying, “12 Random Words tells stories of love and yearning, each portrait a puzzle piece that reveals fragments of discovery, each one a treasure.”

In her homeland, Martínez worked as a theater critic, a radio host and a language instructor. So what made her want to move to America?

“I had worked with American people in Argentina for a long time,” she says. “And I had visited the United States many times before moving. I had always felt that I had the same type of mentality as Americans – if you want something, you need to work for it, to do your best and grab what you need to grab to make it yours.

“The second most practical reason is that there was this huge economic crisis in Argentina in 2001. I knew that my line of work might disappear, so I decided to bring my business to Dallas.”

And now, she’s married to “a wonderful guy from Dallas,” who manages to speak, as she says with a laugh, “a little Spanish.”

When it comes to the “dark qualities” in her characters, she says, “We all have dark qualities.” But one of her baker’s dozen of stories explores the notion in chilling depth, underscoring the truism, as she sees it, “that you cannot have light without darkness.”

She lists as her influences such literary giants as Umberto Eco, Milan Kundera and Philip Roth. “The best way to become a wonderful writer,” she says, “is to become a wonderful reader.” She calls her initial foray into reading Roth “like a punch to the face.”

She embraces life in her adopted hometown, she says, “because the people are so generous. They opened their arms. They didn’t care that I had an accent. They wanted to work with someone who wanted to do their best. They helped me grow my business.

“The first time I told people I was writing a book, they said, ‘That’s wonderful! That’s fantastic! You’ll be great.’ That kind of support, people shouldn’t take it for granted. Every time I have a big idea, I know that if I say it, it may happen. And that’s the beauty of America.”

By Jon Hartley
April 30, 2016

Earlier this month, Argentina issued $16.5 billion in bonds in the largest emerging market debt deal on record, effectively returning to international capital markets for the first time after a following a plague of defaults over the past 15 years under the Christina Kirchner administration. The Argentinian bond issue was viewed as being enormously successful that the issue was oversubscribed 3 times over, an unbelievable feat for a government that only a few years ago was deemed non-creditworthy, while depleting central bank foreign reserves to remain solvent.

The success of the offering and the symbolic return to international capital markets is almost entirely due to the market reforms implemented under the leadership of new Argentinian President Mauricio Macri, who took office last December. These reforms include settling with existing creditors on previous defaults, removing currency controls and taming inflation.

Settling with existing creditors on previously defaulted Argentinian sovereign debt

When Argentina defaulted on more than $80 billion in 2001, it was the largest default of its kind in financial history. Bondholders, led by a group of New York hedge funds including Paul Singer’s Elliot Management, battled the nation for payment for nearly 15 years. While the Argentinian government was able to settle with some creditors previously, due to the lack of a collective action clause (CAC) in the initial offering, a supermajority of bond holders could not bind holdout funds like Elliot Management. Fortunately, the country’s new debt issue and others going forward will include CACs, learning from the past.

The Macri government’s settlement with Elliot, making them whole on debt bought at a cheap discount, represents more than just a win for the holdout funds. More importantly, the settlement represents good faith that Argentina will honor all of its debts in the future, likely contributing to the success of the new 2016 bond issue.

Removing currency controls on the Argentinian peso

In one of Macri’s first moves after taking power in December 2015, President Mauricio Macri announced his new government would lift currency controls to attract investors and kick-start the economy, a move that was met with immediate depreciation of the currency from its artificial peg.

Allowing a free, floating exchange rate effectively ended a four-year currency policy that restricted imports, hurt economic growth and created a thriving black market in Argentinian peso-U.S. dollar foreign exchange within the country.

Argentinian free-market reforms, central bank changes and inflation measurement improvements

In further undoing the populist economic legacy of Cristina Kirchner, Macri since taking office has eliminated most farm export taxes, reduced individual income taxes, begun restaffing Argentina’s discredited statistics agency, and has replaced the central bank president, installing MIT-trained economist Federico Sturzenegger as the country’s new central banker.

As Greg Ip recently observed in the Wall Street Journal, Argentina’s central bank advances and transfers to the government have been responsible for inflation above 20% in recent years. Fortunately that policy will effectively end under Sturzenegger.


In addition, restaffing Argentina’s statistics agency should help put the country on a path to providing accurate measurements of economic activity. Alberto Cavallo and Roberto Rigobon, co-founders of the MIT Billion Prices project have created their own online inflation indices for Argentina using online price data, which demonstrated the national inflation statistics were significantly doctored to underreport inflation during the Kirchner reign.

PriceStats/MIT Billion Prices Project Online Year-over-Year Inflation (%) vs. Argentina National Statistics Authority (INDEC) Reported Year-over-Year Inflation (%)


Fortunately, Macri’s market reforms have already demonstrated considerable promise, and the country’s new bond issue is a monumental first success.

By Raquel García
April 29, 2016

Make-Work Program Supposed to Create 120,000 Jobs

Argentina President Mauricio Macri is trying to counteract the approval of an anti-firing law put forward by the Senate with the announcement of a housing program that could create 200,000 jobs, as well as fulfill a campaign promise to invest in the housing sector with less resources.

The program, which will be announced this Thursday, includes the construction of homes, the presentation of property deeds and the granting of credit with lower subsidies. It is expected to reach a million homes within the next eight years.

The government will construct 120,000 homes throughout the country through a “transparent system that will give priority to families of lower incomes,” an official told Télam.

With this plan, 200,000 new positions will be created in the construction industry throughout every province. Construction is an area that saw the most positions lost in the last few years.

On top of this, 300,000 property deeds will be given to families with little economic resources so that they can have their own homes. Over 450,000 microcredit with little or no interest rates for making fixes to gas light and water systems.

The plan also includes urbanization work and improving the integral villages and settlements throughout the country. Residents in these areas will be guaranteed access to drinking water, sewers, streets, sidewalks and public spaces.

It will also be announced a continuous and improving Program for Argentinean Credit (Pro.Cre.Ar) with the creation of 175,000 and accessible fees, that are directed at people that hire someone who attain their own house.

This Friday, Macri will announce from the Tucumán Province measures that will provide solutions to 225 unprotected areas, most of which have to do with housing. In this program, the government will carry out community-specific needs on a case-by-case basis.

This announcement will be considered with a march by five trade unions on the Day of the Worker to protest dismissals in the public sector.

Local press underscored the government has created an ad campaign to show he is working to revive the country’s economy by creating a suitable climate to attract investment.

By Antonella Marty
May 1, 2016

Hypocrisy Shows All the Peronist Opposition Wants Is to Sabotage President Macri

In Argentina, the populist ideology known as Peronism is so paradoxical and inconsistent that its latest support of the so-called “anti-layoffs law” is no longer surprising.

The bill spearheaded by the Peronist opposition, which has already passed the Argentinean Senate, seeks to suspend layoffs in the public and private sectors for 180 days and force employers to give a double severance pay.

Peronists call themselves the upholders of progress and work, but all they do is create barriers for economic growth and productive jobs. The founder of the movement, former President Juan Domingo Perón, famously said that “to govern is to give jobs” — but at whose expense? At what cost?

One must be somewhat thick not to realize, after abundant examples in Latin America and across the world, that prohibitionist policies just lead to undesired consequences, often achieving the exact opposite of the intended goal.

If all it takes to solve a problem is legislation, why not promote a bill against hunger, cold, poverty, heat, accumulation or scarcity? Prohibition is a self-destructive path has never achieved its purpose.

By prohibiting layoffs, companies will be destroyed. The employer will be restricted, unemployment will increase, and at some point accumulated layoffs will come. The result? The law will not benefit those who are already employed, let alone those who are unemployed.

Moreover, companies will avoid risk and think twice before hiring someone. When the burden becomes too large, they will stop hiring and overall unemployment will increase.

The anti-layoffs bill may be one more botched magical solutions peddled by the Peronists over the last decade under the Kirchner administration, disguising a problem they created and that they now want the current administration to bear the burden for.

It is worth recalling one of Perón’s first economic measures in 1945, when he got a law passed freezing rents and banning evictions. This caused a fall in the construction of rental housing. The owners and potential lessees went bankrupt. Those who had savings invested in real estate were impoverished, future investment in rental housing disappeared, and nobody wanted to accept a new tenant for fear of not being able to evict them.

Everyone in the business was harmed, as you can always expect to happen with this kind of prohibitionist approach.

In Venezuela’s Chavista model, anti-layoffs rules produce the same effect. The law establishes that “work stability is guaranteed and all forms of unjustified dismissal are restricted.” Today you have the Venezuelan government reducing working hours because they have destroyed the country’s economy with similar interventionism.

Shortages, insecurity, expropriations, prohibitions, price controls and thousands of arbitrary policies have destroyed private inventiveness, and have filled the country with inefficient public employees.

In the meanwhile, ordinary citizens focus all their waking time on how to survive, where to find food or medicine, and how to dry out their hair without a hairdryer, a suggestion of President Nicolás Maduro on how to save energy.

In Argentina, the hypocrisy about this measure is so blatant that it is baffling.

Héctor Recalde, a congressman for the Peronist Front for Victory movement, expressed in 2014 — when Peronist Cristina Kirchner was in power — that “we must be careful” about any anti-layoffs legislation “because these issues may hinder job hiring”.

Fast-forward to 2016 and a new administration. Recalde now states that “all blocks of the opposition signed this project. It has the intention to help SMEs and workers” and “we must not continue with policies for the rich. ”

Recalde’s overflowing inconsistency is just another example of Peronism’s modus operandi. It suggests that what the opposition is after is not helping workers but to sabotage the economic recovery.

The worst part is that this measure will directly harm common Argentineans and not only the business-friendly environment that the Mauricio Macri administration is trying to show the world.

For SMEs, which make up more than 90 percent of private firms in Argentina, it will be really difficult to afford the double severance pay mandated by this bill. They may well end up in bankruptcy, generating more and more unemployment.

No one will invest in a country where rules change overnight, and without investment there is no way out of the problems inherited by the long and terrible Peronist era.

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La Cámpora ¿obliga a militar con capucha?

25 marzo, 2016


21 marzo, 2016

Indonesia rights body urges Obama to open secret US files

Monday, March 21, 2016
Church endorses dictatorship trials

Synod backs quest for ‘truth and justice’ in landmark move

In a message of great political significance, just days before the 40th anniversary of the last military coup, the Catholic Church yesterday called for trials prosecuting human rights abuses committed during the 1976-1983 dictatorship to continue in the courts.

“The return of democracy was the beginning of a path of truth, justice and meeting for all (Argentines), a path we need to continue to take in order to reach (a state of) social harmony and friendship,” bishops grouped under the Argentine Synod (CEA) said in a statement yesterday.

It was the first time Church leaders had used the “truth and justice” slogan coined long ago by human rights organizations in a public statement, which came just 24 hours after the Church announced it would open up its archives related to those dark years.

The 246-word statement was issued days after a plenary meeting of the Permanent Commission of the CEA, where bishops had discussed the forthcoming anniversary of the military coup d’état, which took place on 24 March, 1976.

“Argentines cannot stop asking ourselves how we ended up with the darkest chapter of the country’s history. The consequences of infighting, pain and death are still felt today and emerge as a past that we need to deal with and heal,” the Church said.

“We should never allow such an event to happen ever again and we should not forget,” the statement added in decisive language.

Just a day earlier, the Vatican announced it will be declassifying files requested by human rights organizations, in order to find out what happened to those detained and disappeared during the military dictatorship. That news followed US President Barack Obama’s historic announcement that he intends to open up previously withheld US military and intelligence files.

A clearer stance

Church leaders had hinted that their position on the coup would be made public, days after 22 bishops met at the CEA’s headquarters in downtown Buenos Aires on March 14-15 to discuss the issue.

But the “fine print” of the statement remained a mystery, with the conservative La Nación daily suggesting a few days ago that the Church’s letter would call on Argentines to heal past wounds.

Somewhat surprisingly, the statement released yesterday lunchtime openly condemned “state terrorism” (which the Church said led to “torture, murder and the … kidnapping of children”) and contained no visible traces of the so-called “Two-Demons theory” that equated the victims of attacks by left-wing armed groups with the victims of state terrorism.

Church leaders said yesterday the country’s wounds will only be healed “through a path of truth, repentance and justice” — a nod at human rights trials that were restarted under the administration of former president Néstor Kirchner.

Last year, human rights groups publicly voiced their concerns about the Catholic Church’s stance of supporting trials against repressors, after Bishop Emeritus of San Isidro Jorge Casaretto said during a discussion panel that “reconciliation” had to be a political goal in the near future.

Back then, head of the Argentine Synod, José María Arancedo, told rights leaders that the Church did not endorse the suspension of proceedings — a stance that was underlined firmly in yesterday’s statement.
The Vatican meanwhile announced that Pope Francis will meet with relatives of the disappeared after his regular Wednesday audience in St Peter’s Square this week.

Sources from the Holy See said Francis would host Genevieve Jeanningros, nephew of French nun Leonie Duquet, who disappeared in Buenos Aires in 1976, Marie-Noelle Erize Tisseau, the sister of Marie-Anne, disappeared in San Juan that same year and Víctor Caravajal, the brother of communist leader Alberto Caravajal, who was murdered in August, 1977.

The role of priests

On Saturday, the secretary-general of the CEA, Carlos Malfa, said that the Church’s archives related to dictatorship-era “will be declassified,” an announcement hailed by human rights leaders.

Malfa said sorting through the files could take some time, but stressed clear progress was being made with the powers that be at the Vatican.

As the Herald reported last week, rights groups want the Church to hand over internal files or individual records from priests and nuns, who may have been in touch with prisoners.

The Attorney General’s Unit for Cases of Child Appropriation has also requested that the Church hand over baptism certificates as investigators believe that those who stole babies sometimes took on roles as godparents.

According to the Centre for Legal and Social Studies (CELS), nine priests currently face charges for having committed crimes against humanity. But probes have stalled — since the reopening of dictatorship-era trials in 2006, only two priests have been convicted.

The founder of CELS, the late Emilio Mignone, once accused Jorge Bergoglio — now better known as Pope Francis — of being linked to the kidnapping of two priests, Orlando Yorio and Francisco Jalics, during the dictatorship.

“The possible cooperation of Bergoglio and other leaders of the Catholic Church might never be cleared before the courts. The election of Bergoglio as pope in 2013 placed a heavy tombstone on these investigations,” the CELS wrote in 2015.

The allegations have never been confirmed.

Buenos Aires Herald staff









By Nick Miroff
20 March 2016

BUENOS AIRES – The fictional world of the late Argentine writer Jorge Luis Borges was a place of bookshelves that stretched to infinity, dreams within dreams and detective stories that led in circles.

Argentina for the past 14 months has been lost in a real-life labyrinth worthy of a Borges fable – ever since prosecutor Alberto Nisman was discovered dead in a pool of blood on his bathroom floor.

The body of Nisman, 51, was found the day before the prosecutor was expected to publicly accuse then-President Cristina Fernández de Kirchner of making a secret pact with Iran to gloss over Tehran’s possible role in the 1994 bombing of a Jewish community center in Buenos Aires. It was South America’s worst terrorist attack.

Investigators initially ruled Nisman’s death a suicide. Argentines took to the streets in protest.

As President Obama arrives in Buenos Aires on Tuesday for the first state visit by a U.S. president in 19 years, the unsolved mystery of Nisman’s death continues to hang over the country, casting a shadow far beyond Argentina’s borders.

“Everyone knows it was a homicide,” said Jorge Asís, a columnist and retired diplomat, “but no one can prove it.”

Nisman’s family and supporters have been pressing for a formal homicide investigation, and on Friday a federal tribunal in Buenos Aires heard new arguments seeking to elevate the case to a high-level homicide probe. The three-judge panel could accept those arguments or leave the case with lower courts, upholding the version of events that points to a suicide. A ruling is expected in the coming days.

The judge previously overseeing the case referred it to Argentina’s highest court after Antonio Stiuso, the country’s shadowy former intelligence chief, made a dramatic return from self-imposed exile in the United States last month and testified that Nisman had been killed by a “group of people” with ties to former president Fernández de Kirchner. Stiuso, who worked closely with Nisman, offered no evidence for the claim, according to attorneys who have seen his sealed testimony.

New Argentine President Mauricio Macri, a centrist whose election in November ended 12 years of governance by Fernández de Kirchner and her late husband, Néstor Kirchner, has promised Argentines a thorough, impartial investigation to clear up once and for all how and why Nisman died. But the circumstances of the death are so murky that few here think the country will ever know what happened.

Nisman had spent more than a decade investigating the 1994 bomb attack that killed 85 people at the Argentine-Israeli community center known by the acronym AMIA.

Argentina initially blamed Hezbollah agents and Iran for the attack, and in 2004 Nisman was assigned to the case by then-President Néstor Kirchner, who said the previous investigation had been botched. Interpol Red Notice arrest warrants were issued for several top Iranian officials, essentially barring them from leaving their country, and Kirchner denounced Tehran at the United Nations and other international forums.

In 2007, Kirchner was succeeded by his wife, Cristina, just as relations with Iran were beginning to improve. She drew Argentina close to then-President Hugo Chavez’s Venezuela, which had friendly ties with Iran. Another close ally of Iran’s, Syrian ruler Bashar al-Assad, visited Buenos Aires for talks with the president in 2010.

It was then that Kirchner agreed to reset relations with Iran, a major market for Argentine grain. Nisman later alleged that her government had begun maneuvering to have the Interpol warrants lifted as part of an agreement she signed with Tehran in 2013 to form a “truth commission” to investigate the bombing.

Nisman objected to the accord, and his relationship with Fernández de Kirchner frayed.

On Jan. 19, 2015, Nisman was preparing to go before Argentina’s Congress to denounce Fernández de Kirchner in a report accusing her government of colluding with Iran to bury the investigation into the bombing.

According to the official version of events, Nisman that weekend dismissed the government security team assigned to protect him, then summoned his aide Diego Lagomarsino and asked to borrow a gun. Lagomarsino said he returned with the weapon to Nisman’s apartment in an upscale Buenos Aires district, then left.

Nisman subsequently died from a bullet to the head that had been fired from Lagomarsino’s .22-caliber Bersa pistol.

There was no sign of forced entry. No suicide note. Investigators swarmed the apartment, contaminating the crime scene, according to Nisman family attorneys. Nisman’s computer and cellphone appeared to have been altered.

Fernández de Kirchner initially called the death a suicide, then backed away from the claim. A month later, 400,000 protesters marched in silence through the rainy streets of Buenos Aires.

It was not until last month that a government prosecutor, Ricardo Sà¡enz, made the first official recommendation that Nisman’s death be investigated as a homicide.

The critical piece of evidence for Sáenz: Nisman had no gunshot residue on either hand. In addition, he had displayed no signs of depression. On the contrary, friends and relatives say, he had seemed eager and determined to deliver his report to Congress.

“As far as I’m concerned, he was murdered,” Sáenz said in an interview.

Sà¡enz, who has clashed publicly with Fernández de Kirchner in the past, said: “I won’t rule out that the former president will be called to testify.”

“She said it was a suicide, then later it was a homicide, so she should be asked what information she had,” he said. “I think she should be called to clarify what she knows.”

Supporters of Fernández de Kirchner accept that Nisman might have been murdered, but they suggest his killing could have been part of a scheme to frame Fernández de Kirchner.

Suspicion also falls on Lagomarsino, the aide hired by Nisman to help with his computer needs and whose fingerprints were strangely absent from the gun he said he lent to Nisman. Lagomarsino was the last person known to have seen the prosecutor alive, and his attorneys have fought the Nisman family’s attempt to elevate the case to a federal murder investigation.

In a bizarre twist, Lagomarsino is under investigation in a separate probe along with Nisman’s mother and sister, whose names appear on a U.S. bank account of Nisman’s that contains more than $666,000. Nisman failed to report the account, which is illegal for a prosecutor, and investigators say he also used his mother’s name to hide his ownership of three investment properties in Uruguay.

Stashing money and investments outside Argentina is nothing exceptional for someone with Nisman’s profile, prosecutors say. But tracing the payments in those accounts may be one of few ways to map out Nisman’s web of relationships and obtain new clues as to who might have wanted him dead.

By Lesley Stahl
Mar 20, 2016

The following script is from “Presidente Macri” which aired on March 20, 2016. Lesley Stahl is the correspondent. Shari Finkelstein and Nieves Zuberbühler, producers.

In a matter of months, Argentine President Mauricio Macri has made a U-turn in his country’s foreign policy, seeking closer ties with the West

There’s a lot in the news about a wealthy businessman-turned-presidential candidate with a five-letter last name. But the one we’re going to tell you about tonight already won his election and his last name isn’t Trump; it’s Macri.

He is the new president of Argentina, a surprise, come-from-behind victor who has the eyes of the region and the world on him as he tries to pull his country — the second largest in Latin America — out of a morass of debt, inflation, and international isolation. This week, President Obama will be the first U.S. president in more than a decade to visit Argentina, a sign that the U.S. government has high hopes for Mauricio Macri and his promises to turn his country around.

We met Mauricio Macri just two months into his presidency in Argentina’s version of the White House, a pink house, called the Casa Rosada. He took over a country that had been ruled for eight years by a left-wing populist named Cristina Kirchner who allied Argentina with anti-American regimes like Iran, Venezuela and Cuba.

Lesley Stahl: Here Argentina has been in this almost a bloc that takes in almost all of South America.

Mauricio Macri: That was–

Lesley Stahl: Left-leaning.

Mauricio Macri: Not anymore. That was, and not anymore.

Not anymore because he made a U-turn in his country’s foreign policy. In a flash, Argentina has become pro-American. Macri and Vice President Biden were all smiles at the World Economic Forum in Davos, Switzerland, in January, where Macri went seeking closer ties with the West and foreign investment. He brought one of the men he defeated in the election with him, which impressed the vice president.

Biden: I want the American press to observe something. The new president brought along the leader of the opposition with him. That’s what we got to do at home.

Mauricio Macri: I really believe in 21st century demands that we have to be open, and not putting any more ideological differences in front of the best solutions.

He’s a pragmatist. Trained as an engineer, Macri started off an outsider in Argentine politics. He is the son of one of the wealthiest men in the country, and worked at first in the family real estate and construction business, once making a deal with that other scion of a real estate empire.

Lesley Stahl: I heard that you actually have a relationship with Donald Trump.

Mauricio Macri: It’s a long story, long away.

It was more than 30 years ago. Macri told us his father had invested in a real estate venture in New York City but ran into problems and asked him to arrange a sale to Donald Trump.

Mauricio Macri: It was a very unique moment for me because I was only 24 years old.

Lesley Stahl: You negotiated with the guy who says he’s the best negotiator in the world?

Mauricio Macri: He thinks that, yeah. I don’t– I’m not so sure. I’m not so sure.

Lesley Stahl: Did he win?

Mauricio Macri: We were in a very weak position. Because the– he was local. Having the support of all the banks. But I could say that we tied.

Now, at 57, he’s happily married to fashion designer Juliana Awada. Watching them play with their four-year-old daughter Antonia, you can’t help but think of the Kennedys and Camelot — and the comparison has been made in Argentina.

When Macri ran for president, no one thought he would win, partly because of his image as a wealthy businessman unable to connect with the people. But that image was softened by campaigning with his wife and young daughter at his side and by their openness about their relationship.

Juliana Awada: I never imagined I was going to end– with him. And when I have the opportunity to met him, I fall completely in love.

That was seven years ago. He’d already been married twice and had older children — as did she.

Mauricio Macri: I call my best friend. I told him, “I’m going to marry again.” “No, come on, you can’t do it. You have just finish a relation two months ago.” “No, this is the lady of my life. I want to be with her for the rest of my life, and I’m sure that this is the correct decision.”

At their wedding the following year, Macri revealed a hidden talent.

Mauricio Macri: I’m a great singer.

Juliana Awada: Ah.

Lesley Stahl: You’re a great singer?

He set out to prove it at their wedding party. He dressed up as his favorite rock star, Freddie Mercury of the band Queen — complete with a fake mustache, and started serenading Juliana. It almost killed him.

Mauricio Macri: And in the moment I was breathing to sing the up part of “Somebody to Love,” I swallow my moustache.

Lesley Stahl: You swallowed the moustache–

He started choking on the Freddie Mercury moustache.

Mauricio Macri: It end up here. It didn’t go– it didn’t go down. So, I spend like–

Juliana Awada: Twenty minutes.

Mauricio Macri: Twenty minutes.

Juliana Awada: Half an hour.

Mauricio Macri: Thinking that I was going to die. I couldn’t breathe. Now is funny, but it was a horrible moment, yeah.

Lesley Stahl: You’ve had a couple of brushes with death, actually.

Mauricio Macri: No, no. This was quite funny. The other one wasn’t so funny.

Lesley Stahl: No.

The other one happened when he was 32. He was grabbed off the street – and kidnapped.

Lesley Stahl: Is it true when they kidnapped you, they put you in a coffin?

Mauricio Macri: Yes. To take me to the place. And then in another little bit bigger coffin. It was a box.

He was held for 14 days.

Lesley Stahl: Did you think you’d never live through that?

Mauricio Macri: You keep thinking all the– all day because you are trapped there with nothing to do, so you think I’m going to die, I’m not going to die because in many cases that group of kidnappers killed the victims.

But he was released, after his father paid a $6 million ransom. The incident changed the trajectory of Macri’s life, dramatically. It persuaded him to leave his father’s business and set out on his own. First he became president of one of Argentina’s most popular soccer teams, Boca Juniors. He then tried his hand at politics. He created his own third party and eventually ran for mayor of Buenos Aires. On his second attempt, he won. That’s when a whole new Macri emerged.

Dancing has become a Macri trademark.

Lesley Stahl: You’re known for this.

Mauricio Macri: You know, dancing is like it’s another way of communicating, no?

Lesley Stahl: You know, I’ve heard it said, no offense, dad dancing.

Mauricio Macri: Dad dancing?

Lesley Stahl: Older man dancing–

Mauricio Macri: No, no, no, no.

Lesley Stahl: I’ve heard that.

Mauricio Macri: No, no. You have to watch it. You have to watch my performance. Because is advanced dancing. There are so innovating steps. I dream them. First I dream them and then I perform them.

Macri got to live out two dreams in December when he danced on the balcony of the presidential palace at his inauguration — after a close, hard-fought election that left the country bitterly divided. Even the transition was contentious. Breaking tradition, the outgoing president Cristina Kirchner refused to attend the swearing in.

Kirchner had been a charismatic leader, in the style of the popular Eva Peron, who shared the spotlight with her husband, President Juan Peron, in the 1940s, and whose legend went all the way to Broadway.

“Don’t cry for me Argentina”

The Peronist Party has dominated Argentine politics on and off for the last 70 years. Kirchner was a Peronist, whose populist economic policies: generous subsidies on things like electricity, high taxes on agricultural exports, burdensome regulations, a bloated bureaucracy, and currency controls, all in combination, crippled the Argentine economy.

Alfonso Prat-Gay: She left an economy that’s not been growing for four years now, a stagnant economy.

Alfonso Prat-Gay is President Macri’s minister of finance.

Alfonso Prat-Gay: High inflation. Eight years in a row of more than 25 percent inflation. A significant fiscal deficit. The Central Bank was running out of reserves.

Lesley Stahl: This is what you walked into.

Alfonso Prat-Gay: Absolutely.

And making matters worse, the Government Bureau of Statistics, called INDEC, had been minimizing the problems.

Alfonso Prat-Gay: The National Statistics Institute was an institute that was basically lying to us and to the rest of the world.

Mauricio Macri: They were issuing wrong numbers.

Lesley Stahl: Fake numbers?

Mauricio Macri: Fake–

Lesley Stahl: Phony numbers, just made up statistics?

Mauricio Macri: Exactly. What the president wanted.

Lesley Stahl: And it wasn’t real–

Mauricio Macri: And that’s not the way. That’s not the way.

Lesley Stahl: No.

Mauricio Macri: If you have a problem, you have to recognize it, and solve it.

That’s my commitment, no?

Lesley Stahl: So do you even know what the inflation rate is? Do you even know what the budget deficit is?

Mauricio Macri: We are building up the real numbers.

Even without those precise numbers, he and his team plunged into action, undoing Kirchner’s legacy. What has heads spinning here is the speed with which they have changed course 180 degrees in just a matter of weeks.

Lesley Stahl: You have cut export taxes dramatically, you’ve let your currency float, you’ve cut electrical subsidies.

Mauricio Macri: Yes

Lesley Stahl: Fired thousands of government workers. You have done so many dramatic, big things.

Mauricio Macri: Well, but we need it. We need it because we need to put our country back to growth. We were trapped with so many rules, that we couldn’t move.

But he raised eyebrows, by making the changes while the Peronist-dominated Congress was in their summer recess.

Lesley Stahl: Most if not all of the things you’ve done, dramatic, big, you did by presidential decree. Congress is on recess. You didn’t negotiate with them. You didn’t consult with them.

Mauricio Macri: I’m using the constitution. I will always respect my constitution, it’s a very good one.

Lesley Stahl: But you criticized Cristina Kirchner for doing that. You said she didn’t go through the democratic process.

Mauricio Macri: Lesley, I only criticized her when she did it going over the constitution.

Lesley Stahl: You say that, but you’ve been highly criticized, just making all these decrees.

Mauricio Macri: Well, you know– at a certain level always the opposition has to criticize something. Let them.

Macri has worked hard at winning over as many in the opposition as possible. He met early on with the two men he ran against as well as all the nation’s governors, and since Congress has come back, he’s shown his political skill by convincing a whole bloc of Peronist legislators to work with him.

Mauricio Macri: I have received all of them, and say, “Well, I’m ready to work. Do you agree that we need to work towards zero poverty? We have to defeat drug trafficking. We have to improve the quality of our democracy.” Well, yes. Well, let’s find in which specific projects we can do it. And we found– we found, and we are finding that there are ways in which we can cooperate, even though in two years we are going to compete again in an election process. But in the meantime we will show our citizens that what they are demanding, is going on. That we work together.

What a concept — two sides looking for compromise. The public seems to like it — Macri’s approval ratings are over 60 percent, but it’s early. Trade unions are threatening strikes, and the only other non-Peronist presidents in over 30 years were both forced out of office before the end of their first terms.

Lesley Stahl: What’s the pressure like on you at this moment? You’re doing so much so quickly.

Mauricio Macri: That we have to do more. That’s the pressure. We are in a very bad starting point, but let me tell you, I’m here running the country because I believe in my people. I have the luck to choose what to do in my life. And I have chosen this because I believe that everybody can do much better than what they are doing now. So I’m trying to do my best. Trying to do my best.

After we interviewed him, another big development. President Macri has settled a multibillion dollar battle with New York hedge funds that will allow Argentina, after 15 years, to once again raise financing overseas and help attract foreign investment.

Back to contents

Saturday, March 19, 2016

A representative for Argentina’s Catholic bishops says church authorities are working to declassify their archives from the time of the country’s 1976-83 military dictatorship.

Episcopal Conference Secretary-General Carlos Malfa tells the official Telam news agency that the date of the release isn’t set.

Many senior clerics were close to the rulers at the time while some radical priests were persecuted and killed by them. Pope Francis was then head of the country’s Jesuits. He’s been criticized for not speaking out publicly, but credited with saving the lives of some victims.

Three people who were disappeared by the regime are scheduled to meet Francis on Wednesday, a day before the 40th anniversary of the military coup.

The U.S. also announced plans to declassify documents. President Barack Obama visits Argentina this week.

19 March 2016

(Reuters) – Argentina settled with an additional 115 individual creditors holding defaulted sovereign bonds for $155 million, Daniel Pollack, the court-appointed mediator in the long-running case, said on Friday.

Pollack’s announcement brings the total amount of settlements agreed in principle with U.S. creditors for more than the original $6.5 billion pot of money committed to end the dispute. The most recent settlement also moves Latin America’s No. 3 economy closer to ending a festering 14-year legal battle over its historic default.

“The parties anticipate that most of these bondholders, all of whom have both money judgments and injunctions, will opt to receive 70 percent of their claims rather than 150 percent of the principal of their bonds, both of which are options available to them,” under the terms offered by the government on Feb. 5, Pollack said.

Since the election of President Mauricio Macri in November, Argentina has moved swiftly to settle the debt dispute, mainly with U.S.-based hedge funds that sued in federal court for full payment on sovereign bonds defaulted upon in early 2002.

On Feb. 2, it reached a $1.35 billion agreement to settle with a group of Italian investors who held defaulted bonds.

On Feb. 5, it committed to spending $6.5 billion in order to settle more than $9 billion worth of claims in the U.S. courts before U.S. District Judge Thomas Griesa. So far it has agreements from more than 85 percent of remaining holdouts.

It reached agreement in principle with four major U.S. holdout creditors on Feb. 29 for $4.65 billion. They have until April 14 to deliver the cash.

“As with all such settlements, these are subject to the lifting of the Lock Law and the Sovereign Payment Law by the Argentine Congress and the lifting of the Injunctions by Judge (Thomas) Griesa,” Pollack said.

Griesa’s 2012 ruling barred Argentina from paying creditors who settled previously in 2005 and 2010 for less than 30 cents on the dollar without also making a court-awarded payment to the holdout creditors.

The injunctions were removed by Griesa on March 2. The issue is now being heard before the U.S. 2nd Circuit Court of Appeals.

“This group of 115 individual bondholders had appealed the vacating of the Injunctions by Judge Griesa, but have now withdrawn their appeals with prejudice,” Pollack said.

On March 16, Argentina’s lower house of Congress supported Macri’s legislative efforts, voting 165 to 86 in favor of removing those legal impediments.

The dispute shut Argentina shut out of the international capital markets.

Legislators loyal to former leftist president Cristina Fernandez, a Peronist who refused to negotiate with the bondholders, argued Macri was selling out to Wall Street investors by offering repayment terms of 70-75 cents on the dollar.

Argentina plans to sell three bonds for a total of $11.68 billion in mid-April in order to pay the creditors in cash.

By Daniel Burke CNN Religion Editor
18 March 2016

(CNN) — President Barack Obama plans to visit Argentina, the homeland of Pope Francis, next week in his first presidential trip to the Latin American nation.

Obama’s visit will coincide with the 40th anniversary of Argentina’s military coup, which began a period of political strife and violent government oppression known as the “Dirty War.” Alongside the Argentine people, Obama is expected to honor the war’s many victims on March 24.

The Rev. Gustavo Morello is a sociologist and Jesuit priest who spent years digging into the Catholic Church’s role in the Dirty War. When the junta seized power in 1976, it began a systematic campaign to wipe out suspected dissidents, and thousands of people were kidnapped and “disappeared.”

Morello’s book, “The Catholic Church and Argentina’s Dirty War,” examines the context of the disappearances. In particular, he investigated the kidnapping of five seminarians and an American priest in 1976.

Morello spoke with CNN about what made him want to explore this dark chapter in his native Argentina’s history, and whether his research tells us anything about the country’s most famous Catholic, Pope Francis.

Q: What is your book about?

It’s about an American priest and five South American Catholic seminarians, all of them of the Congregation of Our Lady of La Salette, who were kidnapped in Argentina in 1976. That case is like a tree; from it I went to explore the forest.

I explored the increasing political violence in my country at the time, the dictatorship, the “disappeared,” and the struggles of those who were trying to save them.

The story of the kidnapping is very amazing, almost movie-like. The seminarians left the house in the afternoon to attend classes, but agreed to come back immediately after because Sister Joan McCarthy, an American nun, was visiting them. They planned to have dinner together.

While the Rev. James Weeks was taking a nap and Joan was knitting in front of the fireplace, a mob from Cordoba police department broke into the house. A long nightmare began that evening, a nightmare that to some extent is ending now, as the people responsible for the kidnapping are in finally in court for human rights violations.

The priests were “disappeared” for a couple of days, but since Weeks was American and his family knew Ted Kennedy and the Rev. Bob Drinan, a Massachusetts congressman at the time, State Department got involved. Weeks was expelled from the country after a week and started a campaign to release the South American seminarians.

While Weeks and McCarthy were demonstrating in front of the Argentinean Embassy in D.C., the seminarians were sent to a concentration camp and tortured, by other fellow Catholics. The discussion at the torture chamber was about what “true” Catholicism was. It was bizarre.

Q: Sounds bizarre indeed. Of all the kidnappings that occurred during the Dirty War, what made you want to investigate this one?

I was interested in the relations of religion and violence. I have done research about the Montoneros, a guerrilla army in Argentina’s 1970s, and the links of that organization with the Catholic faith.

I wanted to know about the Catholic Church and its behavior during the dictatorship. It is still a very discussed issue in my country. And I was intrigued by the fact that many good, honest people did nothing when the government was kidnapping and killing innocent people. Why didn’t any alarm sound? Why weren’t there, from the religious leaders, any red lights? Was it just complicity, agreement with the government?

Q: How complicit was the Catholic Church in the Dirty War?

Religious people don’t live in a vacuum, but in interaction with politicians, students, workers, military. I wanted to place Catholics in that context. I realized that state terrorism, and the persecution against certain types of Catholics, started before the military dictatorship, under a democratic government.

When I was attending a conference, I actually found one of the seminarians and we started to talk. My conversation with Alejandro Dausá snowballed to other people, and I realized that I wanted to focus on the people, the regular guys, and not in the church’s official documents, though I used them a lot.

I discovered that Catholic people reacted in different ways facing violence. Some viewed secularization as a threat to the world they loved, and therefore supported state terrorism. There were others who saw in the transformation an opportunity to craft the world in the way they wished, and they were mostly the victims of state terrorism.

And there was a third group, who acknowledged the transformations brought about by modernity, but were afraid of social violence, and wanted to preserve a good relation with the authorities.

Q: Whatever happened to the seminarians?

The Rev. Weeks and Sister Joan passed away last year. James was living in in a nursing home in Connecticut. Joan was in La Rioja, northwestern Argentina, helping a rural community there.

I was able to find three of the seminarians. One of them is a priest in Argentina, another was ordained as a priest but left the ministry and helps communities in Bolivia, and another one left the congregation, got married and had children.

The case was brought to court, and is under trial now, after almost 40 years. Last May when I visited my family in Argentina, I was called as a “contextual witness,” so I went to court and gave my declaration. I talked about the research I’ve done, so it was a good way to make use of my studies. My work is not just for other colleagues, but it also may help other people to understand what happened and also to get justice.

Q: A lot of people will want to know if your research tells us anything new about Pope Francis, who was the Jesuit leader (superior) in Argentina during the Dirty War.

The book is not about the Pope, but two months before the La Salette seminarians were kidnapped in Cordoba, two Jesuits were kidnapped in Buenos Aires.

In those years the pope, then known as the Rev. Jorge Bergoglio, was the superior of Argentine Jesuits. I didn’t focus my research the Jesuits, but since I explore the historical and political situation of Argentina and the Catholics in those years, I think my book provides a good understanding of what was going on. I explore the context where the pope comes from, and I do think that context matters when we try to understand a person.

I show the complexity of the historical situation and the different forces any religious superior had to navigate to be faithful to the people and at the same time protect their priests, a situation where people were hurt and now need to be healed, even 40 years later.

By Susan Segal
18 March 2016

(CNN) — President Barack Obama’s visit to Cuba and Argentina next week will be rich in both substance and symbolism.

Early in his first term, President Obama said he was determined to open a new chapter of engagement between Latin America and the United States, one based on mutual respect and shared values. By abandoning the policies that for decades were the hallmark of U.S.-Latin America relations, the Obama administration has therefore succeeded in building stronger and more productive ties between the United States and its southern neighbors.

This is the right approach for a region that, despite some notable exceptions, has over the past 30 years overwhelmingly embraced democratic institutions, held regularly scheduled elections, and, more often than not, respected political alternation.

Of course, Latin America was hardly at the top of President Obama’s foreign policy priorities when he came to office, given challenges facing the global economy and the growth of extremism across the Islamic world, among other issues requiring his immediate attention. Still, the administration can chalk up a list of important achievements across the region, from the historic opening of relations with Cuba, to trade agreements with Colombia and Panama, to continued security support for Colombia, which contributed to a major peace breakthrough with left-wing guerrillas.

Meanwhile, despite the current inflammatory political rhetoric, commercial ties between the United States and Mexico are at an all-time high, with trade between the two countries reaching $1.46 billion per day.

The region has also benefited from Obama’s critically important decision to designate Vice President Joe Biden as his point person on Latin America. Using both his natural charm and his deep knowledge of a region he has visited 14 times over the past seven years, Biden has successfully bridged a gap in relations with Brazil and persuaded the U.S. Congress to approve crucial aid for Central America.

True, it has not all been a succession of victories and achievements. U.S. relations with several Latin American governments remain testy, and the administration has maintained a war of words with Venezuela over the need for greater democratic pluralism in that country. However, President Obama has understood that the region is not a monolithic block, that in every country democratic institutions will evolve at their own pace, and that the role of the United States is to support and encourage rather than dictate and interfere.

This is underscored most clearly in the fact that Barack Obama will be the first sitting U.S. president to visit Cuba in almost 90 years. His policy toward the island is, without a doubt, his boldest hemispheric initiative, as it chips away at a more than half-century-old embargo policy that has hurt ordinary Cubans, put U.S. commercial interests at a disadvantage compared to those of other countries, and poisoned the U.S. relationship with the rest of the continent.

Critics of the rapprochement cite Cuba’s human rights record, and they are right to do so — it is a topic of considerable concern. But we are in a better position to have a real impact if the United States establishes a more fluid rapport with Havana. The truth is that the embargo has ultimately failed to persuade the Cuban authorities to allow a more open and democratic society. It is time to try a different approach.

President Obama’s decision to visit Argentina just over 100 days into President Mauricio Macri’s term, meanwhile, is also very significant. The trip, which is the first visit by a U.S. president since 2005, clearly recognizes the newly elected President’s determination to reinsert Argentina into the global economy, as well as his willingness to build a mutually beneficial relationship with the United States. In Buenos Aires, there will be an opportunity for both leaders to engage in a substantive dialogue about the future of the region, as well as expand on an extensive bilateral agenda that includes trade, investment, education, renewable energy and climate change, citizen security, and drug policy. Most importantly, the trip recognizes Argentina’s new direction under President Macri’s leadership and the unique opportunity it represents for both the people of Argentina and the hemisphere.

With just over nine months before he hands the reins over to a successor, President Obama continues to implement his strong vision for the region, anchored in building new relationships and renewing old ones as well as creating partnerships across countries linked not just by geography but by shared history, interests, and values. This is the right path for increased and long-lasting prosperity for all.

Governors will leverage their congressional influence to gain significant concessions, probably including a new revenue-sharing regime, given the urgency of the issue. However, they are aware that Macri will have little to offer them if the deal fails, making eventual passage likely.

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