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27 octubre, 2015

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By Simon Romero and Jonathan Gilbert
27 October 2015

BUENOS AIRES — With a largely noncombative campaign that stunned Argentina by pushing the presidential race into a tightly contested runoff, Mauricio Macri, the mayor of Buenos Aires, also achieved another surprise, driving a wedge into the dominating political movement led by President Cristina Fernández de Kirchner.

In the race to succeed Mrs. Kirchner, both Mr. Macri, who is proposing economic shifts to reduce protectionism, and Daniel Scioli, a former speedboat racer endorsed by the president, scrambled on Monday to reposition their campaigns. Both need voters who opted for other candidates, opening a frenetic new phase in Argentine politics before the runoff election on Nov. 22.

Pollsters had cast Mr. Scioli as the front-runner, but momentum appeared to be shifting to Mr. Macri, especially after a rising star in his party, María Eugenia Vidal, the deputy mayor of Buenos Aires, defeated Aníbal Fernández, Mrs. Kirchner’s cabinet chief, in the governor’s race in Buenos Aires Province.

In obtaining control of the province, a coveted stronghold, Mr. Macri’s party, called Let’s Change, not only defeated one of Mrs. Kirchner’s top supporters. The result was also seen as a referendum on Mr. Scioli, the governor of Buenos Aires Province since 2007.

Political analysts paid particular attention because voting preferences in the province have historically foretold important shifts in Argentine politics.

”The candidate who has best interpreted the moment is Macri,” said Carlos Germano, an independent analyst. ”He needs to keep pointing toward dialogue and harmony,” he said, predicting that Mr. Macri would meet with leaders of the other opposition parties to solicit their support.

Mr. Scioli took 36.9 percent of the vote, compared with 34.3 percent for Mr. Macri in the first round — an unexpectedly slim margin that astounded many Argentines. Mr. Macri ran a largely nonconfrontational campaign in which he obtained high levels of support in Córdoba, Argentina’s second-largest city.

”It utterly surprised me,” Jorge Vargas, 65, who polishes floors for a living in Buenos Aires, said of the results. ”I voted for Scioli because I don’t like Macri’s background. He’s completely bourgeois.”

Still, political analysts lauded Mr. Macri’s attempts to soften his patrician image by trying to appeal to some in Peronism, the ideologically flexible political movement that has held sway in Argentina for decades. Governing Argentina for the last eight years, Mrs. Kirchner repositioned her faction of Peronism to enhance the role of the state in the economy and increase antipoverty spending, while stepping up attacks on critics.

But with his strong showing, attention shifted on Monday to Mr. Macri, 56, who was raised in one of Argentina’s wealthiest families and gained prominence as the president of Boca Juniors, one of Argentina’s most popular soccer clubs. He is running to the right of Mr. Scioli, but he has emphasized that he would seek to maintain some of Mrs. Kirchner’s policies on social spending.

Reacting to the runoff outcome, Agustín Rossi, Mrs. Kirchner’s defense minister, told reporters that the president’s supporters needed to ”be humble” in mobilizing a response to Mr. Macri’s rise. Mr. Rossi conceded that Mr. Macri had run a smooth campaign, highlighted by alluring ”sound bites,” but he said Mr. Macri could end up eroding social welfare benefits.

Mr. Macri entered politics after a harrowing episode in 1991 in which he was kidnapped by police officers and transported to a hiding place inside a coffin. Twelve days later, he was freed after his father, an Italian-born magnate, paid a multimillion-dollar ransom.

His father, Franco Macri, 85, assembled a business empire involved in construction and car manufacturing. Sometimes openly dismissive of his son’s political ambitions, Franco Macri said last year that his son had ”the brain to be president, but not the heart,” explaining that he believed Argentina’s next president had to come from the radical wing of Mrs. Kirchner’s political movement.

As mayor of Buenos Aires, Mr. Macri has remodeled public spaces, including plazas and the riverfront, and built bus lanes along major thoroughfares — achievements welcomed by voters. He has also sought to develop the poor south side of the city by encouraging technology businesses, as well as municipal government offices, to set up in the area.

Both Mr. Macri and Mr. Scioli must attract more voters, especially those who opted for Sergio Massa, a former ally of Mrs. Kirchner who took 21.3 percent of the vote, and those who supported small leftist parties.

After avoiding a debate before the first round of voting, Mr. Scioli said on Monday that he would accept a debate with Mr. Macri, reflecting how the candidate endorsed by Mrs. Kirchner now finds himself on the defensive. Both candidates have avoided the president’s belligerent tone in favor of a more mollifying approach.

In reaction to a potential shift if Mr. Macri’s momentum builds, Argentine stocks surged on Monday. But analysts said such sentiment failed to reflect the possibility of a bruising runoff campaign. Moreover, Mr. Macri recognizes that he must attract supporters of Mr. Scioli, a challenging aim in what remains a highly polarized society.

”For days, Macri has been working on this fissure, probing the Peronists from within,” Carlos Pagni, a political columnist, wrote in the newspaper La Nación.

Some voters were perplexed by the runoff. ”Scioli’s no good; he’s under Cristina’s thumb,” said Mary Dany Correa, 82, a retired civil servant who voted for Mr. Massa. ”Macri’s done good things in the city, but I don’t see him as capable of running the whole country. There are a lot of things to fix.”

But Mr. Macri’s showing uplifted many supporters who want a change after 12 years of Mrs. Kirchner and her predecessor, her late husband, Nestor Kirchner.

Santiago Elizalde, 27, an information technology salesman who voted for Mr. Macri, said that while he was ecstatic that his candidate had upended the race, ”it’s a match he still has to play.”

27 October 2015

Argentina voters are tired of sinking living standards and shrinking freedoms. At least that’s the hopeful reading of Sunday’s presidential election in which more than 60% of voters failed to pull the lever for the candidate backed by President Cristina Kirchner.

Mrs. Kirchner is barred from running for a third four-year term, so her Peronist Front for Victory party backed Buenos Aires province governor Daniel Scioli. He won only 36.5% of the vote while Buenos Aires city mayor Mauricio Macri surprised pollsters with 34.7%. Sergio Massa, a Peronist member of the lower house, finished third with 21%. Mr. Massa hasn’t said who he will back in the Nov. 22 runoff, but he also campaigned on the need for a change.

Argentina is a mess. The Kirchners — Cristina for eight years and her late husband Nestor for four before that — have promoted socialist economics and protectionism. They politicized the judiciary, seized private property and stiffed international creditors. Inflation is running at 25% by private estimates, and capital is fleeing the country. The central bank may run out of reserves by the end of the year. Mr. Macri has said he’ll lift exchange controls while ending the country’s trade and financial isolation.

The clearest sign that more Argentines are coming out of their populist trance was the result in the race for governor in the wealthy province of Buenos Aires, a Kirchner stronghold where one in every four Argentines lives. Peronists have held the province for 28 years. But on Sunday 42-year-old Maria Eugenia Vidal, a member of Mr. Macri’s Cambiemos coalition, handily defeated Mrs. Kirchner’s candidate.

That bodes well for Mr. Macri if the presidential runoff is fair, which is never a sure thing in Peronist Argentina.

By Taos Turner and Juan Forero
27 October 2015

BUENOS AIRES — Until Mauricio Macri stunned Argentina’s political establishment on Sunday by triggering a second round of presidential voting, many of his compatriots saw him as a wealthy heir unconnected to the problems of ordinary Argentines.

But as the votes were tallied on Monday, it emerged that the 56-year-old mayor of Buenos Aires had marshaled a far larger percentage of votes than polls had forecast for Sunday’s first round. Now Mr. Macri, the son of an Italian immigrant who grew rich and influential here, will challenge the ruling Peronist movement’s candidate, Daniel Scioli, in a runoff that could truncate the populist party’s plans to extend its 12-year rule.

“The truth is that Macri rules,” said Leon Luna, 37, who as a municipal truck driver is the kind of voter Peronists have wooed for decades.

Polls ahead of Sunday’s vote suggested that Mr. Scioli, a 58-year-old ally of President Cristina Kirchner and the governor of Buenos Aires province, would come close to achieving the result needed to win outright: 40% of the vote and a 10-point lead over Mr. Macri. But by Monday, with 97% of the votes counted, Mr. Macri had 34.3% of the vote, and Mr. Scioli getting just over two points more than that.

Observers say Mr. Macri upended the race by highlighting what his campaign called his efficiency in running this vast city, rather than focusing on his personality. Mr. Scioli, who was vague about how he would govern and didn’t attend a presidential debate, was rejected by 63% of voters.

“Macri has created a party infrastructure with a diverse membership base that tried to get out of the center-right corset,” said Juan Cruz Diaz, managing director of Cefeidas, a risk advisory firm. “He was able to capture the imagination of Argentines this way.”

Many people who voted for Mr. Macri said they believed him to be the best candidate to undertake the overhauls economists say are needed to correct an economy whipsawed by high inflation and fast-depleting foreign-currency reserves.

“Argentina needs change and we’re going to bring change,” Mr. Macri told supporters on Monday morning.

Between now and Nov. 22, Mr. Macri and Mr. Scioli will be vying for the 21% of the vote that went to third-place Sergio Massa, a dissident Peronist now thrust into the role of kingmaker.

Mr. Massa, 43 years old, was once cabinet chief to Mrs. Kirchner but hasn’t said whom he would support. A spokesman said senior members of his coalition would meet this week to discuss a strategy.

A poll conducted a month ago by Consultora Wonder showed that 71% of Mr. Massa’s voters would go for Mr. Macri. A key reason, said Carolina Yellati, the firm’s director, is that Mr. Massa’s supporters generally oppose Mrs. Kirchner’s government.

On Monday, Mr. Scioli, who ran a cautious and civil campaign, came out aggressively, telling prospective voters that Mr. Macri would end the country’s bountiful social programs if elected. “I know very well what we want to care for, what we want to protect,” he told supporters Monday.

Leandro Maturana, a unionized government worker and die-hard Peronist, believes the message. “Macri is a businessman who will take away the subsidies and cut the budget, to make an adjustment against Peronist people,” he said.

Mr. Macri has spent much of his life in the boardroom, moving up in his father’s construction company before becoming an executive at a car manufacturer.

Before becoming mayor of Buenos Aires, he was president of Boca Juniors, a beloved soccer club that plays in a working-class district long home to immigrants.

By Andres D’Alessandro, Chris Kraul
27 October 2015

The presidential race is surprisingly close as Buenos Aires’ mayor forces next round with ruling party candidate.

In a much-closer first round of presidential voting than expected, the mayor of Buenos Aires, Mauricio Macri, forced a Nov. 22 runoff with Daniel Scioli, the ruling party candidate who has been favored to become Argentina’s next president.

With nearly all votes counted, Scioli, who is governor of Buenos Aires state and a former vice president, tallied 36.9% of the ballots cast. Macri was close behind with 34.3%.

Scioli, the handpicked choice of outgoing President Cristina Fernandez de Kirchner, needed at least 40% and a 10-percentage-point advantage to avoid a second round of voting.

When it became clear he would not win outright, Scioli emerged from his campaign headquarters in Buenos Aires on Sunday night to ask for independent voters’ support.

Macri was euphoric. “What happened today has changed the political history of the country,” he told supporters.

An engineer by training, Macri is a centrist technocrat who has promised to make Argentina function more efficiently by building better public transportation, schools and hospitals. He said he would digitize the bureaucracy and bring down costs.

The two will face off in the first presidential runoff in Argentine history. The third-place finisher, congressman Sergio Massa, who garnered 21.3% of votes, could play kingmaker if he throws his support behind either candidate.

Massa gave no indication of whether he would endorse either candidate, saying only that he would release a document in the coming days with his proposals for the next president.

One reflection of the disappointing results for the president was that Anibal Fernandez, her Cabinet chief and handpicked candidate to replace Scioli as Buenos Aires state governor, lost by 5 percentage points to Macri ally Maria Eugenia Vidal.

The loss marks the first election since 1987 that a Peronist — the name given to followers of late Argentine President Juan Peron and his second wife, Eva Peron — has not won the governorship of the country’s most populous state.

Argentines turned out in big numbers — 79% of the 32 million eligible voters cast ballots — to decide Sunday’s election. The voting was widely seen as a referendum on the presidencies of Fernandez and her late husband, Nestor Kirchner. Between them, they have led Argentina since 2003.

Although many young and lower-middle-class voters favor the president’s support for human rights and a social safety net, others expressed dissatisfaction with a 28% inflation rate and a stagnant economy that last year shrank 2% in terms of the value of total goods and services produced.

Cold but mostly sunny weather nationwide boosted the turnout, election officials said. Many voters cast their ballots early Sunday to return home in time to watch Argentina’s national rugby team lose to Australia in the televised semifinals game of the world championship in London.

Scioli, who ran on the Victory Front ticket, promised to continue the president’s social welfare policies with some changes, including a harder line on rising crime. He also called for economic reforms, including the settling of a decade-old bond default.

“I voted for Scioli because I understand he will maintain the project that Nestor and Cristina began,” 30-year-old graphic designer Emilio Ferreyra said after voting in the capital. “It’s a way of staving off the right wing.”

After voting in Dique Lujan in Buenos Aires state, Scioli had declined to predict an outcome.

The election may mark the end of national power of “Kirchnerismo,” but the family will remain a local force at least. The couple’s son, Maximo, was elected to a national congressional seat for Santa Cruz state, and Nestor Kirchner’s sister, Alicia, was elected Santa Cruz governor.

Though many voters expressed support for Fernandez’s wealth-redistribution programs and prosecution of those implicated in atrocities committed during the 1976-83 dictatorship, it was clear many were tired of her heavy hand in the nation’s economy.

“I voted for Macri because in the last few years the country hasn’t grown economically or socially,” said Karina Cunibertti, 46, an insurance company employee in Buenos Aires. “Macri represents the possibility of change. I hope he wins the runoff and reestablishes the good functioning of the government and brings about real opportunity for all.”

By Andre F. Radzischewski
27 October 2015

BUENOS AIRES — The stunning virtual tie in Sunday’s presidential election here suggests the populist ruling coalition founded by Cristina Kirchner and her late husband and predecessor, Nestor Kirchner, may see its long grip on power crumble when the term-limited incumbent leaves the Casa Rosada, Argentina’s White House, on Dec. 10.

Pollsters had widely expected Argentines to hand the presidency to Daniel Scioli, the governor of Buenos Aires province and Ms. Fernandez’s handpicked heir, effectively extending the Kirchners’ 12-year reign. Instead, the unexpectedly strong showing of their longtime nemesis, pro-business Buenos Aires Mayor Mauricio Macri, has forced a runoff and fueled what one commentator called a “social revolution against Kirchnerism” that could well lead to a long, unheard-of center-right victory in South America.

“These results are a very positive outcome for Macri and a big disappointment for Scioli,” Credit Suisse economist Casey Reckman wrote in a note to clients Monday. Given the way he won the expectations game, Mr. Macri “will likely have stronger momentum going in to the next month of campaigning thanks to yesterday’s outcome.”

Sunday’s result may even reverberate beyond Argentina’s borders as other leftist leaders in the hemisphere, such as Brazilian President Dilma Rousseff and Venezuela’s President Eduardo Maduro, are increasingly coming under fire and seeing their power threatened for the first time in years.

“People are tired of this kind of populism” often linked to a high level of corruption, said Marcelo Camusso, who heads the political science department at the Catholic University of Argentina.

The most important figure in Argentina’s Nov. 22 runoff, though, may not be Mr. Macri nor Mr. Scioli, but Sergio Massa — Sunday’s third-place finisher — who for now seems to hold the keys to the presidential palace.

Like Mr. Scioli, Mr. Massa forms part of the larger Peronist movement and once served as Cabinet chief early on in Ms. Fernandez’ administration. But the mayor of a Buenos Aires suburb has since turned into a vociferous critic of the incumbent, accusing her of unjust tax policies, widespread corruption and a failure to rein in violent crime and drug traffickers.

Wooing Massa

That mixed political heritage meant that both Mr. Macri and Mr. Scioli on Monday immediately laid claim to the 21 percent of votes Mr. Massa had captured in Sunday’s first round. “I feel that they think the same as us here,” Mr. Macri said about Mr. Massa’s supporters. “He also took a position for change.”

Massa backers were “much farther away from Macri than from us,” Mr. Scioli countered hours later. But for the Fernandez heir, reaching out too far to the Peronist “dissident” would invariably force a break with the Kirchnerist orthodoxy, a dangerous game that cuts into his own base, said Mariano de Vedia, a political commentator for the La Nacion daily.

“Scioli appears very weakened. It is unlikely that he can improve his performance” Mr. de Vedia said. “He faces a dilemma; I do not think he is capable” of breaking with Ms. Fernandez.

The governor himself seemed to acknowledge his conundrum Monday as he tried to shift attention to a proposed televised debate with Mr. Macri, an encounter he had previously ruled out by arguing that his positions were well known. The Buenos Aires mayor almost immediately took his rival up on the challenge, and his Cambiemos (“Let’s Change”) coalition said Mr. Macri had never shied away from such a debate.

Mr. Scioli’s change of heart, meanwhile, came after Vice Mayor Maria Eugenia Vidal, Mr. Macri’s second in command in the capital, was confirmed to have won the gubernatorial election in Buenos Aires to succeed Mr. Scioli — the first non-Peronist governor there since 1987.

“This was a truly historic event [that] will produce an enormous change in Argentine politics,” Mr. Camusso predicted.

Critics had repeatedly accused Ms. Vidal’s challenger, none other than Ms. Fernandez’s Cabinet chief, Anibal Fernandez, of ties to organized crime, and the unpopular hard-liner’s nomination may have been too much even for the president’s backers. Mr. Camusso said the message to Ms. Fernandez was: “We follow you, but we are not going to follow you anywhere.”

Mr. Massa, meanwhile, has so far kept mum on which candidate — if any — he might endorse in the coming runoff.

“In three weeks Argentines will have to choose a new path,” he told the crowd at his election night rally. “We know the role we play. In the next hours we will get together [to announce] what we are going to do.”

But how he aligns his loyalties may depend less on ideology and more on his personal ambitions, said Joaquin Morales Sola, a prominent columnist with La Nacion. Mr. Massa stands to emerge as the unchallenged leader of the Peronist movement if Mr. Scioli — and, by extension, Ms. Fernandez — were to lose in November.

“It is in Massa’s interest that Macri be president,” Mr. Morales Sola said.

“Massa can be an important guide for a disoriented and beaten Peronism,” Mr. Camusso agreed.

Not all of his backers may comply with a likely Massa endorsement, Mr. Morales Sola said. Still, the vast majority of Argentines, who in 2011 reelected Ms. Fernandez with 54 percent of votes, this time preferred opposition candidates. “I don’t know where [Mr. Scioli] is going to get [that] 15 percent he needs to win the runoff,” he said. “To me, he is in a very complicated situation.”

Argentina’s long-suffering investors, meanwhile, seemed delighted with the prospect of a Macri victory. The Argentine Business Association praised the vote and — in thinly veiled criticism of Ms. Fernandez’ autocratic style — called on leaders to “deepen the dialogue between all stakeholders” so as to propel “the social and economic development of our country.”

By Peter Prengaman
October 26, 2015

BUENOS AIRES, Argentina — The top two presidential candidates in Argentina reset their campaigns on Monday after a razor-close election vote forced a runoff and cast doubt on the legacy of President Cristina Fernandez, a polarizing leader who spent heavily on programs for the poor but made enemies with her brash style and failure to solve economic ills.

Sunday’s presidential election shook up the political landscape. Numerous polls in recent months had projected that ruling party candidate Daniel Scioli would win by 10 percent or more.

Scioli, the governor of the Buenos Aires province, had been viewed as an easy front-runner thanks to the support of Fernandez, a charismatic two-term president. Fernandez won admirers for rewriting the South American country’s social contract but also drew sharp criticism for widespread allegations of corruption in her administration and for fights with political opponents and other nations that many Argentines found tiresome.

With 97 percent of polling places reporting Monday, Scioli had 36.9 percent of the vote, while opposition candidate Mauricio Macri had 34.3 percent.

That forces a second round, since to win in the first round a candidate needs 45 percent or 40 percent and a 10-point advantage over the nearest competitor.

“A runoff will be like reshuffling the cards and dealing again,” said Mariel Fornoni, director of consulting firm Management & Fit. “The political landscape will be very different on Nov. 22”

Scioli reminded supporters on Monday that he captured the most votes, and warned that Macri would undo popular state programs.

“Sometimes the word ‘change’ can be attractive in politics,” said Scioli, arguing that the state should continue to have a strong hand in Argentine society.

Scioli also invited Macri to a debate, an about-face after refusing to debate the other five candidates a few weeks ago.

Macri called the vote “transformative,” and promised to convince voters who didn’t choose him on Sunday.

“We will correct the abuses and the fraud of inflation,” Macri said, reiterating one of his common themes.

Many Argentines are worried about high government spending and inflation around 30 percent. Many have also grown tired of a legal fight with creditors in the U.S. that has kept the country out of international credit markets.

Macri presented himself as the man to put Argentina’s economy in order, promising to resolve the debt fight and lift unpopular currency restrictions.

But he also tailored his campaign to the millions who receive some form of government support. He promised to maintain popular programs for the poor and increase spending in some areas.

He even inaugurated a statue of Juan Peron, a three-time former president who founded the ideological movement to which Fernandez adheres.

Scioli, a former boat racer who lost his right arm in an accident, presented himself as the continuation of Fernandez’s policies but who would also fix anything broken.

Both candidates’ decision to straddle the center also led to many questions about what they would really do in office.

“I think this election was an expression of widespread fatigue” with the current government, said Jorge Neimark, an 85-year-old retired lawyer. “Even if Macri didn’t represent any ideology, he does represent a change.”

Over the next month, both candidates will be heavily courting Sergio Massa. The former Fernandez loyalist came in third on Sunday, garnering 21.3 percent of the vote.

On Monday, analysts, pundits and ordinary Argentines were debating theories on why the polls were so far off. A popular mashup video on Twitter showed reality television personality and U.S. presidential candidate Donald Trump in the board room of his show “The Apprentice.”

With a headline addressed to Argentine pollsters, Trump is seen doing his signature “You are fired!”

By Benedict Mander
October 26, 2015

Argentine assets rallied strongly on Monday after Mauricio Macri, the reformist mayor of Buenos Aires, raised investor hopes that the ruling Peronist party would soon be ousted from power after an unexpectedly strong showing in presidential elections on Sunday.

With an end in sight for 12 years of populist rule by President Cristina Fernández de Kirchner and her late husband and predecessor Néstor Kirchner, optimism is running high that centre-right Mr Macri could beat Daniel Scioli, the government-backed candidate, in a run-off vote next month.

Polls in the run-up to the vote had shown Ms Fernández’s anointed successor with as much as a 10-point lead over his more market-friendly rival; however Mr Scioli only won 36.9 per cent of the vote, while Mr Macri gained 34.3 per cent, with 97 per cent of votes counted.

Because of Argentina’s unique electoral rules, Mr Scioli needed 45 per cent of the vote, or 40 per cent plus a 10-point lead over Mr Macri, to win outright. The two contestants will now face off in a second vote on November 22.

Mr Macri’s stunning performance has boosted investor hopes that Argentina will break from Peronism, whose dominance of Argentine politics over the last 70 years has coincided with the nation’s downfall from one of the richest in the world to one of Latin America’s most troubled economies.

Prices for Argentina’s dollar bonds due 2017 jumped more than 10 per cent to 111.50 cents on the dollar on Monday. Yields on the bonds plummeted from 7.46 per cent to just under 1 per cent, before rising to 1.83 per cent. Investors also bid up the bonds due 2033 to an eight-year high of 110 cents on the dollar.

Andrew Stanners, an investment manager at Aberdeen Asset Management, described the result as “a welcome surprise”. “Macri is the candidate who is most keen to get on and reform Argentina’s economy. Those reforms will be pretty painful but it’s encouraging that the country seems to be realising that they are desperately needed by voting for him,” he said.

Mr Macri would move fast to fix serious macroeconomic imbalances, which include a ballooning fiscal deficit financed by the central bank, precariously low foreign exchange reserves and one of the highest inflation rates in the world.

The former president of the Boca Juniors football club has pledged to remove strict capital controls immediately and allow the overvalued peso currency to float freely. He would also tighten fiscal policy by cutting back on costly subsidies and attempt to resolve a long-running creditor dispute that has blocked Argentina’s access to the international capital markets since a $100bn sovereign debt default in 2001.

By Benedict Mander
October 26, 2015

Branded an international financial pariah since what was then the biggest sovereign debt default in history in 2001, investors are optimistic that Argentina will soon come in from the cold.

A stunning performance in presidential elections on Sunday by Mauricio Macri, the centre-right mayor of Buenos Aires who campaigned for change, has raised hopes that he could clinch a victory in a run-off vote on November 22. The prospect of a break from rule by Argentina’s dominant Peronist party sent bond prices soaring on Monday.

“‘Macrinomics’ is now a distinct possibility. This would be a positive for the country,” said Edward Glossop, emerging markets economist at Capital Economics in London. “It’s clear that the tide is turning in Argentina and disillusionment with interventionist and populist policies is growing,” he added.

Markets see whoever wins the run-off vote — Mr Macri is set to face off against the government-backed Daniel Scioli, the moderate Peronist governor of the province of Buenos Aires — as an improvement on the last 12 years of rule by President Cristina Fernández and her late husband and predecessor, Néstor Kirchner.

But Mr Macri, who some pollsters had predicted would not win enough votes to make it to the second round, has promised to move much faster to fix serious macroeconomic imbalances, which include a ballooning fiscal deficit financed by the central bank, precariously low foreign exchange reserves and one of the highest inflation rates in the world.

“A Scioli victory in the first round would not have been bad, but a Macri victory in the second round would make this an economic normalisation trade, not just an ‘anybody but Cristina’ trade,” says Daniel Freifeld, principal of Callaway Capital Management, an investment firm.

“Equity valuations and yields should converge with regional averages, which will translate into significant gains,” he added.

Mr Macri has pledged to remove strict capital controls immediately and allow the overvalued peso to float freely. The former president of the Boca Juniors football club would also tighten fiscal policy by cutting back on costly subsidies and attempt to resolve a long-running creditor dispute that has blocked Argentina’s access to the international capital markets since its $100bn sovereign debt default.

Meanwhile Mr Scioli has promised to implement more “gradual” reforms, and warns that Mr Macri would represent a return to the neoliberal economic policies of the 1
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By Peter Prengaman
October 26, 2015

BUENOS AIRES, Argentina — The ruling party’s presidential candidate promised continuity with some changes. The leading opposition candidate promised changes with some continuity.

Argentine voters seemed to call that a draw in Sunday’s election, giving the two men a neck-and-neck finish and forcing a runoff in their bid to succeed President Cristina Fernandez, a polarizing leader who garnered both devotion and loathing as she spent heavily on the poor and blasted political opponents and even other nations like the United States.

With 80 percent of polling places reporting early Monday, opposition candidate Mauricio Macri and ruling party candidate Daniel Scioli each had 35 percent of the votes. Sergio Massa, a former Fernandez loyalist who broke away to form his own political movement, was third in the six-candidate field with 21 percent.

The unexpected tight finish means Macri and Scioli will square off in a Nov. 22 runoff. To win the first round, a candidate had needed 45 percent of the votes or 40 percent and a 10-point advantage over the nearest competitor.

Scioli, the governor of the Buenos Aires province, had been viewed as an easy front-runner thanks to the support of Fernandez, who won admirers for rewriting Argentina’s social contract but also drew sharp criticism for widespread allegations of corruption and numerous economic ills, like high inflation.

Numerous polls had predicted Scioli would win by more than 10 points, indicating the only question was whether he could gain enough votes to avoid a runoff.

The strong showing by Macri, the mayor of Buenos Aires, underscored that many voters are ready for change after 12 years of Kirchnerismo, the political movement founded by Fernandez and her late husband and predecessor as president, Nestor Kirchner.

“What happened today changes the politics of this country,” Macri told supporters late Sunday.

Scioli, the governor of the Buenos Aires province and a former vice president, presented himself as the continuation of Fernandez’s policies but who would also fix anything broken.

“I invite undecided and independent (voters) to join me in this great celebration of Argentine development,” Scioli told a gathering of supporters late Sunday.

Macri campaign as the candidate to put Argentina’s economy in order, promising to resolve a long-running fight with U.S. creditors and lift unpopular currency restrictions.

But he also tailored his campaign to the millions who receive some form of government support. He promised to maintain popular programs for the poor and increase spending in some areas. He even inaugurated a statue of Juan Peron, a three-time former president who founded the ideological movement to which Fernandez adheres.

“Macri can inaugurate whatever he wants,” said Claudio Toledo, a Scioli voter. “I don’t trust Macri.”

While Macri’s moves raised eyebrows and drew sharp criticism from Scioli, they likely helped Macri capture undecided voters. But both candidates’ decision to straddle the center also led to many questions about what they would really do in office.

Many Argentines are worried about high government spending and inflation around 30 percent as well as being concerned about the legal fight with creditors in the U.S. that has kept the country out of international credit markets.

Still Argentines have a nightmarish reference point for a truly bad economy: the financial collapse of 2001-2002, when the country defaulted on $100 billion in debt and overnight millions of middle class people were impoverished. And Fernandez and her late husband are widely credited with lifting Argentina up from that crisis.

Fernandez sharply increased spending on social welfare programs, which range from work training to stipends for single mothers. Her government was the first in Latin America to legalize gay marriage, and it nationalized airline Aerolineas Argentinas and the YPF oil company while strengthening ties with Russia and China.

Scioli, a former boat racer who lost his right arm in an accident in 1989, bristled at suggestions that Fernandez would continue to dominate behind the scenes.

“What Scioli would do in office is a mystery,” said Maria Fernandez, who owns a real estate company. “Will he take orders from Cristina or do something else?”

“I don’t want to find out,” added Fernandez, who voted for Macri.

By Peter Prengaman
October 25, 2015

BUENOS AIRES, Argentina — In one of the most important elections of a generation, Argentines on Sunday chose between a ruling party candidate who promised to continue with the loved and sometimes loathed policies of President Cristina Fernandez and an opposition leader who argued the South American nation needs an overhaul.

It was no surprise that the leading candidates defined themselves in terms of Fernandez, a polarizing leader who along with her late husband dominated national politics for 12 years and rewrote the country’s social contract.

Polls closed in the evening without any reports of disturbances, and election officials said the first official results would not be known until late Sunday.

During the chilly but clear day when bars were closed and there were not the usual weekend soccer games, millions filed into schools, churches and other businesses converted into polling places to cast their votes — sometimes undecided right up to the last moment.

“The truth is I don’t like any of the candidates,” said Anai Roy, a college student who said she would make a choice in the polling booth. “So I just have to decide who is the best of bad.”

The decisions of voters like Roy would be key, as Argentines have been deeply divided about the rule of Fernandez and about who might improve the economic problems and corruption plaguing the nation of 41 million people.

Inflation is around 30 percent, the economy is stagnant and a bitter court fight with a group of creditors in the U.S. has scared off investors and kept Argentina on the margins of international credit markets.

But Argentines have a unique, nightmarish reference point for a truly bad economy: the financial collapse of 2001-2002, when the country defaulted on $100 billion in debt and overnight millions of middle class people were impoverished.

“The economy is OK. It’s not great,” said Maria Victoria Murillo, an expert on Argentine politics at Columbia University’s School of International and Public Affairs. “But for Argentina, OK is pretty good.”

Daniel Scioli, the governor of the Buenos Aires province and a former vice president, was the chosen successor to Fernandez, who nears the end of her second term with approval ratings around 50 percent.

Fernandez and her late husband and predecessor as president, Nestor Kirchner, are widely credited with lifting the nation after the collapse. Fernandez sharply increased spending on social welfare programs, which range from work training to stipends for single mothers. Her government was the first in Latin America to legalize gay marriage, and it nationalized airline Aerolineas Argentinas and the YPF oil company while strengthening ties with Russia and China and often accusing the United States of meddling in the country’s affairs.

Scioli, a former boat racer who lost his right arm in an accident in 1989, presented himself as the continuation of Fernandez’s policies who would also fix anything broken. He bristled at suggestions that Fernandez would continue to dominate behind the scenes.

“What Scioli would do in office is a mystery,” said Maria Fernandez, who owns a real estate company. “Will he take orders from Cristina or do something else?”

“I don’t want to find out,” added Fernandez, who was voting for Mauricio Macri, the lead opposition candidate.

Macri, the Buenos Aires mayor, presented himself as the candidate to put Argentina’s economy in order, promising to make a deal with the U.S. creditors and lift unpopular currency restrictions.

But Macri also has tailored his campaign to the millions who receive some form of government support. He promised to maintain popular programs for the poor and increase spending in some areas. Macri even went so far as to inaugurate a statue of Juan Peron, a three-time former president who founded the ideological movement to which Fernandez adheres.

Ramiro Blanco said she was voting for Scioli in large part because Fernandez picked him.

“I want to preserve everything we have achieved in these years,” said Blanco, a clothing store manager. “Macri would be a return to the past” conservative economic policies that many Argentines believe led to the 2001 collapse.

To win outright, a candidate needed 45 percent of the votes, or 40 percent and at least a 10-point advantage over the nearest competitor.

By Benedict Mander in Buenos Aires
October 26, 2015

Argentina’s presidential elections are set to continue to a run-off vote next month in a blow for the leftist government of President Cristina Fernández de Kirchner after a turnround in the fortunes of the opposition candidate, Mauricio Macri.

“What happened today changes the politics of this country,” Mr Macri, the centre-right mayor of Buenos Aires and former president of Boca Juniors football club told a crowd of euphoric supporters amid balloons and blaring music.

“It is today, it is here, it is now. Let’s go Argentina!” he bellowed, before breaking into a dance.

Mr Macri was almost neck-and-neck early on Monday morning with Daniel Scioli, Ms Fernández’s anointed successor, who billed himself as the continuity candidate. Mr Scioli was slightly ahead with 36 per cent of the vote while Mr Macri had 35 per cent, with 88 per cent of ballots counted.

Opinion polls had shown Mr Macri lagging behind Mr Scioli by about 10 percentage points — casting doubt on whether he would even be able to prevent the government-backed candidate from winning outright — analysts now say he has a good chance of removing the ruling Peronist party from power after 12 years.

Argentina’s unique electoral rules require the winner to receive more than 45 per cent of the vote to avoid a second round, or 40 per cent with a 10-point lead over the runner-up. With no candidate achieving these conditions, the vote will now go to a run-off on November 22.

The outcome will greatly depend on those who voted for Sergio Massa, a dissident Peronist, who came third with about 21 per cent. The former cabinet chief of Ms Fernández refrained from throwing his weight behind either candidate in a speech on Sunday night, although analysts expect the majority of his voters to back Mr Macri.

Although initial results were not published until after midnight, Mr Scioli appeared before supporters earlier in the evening to give a speech aimed at winning over undecided voters.

He played on concerns that Mr Macri would represent a return to the neoliberal policies that characterised Argentina in the 1990s, culminating in the 2001 economic crisis and what was then the biggest sovereign debt default in history.

“Changes have to go forwards, not backwards, and always include the most in need,” said a humbled Mr Scioli. “Argentines don’t want to go back to [macroeconomic] adjustments, devaluations and indebtedness. My commitment is to be a president who represents all Argentines, not just a few.”

With Argentines also voting for congressional deputies, senators and regional governors on Sunday, perhaps the biggest surprise of the night was the victory for the candidate for Mr Macri’s “Let’s Change” coalition in the province of Buenos Aires, by far the most populous in the country with about 37 per cent of the nation’s voters.

María Eugenia Vidal was leading with almost 40 per cent of the vote in what has traditionally been a Peronist stronghold owing to its large working-class population. The government’s candidate, Aníbal Fernández, who is the president’s cabinet chief but no relation to the president, was trailing with 35 per cent.

“Tonight we are making history,” Ms Vidal told ecstatic supporters. “We made the impossible possible. We changed resignation for hope, sadness for enthusiasm and joy, the past for the future.”

By Benedict Mander in Buenos Aires
October 25, 2015

Whoever wins Argentina’s presidential elections on Sunday will inherit an economy in dire straits. Restricted access to foreign currency has caused the country’s reserves to decline to dangerously low levels.

Most observers expect President Cristina Fernández de Kirchner to hand over power on December 10 without the economy suffering another big financial shock. But her successor may not be so lucky.

How bad is it?

Pretty bad. At the root of the problem is a ballooning fiscal deficit, now about 7-8 per cent of national output, which is being financed by printing money. It should be no surprise, therefore, that Argentina has one of the highest inflation rates in the world. It reached about 30 per cent last year but has since fallen thanks to stalled economic growth.

It does not help that Argentina cannot borrow abroad because of a continuing creditor dispute. Strict capital controls were introduced in 2011 that led to a massively overvalued official exchange rate — and a plummeting black market rate — while foreign reserves have been in steady decline ever since. Net reserves will end the year below $10bn. Few dispute that this situation is unsustainable.

What are the candidates going to do?

Faced with an economic time bomb, even Daniel Scioli, the government-backed candidate, has admitted that reforms are necessary — although he insists that any changes must be “gradual” and that there will be no “adjustment”. But he has been vague about what he will actually do, in part because he needs to toe the government line and thus keep Ms Fernández and her supporters on side until the elections.

Nevertheless, his economic advisers admit in private that it will be important to reach a swift deal with the “holdout” creditors so Argentina can access international finance to plug the deficit. That is all the more important for Mr Scioli because he says he will not remove capital controls quickly or devalue the currency, defending the central bank’s management of the exchange rate.

He pledges to bring inflation down to single-digits during his term and is emphatic about the importance of attracting foreign investment, hoping for some $30bn a year. He promises businesses that they will be “profitable” but he has been non-committal on what he would do about quotas and export taxes.

Chart – Argentina’s fiscal balance as % of GDP

And the other guy?

Mauricio Macri, the market darling, is billing himself as the turnround candidate, although he has attempted to assuage fears that he will implement “shock treatment”.

Nevertheless, committed to free and open markets, he wants to normalise Argentina’s economic relations with the rest of the world, especially in trade and finance, which also involves resolving the dispute with the holdout creditors.

Central to this idea is restoring credibility and independence to Argentina’s institutions, especially the judiciary, the central bank and the discredited statistics institute.

Mr Macri argues that there is plenty of room to bring down the fiscal deficit without an adjustment simply by making spending more efficient — although this would involve reviewing costly subsidies.
But he has pledged to remove capital controls immediately, and to let the currency float freely, which it is hoped will lead to big inward flows of investment. He would also ask Alejandro Vanoli, the central bank president, to resign.

To stimulate more investment, Mr Macri has also promised to abolish quotas and taxes on exports, although not entirely on soya exports, which are the most profitable. His advisers also reckon they can bring inflation down to 4 per cent in the first two years of his presidency.

Will these plans work?

The big difference between Mr Scioli and Mr Macri is the speed at which they would attack the economy’s problems. Most economists agree on the problems themselves, and what needs to be done about them.

But with Mr Scioli, the danger is that he will move too slowly, held back by those resistant to change and loyal to Ms Fernández, as well as his own fear of the political risks involved. If so, the market could end up forcing an adjustment on him.

With Mr Macri, on the other hand, there is a risk that he could move too fast — especially in removing capital controls, which may not automatically lead to it “raining dollars” as Mr Macri hopes.

By Melissa Gray and Catherine E. Shoichet, CNN
October 26, 2015

(CNN)The race to succeed Cristina Fernandez de Kirchner as Argentina’s president appeared headed for a runoff Monday, with her party’s candidate in a tight race with the outgoing mayor of Buenos Aires.

With nearly 80% of polling places counted, Daniel Scioli of Fernandez’s Front for Victory coalition and Mauricio Macri of the Let’s Change coalition each had 35.48%, according to official results.

In third place at 21.23% was Sergio Massa, who earlier Sunday said his coalition, United for a New Alternative, did not get the numbers it was hoping for and was not in the top two.

According to the constitution, to win the presidency a candidate must either win 45% of the vote or have an advantage of 10 percentage points over their closest rival.

If neither requirement is met, the top two candidates compete in a runoff, which would be held November 22.

Fernandez was elected in 2007, succeeding her husband, Nestor Kirchner, who served one term. He died of a heart attack five years ago this week.

She won re-election in 2011.

Both Massa and Scioli, whom Fernandez endorsed as her successor, anticipated being in a second round of voting.

“It is an irreversible trend at a national level: There is a second round in Argentina,” Sen. Ernesto Sanz said from the headquarters of Let’s Change before the results began coming in.

Asked about the possibility of a runoff, Alberto Samid, vice president of the Central Market and a close confidante of Scioli, told CNN: “If there is a second round, we will win twice.”

A major issue in the election is whether the new leader will end the country’s fight against New York hedge funds, an unresolved debt debacle that has shut out Argentina from much of the global economy while suffering from massive inflation, declining cash reserves and major economic growth.

By Hugh Bronstein and Richard Lough
October 26, 2015

Conservative opposition candidate Mauricio Macri stunned Argentina’s ruling party with an unexpectedly strong showing in the presidential election on Sunday, forcing a run-off vote next month, preliminary results showed.

Daniel Scioli, backed by outgoing leftist President Cristina Fernandez, had a big lead in pre-election opinion polls but the results on Sunday showed the two men in a tight race with everything to play for in the run-off.

With returns in from almost 97 percent of polling stations, Scioli had 36.8 percent support while Macri had 34.4 percent.

“What happened today will change politics in this country,” Macri, the pro-business mayor of Buenos Aires, told thousands of jubilant supporters inside his campaign headquarters.

Scioli could extend his lead as the last remaining votes come in but it was still a disappointing night for him and he looks vulnerable in the run-off election on Nov. 22.

The outcome of the election will shape how the South American country tackles its economic woes, including high inflation, a central bank running precariously low on dollars and a sovereign debt default.

Scioli is running on a platform of “gradual change” and has promised to maintain popular welfare programs while Macri advocates moving quickly to open up the economy.

Stung by Macri’s showing, Scioli launched an unusually blunt attack on his rival on Sunday night, saying he would want to scrap popular welfare policies like one that gives benefits to mothers for each of their children.

“We have two very different visions,” Scioli said.

The first-round results were met with stunned silence at Scioli’s headquarters, where supporters earlier celebrated what they expected to be a convincing lead or even outright victory.

“I would love to be able to tell you that we will able to come back in the second round, but I don’t know,” said one supporter.

To avoid a run-off, Scioli had needed 45 percent support on Sunday, or 40 percent with a 10 percentage point lead over his nearest rival. In the end, he fell far short.


“The polls were totally wrong. This is totally unexpected,” said political analyst Ignacio Labaqui. “An eventual Scioli victory, which was the consensus forecast, is clearly at stake.”

In a speech before thousands of party militants, Scioli reached out to swing voters for their support.

“United together we will triumph,” Scioli told voters in a rallying call. “I call upon the undecided and independent voters to join this cause.”

Scioli will seek to exploit a perception among many voters that Macri, the son of a construction magnate, would restore the kind of right-wing policies widely blamed for triggering a deep economic crisis in 2001-2002, when millions fell into poverty.

In third place on Sunday was moderate lawmaker Sergio Massa, a former Fernandez cabinet chief who split from her party in 2013. He won about 21.3 percent support and the race for his voters will start on Monday.

While some will find Macri’s shock therapy proposals hard to stomach, others believe Scioli will be unable or unwilling to end Fernandez’s divisive and populist policies.

Scioli, a former powerboat champion who is governor of Buenos Aires province, draws much of his support from poorer Argentines who credit Fernandez with strengthening Argentina’s social safety net.

Fernandez was barred by law from seeking a third consecutive term, but could return as a presidential candidate in 2019.

Macri has vowed to start dismantling her protectionist currency and trade controls on his first day in office if he wins. Fernandez will hand over to her successor on Dec. 10.

Macri is seen by Wall Street investors as the candidate most likely to negotiate with a group of “holdout” hedge funds whose suit over bonds defaulted on by Argentina in 2002 caused a new and ongoing default last year.

“It’s a shocking result and markets will likely react positively,” Alejo Costa of local investment bank Puente said of the first-round vote. “For U.S. dollar bonds, the market will reassign chances of a holdout resolution under a potential Macri administration.”

Partial results also suggested the ruling Front for Victory party lost clout in the lower chamber of Congress, making it less of an obstacle to a debt deal if Macri prevails in November.

In another damaging blow to the ruling party, Macri’s alliance won the gubernatorial election in Buenos Aires province, Argentina’s most populous, where Fernandez had hoped to install her cabinet chief Anibal Fernandez.

By Taos Turner
26 October 2015

BUENOS AIRES–Argentina’s ruling party presidential candidate, Daniel Scioli, suffered a setback in Sunday’s election as his adversary, the business-friendly mayor of Buenos Aires, was outperforming him in a first round of voting.

The unexpected showing of the center-right mayor, Mauricio Macri, took pollsters and the country’s political establishment by surprise. It also assured a runoff election on Nov. 22, the first in Argentine history.

Mr. Scioli, 58 years old and the governor of Buenos Aires Province, had a clear lead heading into the election with polls putting him on the cusp of a first-round win. But as results came in after midnight on Monday, more than six hours after polls had closed, Mr. Macri had almost 36% of the vote compared with about 35% for Mr. Scioli.

Mr. Scioli appeared likely to pull ahead as results from poor districts come in through the early morning hours, said Ernesto Calvo, a political science professor at the University of Maryland who has closely tracked the Argentine campaign.

But Mr. Scioli, a former world champion powerboat racer, had campaigned hard to win in the first round. His weaker-than-expected performance is a blow not only to his campaign but to President Cristina Kirchner and their ruling Peronist Victory Front coalition.

At stake are Mrs. Kirchner’s trademark policies, including heavy government spending to expand welfare programs, currency controls and import barriers that economists say have stalled the economy and spurred 25% annual inflation.

25 October 2015

BUENOS AIRES—The business-friendly mayor of Argentina’s bustling capital won enough votes in Sunday’s presidential election to trigger the first runoff in the country’s history, dealing a startling setback to the candidate backed by the ruling party.

The unexpectedly strong showing by Mauricio Macri, the center-right mayor of Buenos Aires, took pollsters and the country’s political establishment by surprise. It also assured a runoff election on Nov. 22.

Daniel Scioli, 58 years old and the governor of Buenos Aires Province, had a clear lead heading into the election with polls putting him on the cusp of a first-round win.

But as results came in early Monday, more than seven hours after polls had closed, Mr. Scioli had 35.6% of the vote compared with 35.4% for Mr. Macri. Almost 82% of the votes had been counted.

Mr. Scioli appeared likely to pull ahead as results from poor districts come in, said Ernesto Calvo, a political-science professor at the University of Maryland who has closely tracked the Argentine campaign.

But Mr. Scioli, a former world champion powerboat racer, had campaigned hard to win in the first round. His weaker-than-expected performance is a blow not only to his campaign but also to President Cristina Kirchner and their ruling Peronist Victory Front coalition.

At stake are Mrs. Kirchner’s trademark policies, including heavy government spending to expand welfare programs, currency controls and import barriers that economists say have stalled the economy and spurred 25% annual inflation.

“This result represents a shock, positioning Mr. Macri within reach of the presidency,” said Mr. Calvo.

The second round will signal the end of 12 years of rule by Mrs. Kirchner and her late husband, Né stor.

Whoever is elected will have to make tough choices to address a moribund economy and a rapidly rising budget deficit.

In a speech, Mr. Scioli asked for his followers to “keep accompanying us” and launched into the kind of sharp attack on Mr. Macri that veered from the largely civil discourse that had marked campaigning until now.

“It it were up to Macri, we wouldn’t have universal benefits for children, YPF, nor Aerolineas,” Mr. Scioli said, referring to social programs and the oil and airline industries Ms. Kirchner nationalized.

Mr. Scioli added, in comments widely interpreted here as an opening salvo to a new campaign ahead of the second round, that there were “two very different visions about the present and future of Argentina are at play. Our priorities are the poor, the workers and the middle class.”

Mr. Macri, in a lively speech before overjoyed supporters, celebrated early results that seemed to show his campaign was still alive. “What happened today changes the politics of this country,” he said.

Mr. Macri’s Republican Proposal Party, or Pro, was also close to winning the governorship of the Buenos Aires province after 28 years of uninterrupted rule by the Peronists.

Despite the setback for the Victory Front, Mrs. Kirchner is leaving office on Dec. 10 with a 42% approval rating, according to the polling firm Management & Fit, the highest of any departing president in modern Argentine history. She is constitutionally barred from seeking a third consecutive term.

A win for Mr. Macri would significantly alter Argentina’s political landscape and mark the emergence of a new and competitive political coalition led by the Pro. In interviews inside and outside Buenos Aires, some voters said they were ready for a change.

“It’s become too hard to live in Argentina,” said Liliana Levy, 48, a systems analyst who voted for Mr. Macri. She says half of her salary goes to paying rent and that she struggles to care for her elderly mother. Mr. Macri’s background as a businessman appealed to her and she says he was a good mayor.

By Charles Newbery
26 October 2015

Buenos Aires (Platts)–26Oct2015/1210 am EDT/410 GMT Argentina’s presidential election Sunday likely will go to a November runoff against the two leading candidates, in a race widely watched by the oil industry for signs of improvement in policies and investment conditions.

Buenos Aires Mayor Mauricio Macri took 36% of the votes for Cambiemos, a coalition of more conservative parties, according to a count of 70% of the ballots by the National Electoral Board.

The first official results were released just past midnight local time (0300 GMT Monday), more than six hours after voting ended.

The results put Macri ahead of Buenos Aires Governor Daniel Scioli, who took 35% for Front for Victory, a populist left-of-center party that has been in power since 2003, according to the preliminary results.

Sergio Massa, a left-of-center congressman, trailed in third with 21%, while the other three candidates were far behind.

If the results hold at these percentages, Scioli and Macri will go to a November 22 runoff. To avoid a runoff, a candidate needs 45% of the votes or at least 40% plus a 10-percentage-point lead on second place, according to election rules.

This shifts attention to which candidate will pick up the losing candidates’ supporters. Ahead of Sunday’s election, analysts said a possible scenario would be that those who voted against Scioli would cast their ballots for Macri in the runoff.

However, there is potential for Massa’s voters siding with Scioli, as both men are part of Peronism, a nationalist political movement that has dominated since the 1940s.


Either way, the winner is expected to take office December 10 and work to rebuild energy supplies.

Macri has taken on as an energy adviser Juan Jose Aranguren, a former president of Shell Argentina, a leading upstream and downstream player.

Scioli already has been taking steps to plan for the energy rebuild if he becomes president. He has vowed to keep domestic oil prices at between $63/b and $77/b even if international prices are lower, as they are now at about $48/b.

He also has promised to implement a program to boost natural gas production, offering to pay a $5/MMBtu subsidy on top of the average gas price in 2014 to producers who increase output. The average for state-run YPF, the country’s biggest gas producer, was $4.29/MMBtu in 2014, meaning that the incentive could be more than a current program for paying $7.50/MMBtu for output from new developments.

Argentina has huge oil and gas resources in largely untapped shale and tight plays, as well as potential for offshore finds. This has attracted the attention of Chevron, ExxonMobil, Shell, Total and other companies to drill for the resources, targeting at first the Vaca Muerta shale play.

The first development of the play by YPF and Chevron has helped to stabilize national oil production and boost that of gas after a decade of decline.

Argentina produced an average of 532,000 b/d of oil in the first eight months of this year and 117.3 million cu m/d of gas, according to the Argentine Oil and Gas Institute, an industry group.

Jonathan Gilbert
25 October 2015

In 2001, Enrique Guastavino’s business renting pedal boats on a lake here was at a breaking point. “I didn’t have enough money to pay my staff,” he says. Today, however, the business is thriving and Mr. Guastavino says the government is to thank.

In recent years, President Cristina Fernandez de Kirchner has faced scandals, street protests, and apocalyptic news coverage, and many observers abroad believed her party was on its way out. Mrs. Kirchner has presided over economic tumult, including a currency devaluation last year. Import restrictions have hindered domestic manufacturers and global prices of soy, Argentina’s biggest export, have crashed. Economic growth has slowed sharply since 2011.

Nevertheless, Kirchner’s leftist Front for Victory party seems well positioned to win a fourth consecutive term in elections on Sunday. This resilience reflects strong approval in several sectors of how the party has governed Argentina over the past 12 years. Analysts say the “main street” economy appears healthy – and voters like Guastavino are content. Unemployment, for instance, is around 7 percent and policymakers have hiked wages for influential trade union workers, even as inflation nears 28 percent. This is far from the chaos of 2001-2002, when economic turbulence plunged millions into poverty, and hyperinflation a decade earlier.

“I can’t complain about her government,” says Angelica Laplume, a security guard, noting the improvements under Kirchner. “There’s work for who wants it, the restaurants are full, people go on vacation.”

‘Sharp change’?Kirchner cannot run for a third consecutive term in Sunday’s elections, so the Front for Victory’s candidate is Daniel Scioli, a state governor. Polls give him a big lead over his center-right rival, Mauricio Macri, of the Cambiemos or “Let’s change” alliance. But it is unclear whether Mr. Scioli will win enough votes to avoid a run-off next month.

Scioli, a former powerboat racer, is promising to take the reins of Kirchner’s broader political project. This includes her focus on reducing the equality gap, which she has tackled in part by expanding social benefits, a cornerstone policy that is supported by many Argentines.

Sixty-two percent of Argentines want some form of continuity, according to research released by Management and Fit, a local polling firm. This has forced Mr. Macri to modify his campaign in order to appeal to these voters. He’s promised to keep social benefits, like child welfare, and to safeguard nationalized companies. As a result, the difference between Kirchner’s party and its competitors is much less noticeable.

“At the beginning of the campaign the talk was about sharp change, but it wasn’t resonating much and Macri shifted towards Scioli,” says Louisa Richey, a senior risk analyst at the Cefeidas Group in Buenos Aires.

Continuity with changeStill, there are many who prefer change. They have grown weary, for instance, of Kirchner’s imperious style and argue that her protectionist economic policies and nationalist rhetoric have isolated Argentina from the world.

In turn, Mr Scioli has also reached out to these voters, offering — as he did on a popular TV show this week — to implement “continuity with change.”

“We can’t say that the mandate is either change or continuity,” says Raul G. Aragon, a pollster and political commentator here. “It’s not a dichotomy; it’s more nuanced and Scioli is the best representative of it.”

On the streets of Buenos Aires, this nuance was reflected among voters. “It would be a good change,” says Luis Addesi, who runs a convenience store, of Scioli’s candidacy. “We would have continuity but he’s going to bring in his own politics, too.”

Changes would include a more consensual style of leadership, according to Scioli’s advisers, and moves to correct economic distortions, like the inflation rate, a high budget deficit, and low reserves of hard currency. These would require moves to which Kirchner has previously been averse, like negotiating with hedge funds in New York and easing electricity and gas subsidies, economists say.

Still, there are many Argentines that believe change isn’t possible under Kirchner’s party, which is part of a larger political movement that has dominated Argentina for decades.

“They seem very corrupt,” says Lidya Bruzzese, a housewife who is ditching Front for Victory to vote for Macri. “And also very authoritarian. I don’t see the progress.”

In the gritty conurbation that encloses Buenos Aires where Kirchner’s party is strong, Macri is gaining ground. “I’m tired of 30 years of the same; I want something else,” says Reinaldo Capparelli, the owner of a plant store.

But even staunch supporters of Macri pointed to the value of preserving some of Kirchner’s policies. “Macri has to keep the social benefits,” says Christian Afalo, a blacksmith. “If he doesn’t, the whole world could fall in on him.”

President Kirchner has presided over a slowing economy and a rocky relationship with foreign creditors. But her party’s candidate for president is in the lead ahead of Sunday’s poll.

By Andres D’Alessandro and Chris Kraul
25 October 2015

Despite Argentina’s slumping economy, rising crime rates and spiraling inflation, an ally of outgoing President Cristina Fernandez is the heavy favorite to place first in Sunday’s
presidential election, a reflection of the popularity of her populist social programs and human rights record.

The question is whether Buenos Aires state Gov. Daniel Scioli will tally enough votes to win the election outright against his two main opponents, Buenos Aires city Mayor Mauricio Macri and Congressman Sergio Massa.

To do so, Scioli must win at least 45 percent of the votes, or garner 40 percent and outdistance his nearest opponent by a margin of at least 10 percentage points.

Recent polls show Scioli with between 38 percent and 41 percent support, Macri between 29 percent and 32 percent and Massa between 20 percent and 23 percent.

In any scenario, the election means the end of 12 years of Kirchnerismo, which critics call a somewhat authoritarian variation of the socialist politics that have long dominated in Argentina.

The late Nestor Kirchner held the top job from 2003 to 2007, and was succeeded in office by Fernandez, his wife, whose second four-year term ends Dec. 10.

She will leave an economy suffering from 28 percent inflation and stagnant growth after a miserable 2014 in which total economic output shrank 2 percent.

The slowdown’s effects have been masked by a burst in election-year public spending that will create a large government deficit this year, a mess her successor will have to clean up, said economist Cynthia Moskovits of the FIEL think tank in Buenos Aires.

But Scioli, the Victory Front party candidate and the president’s choice to succeed her, will benefit from the solid support she enjoys among young and lower-middle-class voters. They approve of her wealth redistribution efforts and subsidies of public transit and utilities prices, as well as her determined prosecution of those culpable for deaths, kidnappings and torture of thousands of victims during the military dictatorship from 1976 to 1983.

Many Argentines credit Kirchner and Fernandez with rescuing the country from political and economic chaos that followed a bond default and devaluation in 2001.

Violent protests in that era resulted in 32 deaths. The country saw five presidents take office from late 2000 through 2001.

The Kirchners’ social programs included expanded pension coverage, elderly care and education subsidies. The programs were financed partly by higher tax and duty revenue produced by the global commodities boom that saw skyrocketing prices and demand for Argentine wheat, soy and beef.

The Kirchners’ policies reduced the poverty rate from 57 percent in 2002 to 25 percent in 2014. Their massive boost in public sector hiring helped lower unemployment rate from 21 percent in 2002 to the current 5 percent.

“People see her policies as benefiting those in need,” said Columbia University political science professor Maria Victoria Murillo. “Her popularity is more than 40 percent, which is not minor given the economy that’s not so good and the fact she has been around for eight years.”

Other actions taken by Fernandez have been less popular, including the nationalization of public services, an airline and the biggest oil company.

She is also criticized for a perceived hostility toward the media and her refusal to settle the dispute with “holdout” bondholders dating back to the 2001 default. That failure has hurt Argentina’s access to the global financial markets, Moskovits said.

Many have also decried what they see as Fernandez trying to perpetuate her hold on power, like socialist heads of state in Bolivia, Ecuador, Nicaragua and Venezuela in recent years.

But her plan to run for a third term was frustrated by reversals in the 2013 legislative elections that ended any chance of a needed constitutional reform.

For those reasons, even Scioli has tried to put some distance between himself and his patron, saying that, if elected, he would name ministers who oppose some of Fernandez’s policies.

He has also said that he would settle the bondholder dispute once and for all, and that he would take a tougher approach to rising crime.

By Simon Romero and Jonathan Gilbert
25 October 2015

BUENOS AIRES — Her party’s candidate is widely seen as the front-runner. One of her closest aides is his running mate. Her son and her economy minister are running for Congress, too. And if they don’t win, a new law prevents whoever replaces her from undoing one of her signature economic policies.

Argentines go to the polls on Sunday to pick their next president, officially marking the end of an era. For the last 12 years, the presidency has been shared by one couple — Cristina Fernández de Kirchner and her late husband, Néstor Kirchner — whose influence on the country has been so sweeping that they have their own political movement: Kirchnerismo.

But while Mrs. Kirchner, 62, is constitutionally barred from seeking a third consecutive term, she is not going quietly. After emerging as one of Argentina’s strongest leaders in decades, she has sought to assert her lasting sway with a range of calculated moves in recent months.

Daniel Scioli, the candidate endorsed by Mrs. Kirchner, speaks about a continuity with her policies, while suggesting a few important tweaks, like improving strained ties with the United States and Argentina’s creditors.

Adding to the message that her course will be maintained, Carlos Zannini, her legal secretary, who is believed to be one of her closest advisers, was picked to be Mr. Scioli’s vice-presidential running mate.

Mrs. Kirchner also pushed through a new law that would require congressional approval to sell state-owned stakes in companies, chiefly a portfolio acquired when she nationalized pension funds in 2008.

Axel Kicillof, her economy minister, said the measure would ensure that any effort to privatize such holdings in the future would not be a ”unilateral decision by the executive branch,” making it much harder to undo some of her most contentious decisions. Mrs. Kirchner herself proudly said that ”nobody’s pen will now be enough” to dilute the role of the state.

Mrs. Kirchner, who has often been underestimated by her opponents, has also moved to place supporters in important positions in the central bank and across the judiciary. Beyond that, her son, Máximo Kirchner, and Mr. Kicillof, a rising star in her administration, are also running for Congress.

People in her government contend that her influence is here to stay.

With his three-day beard, abhorrence for neckties and an office stacked high with tomes on political philosophy, Ricardo Forster fits right into the high echelons of Mrs. Kirchner’s leftist government. He even has the lofty job title to prove it: secretary for strategic coordination of national thought.

”Conflict is the energy of democracy,” Mr. Forster, a 58-year-old professor of philosophy, said in an interview. He defended Mrs. Kirchner’s combative governing style while listing the highlights of the Kirchner presidencies, including the broad expansion of antipoverty programs, and the nationalization of pension funds and the country’s largest oil company.

Some might brush off Mrs. Kirchner’s recent maneuvering as a last grasp for clout, but her popularity at the end of her second contentious term is relatively strong. With Argentina’s economy posting modest growth this year, avoiding catastrophic predictions, her approval ratings are around 42 percent, well above those of Brazil’s president, Dilma Rousseff, and Chile’s president, Michelle Bachelet, both of whom are battling corruption scandals and economic slowdowns.

”I take my hat off to her,” said Silvia Ribé, 45, an actor who was drinking coffee with friends at Gargantúa, a bar and community theater here. ”She didn’t care about losing favor abroad. She was determined to cut ties with the international system,” she added, referring to Mrs. Kirchner’s battles with the International Monetary Fund and a group of creditors in New York.

”There’s something hazy about the figure of Scioli,” Ms. Ribé continued, explaining that she was concerned he could veer too far from Mrs. Kirchner’s leftist path. ”He might sink us into the mud,” she said. ”We don’t know if Cristina is going to put a revolver against his head so that he does everything to the letter.”

Mr. Scioli, 58, a former powerboat racer who lost his right arm when his boat flipped in 1989, switched to politics in the 1990s. He won a seat in Congress as a supporter of Carlos Menem, a former president from a conservative wing of Peronism, the ideologically malleable movement that dominates Argentine politics four decades after the death of the three-time leader Juan Domingo Perón.

But not everything is lined up for the continued influence of Mrs. Kirchner, who succeeded her husband as president in 2007 and was re-elected in 2011. While her own leftist movement, Kirchnerismo, has emerged as the dominant faction within Peronism, political analysts question whether that will remain the case after she leaves office.

Mr. Scioli served as Nestor Kirchner’s vice president from 2003 to 2007, but as governor of Buenos Aires Province he has sometimes been at odds with Mrs. Kirchner and her supporters, who have viewed him as too close to corporate interests.

”His conflict with Cristina is inevitable,” said Rosendo Fraga, an Argentine political analyst, reflecting a preference here for using Mrs. Kirchner’s first name. He noted the expectation that she could try to run for president again in 2019, an ambition that could put her on a collision course with Mr. Scioli.

Mrs. Kirchner herself seems to be welcoming talk about a possible return. She recently met with the author of a line of graffiti, ”Embrace me until Cristina returns,” images of which have been widely shared on social networks.

In a well-polished video on her Facebook page, Mrs. Kirchner is shown defiantly celebrating her policies. Mr. Scioli makes an appearance, too, as if reminding him and the electorate of who paved the way for his candidacy.

”If Scioli wins,” Mr. Fraga said, ”this will be the most important political conflict of the next period, something that is already being insinuated.”

Looking forward to the end of a long stretch in which Mrs. Kirchner relished clashing with opponents in the news media and the business establishment, some Argentines cannot wait for the president and her polarizing style of governing to leave office.

”It’s the best thing that could happen to us,” said Juan Addesi, 52, a watch repairman. Mr. Addesi, who plans to vote for Nicolás del Caño, a socialist, said he was angry that his business had been hindered by import restrictions that make it difficult to obtain spare parts. ”I could be 10 times better off,” he said.

Others question how Mrs. Kirchner, whose personal wealth has grown over the past decade, according to her sworn declarations, will handle claims of corruption once she leaves office.

She is under investigation over accusations that a family hotel business in Patagonia was used to launder money. A businessman with close ties to the Kirchners has been accused of paying for block reservations through his companies, but the rooms appeared to have never been occupied. Mrs. Kirchner’s chief of staff said the investigation had become a defamation campaign against her.

Claudio Bonadio, a judge leading the case, was removed from the inquiry this year after he ordered several raids on offices of the hotel business. Judge Daniel Rafecas, his replacement, is widely viewed as partial to the government. In 2012, he was removed from a corruption case involving the vice president, Amado Boudou, after sending WhatsApp messages advising Mr. Boudou’s lawyer. One of Mrs. Kirchner’s opponents warned this week that the inquiry into the hotel business could be shelved, an expectation echoed by others.

Still, Mrs. Kirchner is trying to project her sway beyond the elections, which could go to a second round if no candidate wins outright on Sunday.

”It’s the last kiss of power for her,” said Federico Finchelstein, an Argentine historian at the New School for Social Research in New York, noting that Mrs. Kirchner had held a teleconference recently with President Vladimir V. Putin of Russia, emphasizing plans to forge closer ”strategic” ties between the two countries.

”She’s trying to assert the foreign policy of the next administration,” Mr. Finchelstein said. ”But if history prevails, there will be an exodus to the new president. After all, he’s the one who controls the purse strings and effectively signs the checks from the executive branch.”

Mrs. Kirchner’s supporters say that much depends on the paths pursued by the president and her successor.

”She’s not going to interfere in any decision that Scioli takes,” said Mr. Forster, the secretary of national thought. Then he qualified that statement, adding, ”unless there’s a dramatic shift in what this political project has consisted of until now.”

By Jonathan Gilbert
24 October 2015

BUENOS AIRES — Some voters received sacks stuffed with bottles of cooking oil, pasta and flour. Others were ferried to the polls in convoys of cars. There were even reports of a raffle in which the grand prize was a Chevrolet.

In return, the voters promised to cast their ballots for particular candidates during recent municipal elections in Tucumán, in the north of Argentina. The rampant vote buying was branded a ”scourge” last month by judges looking into the validity of the polls, although the results were allowed to stand since the practice, which experts say is widespread in Argentina, is not actually illegal.

The vote buying, documented by election observers from the National University of La Plata and highlighted in the news media, has ignited debates about the frailty of the country’s democracy as it prepares for presidential and parliamentary elections on Sunday.

”The problem is poverty and that there are people willing to lose their voting freedom for a bag of food,” Margarita Stolbizer, a candidate for the Progressive Front, said in an interview with the newspaper Perfil.

Vote buying strategies will probably sway 5 to 12 percent of Argentine voters on Sunday, according to estimates by Rodrigo Zarazaga, the director of the Center for Research and Social Action, a Jesuit institute. Mr. Zarazaga is an expert on clientelism, the term used when politicians turn the electorate into clients over a long period of time, offering services and goods in exchange for support, a common practice in the region that has been closely scrutinized here in recent weeks.

Many voters fear that such practices could skew the results of the national elections. ”They won’t vote according to their convictions,” said Héctor del Bianco, 61, who works at a car showroom. ”They’ll vote because of the money.”

In Tucumán, while all parties engaged in vote buying, the majority was attributed to the Front for Victory, an arm of the Peronist political movement that has dominated Argentine politics for decades, and which is led by President Cristina Fernández de Kirchner. The party has been in power since 2003, and is well placed to secure a fourth consecutive term in Sunday’s elections, led by Mrs. Kirchner’s successor, Daniel Scioli.

Some party officials conceded that there was vote buying in Tucumán, where the party’s candidate for governor, Juan Luis Manzur, won easily.

But Mr. Scioli, the governor of Buenos Aires Province, denounced the opposition’s efforts to annul his victory. ”It’s the impotence of the opposition,” he told reporters. ”They didn’t get the result they hoped for, so they looked to delegitimize the elections.”

Under Mrs. Kirchner, supporters say, the Front for Victory has modernized Argentina’s democracy, which is enjoying its longest unbroken run — 32 years — since a suffrage law was passed a century ago. They underscore Mrs. Kirchner’s liberal social agenda and her expansion of welfare benefits. She has also pushed for the prosecutions of former military leaders on human rights crimes charges and moved to restrict the size of news media empires.

But this progress has been undermined by a resilient culture of vote buying that is most rife within the Peronist movement, according to experts, explaining that clientelism has long been practiced by Argentina’s incumbent parties.

”If you’re buying the votes of the poor, you are silencing their preferences, and that is tragic,” said Mariela Szwarcberg, a politics professor at Reed College in Portland, Ore.

Evidence of vote buying in Tucumán includes a video posted online of two men who were candidates for a town council. They had filmed themselves driving to the town, Tafí Viejo, to hand out packs of herbal tea. ”Let’s make a trade,” says one, before adding, ”Vote for me.”

The men, who later claimed they had been joking, were candidates for Kolina, an organization that is part of the Front for Victory’s grass-roots support network.

Sacks containing staples like flour, cooking oil and sugar, worth a total of $15 to $20, were systematically distributed by several parties to voters statewide, said Sebastián López Calendino, one of the election observers.

Other practices condemned by the judges were the use of convoys, reported by election observers, to transport voters to polling places and raffles organized in the days before the elections.

One Front for Victory official raffled off a Chevrolet hatchback car, according to the local news media.

There is no provision in Argentina’s electoral code that explicitly criminalizes vote buying. Julia Pomares, a specialist on election issues and director at Cippec, an Argentine public policy research center, noted that the validity of the elections in Tucumán was challenged on constitutional grounds. Because polling booths ensure secrecy, the judges decided, vote buying does not actually suppress the constitutional right to freely choose candidates.

Politicians often use networks of go-betweens, known as ”punteros,” to whom they give public funds and resources. They supply poor voters with basic items, like food, medicine and construction materials, experts say.

Often, these campaign workers — who were the subject of a fictional hit TV series in 2011 called ”The Puntero” — also hand out welfare benefits and jobs.

In Argentina, the punteros are largely concentrated in the sprawling outskirts of Buenos Aires, the capital city that is home to nearly a third of the country. In these outlying neighborhoods, Peronists have the most extensive networks, Mr. Zarazaga said. But other parties, like Republican Proposal, led by Mauricio Macri, the mayor of Buenos Aires and Mr. Scioli’s chief rival in the elections, also rely on punteros.

”It’s a historic and commonplace practice; Peronism gets stigmatized, but there’s no party that hasn’t used it,” said Mario Gómez, 58, who works at a cultural center in Villa 21-24, a slum on the city’s south side.

”People are used to it,” said Yessica Ibáñez, 32, a self-described ”full-time mom” from Villa 21-24, explaining how friends and family had been offered jobs as janitors, or goods like mattresses and corrugated iron, a useful roofing material. ”If you ask for somebody’s vote, they ask you what you’re offering in exchange.”

Experts say that the punteros are often allowed to administer access to some of the welfare benefits and social programs expanded by the Front for Victory. Some argue that by doing this they are performing a vital role, spanning the gap between the state and marginalized corners of the country that policy makers might ignore.

”People don’t get the social ambivalence,” said Javier Auyero, a sociology professor at the University of Texas at Austin who researched clientelism here in the 1990s when, he said, it surged under a Peronist government. ”It’s a strategy of control, but it’s also how poor people solve their most pressing needs,” he added.

But Sergio Massa, a congressman who is third in the polls, has promised to ”sweep away the go-betweens who extort people with welfare benefits.”

”That breaks the circle of clientelism,” he told reporters.

By Andres D’Alessandro, Chris Kraul
24 October 2015

Despite Argentina’s slumping economy, rising crime rates and spiraling inflation, an ally of outgoing President Cristina Fernandez de Kirchner is the heavy favorite to place first in Sunday’s presidential election, a reflection of the popularity of her populist social programs and human rights record.

The question is whether Buenos Aires state Gov. Daniel Scioli will tally enough votes to win the election outright against his two main opponents, Buenos Aires city Mayor Mauricio Macri and Congressman Sergio Massa.

To do so, Scioli must win at least 45% of the votes, or garner 40% and outdistance his nearest opponent by a margin of at least 10 percentage points. Recent polls show Scioli with between 38% and 41% support, Macri between 29% and 32% and Massa between 20% and 23%.

In any scenario, the election means the end of 12 years of Kirchnerismo, which critics call a somewhat authoritarian variation of the socialist politics that have long dominated in Argentina. The late Nestor Kirchner held the top job from 2003 to 2007, and was succeeded in office by Fernandez, his wife, whose second four-year term ends Dec. 10.

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She will leave an economy suffering from 28% inflation and stagnant growth after a miserable 2014 in which total economic output shrank 2%. The slowdown’s effects have been masked by a burst in election-year public spending that will create a large government deficit this year, a mess her successor will have to clean up, said economist Cynthia Moskovits of the FIEL think tank in Buenos Aires.

But Scioli, the Victory Front party candidate and the president’s choice to succeed her, will benefit from the solid support she enjoys among young and lower-middle-class voters. They approve of her wealth redistribution efforts and subsidies of public transit and utilities prices, as well as her determined prosecution of those culpable for deaths, kidnappings and torture of thousands of victims during the military dictatorship from 1976 to 1983.

Many Argentines credit Kirchner and Fernandez with rescuing the country from political and economic chaos that followed a bond default and devaluation in 2001. Violent protests in that era resulted in 32 deaths. The country saw five presidents take office from late 2000 through 2001.

The Kirchners’ social programs included expanded pension coverage, elderly care and education subsidies. The programs were financed partly by higher tax and duty revenue produced by the global commodities boom that saw skyrocketing prices and demand for Argentine wheat, soy and beef.

The Kirchners’ policies reduced the poverty rate from 57% in 2002 to 25% in 2014. Their massive boost in public sector hiring helped lower unemployment rate from 21% in 2002 to the current 5%.

“People see her policies as benefiting those in need,” said Columbia University political science professor Maria Victoria Murillo. “Her popularity is more than 40%, which is not minor given the economy that’s not so good and the fact she has been around for eight years.”

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Other actions taken by Fernandez have been less popular, including the nationalization of public services, an airline and the biggest oil company. She is also criticized for a perceived hostility toward the media and her refusal to settle the dispute with “holdout” bondholders dating back to the 2001 default. That failure has hurt Argentina’s access to the global financial markets, Moskovits said.

Many have also decried what they see as Fernandez trying to perpetuate her hold on power, like socialist heads of state in Bolivia, Ecuador, Nicaragua and Venezuela in recent years. But her plan to run for a third term was frustrated by reversals in the 2013 legislative elections that ended any chance of a needed constitutional reform.

For those reasons, even Scioli has tried to put some distance between himself and his patron, saying that, if elected, he would name ministers who oppose some of Fernandez’s policies. He has also said that he would settle the bondholder dispute once and for all, and that he would take a tougher approach to rising crime.

“Scioli has developed an ambiguous campaign with some definite differences with respect to Fernandez,” said political analyst Sergio Berensztein.

Cecilia Mosto, an analyst with the CIO public opinion consultants, said Scioli has successfully played both sides of the political fence.

“His campaign is oriented toward an alliance with the government while differentiating himself from an economic model that shows signs of exhaustion and of deteriorating institutional integrity, including corruption,” Mosto said. “This double game has given him an advantage against his opponents.”

Vilma Farias, 60, a domestic worker in Buenos Aires and longtime Fernandez supporter, said she will reluctantly vote for Scioli.

“I have my doubts about voting for him because I think we have to improve on things that [Fernandez] hasn’t done well, especially in the last few years,” Farias said. “But I think [Scioli] will be different from Cristina. I certainly hope so.”

Prior to his election as governor, Scioli, 58, also served as vice president under Kirchner, congressman and national secretary of sports and tourism. Before entering politics, he was an internationally known racer of high-speed boats. He lost an arm in a racing accident in 1989.

By John Otis
24 October 2015

As Argentines prepare to vote Sunday, powerful clan appears to be losing its cachet even in its hometown

RÍO GALLEGOS, Argentina—From the main drag to the graveyard of this windswept Patagonian outpost, the imprint of Argentina’s first family is everywhere.

Walls are decorated with graffiti lauding President Cristina Kirchner. Her late husband and predecessor, Néstor Kirchner, has an avenue named after him, and his remains lie in a mausoleum with an eternal flame partly inspired by Napoleon’s tomb. Staring down from campaign billboards are the faces of their son, Máximo Kirchner, and Alicia Kirchner, the president’s sister-in-law.

“Since 1987 there has always been a Kirchner on the ballot,” said Javier Bielle, a former legislator here in Santa Cruz province, the base of the Kirchner family’s political dynasty. This sparsely populated expanse of glaciers and oil fields in Argentina’s deep south is to the Kirchners, he said, “what Arkansas was for Bill and Hillary Clinton.”

Yet even here, the Kirchner juggernaut that has controlled the presidency over 12 years appears to be losing momentum as Argentines prepare to cast ballots in Sunday’s general elections.

Cristina Kirchner, 62 years old, is constitutionally barred from a third consecutive term but she could run again in 2019, and her 41.7% job-approval rating is higher than that of several other South American presidents. In speeches, Mrs. Kirchner has called on her handpicked successor and current presidential front-runner, Daniel Scioli, to stay true to her populist economic policies that have included company takeovers and currency controls.

Mr. Scioli has sent strong signals that if he wins, he will chart a more centrist economic course to combat rising poverty, 25% inflation, and dwindling foreign reserves. His advisers have hinted he would negotiate with U.S. hedge-funds Mrs. Kirchner has denounced as “vultures” after they held out from a settlement of Argentine sovereign debt.

The president hopes to retain her redoubt in Río Gallegos, the capital of Santa Cruz, 1,500 miles from Buenos Aires. It was here in 1987 that “Kirchnerismo” began when her husband was elected mayor. He became governor of Santa Cruz in 1991.

Now the president’s son, Máximo, is running for one of the province’s two seats to Argentina’s lower house. Until recently, the reticent 38-year-old shunned the spotlight and preferred sleepy Río Gallegos to cosmopolitan Buenos Aires. He is under investigation for alleged money-laundering linked to the Kirchner family’s hotel business in Patagonia, and his critics point out that serving in congress would provide immunity from prosecution. He couldn’t be reached for comment. The family has denied any crime was committed.

Alicia Kirchner, who is Néstor Kirchner’s sister and the Minister of Social Protection, is in a tight race for Santa Cruz governor against incumbent Daniel Peralta and opposition candidate Eduardo Costa, who is leading in the polls.

“If she loses Santa Cruz, it would be a blow to the heart of the Kirchner movement,” said Mr. Costa.

To fend off that outcome, Cristina Kirchner has traveled to Santa Cruz three times this month for appearances with her son and sister-in-law. One was a ribbon-cutting ceremony for a public swimming pool in Río Gallegos, an event Argentine television stations were ordered to broadcast live.

Pre-empting TV programming for official announcements is supposed to be reserved for “grave” or “exceptional” events, such as a coup d’état or weather emergency. But Fernando Torrillate, a spokesman for the government’s TV regulator, insisted the swimming pool’s inauguration met the “exceptional” standard.

In her speech, Cristina Kirchner recalled how her late husband never learned more than the dog paddle because the town lacked a public pool. Like other projects Mrs. Kirchner has rushed to inaugurate ahead of Sunday’s vote, the swimming pool isn’t yet finished. As construction workers with hammers and power saws worked at the pool site a few days after Mrs. Kirchner’s visit, Néstor Turri, who lives across the street, shook his head. “Cristina is a demagogue,” he said.

Calls to the presidency seeking comment weren’t returned.

What critics consider the Kirchners’ authoritarian political style was honed in Santa Cruz in the 1990s. As governor, Néstor Kirchner pushed lawmakers to change electoral rules so he could serve three terms and pressured the media for favorable coverage, said Milagros Pierini, a local human rights activist.

More than half of Santa Cruz’s workforce are government employees. “Here, the government is also your supervisor, your boss,” said Pablo Manuel, an editor at TiempoSur, a Río Gallegos newspaper.

Home to major petroleum and natural-gas deposits but just 350,000 people, Santa Cruz has long boasted the highest per-capita budget of any Argentine province. Mr. Kirchner used it to build schools and pave roads connecting far-flung oil towns, Atlantic ports and tourist resorts flanked by massive glaciers.

A tireless campaigner, he seemed to know everybody’s name. “Even as president, Néstor would call down here to ask about some old woman to find out how she was doing and to make sure we were taking care of her,” said Juan Carlos Batarev, a local Peronist official.

Mr. Kirchner was succeeded by his wife in 2007 and then died of a heart attack three years later. Since then, Santa Cruz has been rocked with corruption scandals, some involving real estate deals in which the Kirchners were allegedly implicated.

During a 150-day strike by municipal workers this year, trash piled up in Río Gallegos before being blown into surrounding pastures by the fierce Patagonian wind. The outskirts of town now look like a dump, prompting some residents to say it is time to change course.

But at the swimming pool event, where she shared the stage with candidates Alicia and Máximo Kirchner, Mrs. Kirchner implored voters to extend the family legacy.

“Our political project isn’t about last names,” she said. “It’s about Argentina.”

By Taos Turner
24 October 2015

BUENOS AIRES — After years of rampant government spending and rigid currency controls, Argentina is so short on dollars that whoever wins Sunday’s presidential election will have to pursue unpopular policies to keep the economy afloat.

Mired in a toxic mix of economic stagnation and one of the world’s highest inflation rates, Argentines have been ditching their pesos and seeking safety in the greenback. That puts them in competition with a government that is itself scrambling to retain and obtain dollars to make debt payments and pay for imports.

The incoming president, who takes office Dec. 10, will need to stanch the bleeding of the central bank’s foreign-currency reserves, which have fallen by almost half since 2011 to $27 billion.

“Life is not going to be easy for the next government,” said former Finance Minister Jose Luis Machinea.

The growing demand for greenbacks means the central bank is losing about $2 billion a month.

Around $11 billion in reserves are on short-term loan from China. An additional $3 billion is owed to bondholders and $8 billion are deposits from the local financial system. Meanwhile, importers say the bank owes them around $9 billion for goods that have been brought into the country.

Those claims could the bank’s holdings dangerously depleted. “By December that number will be around zero,” said Juan Luis Bour, chief economist at Argentine research firm FIEL.

A central-bank spokesman declined to comment.

In Argentine “caves,” as the black-market exchange houses are commonly called, the peso has weakened to 16 to the dollar, while the official rate has remained at 9.5 pesos. Departing President Cristina Kirchner has kept the official rate stable to contain inflation, estimated to reach 25% this year, but the policy has reduced competitiveness for exporters.

As the global commodities bust has spread, a recession in Brazil has compounded Argentina’s troubles. Brazil’s currency has weakened by about 32% this year, making it harder for Brazilians to buy Argentine exports.

The three leading candidates to succeed Mrs. Kirchner, including her preferred heir, Daniel Scioli of the ruling Front for Victory coalition, believe policies need correcting to rein in inflation and reduce a budget deficit surpassing 6% of gross domestic product.

Argentina’s economy boomed during Mrs. Kirchner’s first term, bolstered by high prices for the country’s soybean exports. Poverty and unemployment fell. But from 2011 to 2014, the economy shrank 3.1% in per capita terms, the most in Latin America, according to consultancy Orlando J Ferreres & Asociados.

The Kirchner administration has aggressively printed money and increased public spending by around 30% in annual terms. But continuing on that path would stoke further inflation, possibly forcing the next president to cut spending or raise taxes — unpopular policies that could infuriate Kirchner loyalists in Congress.

The International Monetary Fund expects Argentina’s economy to contract 0.7% next year, and analysts say inflation could jump to 35% if the government devalues the peso.

But economists say the next president will have no choice but to ease currency controls and settle a legal battle with U.S. hedge funds that has prevented Argentina from tapping global credit markets.

“None of the candidates can escape from this,” says Nicolas Dujovne, a former director of Argentina’s central bank.

Mr. Scioli, who is leading in the polls, has pledged to gradually tweak the economy. His rivals, the conservative mayor of Buenos Aires, Mauricio Macri, and Sergio Massa, a young dissident of the ruling Peronist movement, say they would quickly lift currency controls.

October 26, 2015

The polls leading up to Argentina’s presidential election Sunday got it all wrong. Numerous surveys indicated ruling party candidate Daniel Scioli, President Cristina Fernandez de Kirchner’s chosen successor, would win enough votes for an outright victory.

Instead, 56-year-old Mauricio Macri, the center-right mayor of Buenos Aires and former boss of the popular football club, Boca Juniors, won 35.2 percent of the vote to Scioli’s 35.9 percent, with 86 percent of the polling stations reporting, virtually insuring the country’s first-ever run-off election on November 22.

“What happened today changes the politics of this country,” Macri told his supporters late Sunday. Macri wants to lift capital controls and trade restrictions to win investor confidence and bring hard currency into the dollar-starved economy.

Scioli has vowed to uphold the core elements of “kirchnerism,” a populist creed built around trade protectionism, social welfare and defense of the working classes. The 58-year-old Buenos Aires provincial governor and powerboating fanatic who lost his right arm in a 1989 racing accident, also promised a change in style to attract more investment and increase productivity, and has assembled an economic team of free-market advocates. He talked of a more gradual approach to monetary reform, while maintaining a generous social welfare safety net.

Under Argentine electoral law, in order to win outright in the first round a candidate must claim more than 45 percent of the vote, or at least 40 percent with a margin of 10 points over the runner-up.

By Kenneth Rapoza
October 25, 2015

The days of hardline Peronism, Cristina Kirchner-style, are over. As of Sunday, Oct. 25, Kirchnerism officially rides off into the sunset. And whatever replaces it today will be a significant improvement for Argentina. Once the Paris of the South, it has become the Venezuela of the Southern Cone of the Americas. Its Yankee-go-Home government managed to keep civil unrest in check, but destroyed the economy in the meantime. For this reason, nearly everyone with money at work in the country will be saying good riddance when the day is done.

“Regardless of Sunday’s presidential election result, the end of the Kirchner administration marks the beginning of significant changes in both external policy and domestic politics for Argentina,” say Barclays Capital researchers led by Pilar Tavella in New York.

Currently, Buenos Aires mayor Daniel Scioli holds a lead in the polls. He is no stranger to the Kirchner juggernaut. He was Cristina’s husband Nestor’s vice president between 2003 and 2007. He is a Peronist, but not as hard line as Kirchner, business leaders told FORBES during a trip to the city last year. Scioli is the candidate most likely to be elected president, either on Sunday or after a run-off vote on November 22.

If Sunday’s result is tight, there could be significant uncertainty on Monday morning.

A number of congressmen, governors, and mayors will also be elected. Should results be similar to the primary elections, the next Congress will be fragmented. There will also be changes in provincial leadership. Congress and governors will likely play a larger role in shaping politics and policies under the next administration.

It is uncertain how collaborative the outgoing administration will be up to the formal handover of power on December 10.

But, the need to boost central bank profits and jump start reserve accumulation, as well as the fact that Scioli seems to want Alejandro Vanoli to remain at the central bank, leads Barclays to believe an official devaluation of the peso to about 11.5 to the dollar is plausible. The official exchange rate now is 9.52. On the streets, known as the “Blue Market”, it sells for around 12 to 1.

By Dave McNary
Oct 23, 2015

Fox has set a Jan. 29 release date in the U.S. for the crime film “The Clan,” Argentina’s entry for the foreign-language category for the Academy Awards.

The film, directed by Pablo Trapero from his own script, will launch in New York and Los Angeles before expanding. Trapero won the Silver Lion Best Director Award at the Venice Film Festival.

“The Clan” has also been named as an official selection at the upcoming AFI Fest in November.

Producers are Hugo Sigman, Matías Mosteirín, Agustín Almodóvar, Pedro Almodóvar and Esther García — the same producing team behind last year’s “Wild Tales” — as well as Trapero.

The story centers on the Puccio family, which kidnapped four people in Buenos Aires in the 1980s and murdered three of them. The film set a weekend box office record in Argentina when it opened in mid-August.

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12. VOLKSWAGEN TO RECALL AROUND 17,000 VEHICLES IN BRAZIL (Dow Jones Institutional News)






By Andrés Oppenheimer
October 21, 2015

Poverty has grown under President Cristina Fernández
Argentina is among countries growing the least in Latin America
The winner of Sunday’s presidential election will have to adopt belt-tightening measures

Argentina’s President Cristina Fernández de Kirchner still enjoys relatively high popularity rates thanks to an artificially inflated economy, but she may go down in history as one of Argentina’s most disastrous presidents ever.

Fernández, who will start her final weeks in office after Sunday’s presidential elections, has performed an economic miracle in reverse: Despite inheriting the country’s biggest economic bonanza in recent history, thanks to record prices for Argentina’s commodity exports, she will leave Argentina poorer than before.

There is no economist in the world who can dispute this: When she took office in 2007, Argentina’s economy was growing at 8 percent annually, and was one of the most rapidly growing economies in the world.

This year, Argentina’s economy is stagnant at 0.4 percent, and will contract by 0.7 percent in 2016, according to International Monetary Fund (IMF) estimates. Alongside Venezuela and Brazil, it’s Latin America’s worst performing economy.

The percentage of Argentines living in poverty has risen from 27.9 percent of the population in 2007 to 28.7 percent in 2014, according to Argentina’s Catholic University’s Social Debt Observatory. The Fernández government stopped releasing poverty figures two years ago.

When it comes to inflation, Argentina changed its way of calculating inflation in 2007. Since then, the government has estimated inflation to run at about 10 percent a year, while international financial institutions and private economists calculate it at 27 percent.

But the saddest fact is that Argentina, which was one of the world’s most advanced and best educated countries early in the 20th century, is now ranking near the bottom of international education, innovation and competitiveness rankings.

Argentina now ranks 59th among the 65 countries from around the world that participated in the PISA standardized test of 15-year-old students. In science and technology, despite the country’s wealth of individual talents, Argentina registered only 81 international patents last year, compared to South Korea’s 18,200, according to the U.S. Office of Patents and Trademarks.

In the World Economic Forum’s 2014-2015 Global Competitiveness ranking of 144 countries, Argentina ranks 104 in overall competitiveness, 138 in protection of property rights, 127 in irregular payments and bribes, 142 in wastefulness of government spending, 143 in favoritism in government decisions, 135 in government transparency, 133 in reliability of police services and 138 in ethical behavior of firms.

And yet, polls show that nearly 40 percent of Argentines are supporting government-backed candidate Daniel Scioli in Sunday’s vote, which could be enough for him to win with a divided opposition.

How can one explain that more than a third of Argentines support the government candidate, despite Argentina’s dramatic involution?

Part of it is because the government is giving cash subsidies to millions of people and has increased the number of public employees by 42 percent, to 1.7 million people. Part of it is because the government controls much of the media, and its propaganda machine has fooled many into thinking that the country has been better off under Fernández.

And part of it is — as Nobel prize winner Mario Vargas Llosa told me two weeks ago — due to Argentina’s “persistence in making mistakes, which seems to be an Argentine vocation.”

My opinion: Whether Scioli wins or loses on Sunday, Argentina is nearing its hour of truth. With an economy deeply in the red, continued capital flight, and simultaneous economic downturns in China and Brazil, Argentina’s biggest export markets, whoever wins the election will have to carry out painful economic adjustments.

By then, Fernández will be out of office, fighting to avoid legal prosecution on massive government corruption charges and possible wrongdoing in cases such as the mysterious death of government prosecutor Alberto Nisman, and hoping to influence the future government through the judiciary, congress and other institutions she now controls.

But when the belt-tightening begins, many Argentines will realize that she has squandered her country’s economic bonanza in a populist fiesta, and that she has been one of her country’s worst presidents in recent memory.

By Taos Turner
October 21, 2015

Candidate endorsed by President Cristina Kirchner suggests he will take a more conciliatory stance toward U.S.

BUENOS AIRES— Daniel Scioli, the front-runner in Sunday’s Argentine presidential election, comes from a populist ruling party that revels in defying the U.S.

But while reaping the benefits that accompany President Cristina Kirchner’s endorsement, Mr. Scioli is quietly indicating he would welcome foreign investors and settle a dispute with U.S. bondholders that has kept Argentina from tapping global credit markets.

Mr. Scioli recently tweeted a photo of himself with U.S. Ambassador Noah Mamet, who has never met with Mrs. Kirchner. His aides have been conversing with the U.S. Drug Enforcement Administration, which sharply reduced its Buenos Aires staff since Mrs. Kirchner curbed her government’s cooperation.

Such evidence of a more conciliatory stance toward the U.S. has caused grumbling among Mrs. Kirchner’s top aides, who want Mr. Scioli to closely adhere to her policies should he win. Argentina’s constitution bars her from a third term.

‘Daniel wants Argentina to be a normal country—to be free of the things that make it not normal.’
—Alejandro Morales, an adviser to Mr. Scioli

Under Mrs. Kirchner, Argentina has allied itself with Venezuela, Russia and other countries challenging U.S. interests. Her government has intervened in the economy, expropriated foreign-owned firms and ignored a U.S. court order to pay what could amount to more than $1.8 billion to hedge funds.

“Clearly, he’s not one of them, but he doesn’t say it,” political analyst Federico Thomsen said in reference to Mr. Scioli’s differences with Mrs. Kirchner’s populist Peronist movement.

Throughout the campaign, Mr. Scioli has publicly remained at the president’s side, avoiding statements that would alienate the far-left part of her base, which views him with distrust.

But the potential cabinet members Mr. Scioli has revealed are considered distant from Mrs. Kirchner, said Ricardo Romano, a prominent Peronist who was deputy chief of staff for former President Carlos Menem. “The disclosure of his would-be cabinet was a pre-emptive move to avoid potential interference from Mrs. Kirchner,” he said.

So far the strategy appears to be working. Mr. Scioli, the 58-year-old governor of Buenos Aires province and home to nearly 40% of the country’s population, is the Peronists’ best hope of retaining the presidency. The scion of a once-prominent business family, he is leading a field of three major candidates ahead of a first round of voting, drawing 38% support, according to a recent poll by Management & Fit. His main challenger, Buenos Aires’s market-friendly Mayor Mauricio Macri, is in second with 29%. Sergio Massa, a dissident Peronist who broke with Mrs. Kirchner, trails at 21%. To win outright and avoid a November runoff, Mr. Scioli would need at least 40% of the vote and a minimum 10-point lead over Mr. Macri.

‘I don’t think there’s much ideology there. Look at his track record—he’s been with everybody. ’
—Political analyst Federico Thomsen

Though Mr. Scioli was a no-show at a presidential debate earlier this month and gives speeches short on details, his aides and close allies have said he is pondering a new direction for Argentina, both in economic terms and in its relations with Washington.

“Daniel wants Argentina to be a normal country—to be free of the things that make it not normal,” said Alejandro Morales, an aide, referring to rigid currency controls and Latin America’s second highest inflation rate after Venezuela’s.

An ally, Juan Manuel Urtubey, the governor of Salta province, recently told business leaders in New York that China’s economic slowdown demands a range of reforms here, including better relations with Washington. “With Daniel Scioli as president, these things are possible,” Mr. Urtubey said.

Economists say a sharp shift may be unavoidable: Foreign reserves are set to run out just as the new president takes office in December. Argentina’s closest trading partner, Brazil, is mired in its worst recession in 25 years, and the economy here is on track to contract 0.7% next year.

Mr. Scioli’s advisers say he would cut back on costly utility subsidies, incentivize exports and overhaul a statistics agency that economists accuse of doctoring inflation data. It remains unclear how fast he would move on those plans.

In brief interviews with The Wall Street Journal, Mr. Scioli wouldn’t say how his presidency might differ from Mrs. Kirchner’s. “They are phases of the same project,” he said, implying his administration would continue with her policies.

Argentina’s Presidential Candidates
Meet the top contenders in Sunday’s election

Daniel Scioli
58 years old
Coalition: Victory Front
VP: Carlos Zannini

A former speedboat racing champion and now the governor of Argentina’s biggest province, Daniel Scioli was vice president from 2003-2007. As the ruling party candidate, he has called for continuity.

Mauricio Macri
56 years old
Coalition: Cambiemos
VP: Gabriela Michetti

A former Boca Juniors soccer club president and now the mayor of Argentina’s capital city, Mauricio Macri has long led the calls for changing Argentina’s economic and foreign policies.

Sergio Massa
43 years old
Coalition: United for a New Alternative
VP: Gustavo Sáenz

A mayor and former cabinet chief for President Cristina Kirchner, Sergio Massa later turned against her policies and has called for putting corrupt politicians in jail.

Those who have closely followed his career describe him as enigmatic, or at least not given to bold policy pronouncements.

“You have to interpret him, guess what he’s saying and look at his gestures,” said Pablo Ibáñez, co-author of “Secret Scioli,” a biography highlighting his penchant for vague pronouncements that reveal little.

A former speedboat racing champion who lost his right arm in a crash, Mr. Scioli entered politics in the 1990s, serving in Congress and allying with Mr. Menem, a darling of Wall Street. From 2003 to 2007, he was vice president to Néstor Kirchner, Mrs. Kirchner’s late husband, who helped bury U.S. plans for a hemispherewide free-trade zone.

“I don’t think there’s much ideology there,” said Mr. Thomsen, the analyst. “Look at his track record—he’s been with everybody.”

Critics of Mr. Scioli say he is more interested in marketing his image than in managing the country.

“The only ministry that works in the province is the publicity ministry,” said Mr. Massa, one of his rival presidential candidates.

When heavy flooding hit the province in August, Mr. Scioli flew to Italy—returning only after photographs of him in first class hit the press while much of the province was underwater.

He dedicated just 5% of public spending to infrastructure from 2008 through 2013, far less than any other Argentine province, according to Iaraf, a think tank. Standard & Poor’s recently said in a report that the province’s financial management was weak and lacked planning.

But analysts at both S&P and Moody’s Investors Service said in interviews that Mr. Scioli’s economic team has been professional and transparent. They also noted that what one of them called Mrs. Kirchner’s “haphazard” macroeconomic policies hamstrung Mr. Scioli with rampant inflation and other hurdles.

London-based consultancy Capital Economics said in a research note that Mr. Scioli, who became governor in 2007, had “impressively” turned a substantial fiscal deficit into a surplus. His plan to appoint Silvina Batakis—currently the provincial finance chief—to run Argentina’s economy should he win is also seen as a positive sign, it said.

Gustavo Marangoni, an adviser who is president of one of Argentina’s biggest public banks, says Mr. Scioli has a solid business sense.

“Daniel understands the mentality of businessmen very well because he comes from a business family,” he said.

By Lucinda Elliott
October 22, 2015

Fund managers are sticking by their positions as country approaches a change of government.

As the Kirchner years draw to a close, many investors are convinced there is nowhere to go but up for Argentina. Ahead of the October 25 presidential election, a survey by FT Confidential Research shows those fund managers with exposure to Argentine equities are holding on to their investments or even planning to buy more.

But fund managers with no exposure are still not ready to take the plunge, the survey found.

Eight out of 20 equity fund mangers polled during the third quarter of this year have exposure to Argentina, unchanged from three months ago and up from six at the beginning of the year.

And while allocations are still shy in comparison with the other five Latin American markets surveyed, a small cadre of investors plan to step up their exposure in the final quarter of this year, regardless of the election outcome. Nine investors plan to hold Argentine shares in their portfolio in the fourth quarter.

There is increasing confidence that Daniel Scioli of the ruling Peronist party, the frontrunner in opinion polls, will win the presidency and seek a speedy solution to a long-running and bitter dispute with a group of holdout US hedge funds that has locked Argentina out of global capital markets for a decade, and that he will begin the macroeconomic reforms needed to fix Argentina’s stagnant economy.

“Scioli winning the election is priced in, and the stocks I own can’t go down much further; so I’m in,” said one portfolio manager based in Santiago who manages $500m dedicated to Latam equities.

Fund managers polled singled out what they said were attractive investments including Argentine banks, real estate companies and online retailer Mercado Libre.

Equity allocations to Argentina vs benchmark — number of respondents

Q1 2015
Q2 2015
Q3 2015
Q4 2015*
Equal weight
No investment
Source: FT Confidential Research. *planned allocations

“All the long-only guys are going into Argentina, so I’m tempted to follow,” said one New York-based manager of a leading international fund. “The hedge fund guys have sold out of Argentina recently creating some buying opportunities.”

Nevertheless, 11 of the 20 managers polled said they would continue to stay away from Argentine stocks after the election, suggesting optimism about the changes ahead is not undiluted.

October 21, 2015

First lady leaves a royal mess for the next president in Buenos Aires

Argentina is passing from an age of easy prosperity under President Cristina Fernández to more penurious years without her. Since 2004, the country has enjoyed a virtuous cycle of economic growth and social progress. The “victorious decade”, as the strident Ms Fernández likes to trumpet it, is largely thanks to a sovereign debt default, which remains unresolved, and a lucky commodity price boom, which has turned to bust. How to deal with the coming downturn, the legacy of the 2002 default, and the heightened populism Ms Fernández leaves behind are the main challenges facing the victor of Sunday’s presidential election (Ms Fernández cannot run for a third term). The universal lesson is that the adjustment Argentina needs to make is best done quickly; delays only increase costs, especially to the poor.

Two candidates lead the field. Both have stressed, albeit in deliberately vague terms, the need to address growing economic problems. These include currency restrictions and 20 per cent inflation, as well as settling with holdout creditors. These New York-based hedge funds have cloaked themselves in the theology of contract law and won a technical ruling that legally bars Argentina from international capital markets — and just when the country needs extra external financial support.

First in the running is Daniel Scioli, the “continuity candidate”, who has campaigned on a programme of gradual change. As a leading light in the ruling Peronist party, he also has Ms Fernandez’s blessing. That makes his position similar to that of Dilma Rousseff, Brazil’s president, who won power in 2010 after she also was anointed by her predecessor. Like Ms Rousseff, Mr Scioli’s biggest draw is “governability”: the notion that, as a Peronist, he can manage Congress best. Yet that is also Mr Scioli’s biggest drawback — like Ms Rousseff in neighbouring Brazil. Today, it is her Workers party that is blocking the economic measures the country needs to deal with the commodity bust.

Close behind lies Maurico Macri, the “turnround candidate”. The centre-right mayor of Buenos Aires has campaigned on a platform closer to shock treatment, and his biggest selling point, as a non-Peronist, is “credibility”. But this is also his biggest drawback: as an outsider, Mr Macri may be less able to pass reforms. Again, Brazil provides a mirror: Mr Macri’s position is similar to that of Aécio Neves, the centre-right candidate who lost the 2014 election partly because his outsider’s message of economic cold turkey alienated voters, even though Ms Rousseff later took many of its ideas.

Mr Scioli may gain enough votes on Sunday to win outright, rather than face a run-off in November. But whoever becomes president, the need for change is pressing. Government spending has doubled in just five years to 40 per cent of output. However socially progressive that may be, Argentina can no longer afford such free-spending populism — as evidenced by its widening and unfunded fiscal deficit.

Decisive economic action can be politically painful. Yet it is the best course. It would speed investment and lending into Argentina’s underinvested and under-leveraged economy. It would strengthen Buenos Aires’ hand in negotiations with the holdout creditors. And it would mean that Argentina has a better chance of avoiding Brazil’s fate, where a scandal-infested government has suffered the country to slip into a deep recession and seen its own myth of a “victorious decade” turn to ashes. Argentina can still avoid that damming historical judgment — something that all Peronists, even the heterodox Ms Fernández, would surely prefer to avoid.

By Jesica L. Santos
October 21, 2015

On October 25, Argentinians will go the polls to elect their next democratic president who, for the first time since 2003, won’t have “Kirchner” as a last name. But the choice Argentinians will really be making concerns not an individual but, rather, the type of country they want to recover.

The current populist government has been in power for 12 years if we count all the administrations of both Néstor Kirchner (deceased) and his widow and current president, Cristina Fernández de Kirchner.

Having failed to obtain the support needed to amend the Constitution in order to seek a third term, Kirchner recently single-handedly appointed as her successor Daniel Scioli, the former offshore powerboat racing champion and current, more moderate (or at least not as combative) governor of Buenos Aires, the largest province in the country. Scioli owes much of his political support, if not all, to the fact that Kirchner chose him to succeed her as opposed to having a primary, as the rest of the political parties do, to choose the nominee. But first, she made sure to impose on Scioli a running mate whose loyalty to her and her husband has been bullet-proof over the years, Carlos Zannini. And in doing so, rumor is, she has tried to secure her own continuity with decision-making power behind the scenes.

The opposition is represented by five candidates who basically run on the slogan of change, with only two really having the possibility of giving Scioli, who instead promises continuity, a run for his money. These are center-right Mauricio Macri, the current mayor of the city of Buenos Aires (the most important and influential in the country), and Sergio Massa, a Peronist centrist who defected from the Kirchner government two years ago over personal disagreements with Kirchner during the time he served as her Chief of Staff.

A lot is at stake for Argentinians, as their country faces a myriad of serious problems ranging from corruption scandals surrounding the Kirchners themselves and the currently-indicted Vice President Amado Boudou; an inflation rate of over 25% (unless you ask the government who claims it is in low single digits); unprecedented social polarization; a stagnating economy and steep deficit; isolation from global markets; rampant violent insecurity in the streets that were once safe for kids to play in; a total erosion of the public’s trust in judicial institutions; rising poverty levels in urban areas; a lack of investment that prevents growth; an unsustainable fiscal situation; and a very dangerous increase in drug-related crimes.

These are some of the few but grave problems which plague the country, to which we must add the political style of its current leader, known to have created (or imagined) enemies everywhere and infused society with class-related resentment seen fewer times before.

A mere week away from the national presidential election, (a reminder that for Argentinians between the ages of 18 and 69 voting is mandatory) little do we know with any degree of certainty about what might await the country on December 10 when the new president is to take the oath of office.

Polls are generally not to be trusted as most of them are commissioned by the political parties themselves and their results used for marketing purposes during TV ads. And then we have street polls, which give results that are as volatile as the political environment in the country.

As an example of this lack of predictability and lasting allegiances, recently, a candidate for Massa’s party, Mónica López, switched to Scioli’s party but continued to be on the ballot for Massa and appeared on national TV asking that people not vote for her. That is how politics can be in this country.

As a result, we can rely, only a little, on other sources available to get an idea of which candidates people might be leaning towards. If we go by what citizens are manifesting on social media, or to journalists and political scientists on the ground who try to gauge voting tendencies in a professional way despite the natural margin of error that exists with these exercises, we seem to have a scenario in which Scioli continues to be the front runner with approximately 40% of the vote, closely followed by Macri with approximately 30%. This, however, means nothing, particularly if we take into account that to win in this first election and avoid a run-off one, one candidate needs to obtain either 45% of votes, or 40% and a 10-point lead over the candidates who comes in second. As things stand at the moment, and noting once more than in Argentina all can change in a day especially with the high number of undecided voters that exists, it is still improbable that we will see a winner in the first round on 25 October.

The issue that is hard to understand for opponents to the Kirchners’ three administrations is that this is still the scenario even though there is clearly 60% of Argentinians who disapprove of the current government and favor change. This standing was manifested in the primary election held last August where results reflected the projections just described as the likely outcomes in the next election as well (Scioli: 38.4%, Macri 30.1%, Massa: 20.6%). But it is the fragmentation of the opposition that seems to be the cause for a potential failure to achieve a victory in the first round rather than an active support for continuity through the endorsement of Scioli.

The opposition has made the mistake of allowing personal egos to get in the way of forming alliances meant to identify what unites them rather than what separates them. A closer scrutiny of the situation also shows that little change can Massa really offer, when he was the Chief of Staff of Cristina Kirchner for two years and the mastermind of major appointments and policies. But, to the ever-growing poorest, Macri may deviate so much from the current populist agenda that these fear they could lose the welfare plans they have been granted in the last decade, although the candidate denied intending to do so if he wins the presidency. And Scioli seems to have reached a ceiling of those loyal to Kirchner so it is questionable if he will be able to expand the margin he got in his favor in the primary election.

These last weeks could have been key to swaying the undecided but, unlike his opponents, Scioli did not show up at the much-awaited first presidential debate ever on 4 October, claiming he did not want to debate when his ideas are well-known to people already. But what his rivals understood with his decision not to debate them was that either he is not prepared to answer questions, or that Kirchner did not let him, casting a doubt over his preparedness to assume the responsibilities associated with running a country.

But so, if we have no clear winner in the first election, what can happen on 22 November (date set for the second round)? This will depend on whether at that point the opposition will strike a deal to push for change and achieve it, finally. It is my assessment that if Scioli were to face a second round, he could lose if the opposition rallies support for the only candidate at that time who stands a chance. At a minimum, Scioli would be greatly debilitated politically within his party and among the opposition by the results of the election, what could put him at more risk for an actual de facto manipulation on the part of Kirchner. This situation would indeed be a terrible one for Argentina but, fortunately, we are not sure if Scioli could even win first.

What is unquestionable, however, is that regardless of the election results, 10 December 2015 will mark the end of an era for Argentina and a much hoped-for turning point for the majority of its population. Even if Scioli ends up taking office, there will be change for the country. Argentinians will no longer be subjected to a constant abuse of power, nepotism and frequent plans for swapping presidential chairs among family members, and demagogy who targets those with the least opportunities when corruption allegations abound among those in power.

Argentinians will also perhaps have better chances of seeing a restoration of the credibility of institutions, such as the judiciary, and of a significantly deteriorated diplomatic relation with, well, the world. And so Argentina will be a better country as a result. It is just a matter of how much better.

And this exactly will be decided by its citizens this week, when they will choose alternation as part of a healthy democratic government system, not the “least bad” successor of the closest the region has had to a despotic monarch.

By Carolina Millan
October 21, 2015

* Futures contracts are pricing in 25% devaluation in 3 months
* Argentina’s foreign reserves are hovering near a 9-year low

A devaluation is coming to Argentina regardless of who wins presidential elections Sunday.

That’s what traders are betting in the offshore futures market. They see the government allowing its official exchange rate to plunge 25 percent in the next three months to a record low 12.76 pesos per dollar. The central bank controls the rate through daily interventions.

Currency speculators are ratcheting up their devaluation wagers even as front-runner Daniel Scioli, who has promised to make only gradual changes to the country’s foreign-exchange policies, widens his lead in presidential polls. That’s because the central bank is burning through international reserves to prop up the official rate. To traders, that means the new president will have little choice but to allow the peso to weaken significantly or risk depleting reserves already near a nine-year low.

“The market is pricing that no matter who is in the next government, they’re going to have to devalue and fast,” Daniel Chodos, a strategist at Credit Suisse Group AG, said by telephone from New York.

The central bank declined to comment on devaluation expectations in futures markets.

Scioli says the country doesn’t need a large devaluation of the peso which would hurt the purchasing power of Argentines. Leading opposition candidate Mauricio Macri has pledged to allow the exchange rate to float freely on his first day in office if elected, with advisers saying it would likely be somewhere in between the official rate of 9.5 and the black market rate of 16.03 pesos per dollar.

President Cristina Fernandez de Kirchner, who is unable to run for a third-consecutive term, devalued the peso by 19 percent in January 2014. But policy makers have limited declines in the currency this year to 11 percent, compared with a tumble of 32 percent in Brazil, Argentina’s biggest trading partner.

Argentina’s reserves have fallen 18 percent in October to $27.4 billion in large part due to a $5.9 billion payment on its so-called Boden bonds.

“With the overvalued peso, the Brazilian real depreciating and the poor state of the foreign reserves following the Boden 15 payment, the devaluation will have to be faster and less gradual than the market had expected,” Credit Suisse’s Chodos said.

Fernandez has imposed a number of currency restrictions to prevent Argentines from pulling money out of a country where inflation is running above 20 percent, the second-highest in the Western Hemisphere. The controls have spawned a myriad of illegal currency markets where Argentines can sidestep limits on their ability to obtain dollars to better preserve the value of their savings. In the black market, the peso sank to a record 16.11 per dollar Oct. 19.

While the offshore market is signaling a large devaluation, trading in the local futures exchange market known as Rofex indicates that no such move is in the offing. That’s because the central bank also intervenes in that market daily in an effort to tamp down expectations, according to Jorge Piedrahita, Chief Executive Officer of Torino Capital.

In the Rofex market, the peso is expected to fall just 4 percent by December to 9.9 pesos per dollar.

But with Argentina’s reserves dwindling and the country’s exports becoming less competitive as the currencies of its trading partners fall further, Fernandez’s successor will find it hard to avoid a devaluation.

“Even with the uncertainty of the elections, it’s clear that there’s an expectation that the government will have to adjust the exchange rate sooner or later,” said Ezequiel Aguirre, a currency strategist at Bank of America Corp.

By Pablo Rosendo Gonzalez and Charlie Devereux
October 22, 2015

* The two leading candidates plan to cut soybean export taxes
* Macri, Scioli also pledge to eliminate wheat, corn taxes

While it remains unclear who will win Sunday’s presidential election in Argentina, one thing is already decided: farmers are poised to benefit as both leading candidates plan to eliminate wheat and corn export taxes and cut a soybean levy.

Wheat and corn taxes should be cut “immediately” while the 35 percent soybean export levy should be reduced to 20 percent, Miguel Bein, main economic adviser to leading presidential candidate Daniel Scioli, said Wednesday in a report posted on his consulting firm’s website. Mauricio Macri, Scioli’s main contender according to local polls, has previously said he would eliminate corn and wheat taxes while cutting the soybean levy by 5 percent a year.

President Cristina Fernandez de Kirchner, who can’t run for a third consecutive term, has clashed with farmers since gaining office in 2007 when she unsuccessfully tried to raise the soybean tax to 45 percent. That ignited 129 days of strikes, road blocks and food shortages across the country until July 2008 when then Vice President Julio Cobos voted against the increase. Soybeans support a third of government spending.

Stimulating Exports
Argentine farmers have exported $17 billion of grains and oilseed this year, the lowest for the period since 2007, according to exporters’ consortium data, as they wait for a change of government. In 2014, they sold a record $24.1 billion of grains and oilseed to boost central bank reserves.

“By stimulating the export of soybeans stored by farmers we would accelerate the injection of dollars into the Central Bank without issuing debt,” Bein says in the report. He estimates that farmers are hoarding as many as 22 million metric tons of soybeans, about one third of last season’s record crop, or $7.4 billion worth of oilseeds.

Argentina, the world’s third-largest grower of the oilseed after the U.S. and Brazil, is the world’s largest exporter of soybean oil and derivatives, used in soy milk, tofu and animal feed.
Rebuilding Reserves

Cutting export tariffs will help the next Argentine government rebuild its depleted foreign reserves, which at $27.4 billion are near a nine-year low, the report said. Higher reserves would allow Argentina to negotiate from a stronger position with holdouts from the 2001 default.

Argentina defaulted last year for a second time in 13 years after Fernandez defied a New York court order requiring the country to repay disgruntled creditors.

Scioli is within a fraction of winning the presidency in the first round of elections to be held Sunday. He had 39.7 percent of intended votes against 28.8 percent for Macri, according to the average of four polls viewed by Bloomberg. Scioli would need to exceed 40 percent and have a 10 percentage point lead over the second-place candidate to avoid the first run-off in Argentina’s history.

By Sarah Marsh
Oct 21, 2015

In the affluent Recoleta neighborhood of Buenos Aires, where grand 19th century buildings hark back to an era of prosperity, middle class voters fear a presidential election on Sunday will do nothing to halt Argentina’s long decline.

“We always hope things will change for the better but they just get worse. This used to be a rich country,” said Lucila Novillo, 53, who has struggled to keep her interior design business afloat over the past four years as tight capital controls virtually paralyzed the real estate market.

All the leading candidates in the race to succeed leftist President Cristina Fernandez have promised reforms to ease the interventionist policies that her opponents and investors say have choked the economy.

Yet the front-runner is ruling party candidate Daniel Scioli, who has Fernandez’s backing and is broadly supported by poorer Argentines who benefit from expanded subsidies under her government. Scioli offers the least amount and slowest pace of change.

Many middle class voters like Novillo, who will cast her ballot for opposition candidate Mauricio Macri, fear Argentina’s problems are too deep-rooted for any one president to fix and will keep dragging it down regardless who wins.

Despite vast natural resources and a well-educated workforce, the South American country has steadily declined from its perch as one of the world’s richest nations in the 1930s, lurching from one financial crisis to the next.

While Argentina remains Latin America’s third largest economy, its next government will inherit a host of woes from double digit inflation and precarious foreign reserves to last year’s debt default.

“We should be a great country. We have brilliant, well-educated and creative people,” said Novillo. “These qualities should help us grow, but corruption prevents that. The roots of corruption have reached into every corner of this country.”

Most of Fernandez’s cabinet members face corruption allegations, authorities are investigating a possible money laundering scheme at a luxury hotel her family owns, and her vice president is being tried for abuse of power.

The justice system often fails to clean up such cases, many Argentines complain, fostering a lack of confidence in the country’s institutions.


Recoleta’s middle-class and wealthy residents reminisce about Argentina’s heyday when Buenos Aires was known as the “Paris of the South” and complain about its economic decline and what they perceive as worsening crime, healthcare and education.

“Our public education used to be excellent, people came from all over Latin America to study at Argentine universities,” said Eduardo Jesus Zimmermann, 84, a former banking executive.

“Now Argentines head to the United States, England or elsewhere abroad because public universities are a disaster.”

Many put the country’s decline down to Peronism, the fragmented populist movement that has dominated politics since the first presidency in the 1940s of Juan Peron, who won hero status for his fiery nationalism and defense of workers’ rights.

“We’ve been going downhill for 70 years since Peron,” said Zimmermann, on his way to a meeting of landowners.

But Peronism remains Argentina’s most potent political force and Peronist parties have won nine of the 11 presidential elections they have contested. With Scioli, they appear primed to win another.

Zimmermann said Peronist power structures, such as its hold over trade unions and Congress, would make it hard for his preferred candidate, the pro-business Macri, to make the necessary reforms even if he won the presidency.

Macri has campaigned on a platform of change, promising to dismantle capital controls and trade restrictions from his first day in office to win investor confidence and bring hard currency into the dollar-starved economy.

While his pledges are popular among the urban middle class, voters in low income neighborhoods fear he will cut generous welfare benefits introduced by Fernandez.

Those neighborhoods, often densely populated, are ruling party strongholds and might carry Scioli to victory without even needing a second round runoff vote.

Polls show Scioli close to the 40 percent threshold that would be enough for him to win outright providing he has a lead of 10 percentage points over Macri, a strong probability.

For some, the chance of real change is just too small to wait around for.

Delfina Raffo, 30, said she was leaving Argentina next month, following in the footsteps of friends and cousins in search of a brighter future elsewhere.

High taxes and the stagnant economy forced her to close her Recoleta clothes boutique earlier this year. Two robberies at gun-point made the decision easier and she plans to move to Singapore which is safer and where she believes she can earn more.

“I feel we are just going to continue on the same path we’ve been going along … with ever more poverty, and the middle class being pulled lower,” Raffo said.

By Patrick Gillespie
22 October 2015

NEW YORK (CNNMoney) — Wall Street’s hedge funds can’t wait for Argentina’s next president.

They’ve been battling with the current president, Cristina Fernandez de Kirchner, and her predecessor and late husband, Nestor, for 12 years over huge debt payments. That could soon change.

Argentines will elect a new president on Sunday, and a major issue is whether the new leader will finally end the country’s fight against New York hedge funds.

After defaulting on $95 billion of debt in 2001, the country has been in a decade-long fight in courts with the hedge funds, also known as “vultures” in Argentina, South America’s second-largest economy.

The unresolved debt debacle has shut out Argentina from much of the global economy while it has suffered from massive inflation, declining cash reserves and meager economic growth.

There are three candidates running for president: Daniel Scioli, Mauricio Macri and Sergio Massa. Scioli is most similar to the current president and he’s leading in the polls.

But many experts say Macri, second in the polls, is Wall Street’s favorite and most likely to negotiate with the hedge funds. That’s because Macri has proposed economic and financial reforms that would undo Kirchner’s policies, which investors strongly dislike.

“Argentina’s debt problem has to be fixed quickly so that we can return to having credit,” Rogelio Frigerio, the leader of Macri’s political party, PRO, recently told CNN’s Diego Laje in Buenos Aires. “We need to finance these [economic] development policies.”

Argentina’s record-breaking default and the ‘vultures’

The hedge funds, led by billionaire Paul Singer, want about $1.5 billion from Argentina.

Argentina broke the record books when it defaulted on $95 billion of debt.

Singer’s fund, NML Capital, and others scooped up the nearly-worthless debt soon after the default, then waited while the debt gained value and now they want full repayment.

Over the years, the Kirchners renegotiated terms with 92% of its creditors so that they would accept a huge discount, or “haircut,” on debt payments.

These hedge funds are called vultures for picking up cheap, worthless debt of developing countries, then suing them afterward for much more money.

Argentina has offered to pay creditors 30% of the face value of the debt. Singer doesn’t want that, even though his fund already stands to profit from the rising value of the debt.

Singer wants full repayment. And a New York judge, Thomas Griesa, agrees with him.

In fact, Argentina tried to pay the creditors that agreed to the lower amount, but Griesa blocked the payment last year. The judge said that Argentina has to pay the holdouts and other creditors at the same time. Negotiations between Argentina and NML last year failed to reach an agreement.

Until Argentina settles with the holdouts, its economy essentially can’t grow much because it can’t get access to foreign investment.

Another problem is that Argentina, under Kirchner, has manipulated its currency, started massive spending programs and lost the trust of many independent economists inside and outside the country.

Peso problems

For years, ordinary Argentines couldn’t buy dollars from local banks because of government restrictions. Now they can, but there’s still major limits on how much they can exchange.

So many Argentines exchange pesos for dollars on the black market because they don’t want to deal with government restrictions.

Three years ago, one dollar equaled about 6 pesos on the black market. Now one dollar gets you 16 pesos. The official exchange rate is 9.50 pesos to the dollar.

“We think the Argentine currency is significantly overvalued,” Sebastian Rondeau, a Bank of America economist, wrote in a research note. He says the real value is closer to the black market exchange rate.

Change of tune: we could negotiate

For years, presidential candidates have said they would never negotiate with the hedge funds. But each of the current candidates, or their advisers, have hinted that they would consider negotiating with the holdouts.

But settling with funds would be a deeply unpopular decision. In a politically-divided nation, Argentines unite over their hatred of the hedge funds.

“The problem is — how do you package it, how do you sell it after saying you would never negotiate with them,” says Eugenio Aleman, an Argentine and senior economist at Wells Fargo. “They have to figure out how to pay.”

Investors can’t wait for a new president. Argentina’s stock index, Merval, is up 27% so far this year, and experts say it’s because of optimism that the next president will resolve the dispute and open up Argentina’s economy to foreign investment.

NML Capital declined to comment for this article, but it has repeatedly offered to negotiate with Kirchner.

“Argentina is going to pay. The question is how much it’s going to pay,” Daniel Artana, senior economist at the Foundation for Latin American Economic Investigations, told CNN in a phone interview from Buenos Aires.

22 October 2015

U.S. biodiesel producers are asking a federal appeals court to scrap EPA’s approval of imports of biodiesel from Argentina used as a qualifying renewable biomass fuel under the agency’s renewable fuel standard (RFS), claiming EPA failed to undertake necessary public comment on what they call a flawed tracking system for the biodiesel.

EPA Jan. 27 issued an approval of a tracking system designed to show that biodiesel from Argentina meets the criteria to be considered “renewable biomass” under the renewable fuel standard (RFS). The approval, in the form of a letter to the Argentine Chamber of Biofuels (CARBIO), constitutes a judicial reviewable “final agency action,” says an Oct. 8 opening brief filed in appellate court by the National Biodiesel Board (NBB). Relevant documents are available on See page 2 for details. (Doc. ID: 185601)

NBB, representing U.S. biofuel producers, says the decision approves a flawed system that allows access to the U.S. market for biodiesel produced from Argentinian soybeans, and CARBIO’s tracking system cannot ensure that the imported fuel is truly renewable.

NBB says the decision should have been open to public notice and comment, and is also asking the U.S. Court of Appeals for the District of Columbia Circuit to vacate a separate agency action — a letter from the agency refusing their request to seeking public input on the plan.

Further, NBB says EPA’s approval of what the board sees as an inadequate tracking system alters the underlying RFS regulations governing biodiesel, and reopens them to judicial review. The board therefore also asks for remand of those regulations to EPA to address the shortcomings that allow the imports at issue.

“EPA failed to provide any notice of the CARBIO proposal it purports provides sufficient quality assurance to ensure that soybean oil from Argentina, a country that has seen a rapid expansion of agricultural lands, came from lands that were in production prior to December 19, 2007. Public comments were necessary for the first plan of its kind,” says the brief.

NBB, representing U.S. biofuel producers, says that the CARBIO tracking system relies on the identification of “go areas,” which are shown by satellite imagery to have been agricultural in 2007 and not newly cultivated areas that have been recently cleared of forest. However, it is unclear how CARBIO will define such areas, and EPA lacks the means to check that they are correctly identified, the brief says.

“EPA’s review of the CARBIO proposal was arbitrary and capricious in that it did not comply with its own regulations. There was no explanation or analysis to support the identification of ‘go areas’ as ‘existing agricultural lands,’ to ensure feedstock producers, handlers or importers are in compliance, or to even understand the scope of the program,” the filing says. “Indeed, EPA appears to have handed its authority over to third parties, one of which has clear conflicts of interest,” the group says referring to CARBIO. “Thus, EPA could not have ensured that the CARBIO proposal provides the adequate level of quality assurance in clear contravention of its regulations.”

NBB further says that EPA’s actions have “ripened” the underlying RFS regulations on biodiesel for a legal challenge, and that they should be vacated and the relevant provisions on imports and alternative biomass tracking systems remanded to EPA.

The U.S. biodiesel producers say that Argentinian producers are set to “flood” the U.S. market with “biomass-based diesel subject to minimal quality assurance mechanisms,” having lost access to their previous major market, the European Union.

Meanwhile, EPA is preparing to finalize its multi-year RFS proposal setting blending targets for biodiesel and other alternative and renewable fuels. The agency under a consent decree must by Nov. 30 finalize the fuel targets for 2014 through 2016. — Stuart Parker

21 October 2015

In addition to constant policy changes that affect the rules for the insurance sector, the industry has had to come up with creative solutions to cope with Argentina’s high inflation, and the economic environment remains one of the most challenging in the continent for insurers.

Inflation in Argentina, put at around 30% annually by some private groups who disagree with the government’s figures, undermines the ability to estimate the insurable interest-value, according to law firm Kennedys.

The most serious inflation-induced distortions come when calculating the immediate value of insured property.

Once the amounts that are considered appropriate are established, there will be immediate deviations as the face value of the insured property increases due to inflation. In such cases insurance policies will not fulfill their purpose of returning the insured party to the same financial situation as before the loss, as the value of the insured property exceeds the sum insured.

Despite the fact that the most affected party seems to be the policyholder, the industry suffers from these distortions as people are put off insurance.

One solution used by insurers has been to include “adjustment clauses” in the policies extending the coverage beyond the insured sums, simulating a market value for the property. This strategy has the downside that they usually include a cap which in turn translates into an additional premium to be charged to the client.

Other solutions used have been issuing quarterly or even monthly policies, which have higher costs for clients; or US dollar-denominated policies, but these are made ineffective by government exchange controls.

In some countries such as Chile with the Unidad de Fomento and Venezuela with the Unidad Tributaria special index-linked currency units exist designed to offset the effect of inflation. In Argentina the Unidad de Cuenta de Seguro existed decades ago but was abandoned in the 1990s when the peso was pegged to the US dollar, and was never revived.

Moreover, inflation reduces clients’ purchasing power, in turn making insurance more expensive with the subsequent impact on demand.

12. VOLKSWAGEN TO RECALL AROUND 17,000 VEHICLES IN BRAZIL (Dow Jones Institutional News)
By Rogerio Jelmayer
22 October 2015

SAO PAULO–German auto maker Volkswagen AG (VOW.XE) will recall 17,057 vehicles in Brazil to fix software that manipulates emission tests.

The recall will affect Volkswagen’s Amarok pickup, produced in Argentina in 2011 and 2012. The company said it will notify owners of the vehicle from the first quarter of 2016 on details of the recall.

In September, Brazil’s federal environmental agency, Ibama, opened an investigation into Volkswagen to determine if the German auto maker committed fraud in the South American country with its diesel engines. Ibama could impose a fine of up to 50 million reais ($12.7 million) on Volkswagen if the company was found to have violated any of the country’s vehicle-emissions rules.

The U.S. Environmental Protection Agency said last month Volkswagen has admitted to using software on some of its VW and Audi diesel-powered cars to dupe U.S. emissions tests.

Volkswagen is the third-largest auto maker in Brazil in terms of sales, behind Fiat Chrysler Automobiles NV (FCA.MI) and General Motors Co. (GM).

The German auto maker sold 226,942 vehicles in Brazil in the first nine months, according to auto maker association Anfavea.

By Angelica Kershaw
21 October 2015

In similar developments, the ministers of health of Argentina and Peru (MoHs) are working separately on the implementation of electronic patient health records (EHR). According to the regional source Andina, Peru’s MoH in plan to implement (EHR) at a national level in order to make patient records available to hospitals and other healthcare establishments, and improve the efficiency of the national healthcare system by avoiding duplicate patient tests. Similarly, the Argentine Ministry of Public Health in Misiones, has launched the first stage of the province’s digital medical record system, which will initially be introduced for patients within the public healthcare sector. This phase involves the creation of a database that will be accessible throughout the province, as well as the issuance of medical cards.

Significance: With this initiative, the Peruvian government will be implementing law 30024, which establishes the creation of a national registry of EHR and the basis of the system. The regional project in Argentina aims to organise the existing patient information rather than alter the current charging system used at each hospital. However, both of the initiatives are likely to improve patients data report and accessibility by them and healthcare providers facilitating the diagnosis and prescription processes.

By Rene Rodriguez
21 October 2015

Watching The Clan, you have to keep reminding yourself this absolutely insane story really happened. The story of the Puccio family, who lived in a wealthy suburb of Buenos Aires and became infamous for a series of astonishing crimes in the 1980s, has fascinated Argentina for decades but may not be all that well-known in the U.S. This taut, polished thriller, which has been made with the energy and pop-culture savvy of a Hollywood production, should change that.

Director Pablo Trapero (White Elephant) opens the picture with a quick prologue that uses news footage to recount the 1983 appointment of the democratically elected president Raúl Alfonsín and his ensuing reprisals against crimes committed during the country’s “Dirty War,” during which government-sponsored kidnappings left a toll of more than 30,000 desaparecidos (the vanished).

As the film opens, Arquimedes Puccio (Guillermo Francella), a dead-eyed psychopath who worked as an intelligence operative for the previous regime, is continuing his nasty work of kidnapping wealthy people for ransom – and keeping them prisoner in the home he shares with his wife and five children. In an early scene, we watch Arquimedes walking through his house. He asks his middle son Alex (Peter Lanzani) to stop watching TV and checks in on his younger daughter to tell her mom has dinner ready. Everything seems normal – a quotidian routine. Except Arquimedes then makes his way down to the basement, where a hostage is being kept inside a dingy bathroom, hooded and chained and crying for help.

The juxtaposition of a happy home hiding a dungeon of horrors is the primary focus of The Clan: How did Arquimedes and his family manage to carry on as if nothing was happening, even though there were bleeding, injured captives underneath their floorboards? Trapero, who co-wrote the script with Esteban Student and Julian Loyola, turns Alex into the audience surrogate. He’s a handsome, popular young man who works at his father’s surf shop, plays rugby and has a new girlfriend. Oh, and occasionally Alex also helps his father carry out a kidnapping, even serving up one of his rich friends as a victim.

Except Alex isn’t aware – at first – that his father has no intentions of ever returning his hostages alive, even after their families have paid their ransom. The Clan can be terrifying one moment and darkly comical the next: A long sequence depicting the kidnapping of a woman is scored to David Lee Roth’s Just a Gigolo, while another kidnapping attempt goes horribly wrong, Pulp Fiction style. Trapero brings a lush style to the film that helps to heighten the overall weirdness: If it wasn’t based on a true story, you’d write the movie off as preposterous nonsense.

Francella’s performance is too one-note to give the monstrous papa any dimension – the actor’s cold eyes never register any emotion – and the other family members are relegated to the background (the movie cries out for a scene in which Arquimedes’ wife voices how she feels about her husband’s crimes). The strained, strange relationship between father and son ultimately becomes the emotional center of The Clan, culminating with an astonishing closing shot guaranteed to induce startled gasps. It’s a great, jarring moment that is the work of a filmmaker clearly in love with his craft – and a flavor for the darker side of human nature.

By Charles Dolph
October 21, 2015

National elections on October 25th present voters with sharply contrasting visions of government’s role

On October 25th Argentines go to the polls for general elections that will shape the future of Latin America’s third largest economy. In the wake of Hugo Chávez’s death and amid increasing turmoil in neighboring Brazil, developments in Argentina take on added significance in the region.

In addition to the country’s first non-Kirchner president in twelve years, voters will choose provincial governors, senators, and congressional representatives, as well as parliamentary representatives to the South American trade bloc MERCOSUR.

Recent provincial contests resulted in victories for candidates from outgoing President Cristina Fernández de Kirchner’s Front for Victory (Frente para la Victoria) in both Chaco and Tucumán. In Tucumán, the result was disputed by opposition supporters amid violence directed at opposition candidates and allegations of electoral fraud. Despite protests involving clashes with police the result was subsequently upheld by Tucumán’s Supreme Court.

August primaries established three main presidential candidates: successor to Kirchner in the Front for Victory coalition and outgoing governor of Buenos Aires province, Daniel Scioli; dissident Peronist Sergio Massa of the Renewal Front (Frente Renovador); and mayor of Buenos Aires Mauricio Macri of center-right Let’s Change (Cambiemos). Recent polls show Scioli on the cusp of the 40% of the vote plus a 10% edge over his nearest opponent necessary to avoid an unpredictable runoff on November 22nd. However it is far behind Kirchner’s 54% tally in 2011.

The not-quite-commanding margin for Scioli is partly due to electoral realignment since Argentina’s 2013 legislative elections. His emergence as the Front for Victory candidate can be directly traced to the success of Sergio Massa’s Renewal Front. Cristina Kirchner’s cabinet chief from 2008-09, Massa openly split in 2013 to form an alliance rooted in industrialists and mayors from the province of Buenos Aires.

Massa’s coalition won crucial mid-term victories that denied Kirchner the Congressional supermajority necessary to support a constitutional amendment which would have allowed her to run for a third consecutive presidential term. The elections also revealed a gap on Kirchner’s left, as the Trotskyist Workers’ Left Front (Frente de la Izquierda y de los Trabajadores) garnered three seats in the National Congress as well as provincial and municipal legislative representatives across the country, highlighting that the lessons of Argentina’s 2001-02 uprisings have not been forgotten.

Front-runner Scioli has therefore been wooing social movements and the left wing of his own party – channeling Pope Francis’ social agenda in declaring that if elected he will create a Ministry of Popular Economy – while also seeking to attract $30 billion a year in foreign investment to make Argentina a “productive paradise.”

Electoral realignment has not only paved the way for and conditioned Scioli’s candidacy, it has drawn the opposition candidates Massa and Macri closer to each other. However it has so far stopped short of producing an outright electoral alliance between the two.

Beneath changes in the electoral landscape are deeper structural challenges confronting Kirchnerism. Economic growth boomed from 2004-10 under Néstor Kirchner and during Cristina’s first term. While critics are quick to dismiss the impressive economic growth as rooted in the dumb luck of a commodities boom – especially in soy – Mark Weisbrot of the Center for Economic Policy Research points out that soy export indicators in GDP growth do not support such a narrative.

While claims of absolute reliance on soy may be overstated, its structural impacts cannot be denied. Because soy has virtually no domestic market, its emergence as a key export allowed Kirchner administrations to sidestep the conflicts of the past over the prices of beef and wheat, products crucial both for exports and domestic consumption by urban popular sectors. Yet, the growth of soy has generated other political tensions. Its critical role in financing extensive state spending on social programs led to a standoff with agro-export interests when an increase was proposed in export taxes in 2008.

The soy boom has also fueled rising land prices and concentrated ownership in the hands of transnational corporations. This has partially offset the fiscal benefits of soy, as revenues have paradoxically funded the social programs covering the basic needs of those displaced from the countryside by its expanding production.

The resulting “agriculture without farmers” recalls the “pampas without settlers” used by historian James Scobie to describe expanding wheat production in the 19th century. Such echoes of Argentina’s agro-export past underscore the shift – common in the region – from Washington consensus structural adjustment programs to what sociologist Maristella Svampa calls the “commodities consensus” of renewed reliance on mineral extraction and export-oriented agricultural production.

As Argentina’s main source of foreign currency, soy dovetails with the other major external constraint on Argentina’s economy, namely debt. Only after a bitter 2010 dispute with the head of Argentina’s Central Bank did Cristina Kirchner secure access to the reserves necessary to pay off the sovereign debt, renegotiated after the 2001 default.

While a bumper soy crop in 2014 helped replenish the Central Bank’s foreign reserves, they remain under pressure. Economy Minister Axel Kicillof announced earlier this month that nearly $6 billion would go to pay holders of Argentina’s Boden 2015 bonds. Meanwhile, officials triumphantly declared the Boden 2015 payment “the end of a long process of dis-indebtedness” – a clear swipe at holdout “vulture funds” currently litigating in New York for full repayment of secondary market bonds purchased after Argentina’s 2001 default.

The battle with vulture funds, in particular, has become a political rallying point for Kirchner in her final year in office. The UN General Assembly recently adopted nine principles on sovereign debt restructuring triggered by the June 2014 US Supreme court decision preventing Argentina from paying creditors who had agreed to previous restructurings. While the UN principles are non-binding, Kirchner and Kicillof have touted them as a major victory, and sent them to the Argentine Congress to be drafted into domestic law.

Discussion of these structural constraints has been largely muted in the presidential campaigns. Scioli, articulating his economic plan, focused mostly on bringing inflation down to single digits without austerity, but did not mention the debt dispute. These structural issues were also largely absent from the October 4th presidential debate – the first in Argentina’s history – in which Scioli did not even deign to participate.

But economic pressures have been mounting. In January 2014, the Central Bank announced the largest currency devaluation since 2002. Facing a return of high inflation, capital flight, falling foreign reserves, and a devaluing peso, Kirchner has variously turned to currency and price controls. Such measures have met with lukewarm success, as de facto inflation has continued to rise and the “blue” or unofficial dollar hit an all-time high of 16.08 pesos in late September.

Critics of Kirchnerism point to familiar economic problems, as well as growing corruption and insecurity. Nevertheless Peronism – the political legacy of President Juan Perón who governed between 1946-55 and 1973-74 – remains the dominant political force in Argentina. Even Macri, whose political career has been based on being a gorila (Argentines’ name for non-Peronists), recently embraced Perón. Flanked by erstwhile Kirchner ally and head of the General Confederation of Labor (Confederación General de Trabajo) Hugo Moyano, Macri inaugurated a statue to Juan Perón in downtown Buenos Aires in the hope that some of the populist magic would rub off on him.

Even as all three main candidates claim the legacy of Perón, voters will decide on visions for the role of the state that clearly diverge. The divide is most glaring between Scioli and Macri, who will almost certainly be the two candidates on November 22nd should the election go to a runoff. While the former promises basic continuity with the Kirchnerist model, Macri, drawing metaphors from his days as president of the soccer club Boca Juniors, argues that the state should act only as a “groundskeeper” for the field on which private enterprise are the true players. Macri’s plan means fiscal austerity and a general return to the 1990’s economic model that led Argentina into collapse in 2001. In a second round scenario between the two, Sergio Massa would be the king-maker, strengthening his position long-term.

A victory for Scioli on October 25th or after is not guaranteed. Should he prevail he will inherit a country that has substantially recovered from its debt default and crisis of political representation that peaked in 2001-02, even as structural challenges have become apparent. This stability has consolidated under Peronism during more than a decade of Kirchner administrations. The Radical party (the Unión Cívica Radical), Peronism’s historical counterweight, has become associated with overseeing hyperinflation in 1989 and economic and political crisis in 2001. The military is thoroughly discredited. Macri’s upstart Let’s Change coalition has little reach outside the Federal Capital of Buenos Aires.

In this political landscape, the Kirchnerist avatar of Peronism appears poised between continuity and schism. Prominent human rights activist Estella de Carlotto, much to the delight of Scioli’s media critics, recently referred to him as a potential “transition” president keeping the seat warm for Cristina Kirchner to run again in 2019. However, Massa’s emergence within Peronism points to a rightward drift among a significant sector of the movement. The dominance of Kirchnerism in Argentine politics and society might, paradoxically, also be its greatest source of instability.

By Belén Marty
October 21, 2015

* Commerce Secretary Says Consumers Need Him to Stop “Deceptive Marketing”

The Argentinean government is taking greater control over the products sold in the country. As of Wednesday, October 14, Argentina’s high-profile Commerce secretary, Augusto Costa, will now be in charge of approving labels for food and beverages, as well as fragrance, personal-care, and cleaning products sold in Argentina.

Resolution 420/2015, published on Wednesday in the Official Bulletin, requires companies to present product labels and tags to the Commerce secretary in advance.

The Trade Loyalty Department will then have 15 days to decide whether or not the goods will be placed on the Argentinean market. In the event that the agency does not issue a ruling on a given product within the time frame, the item may enter the market, but will be subject to subsequent regulation.

Costa explained the government’s reasoning for the new policy with an example: He placed two Hellmann’s brand ketchup bottles side by side. On one bottle, the label read “fresh tomatoes,” and on the other, “fresher tomatoes.”

“We met with Unilever [Hellmann’s distributor] and we taste-tested each ketchup on a sausage, and they tasted the same,” Costa explained. “These are strategies that companies all over the world use to mask hikes in prices. They may not be breaking any laws, but we created this legislation to get rid of the loophole, and put a stop to this deception.”

Qué buen uso le está dando Augusto Costa a su master en la London School of Economics. Sommelier de ketchup.

— CACK (@caterinack) October 16, 2015

“What a great use of Augusto Costa’s Master’s degree from the London School of Economics. Ketchup sommelier.”

Less than 15 days away from the presidential election, Costa explained that no new personnel will be hired to perform these newly created functions.
“We will use officials already in office to carefully determine which products are the most relevant, like mass-consumption products. We will not fill the building with camporistas [Kirchner supporters], nor change the job market in Argentina.”

The resolution also prohibits companies from placing the words “sale” or “discount” on product labels. The government argues that “if the company cannot guarantee the savings will reach consumers, they should not include this message.”

According to the initiative, the Commerce Department aims “to ensure the proper execution of domestic commercial policies regarding protection for consumers and a competitive market.”

By Charles Newbery
October 21, 2015

On a street corner in Buenos Aires, “No fue magia” (“It wasn’t magic”) is painted on a wall above the initials of President Cristina Fernández de Kirchner.

The graffiti is praising what is seen as the success of Argentina’s president – and that of her late husband and predecessor, Néstor Kirchner – since the country emerged from the 2001-2002 financial crisis.

It also shows how adept the couple have been in building and sustaining a fervent following for their brand of populist left politics, known as Kirchnerism.

When Mr Kirchner took office with the (still ruling) Justicialist Party in 2003, “he vowed to lead Argentines out of hell and into purgatory. He told them they weren’t responsible for the crisis, but victims,” says Eduardo Fidanza, director of Poliarquía Consultores, a public opinion and political consulting firm in Buenos Aires.

Mr Kirchner blamed the free-market policies of the 1990s that had been prescribed by the International Monetary Fund and were advocated by the big banks and corporations. He said these policies pushed Argentina into a crisis of 25 per cent unemployment and 54 per cent poverty in the early 2000s.

In contrast, he pursued inclusive growth aimed at benefiting all members of society, not just big business, as he claimed. Recovery came quickly – and robustly. The economy grew by an average of 6 to 8 per cent each year between 2003 and 2011, and unemployment fell below 7 per cent.

Soaring international commodity prices and demand played a significant role in this recovery as Argentina is one of the world’s leading suppliers of beef, corn, soybeans and soybean derivatives like soy oil.

Mr Kirchner helped fuel exports, chiefly by keeping the exchange rate undervalued. The export boom fattened central bank reserves and brought budget and trade surpluses.

Through the good times, the Kirchners put a focus on culture, labour and the poor, as well as addressing Argentina’s difficult past. They reopened the trials into state torture during the 1976-83 military dictatorship, ramped up state funding for film and television programming, and made football free to watch on TV. Same-sex marriages were legalised. They created child and pregnancy subsidies to help the poor through the crisis, and nationalised Aerolíneas Argentinas, the national airline and YPF, the national oil company. And unions regained their collective bargaining powers, which help to boost wages and pensions.

All of this instilled a sense of stability after so many years of volatility, making the Kirchners “appear as the saviours of Argentine society,” Ana Wortman, a cultural sociologist at the University of Buenos Aires, tells Equal Times. This won them widespread support from Argentina’s middle class, not just the poor and working classes.

Cristina Fernández succeeded her husband in 2007 with 45 per cent of the vote, and won re-election in 2011 with an unprecedented 54 per cent, helped by sympathy for her husband’s death in 2010.

Now 62, Cristina will leave office on 10 December 2015 with a 40 per cent approval rating, rare in a country where most second terms – and some firsts – end in crisis.

Amongst her supporters, Cristina has “a quasi-religious status for saving Argentina from catastrophe,” Wortman says.

Economic woes

Her presidency, however, brought a change to the Kirchnerism model that could be its undoing. Cristina aggrandised her husband’s message. It was no longer about reaching purgatory; it was about remaining in heaven, living in abundance and not accepting austerity, Fidanza says.

The first years of recovery came without many hitches as factories used their neglected capacity after the economic crisis to meet rising consumer demand. But investment didn’t keep pace, due to currency controls, price caps, protectionist trade policies, heavy regulation and other interventionist measures that cut profit potential and made it harder to do business.

Inflation soon hit double digits and peaked at 40 per cent in 2014, before coming down to 27 per cent this year as a slowing economy cut demand. Blackouts and petrol shortages worsened, and infrastructure creaked. Fifty-one people died in a train crash in 2012 after a series of derailments.

“The economic model is unsustainable,” says Eduardo Levy Yeyati, an economist and author of Porvenir, an exploration of future development models for Argentina. “We’re squeezing the last drops of lemon so that people have the feeling of wellbeing.”

The government is running a 6 per cent budget deficit on track to reach 8 per cent in 2016. Shrinking dollar reserves are making it harder to service the national debt and pay for essential imports like energy and food. Manufacturers get dollars in rations for importing equipment and parts, slowing their output. Companies can’t readily send profits abroad, putting a damper on investment. Argentina can’t borrow abroad to ease the strain until a US$100 billion default from 2001 is fully settled, and hiking taxes any further could spark protests like a four-month farm revolt in 2008. Or it could turn more union bosses against Kirchnerism, and deepen a polarisation between its followers and opponents.

Presidential election

The hard times are expected to run through to 2016, a forecast that would mar any party’s chances to retain power.

However, that’s not the case for Kirchnerism. The ruling Justicialist Party candidate, Daniel Scioli, is ahead in the polls for the 25 October general election.

A former vice president of Mr Kirchner and the current governor of Buenos Aires, Scioli, 58, has a 10-point lead on Buenos Aires Mayor Mauricio Macri, a 56-year-old conservative businessman. In third place is Sergio Massa, 43, a congressman and former chief of cabinet for President Kirchner.

All three are more moderate than President Kirchner, and there’s a consensus amongst them that adjustments must be made to rekindle growth, says Levy Yeyati.

This includes settling the defaulted debts, addressing an overvalued exchange rate, cleaning up bogus economic data, scrapping capital controls, cutting inflation and slashing subsidies to rein in the budget deficit.

Such steps are expected to attract what has largely eluded Kirchnerism: foreign investment. But the initial cost is likely to be job losses, higher utility rates and lower purchasing power.

“It was one thing to take the country from hell to purgatory, and another to take it from heaven to purgatory,” says Fidanza.

The belt-tightening won’t come easy. There will be the threat of strikes no matter who becomes president, says Norberto Galasso, a historian and author of Kirchnerism (2003-2015): The Project that Transformed Argentina.

Argentines have grown used to welfare and advancement under Kirchnerism, from buying new cars to sending their children to university for the first time, he says.

“Many people want the model to continue no matter the difficulties”.

For this reason, Galasso believes, Cristina has fielded a close confidant, Carlos Zannini, as Scioli’s candidate for vice president. Zannini, 61, will keep Scioli in check and maintain Cristina’s influence to run for president again in 2019.

“Cristina is a fighter for her convictions,” he says. “I don’t see her dedicated to caring for her grandchildren. She will continue to be an influencer.”

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By Jonathan Gilbert
23 October 2015

BUENOS AIRES — As Argentina prepares for a new president, a glimmer of hope has emerged that a ferocious standoff with American hedge funds may be resolved within months.

On Sunday, Argentines will vote on who will succeed President Cristina Fernández de Kirchner. The front-runner, Daniel Scioli, has at times shared her taste for fiery populist oratory.

Nonetheless, if elected president, he is expected to quietly seek a compromise with the hedge funds over nearly $100 billion of bonds that Argentina defaulted on in 2001.

”It’s very important to close out the holdouts issue,” said Gustavo Marangoni, an economic adviser to Mr. Scioli. ”It’s like a pebble blocking a funnel of investment.”

The standoff has kept the country locked out of global lending markets. Mrs. Kirchner has maneuvered to reach the end of her presidency without the need to return to those markets, but a new leader would need access to help rectify Argentina’s economy, analysts said.

”Whoever wants to govern Argentina needs a country with access to capital markets,” said Federico Thomsen, an economist based in Buenos Aires.

That will mean ending the feud with the hedge funds, often referred to as holdout creditors — or ”vultures,” in the words of Mrs. Kirchner’s government — led by a unit of the billionaire Paul E. Singer’s firm, Elliott Management.

The impasse dates to 2012, when Judge Thomas P. Griesa of the Federal District Court in Manhattan ruled that Argentina could not service the debt it restructured in the years after its 2001 default if it did not pay the litigating holdout creditors, in full, at the same time.

Argentina refused to accept the ruling, earning rebukes from Judge Griesa. Even facing the judgment of a United States federal court, Argentina issued dollar-denominated bonds this year under local law, but it had to pay premium interest rates of 8 to 9 percent. This angered the holdouts, who claim the new debt was marketed internationally and therefore subject to Judge Griesa’s ruling.

Mrs. Kirchner, 62, who is not permitted to run for a third consecutive term, has led a crusade against the hedge funds, accusing them of extorting her government.

Polls here suggest that Mr. Scioli could win on Sunday without the need for a runoff. His closest challenger is Mauricio Macri, a former businessman and soccer club president who has traditionally been viewed more favorably by investors. Mr. Macri has said that he would negotiate with the holdouts.

Yet politics colors these positions. Mr. Macri’s statements appear to have been intended as just criticisms of the government. In interviews, Mr. Macri’s economic advisers said they would let the issue languish and straighten out the economy by addressing other problems.

”I don’t think it’s life or death for Argentina,” said an adviser, referring to resolving debt dispute.

And on the campaign trail, Mr. Scioli, having been endorsed by Mrs. Kirchner, has been nearly as aggressive as the president in calling for a ”world without vultures.”

Mr. Scioli, a former powerboat racer turned state governor, indicated that he would not improve on the terms agreed to by a majority of bondholders in debt swaps in 2005 and 2010. They received about a 65 percent ”haircut” with some deals enhanced by payments pegged to Argentina’s growth rate. That is an offer that the hedge funds have already rejected.

”Argentina’s proposal is clear,” Mr. Scioli, 58, told reporters recently, smoking a cigarillo on the sidelines of a boxing match at a sports club he built next to his home in the Paraná River delta. ”We have to see now if they have the willingness to adapt to what Argentina has been offering.”

Mr. Scioli’s reliance on Mrs. Kirchner ”means he cannot address these issues publicly,” Nicholas Watson, who analyzes Argentina for Teneo Intelligence, a global advisory firm based in New York, wrote in a note to clients.

But if Mr. Scioli wins the presidency, he is expected to forge his own path, independent of the ideological constraints of Mrs. Kirchner’s leftist political movement, known as Kirchnerismo.

”Kirchnerismo is over,” said an adviser to Mr. Scioli who spoke on the condition of anonymity. ”Soon enough, they’ll realize.”

Mr. Marangoni and Mario Blejer, another adviser, said that Mr. Scioli’s government would reinitiate talks that have long been at an impasse.

”I’m in favor of opening negotiations with a very firm stance,” Mr. Blejer said in an interview.

A third adviser, Miguel Bein, who could not be reached for comment, said at a conference in May that Argentina might pay up to 70 percent of the roughly $1.7 billion owed to the holdouts, a sum that includes interest.

That may not be enough to satisfy the holdouts, who have asked for nothing less than the full $1.7 billion.

Mr. Scioli is expected to make other changes in economic policy, including reducing monetization of the fiscal deficit to calm inflation, which is estimated at more than 25 percent, and a gradual devaluation of the peso that could help lure foreign investment and boost competitiveness.

These will require tapping global bond markets to bring in dollars, said Jimena Blanco, who monitors Argentina for Verisk Maplecroft, a risk analysis firm in London.

In the short term, the country may also need those dollars to bolster the central bank’s reserves, which dropped far below $30 billion this month after the government paid off $5.9 billion of maturing bonds.

Although many economists agree that Argentina should end the dispute with the hedge funds so it can bring in dollars by issuing debt abroad, others offer another argument: that the country can talk but delay a deal until the hedge funds cede ground and, in the meantime, attract big foreign investment or even issue debt.

Another presidential candidate, Sergio Massa, 43, an energetic lawmaker who bolted from Mrs. Kirchner’s party in 2013, supports this approach.

Mr. Massa said he would seek to strengthen his negotiating position with the holdouts by first returning to debt markets, using risk mitigation instruments offered by regional development banks to issue bonds at around half the rate investors currently demand.

”Argentina cannot go to Griesa’s bench and surrender,” Mr. Massa said at a lunch with reporters.

If the government reaches a settlement in the coming months, it could still have trouble raising money if it does not also make repairs to its economy, said Siobhan Morden, head of Latin America strategy at Jefferies in New York. She cited Argentina’s fiscal deficit, which is estimated at about 7 percent of gross domestic product, and the precariousness of the central bank’s reserves.

”Does legal access to the markets mean market demand?” Ms. Morden said. ”No. The markets aren’t lenders of last resort.”

By Frederick Bernas and Diane Ghogomu
23 October 2015

BUENOS AIRES — Election season in Argentina is heralded by images of smiling candidates, gazing down from billboards and up from fliers distributed by zealous volunteers. Many names strike a familiar chord with voters, but this year an unfamiliar face suddenly materialized, drawing millions of eyes: Omar Obaca.

”Who knows, he might turn out to be another Obama,” said Laura Buccafusca, 67, a well-coiffured retiree who was walking her dog in the Congreso area, reflecting on the American president’s relatively high popularity here.

But Omar Obaca has no chance of winning. Indeed, he is not even running. He is a fictitious African-Argentine candidate, dreamed up by an advertising company to satirize Argentine, and perhaps American, politics, and setting off a whirlwind in the process.

The comedy campaign has exploded into an Internet sensation, channeling a desire for change after more than a decade of one-family rule — and igniting a fierce debate here over the ways in which black people are portrayed in a society that has long prioritized its ties to Europe.

The billboards advertise an online video series that has drawn more than seven million views. Some of the episodes showcase farcical policies like ”Everyone Dressed as Police” to reduce street crime; paying Argentina’s national debt to China with caramel candy; or rigging the weak Argentine peso to a fantastically strong exchange rate of four American dollars.

”Obaca is the politician that all politicians want to be, but they can’t — because they don’t have ideas and they’re not black,” said Sebastián Rodas, a director at NAH! Contenidos, the advertising company behind the project. ”We’re making fun of the idea that someone can use their color to market themselves in a political campaign. He has proposals, but the first thing is: ‘I’m black, I look like Obama. Maybe that’s good. Vote for me!”’

Some Argentines of African origin have expressed excitement at seeing one of their own in the limelight.

”It gives me hope to see an Afro-descendent as protagonist — this is the first time an Afro actor has had a mass audience,” said Paulo da Silva, 27, an African-Argentine actor whose family left Brazil for Buenos Aires when he was 3. ”For every 10 roles that exist for a white person, there is one for a black person.”

But some leading activists counter that Obaca revives old stereotypes. The newspaper Pagina 12 recently published a scathing op-ed that accused the campaign of ”resorting to one of the oldest traditions of aristocratic families of yesteryear: the black buffoon.”

Its author, Federico Pita, president of the African Diaspora of Argentina, wrote that ”naturalization of racism and white supremacy” had allowed a character who ”ridicules, stereotypes, stigmatizes” to gain huge popularity.

Carlos Álvarez, president of a group called Agrupación Xangô, said that community members had filed a complaint with the National Institute Against Discrimination, Xenophobia and Racism. He called Obaca a ”vulgar” stereotype of a ”happy black guy to liven up the party,” exemplifying ”structural racism.”

The advertisers at NAH, who are generally dismissive of criticism of the campaign, said they were fascinated by the campaign that swept Mr. Obama to victory in 2008, including its groundbreaking social media strategy.

”Political marketing is totally fake, but the first Obama campaign was very genuine,” Mr. Rodas said. ”They didn’t fear doing things differently.”

The actor who plays Mr. Obaca, Marcos Moreno Martínez, grins and radiates an easy charisma, talking in local slang with emphatic hand gestures that evoke his theatrical background.

He got the call for what he described as ”just another casting” in 2010 and was instantly selected for a pilot episode, filmed on the spot. NAH had intended to produce the Obaca series for elections in 2011, but no buyers emerged until the online channel FWTV came forward last year.

Months later, Mr. Martínez, 38, said he felt like a ”star” every time he stepped onto the streets of Buenos Aires, as steady streams of fans request selfies by his side.

”It never ceases to surprise me,” the actor said. ”Kids in other provinces see me, even when I’m not dressed as Obaca, and say, ‘What a genius, I’ll vote for you!”’

He was previously known for playing an inmate in ”Tumberos,” a successful TV drama about corruption and prison life during tough times after Argentina’s 2001 financial crisis.

That led to film and theater roles, but Mr. Martínez needed more income. Like some other struggling actors, he worked as a taxi driver for several years, before selling his car to invest in materials to build a small house that he now rents out. He lives in the provincial city of Luján, about 42 miles from Buenos Aires.

”Nobody ever gave me anything,” he said, recalling the years of crushing three-hour commutes from his home into the capital, where he attended theater classes as a university student. As well as acting, he plays percussion in a Latin dance band and runs music workshops at a school in his neighborhood.

”Obaca arrived at a moment with a lot of political violence,” Mr. Martínez said, describing a polarized atmosphere that breeds social tension.

”People needed to laugh at a fictional politician who promises an Argentina that will not happen,” he added. ”That’s why they get on board with the Obaca dream.”

On Sunday, national elections will bring an official end to 12 years of ”Kirchnerism,” the political movement named for the late president, Néstor Kirchner, who was married to — and succeeded by — the incumbent, Cristina Fernández de Kirchner.

After winning four-year terms in 2007 and 2011, she is constitutionally barred from seeking a third consecutive term.

Although some in Argentina say the country is ready for a political shift, continuity is expected. The front-runner, Daniel Scioli, is a former vice president who has been governor of Buenos Aires Province since 2007 and was endorsed by Mrs. Kirchner.

”None of the candidates has been able to generate a perception of something new,” said Philip Kitzberger, a professor of political science at Torcuato Di Tella University.

But critics contend the Obaca campaign comes at the expense of Argentina’s small black population. Argentina’s 2010 census reported that about 150,000 (or just 0.4 percent) of its 40 million people considered themselves ”Afro-descendent” — an ethnic category that was reinstated after more than 130 years of not appearing on the survey.

Erika Edwards, an assistant professor of Latin American history at the University of North Carolina in Charlotte, said that such a tiny number was probably an underestimate. Argentina’s first census showed that blacks made up about a third of the population in the late 18th century, with most arriving as African slaves. But a huge European immigration, specifically called for by the first Argentine laws, shifted the country’s demographics.

”Miscegenation and racial mixing were actually encouraged under the guise of ‘blanqueamiento’ — the concerted whitening of the nation,” Dr. Edwards said.

In the mid-19th century, Domingo Faustino Sarmiento, revered as the father of education in modern Argentina, announced the ”extinction” of African-Argentines at a time when the black community still published its own newspapers in Buenos Aires.

Despite such assessments, African-Argentines like José Agustín Ferreyra, a prolific filmmaker, and Oscar Alemán, a versatile musician who played jazz with Louis Armstrong, gained recognition in their fields. But African-Argentines still say such accomplishments are neglected.

Mr. Martínez defended his character in the Obaca campaign, contending that there were ”much worse things” than a black politician in a suit who is broadly admired. ”I was asked to play delinquents, thieves or drug dealers so many times that one day I decided to never accept that again,” he said.

By Benedict Mander in Buenos Aires
October 23, 2015

Sensational allegations of drug trafficking have done little to dent Aníbal Fernández’s chances of becoming the governor of Buenos Aires, the second-most powerful political office in Argentina.

But they may have a knock-on effect on the presidential poll also taking place on Sunday, dragging down his Peronist ally, the presidential candidate and current governor of Buenos Aires province Daniel Scioli.

In order to secure a comfortable nationwide victory, the centrist Mr Scioli needs a candidate in the populous province who can win by a much wider margin than Mr Fernández.

Shocking accusations that Mr Fernández masterminded a series of grisly murders in order to take control of an ephedrine trafficking ring — his alleged alias was “the Walrus” on account of his bushy moustache — have contributed to him becoming a “lead life jacket” for Mr Scioli’s electoral performance, says Carlos Germano, a political analyst.

“In the 32 years since Argentina regained democracy, I have never seen an election this close,” says Mr Germano.

The allegations, widely reported in Argentina, have been made by a convicted gangster from prison and have been dismissed by Mr Fernández as a political smear driven by opponents and elements of the media.

The presidential contest is hugely important for Argentina, as it determines the pace and scope of reform needed to turn around one of Latin America’s largest economies.

It will also determine whether Peronism — the political movement that has controlled the country for most of the last 70 years — remains in power after 12 years of populist rule by president Cristina Fernández de Kirchner and her late husband and predecessor, Néstor Kirchner.

Daniel Scioli
Buenos Aires governor and presidential candidate for the ruling Frente para la Victoria (Front for Victory) party, Daniel Scioli, waves during a rally in Quilmes, Buenos Aires Province, on October 20, 2015. Argentine will hold general elections on October 25, in which for an outright winner the candidate needs 40 percent of votes and a 10-point lead ahead of the runner-up. Otherwise, it will head to a runoff on November 22. AFP PHOTO / EITAN ABRAMOVICHEITAN ABRAMOVICH/AFP/Getty Images
Born into a middle-class family, Daniel Scioli first distinguished himself when he negotiated his kidnapped brother’s ransom and release from leftwing guerrillas when he was just 18. But it was his sporting career that brought him fame. After losing his right arm in a powerboat racing accident in 1989, he went on to win several world championships over the next decade. After being elected to congress in 1997, Néstor Kirchner chose him as his vice-president in the 2003 elections.

Mr Scioli’s main rival is the centre-right Mauricio Macri, the market-friendly mayor of the city of Buenos Aires campaigning for change.

Most polls show Mr Scioli within a hair’s breadth of winning 40 per cent of the vote, with Mr Macri polling at close to 30 per cent, making the election too close to call due to polls’ statistical margin of error. Although no pollster disputes that Mr Scioli will win the most votes on Sunday, there is little consensus over whether he will gain enough to avoid a more unpredictable run-off vote on November 22. In order to win outright, contestants must gain 45 per cent of the vote or 40 per cent with a ten-point lead over the runner-up.

Although Mr Scioli is the would-be successor of a president leaving a deeply toxic economic legacy — including a fiscal deficit of about 7 per cent, net foreign exchange reserves of less than $10bn and one of the highest inflation rates in the world — paradoxically most voters see him as the candidate best placed to fix these problems. “Corruption is always an issue, but it won’t define the elections — a bit like education. The fundamental issue here is the economy,” says Mr Germano.

Many Argentines are still suspicious of the “neoliberal” economic policies characterising the 1990s that they fear Mr Macri would resort to in order to kick-start the economy.

And such is the huge sway of Peronism — a political philosophy whose tenets vary according to who fronts it — that Mr Macri attempted to woo undecided Peronist voters by unveiling a statue of the working class hero, Juan Perón, in a square in the city of Buenos Aires.

Mauricio Macri
Presidential candidate Mauricio Macri speaks during a rally in Lanus, on the outskirts of Buenos Aires, October 21, 2015. The Argentinian ruling party’s candidate Daniel Scioli is primed to win the presidential election outright on October 25, with a commanding lead over his nearest rivals, two polls published in local papers on Sunday showed. His closest rival, Macri, the center-right mayor of Buenos Aires city, is seen getting 28 percent of the vote in the election, according to the poll. REUTERS/Marcos Brindicci
The son of a powerful Italian business magnate says it was a 12-day kidnapping ordeal at the hands of corrupt police officers in 1991 that convinced him to go into politics. First, though, he spent a decade running popular football club Boca Juniors. He turned to politics in 2003 and later became a congressman before being elected in 2007 as mayor of Buenos Aires.

Meanwhile, Sergio Massa, the dissident Peronist candidate in third place with around 20 per cent of support, is further complicating Mr Macri’s presidential bid by attempting to persuade voters that he has a better chance of defeating Mr Scioli in a second round vote.

Indeed, it is Argentina’s divided opposition that cleared the way for the Kirchner couple’s self-styled “victorious decade”, which saw the economy’s revival after a devastating crash in 2001. Since then, the Radical party in power at the time, which has traditionally been Argentina’s other main political group, has never recovered the population’s confidence.

Nowhere is the outcome more unpredictable than in the province of Buenos Aires, whose 17m population represent 38 per cent of voters.

Traditionally a Peronist heartland due to its largely working class population, Mr Fernández’s rival from Mr Macri’s “Let’s Change” coalition, María Eugenia Vidal, has soared in polls amid the drug allegations. Mr Fernandez still, however, looks likely to win.

“In a normal country, Vidal, a fresh-faced, experienced politician with no corruption smudges and a reputation as a skilled administrator, would be a shoe-in in an election where she is competing with an old-style Peronist who has been battered by purported links to drug trafficking,” says one jaded observer.

“It’s a very volatile situation,” says José Octavio Bordón, a former presidential candidate and provincial governor.

He argues that although voters are discontent, the absence of a crisis situation like in 2001 means that some 15-20 per cent of voters remain undecided, with “none of the presidential candidates inspiring either great enthusiasm or great fear”.

“The coin has been tossed, but it’s still in the air,” he says.

October 24, 2015

And the beginning of saner economic policies, perhaps.

FIRST, she thrust her finger skyward. Then came a right-left combo, punctuated with an eruption of hip swaying. Beside her with a rigid smile stood Daniel Scioli, the governor of Buenos Aires province and presidential candidate, looking like a child mortified by the antics of his mother. The campaign rally, held earlier this month, was meant to be for him, but the outgoing Argentine president, Cristina Fernández de Kirchner, stole the spotlight.

For the last time, Mr Scioli hopes. On October 25th Argentina will hold the first round of elections to choose a new president, along with half the lower house of Congress and a third of the Senate. They will bring to an end 12 years of government under Ms Fernández and her husband, Néstor Kirchner, who died in 2010. The main question to be settled is how much continuity there will be with the Kirchners’ populist and divisive rule. Mr Scioli is running as Ms Fernández’s heir, under her Peronist party, the Front for Victory (FPV), yet hopes to be his own man. His main rival, Mauricio Macri, the mayor of the city of Buenos Aires, leads an electoral coalition called Cambiemos, “Let’s Change”.

Argentina needs change. As Ms Fernández slips out of office the economy is starting to crumble. Currency controls and trade restrictions, which she imposed in 2011, are choking productivity; inflation hovers at around 25%. The budget deficit is swelling and foreign-exchange reserves are dwindling. Argentina cannot seek external financing until it ends its standoff with creditors who rejected a debt-restructuring plan. Unless the new president quickly reverses Ms Fernández’s populist policies, a crisis is inevitable.

Few Argentines know that yet. Many credit the Kirchners with rescuing the economy from a slump in the early 2000s and for the growth that ensued (which owed a lot to high prices for soy beans, the biggest export). They were open-handed leaders: 40% of the population receives a pension, salary or welfare from the government, a share that has doubled since Ms Fernández took office in 2007. Among recent presidents, only her husband left office with higher approval ratings.

That is why Mr Scioli subjects himself to awkward appearances with her. Recent polls suggest that he is close to the threshold needed for victory in the first round: 40% of the vote with a lead of ten percentage points over his nearest competitor. Mr Macri’s lacklustre campaign has been hurt by corruption allegations against a congressional candidate from his coalition. He splits the anti-Fernández vote with Sergio Massa, a feisty Peronist who left FPV and is third in the polls. If Mr Macri can force a second round, to be held on November 22nd, he might beat Mr Scioli by picking up Mr Massa’s votes. Poliarquía, a polling group, puts support for Mr Scioli in a run-off at 49%, with Mr Macri at 45%.

Whoever wins will have to disappoint voters. To restore competitiveness and open production bottlenecks the next president will have to allow the peso to depreciate and lift restrictions on exports and imports. The gap between the official value of the peso and the “blue-dollar” (ie, free-market) rate has widened to around 70%. Subsidies will have to be cut to narrow the budget deficit, expected to be about 6% of GDP this year (see chart). The central bank is likely to raise interest rates to force down inflation. That may trigger a recession. To have any hope of attracting international capital Argentina will have to strike a deal with its hated creditors.

Mr Scioli hopes that both kirchneristas and their foes will see in him what they want to see. The country can solve its economic problems with “no [fiscal] adjustment, no mega-devaluation and no [economic] shrinkage,” he told The Economist. Any measures will be “gradual”. An inflow of dollars will keep the peso strong. “There will be joy,” he promises.

Mr Macri is more market-minded than Mr Scioli and does admit that the peso will have to devalue. But he also downplays the hardship to come. That said, the front-runners have more in common with each other than they do with Ms Fernández. They are less confrontational and have gathered impressive teams of advisers to whom they listen and delegate. Each is eager to repair Argentina’s strained relations with the United States. Both want to attract investment, relax trade controls and resolve the debt standoff.

What distinguishes Mr Macri most is his determination to break with the Peronist practice of aggrandising presidential power at the expense of other institutions. Ms Fernández enfeebled Congress, the central bank and the official statistics agency, which she stopped from reporting bad news. She undermined the independence of the press and had a go at the judiciary. Mr Macri’s advisers say he would build up institutions with the power to check the presidency. He “will do a real shock to recover the institutional credibility of the country very fast,” promises Federico Sturzenegger, a pro-Macri congressman.

The risk, though, is that Mr Macri might not be able to do much of anything. If elected he will lack a majority in both houses of Congress. At most, two of Argentina’s 24 governors will be his allies. His campaign manager, Marcos Peña, insists that he overcame similar hurdles as mayor of Buenos Aires. But managing a rich city is far different from governing a fractious country of 40m. The two non-Peronist presidents since the military dictatorship ended in 1983 were both forced out of office early.

Mr Scioli has a different worry: that Ms Fernández will continue to upstage him after she leaves the presidency in December, especially if the economy runs into trouble. Many congressmen are loyal to her, as is his likely successor as governor of Buenos Aires province, the country’s most populous. Ms Fernández has said little about her plans, but the song that set her dancing may provide a clue: “A thousand years can pass, you will see a lot fall down. But if we stick together, they won’t hold us back.” It did not sound like a farewell.

October 24, 2015

The front-runner promises continuity. The country needs change

FOR eight years Cristina Fernández de Kirchner has beguiled, enraged, entertained and divided Argentines. She is one of Latin America’s most popular presidents, but her combative style has alienated some of her citizens and much of the outside world. Constitutionally unable to run again in Argentina’s general elections, the first round of which takes place on October 25th, she will be succeeded by a duller figure. The two leading candidates to replace her, Daniel Scioli of her Peronist Front for Victory and Mauricio Macri, Buenos Aires’s mayor, have none of her pizzazz. But either would be a great improvement.

True to her Peronist pedigree, Ms Fernández has hoarded power and suppressed dissent. She has bent the central bank to her will, muzzled the government’s statistics institute and bullied the media. She has tried, less successfully, to suborn the independence of the judiciary.

She leaves an economy in even worse shape than it looks. Like other commodity producers, Argentina is suffering from falling prices for its exports. To this, Ms Fernández has added woes of her own making. The government keeps the peso overvalued. It taxes soybeans and other exports, thereby punishing the country’s most competitive producers. It has repelled foreign capital by defaulting on debt and refusing to settle with its creditors. To husband foreign exchange, it restricts imports. Ms Fernández distracted Argentines with lavish spending on welfare and energy subsidies. That trick will not work for much longer. The country is in danger of running out of reserves; the budget deficit this year is likely to be 6% of GDP; inflation is estimated at 25%; and growth is absent.

The next president will need to escape disaster. That will mean letting the peso fall, reducing subsidies and ending the stand-off with creditors. In the short run, the volte face will hurt. Spending cuts, plus higher interest rates to contain inflation, are likely to push the economy into recession. Only as exports pick up and capital flows back will confidence, and growth, gradually return.

All the main presidential candidates would change the economy’s course, though it is hard to tell from their campaigns just how they would go about it. Running as Ms Fernández’s heir, Mr Scioli suggests that he does not need to make abrupt changes. Despite being a speedboat racer in his youth, he wants to change the economy’s course only gradually. Sergio Massa, a Peronist who has fallen out with Ms Fernández and is running third in the polls, is somewhat more forthright about the need for adjustment. But it is Mr Macri, an economic liberal, who comes closest to admitting the scale of the problem. He acknowledges the need for a big devaluation and seems readier than his rivals to remove capital controls.

Choose Macri-economics
That is one reason to prefer Mr Macri to his two Peronist rivals. The other is the prospect that he would undo the damage Ms Fernández has inflicted on Argentina’s politics. His team promises an “institutional shock”, a change of practice that would make the presidency more accountable and strengthen other bodies, including the central bank and the judiciary. That is the sort of change that Argentina needs if its democracy and economy are to mature.

It will not happen under Mr Scioli. His defenders say that he will be better at dealing with Congress, which will be dominated by his allies. The others, they say, will get nothing done. That is a risk. But the risk of obstruction is a bad reason to pick a second-best president. Argentines should choose Mr Macri.

Oct 22, 2015

The Economist meets the front-runner in Argentina’s elections

ON OCTOBER 19th, Daniel Scioli, the governor of Buenos Aires province, who is the front-runner in Argentina’s presidential election, granted an interview to The Economist. The first round of the election is to be held on October 25th.

As he ate pastries, called supporters and smoked a mini-cigar, here’s how he answered The Economist’s questions. The interview is edited and translated from Spanish.

THE ECONOMIST: Before we start, we wanted to thank you for having us here and giving us this interview.
DANIEL SCIOLI: International relations and the international media will always have room in my agenda.

TE: What would the first 100 days of your presidency look like?
DS: Our agenda is one of the development of the country, which includes accelerating everything that has to do with investment, the energy sector, incentivising the repatriation of capital, gradually addressing inflation, competitiveness of regional economies, subsidies. Always prioritising having a strong internal market.

TE: Could you be a bit more specific?
DS: The country is already stable. No shock or comprehensive economic package is needed. What people see in me is a calm, trustworthy person who can successfully carry out an agenda of integration and foment production. We want to produce more in the energy sector and agricultural sector, and do more in science, technology, tourism and sustainable mining. We want normality. Not to mention, the new president will assume office right when the vacation season begins.

TE: So you’re saying things will be tranquil? Historically, December has been quite rife with conflict and wage strikes.
DS: There will be joy about the fact that all is good—peaceful holidays. With a lot of optimism.

TE: You have said that you want to keep the exchange rate regulated. How do you plan to do that?
DS: A responsible administration of the Central Bank. The peso won’t weaken because, as more dollars enter the country, which will happen, there won’t be any problem. Both exchange rates [the official rate and the free-market “blue dollar” rate] will converge.

TE: And where will the dollars come from?
DS: Exports, repatriation of capital, swaps, for example the one with China, accords with Brazil, international credits from the Inter-American Development Bank, World Bank, Latin American Development Bank.

TE: Recently you called the holdout creditors [who refused a debt restructuring plan put forward by Argentina] “vultures”. Does this mean we can expect you to follow the same hard line with them that Cristina Fernández de Kirchner [the current president] has?

DS: Everyone calls distressed investment funds that. Argentina has the will and the capacity to pay. But we want to do it in just and equitable conditions. And conditions that are sustainable for the country. We are not closed, but we also aren’t going to pay what they’re looking for because it’s disproportionate with respect to what we agreed to with the rest of our creditors. The idea is to look for a settlement with the terms that the rest of the creditors agreed to. That is the position that Argentina currently is taking. The problem is there’s another candidate going around saying he wants to pay the holdouts everything they are asking and so they’re waiting eagerly to see who wins the elections. The truth is that it is a speculation that won’t come to fruition. But beyond the holdout issue, Argentina is going to continue growing, continue developing, and it won’t have any problems–either in attracting investments, or dollars—no problems.

TE: What measures do you plan to implement to increase confidence?
DS: I will make decisions that will generate growing interest in Argentina. They will all be reasonable, gradual, inspire investment and create a very good business environment. That’s how I work.

Jorge Telerman, Mr Scioli’s campaign chief: The Economist knows about the conference you participated in with investors the other week. There must have been $15 billion at those tables. And what was the mood?

DS: You mean, did people like me?
JT: Yes, they loved you.

DS: I was the candidate to make the best impression and I went in jeans and sneakers.
TE: What do you plan to do to reduce the fiscal deficit, which is expected to reach 6% of GDP this year?
DS: Seek economic efficiency. Streamline state companies, make sure subsidies are only being granted to those who need them and seek investment. Even Cuba is saying it’s time for economic sustainability. Even Raúl Castro is saying that. We’ll have an efficient environment. There will be no [fiscal] adjustment, no mega-devaluation and no [economic] shrinkage, because that generates social consequences.

TE: Your advisors say you want to lower inflation, which is now 25% and is predicted to rise next year, to a single-digit level in four years.
DS: We’re going to do it before that.

TE: How?
DS: Investment and increasing productivity in the fields of science, technology and logistics.

TE: The other day Ms Fernández said that the “project” must continue…
DS: The project has certain core elements: industrialisation of the country, decreasing the country’s debt burden, recovering YPF [the state owned oil company] and the railroads and implementing social programs.

TE: So you will not continue with all elements of Ms Fernández’s model?
DS: The demands of a society are always evolving.

TE: And Ms Fernández? It is the first time in recent history that an Argentine president is leaving office with such high popularity ratings. What role will she have after her term ends on December 10th?
DS: It’s great that she’s so popular—great for the country and for her. Her political experience should not be underappreciated. I like to consult everyone.

TE: And will she retain power? A lot of people are very loyal to her.
DS: But she’s part of the project. She’s part of our political team. It’s not us and them. We’re all part of the same political project. There have been
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21 octubre, 2015

FRIDAY, October 9th






By Andre F. Radzischewski Special to the Washington Times
Thursday, October 8, 2015

BUENOS AIRES | Charismatic and canny, Pope Francis has forged close ties with global power brokers and is said to have swayed President Obama’s views on tough issues such as Cuba and Syria.

But the pontiff has also found time to meddle in the day-to-day politics of his native Argentina — and may have played a behind-the-scenes role in preventing the premature departure of President Cristina Fernandez, his one-time nemesis.

Following the mysterious death of a prosecutor who had indicted Mrs. Fernandez on conspiracy charges, Francis in January stepped in forcefully to keep the president from being deposed in a “soft coup,” The Washington Times learned from a close personal friend of the pope.

Local magnates had plotted to seize the moment and oust the president after Alberto Nisman was found with a gunshot wound to his head hours before he was due to testify on a supposed top-level cover-up of Iran’s suspected involvement in the 1994 bombing of a Jewish community center in Buenos Aires.

But through calls and intermediaries, Francis persuaded “the right people at the right moment” to let Mrs. Fernandez serve our her second term, set to expire Dec. 10, Gustavo Vera, a Buenos Aires legislator and social activist who maintains a close friendship with the former Cardinal Jorge Bergoglio, said.

Worried that such an ouster might be followed by a large-scale devaluation of Argentina’s currency — a measure that would have disproportionately affected the poor — “Francis intervened strongly so that the constitutional continuity [would] be respected,” he said.

Helping a democratically elected leader finish her term should amount to “common sense for any Argentine,” Vatican protocol official Monsignor Guillermo Karcher, a close Francis confidant, said in an interview from Rome.

Monsignor Karcher would not comment on the specifics of the January incident. But the pope has never shied away from involving himself in local politics, a trait highlighted during last month’s visit to the United States, where he weighed in on hot-button topics from immigration to capital punishment and met with Kim Davis, the controversial Kentucky county clerk briefly jailed for refusing to issue marriage licenses to same-sex couples.

The pope respects secular institutions and does not mean to interfere in the affairs of sovereign nations, Monsignor Karcher said. Still, Francis “does speak out on important topics,” he said. “He does not have prejudice against anybody. He speaks with one [side] and the other,” the Vatican official added when asked about the Davis encounter.

The boldness of his pontificate, though, may be felt strongest in his native Argentina, where Francis is said to have pulled strings in day-to-day politics a number of times, even though he has yet to visit his native land in the 2 years since his surprise selection as pope.

In January, he seemed to back the nomination of a young jurist to the Supreme Court, an effort that eventually failed because of the candidate’s inexperience. Some analysts say Francis may even have led Mrs. Fernandez to anoint Buenos Aires Gov. Daniel Scioli over more radical rivals as her party’s nominee in the Oct. 25 presidential election.

The relationship between pope and president, meanwhile, has been the subject of much speculation. Mrs. Fernandez had been among Cardinal Bergoglio’s harshest critics during his time as Buenos Aires archbishop, but following Francis’ 2013 election, she made a point of forging more cordial ties with the Jesuit pope.

The pontiff has met with her on more than half a dozen occasions, and the 78-year-old has adopted a “merciful” stand toward the leader known for her harsh rhetoric and confrontational style, Mr. Vera said. “I think he has given her a lesson in humanity,” he said.

By Andre F. Radzischewski
Thursday, October 8, 2015

BUENOS AIRES — For the first time in a dozen years, the Kirchner family is set to leave the Casa Rosada — the Argentine version of the White House — but President Cristina Fernandez’s grip on power will likely extend far beyond the vote in two weeks to determine her successor.

Amid accusations of large-scale corruption and opposition charges of widespread electoral fraud, Ms. Fernandez is determined to do whatever is necessary to protect her legacy and, so critics say, the clout she needs to shield herself from prosecution. Anything but a lame duck, the 62-year-old leftist president has refused to cede center stage to Buenos Aires Gov. Daniel Scioli, her own Justicialist Party’s presidential nominee, making an already rough campaign even more complex.

During the past 12 years, Ms. Fernandez and her late husband and predecessor, Nestor Kirchner, have governed the country in a style that critics dub “monarchical,” and they originally intended to alternate in the presidency to circumvent limits on consecutive terms.

Although Mr. Kirchner’s unexpected 2010 death torpedoed that plan, Ms. Fernandez has shrewdly preserved — and extended — the clan’s influence as she went after independent judges and prosecutors, cut federal funds from provinces led by critical governors and stacked government ministries and state-run companies with fierce loyalists.

“They continue to run the country as if they were its owners,” said opposition lawmaker Fernando Iglesias, author the local best-seller “It’s Peronism, Stupid,” referring to the country’s longtime strongman. “I believe the country is worse off than in 2001,” he said recalling the economic crisis that ended in riots and the resignations of two presidents.

A staggering economy, stubbornly high inflation and the mysterious death of a prosecutor, Alberto Nisman, have all led to Ms. Fernandez’s popularity suffering significantly since her 2011 landslide re-election. But many Argentines still back the president’s Peronist wing, and Mr. Scioli, her hand-picked successor, is still favored to take the reins after the Oct. 25 vote.

Mr. Scioli’s main challenger is Buenos Aires Mayor Mauricio Macri, a pro-market onetime businessman who once was seen as a real threat to end the Kirchners’ dominance of Argentine politics with a platform seeking to end the state’s economic interventionist ways. But he has been falling in recent polls, hurt in part by the rise of a third candidate, dissident Peronist Sergio Massa, who claimed over a fifth of the vote in a recent poll.

Under Argentine electoral law, a candidate needs 45 percent of the vote — or 40 percent with no other candidate higher than 30 percent — to win outright in the Oct. 25 election. Otherwise, the top two finishers will compete in a runoff in late November.

With his poll numbers surging, Mr. Scioli has been taking a front-runner’s approach in recent days, even skipping a televised debate in which Mr. Macri and four other candidates participated. A survey by Ricardo Rouvier and Associates Oct. 2 gave the ruling party candidate 41.3 percent to 30.2 percent for Mr. Macri. Mr. Massa was third with 20.6 percent.

Preserving her clout

Political observers say Ms. Fernandez, despite her shaky political standing, has skillfully maneuvered to preserve her clout after she formally steps down Dec. 10.

To avoid an internal struggle among her own political base, Ms. Fernandez in June tapped Mr. Scioli to lead her Front for Victory, even though she never particularly warmed to the governor of the nation’s most populous province — a key electoral district. His coronation thus did not come without a major concession — the incumbent imposed her chief ideologue, Carlos Zannini, as Mr. Scioli’s running mate.

Nor did Ms. Fernandez hesitate to keep in play the possibility of another run for the presidency when term limits no longer keep her from doing so. “I hope that I do not have to return in 2019,” she said earlier this year, “because that means that who comes after me will be better than me.”

Mr. Zannini’s selection, meanwhile, is only part of a multipronged strategy to cement the Kirchner influence beyond the next president’s inauguration, said Daniel Arzadun, a political scientist and author of a book about the family’s role within Peronism.

Ms. Fernandez is enlisting allies in Congress, where her son and potential political heir, Maximo Kirchner, is running for a seat for the first time. Meanwhile, she can count on the Front for Victory’s ultraloyal grass-roots groups to help her maintain control of the Peronist movement — and come out on top in a potential power struggle with a Scioli-led government.

“The Kirchnerist wing will be left out [of government],” Mr. Arzadun said. But traditionally, “the political power in Argentina revolves around Peronism.”

Irritated by Kirchner loyalists’ lackluster commitment to his campaign, Mr. Scioli said last week that he had no intention of being a “transitional president.” If he moves into the Casa Rosada, the former powerboat racer may well take a page out of the family’s own playbook and cut deals with powerful provincial governors to counter the influence of his predecessor.

But Mr. Macri has not been shy about playing on fears that Ms. Kirchner will be the power behind the throne if her anointed successor wins. When Mr. Scioli declined to take part in the debate Sunday, Mr. Macri remarked, “It looks like [the ruling party] is having trouble defining who is going to govern if it wins the presidency.”

Ironically, a victory by Mr. Macri, the outgoing president’s longtime nemesis, might make it easier for Ms. Fernandez to unite Peronists behind her and hold on to power in the long run, Mr. Arzadun said.

Whomever Argentines pick as their next president Oct. 25, the Kirchners are unlikely to stand by idly during the next four years. But the voters’ choice still matters, Mr. Arzadun said.

By Kamilia Lahrichi
9 October 2015

Argentina has a new law for treating children in hospitals that requires doctors to literally send in the clowns.

The groundbreaking law — the first in the world — for Argentina’s largest province, Buenos Aires, was inspired by the “laughter therapy” of U.S. physician Hunter “Patch” Adams and was implemented in August. All public hospitals in the province that have pediatric services are required to work with specially trained clowns.

The project is “complementary medicine to bring joy to sick children in hospitals, their families and the medical and non- medical personnel,” according to the Argentine Senate.

Ezequiel Belsu, 12, was crippled by pain from a pulmonary disease in intensive care at Hospital Piero. He was not moving.

But his eyes suddenly widened and he smiled when three clowns stepped into his room.

“Up until the clowns got in, he felt desperate. It’s the first time he spent so much time away from his home, so it made him feel better,” said the boy’s mother, Rosana Belsu.

The three go by Dr. Lala, Dr. Azul Primavera (blue spring in English) and Dr. Lulo Alegre. Their real names, respectively, are Evelyn Smink, Mara Asuncin Giardina and Miguel Alegre. And they are trained by the organization Puente Clown in Buenos Aires.

Jos Pellucchi, a physician who is director of Payamedicos, an organization of medical clowns, said clowns have been working in more than 150 hospitals in Argentina and Chile since 2002.

The clowns consult with pediatricians to know which patients they can entertain without disturbing them — or being exposed to a disease.

“We do an activity with everyone in the hospital, from the cleaning employees to the security officers and the doctors, to generate well-being in the workplace,” said Gustavo Iribarne, another Puente Clown professional.

The doctors believe the clowns benefit the patients.

“The fact that someone comes in with a white medical coat and a red nose saying the same things (as a doctor) but with a distinct language changes everything,” said Daniel Rivero, head of pediatrics at Hospital Piero.

“Health issues are not just related to our body. Determining factors include and human contact, which can change how our body works,” he said.

Clowns are important because “the hospital’s environment is very strict with white doors and aggressive people who put needles in children’s veins, tell them bad news and make them swallow awful medicine,” he added.

To build a bridge, clowns give patients in neighboring rooms each end of a rope. The clowns then relay jokes and messages between rooms.

This way, Ezequiel can communicate with his hospital neighbor, 12-year-old Sofia Benites from Paraguay who had her appendix removed.

With some patients, the clowns know that laughter isn’t always the best medicine.

“We don’t necessarily want to make people laugh. Although laughter is always curative, we want people to reconnect with their childhood’s world, dreams and fantasies,” Smink said.

By Charlie Devereux and Charlie Devereux
October 8, 2015

*Scioli adviser says candidate will resolve debt dispute sooner
*Bonds have soared on bets the next president will end default

Bond investors have long believed Mauricio Macri to be the presidential candidate in Argentina who will make ending the nation’s decade-long legal dispute with creditors a priority. With the election just three weeks away, they may want to reconsider.

Macri, the leading opposition contender, is pledging to restore Argentina’s finances by jettisoning currency controls and cutting subsidies that have swelled the budget deficit to a 14-year high. According to Macri’s own adviser, Federico Sturzenegger, those priorities will make striking a deal with hedge-fund foes led by Paul Singer’s Elliott Management less urgent.

By contrast, Daniel Scioli, the front-runner in polls, will seek to finance the deficit by regaining access to overseas debt markets, rather than making wholesale changes to many of the policies implemented by President Cristina Fernandez de Kirchner, according to former central bank Governor Mario Blejer, a Scioli adviser. That will make reaching an accord with the likes of Singer a priority.

Fernandez’s refusal to abide by a U.S. court ruling requiring Argentina to repay disgruntled creditors led to the nation’s second default in 13 years.

“He’ll be forced to negotiate sooner,” Luis Caputo, the president of Axis Inversiones, a money manager that owns Argentina debt, said from Buenos Aires. “This is more about logic than ideology.”

Argentina hasn’t sold debt under international law since it defaulted on a record $95 billion in 2001. Creditors including Singer rejected the government’s debt restructuring deals in 2005 and 2010 and won the right to full repayment in U.S. courts.

‘Social Constraints’

U.S. District Judge Thomas Griesa has blocked the country from honoring its foreign debt until the government reaches a settlement with the so-called holdouts. Fernandez calls the investors “vultures” and has refused to comply with the ruling, triggering another default in 2014.

Scioli and Macri have both indicated they’d hold talks to end the debt dispute. That’s helped spark a 19 percent gain in Argentina’s foreign bonds in the past year, the biggest in emerging markets, according to data compiled by JPMorgan Chase & Co. Government notes due 2033 which fell into default last year are trading at 102.33 cents on the dollar.

The winner of the Oct. 25 election will inherit a budget deficit of about 7 percent and foreign reserves hovering near a nine-year low.

“Scioli believes that you cannot fully correct the deficit given the political, social, economic and financial constraints,” Blejer, who is now vice president of Banco Hipotecario, said in an interview at his office in Buenos Aires. “This makes it extremely important to solve the problem of the holdouts because if you can’t close the deficit quick, you need to finance it in a way that is not damaging.”

‘Negotiate Firmly’

Scioli said Wednesday that the conflict with creditors has held Argentina back from progressing. Jorge Telerman, Scioli’s campaign manager, didn’t respond to an e-mail seeking comment.

“We’re going to have the willingness to negotiate firmly, with tenacity and open to, in fair and equal terms, finalizing something that has conditioned Argentina,” Scioli said at an event with business executives in Buenos Aires.

Macri is betting that his victory will stoke foreign investment in Argentina, which would help boost the country’s reserves, Sturzenegger, who’s a member of Congress, said in an interview at Bloomberg’s offices in Buenos Aires. By reforming Argentina’s institutions and reducing the risk of investing in the country, Macri can help state-run companies such as oil company YPF SA obtain lower borrowing costs, he said.

Lower Incentive

The oil and gas producer, seized from Repsol SA by Fernandez in April 2012, saw yields on its $1.5 billion of notes due 2025 climb to a record 10.77 percent last month before falling to 9.65 percent Wednesday.

The government’s foreign-exchange controls have also spawned myriad illegal currency as Argentines favor dollars in a country where inflation exceeds 25 percent.

“If Macri does his institutional shock, unifies the exchange-rate market, the yield of YPF bonds comes down from 11 percent to 5 percent,” Sturzenegger said. “Then the incentive as a government to solve the holdouts problem is lower because you have financial means of your own.”

Ivan Pavlovsky, Macri’s spokesman, didn’t return a voicemail seeking comment on what Sturzenegger said about creditor negotiations.

Stephen Spruiell, a spokesman at Elliott Management, declined to comment.

To Jefferies Group LLC’s Siobhan Morden, Scioli would have to do more than just end the debt impasse for Argentina to regain access to overseas credit markets. The country will still find it hard to get financing as long as it’s dependent on commodity revenue and refuses to devalue the peso, she said.

“Debt issuance alone is not a strategy,” Morden, the head of Latin America fixed income strategy at Jefferies, said in an e-mail.

By Juan Carlos Hidalgo
October 8, 2015

One of the most controversial and radical moves implemented during the populist rule of Cristina Fernández de Kirchner in Argentina was the nationalization of private pension funds in 2008.

Not only did the government seize $29.3 billion in pension savings but, since the private pension funds owned stock in a multitude of companies, the government also seized that stock and used it to appoint cronies to their boards. This significantly increased the government’s control over the private sector.

Even though none of the opposition candidates has proposed peddling back the nationalization of the pension funds, the Kirchner administration is taking no chances. This week the government enacted a law that makes it extremely difficult for future administrations to sell the stock: from now on it will require a two-thirds majority vote in both chambers of Congress. Since kirchnerismo will likely remain a significant political force in Congress in the foreseeable future, it will enjoy a veto power over any future sale of the stock regardless of who wins the presidential election in late October.

Tellingly, the Argentine government has also drafted legislation that would limit the extraordinary executive powers that the presidency has accumulated since the Kirchner couple came to power in 2003 (Cristina was preceded by her husband Nestor). But don’t count on Cristina discovering her inner Montesquieu. The Kirchner administration has signaled that the bill would be approved only if an opposition candidate wins the election.

Thus, even though Cristina might have only few more months in power, much of her economic model will live on.

TUESDAY, October 13th









By Peter Prengaman
October 12, 2015

BUENOS AIRES, Argentina — Like a dark cloud, the bitter fight between Argentina and a group of holdout creditors in the U.S. has hung over South America’s second largest economy for years, preventing the country from accessing international credit markets.

The dispute pits creditors led by U.S. billionaire Paul Singer against Argentine President Cristina Fernandez, who has refused to pay the $1.5 billion owed to hedge funds she refers to as “vultures.” A U.S. district judge’s rulings in favor of the hedge funds have put Argentina in default, scaring off would­be investors and forcing the country to search for money in unorthodox places.

For Fernandez, who along with her late husband and predecessor Nestor Kirchner helped lead the country after a devastating financial crash in 2001, the issue has been a deeply personal fight and she has taken a tough approach, including a refusal to even engage in talks over the last year.

But many people think her successor being chosen in the Oct. 25 presidential election will feel compelled to resolve the standoff.

“There are big incentives for the next president to resolve this because the government needs foreign funding,” said.

Gabriel Torres, a senior credit officer for Moody’s Investor Services in New York. “For years, it’s been clear that deep down the current administration didn’t care about this.”

A cash crunch would be the biggest prod for clearing up the conflict, analysts say. Argentina has about $27 billion in foreign reserves, relatively low for such a large economy in which the government offers generous subsidies.

The governing party’s presidential candidate, Daniel Scioli, governor of Buenos Aires province who leads in the polls, has taken up Fernandez’s hard line, yet he is also promising to find a solution. Economists on his team have made clear that Argentina will have problems raising money until the dispute is settled. His main opponent, outgoing Buenos Aires Mayor Mauricio Macri, has vowed to negotiate a resolution.

While the candidates remain vague, there are several ways the spat could be resolved. As part of a deal, Argentina could get loans on preferential terms to pay creditors off in lump sums. The country could also simply reissue the debt with new bonds at higher rates.

Still, many Argentines believe the country has been unfairly picked on, which means candidates have to talk tough when it comes to the holdouts, notes Roberto Bacman, director of the South American research firm Center for Public Opinion Studies.

The dispute goes back to Argentina’s $100 billion default on its debts in late 2001. In 2005, and then again in 2010, most of the country’s creditors accepted lower­yield bond swaps. But a group led by Elliot Management refused and sued Argentina in New York federal court. Elliot officials declined to comment on the conflict.

A familiar pattern has subsequently emerged: U.S. District Judge Thomas P. Griesa rules against Argentina, often raising the stakes, such as recently opening the door for Argentine assets in the U.S. to be seized. Economy Minister Axel Kiciloff accuses Griesa of overstepping, and Argentina ignores the rulings.

Largely cut off from international loans, Argentina has turned to countries such as China for backdoor ways to get desperately needed financing. In the last two years, Argentina has signed several agreements with the Asian powerhouse, including multibillion­dollar infrastructure projects and a currency swap.

Fernandez has touted the deals, but the terms have never been made public, and analysts have little doubt China exacts a price far more than the roughly 3 percent interest rate currently available in international loan markets.

“It’s the equivalent of somebody going for a payday loan,” said Brett House, a former IMF economist who is chief economist at Alignvest Investment Management, a Toronto­based investment firm. “Argentina is mortgaging the future” with such deals.

From the outside, the solution seems obvious: negotiate a deal and move beyond the stalemate. But inside Argentina, a country rich in natural resources with a long history of booms and spectacular busts, it’s a political land mine.

Macri learned that the hard way. In June 2014, long before becoming a presidential candidate, he said: “We must go, sit down with Judge Griesa and do what he says.”

Macri was roundly criticized, and now rarely talks about the matter on the campaign trail. When he does, he promises to be a tough negotiator who will not simply pay an “unjustified” sum.

There are other considerations, such as the “me, too” holders of about $5.4 billion in defaulted debt, a second group that has taken Argentina to court. In June, Griesa ruled Argentina also must pay them before paying its majority creditors, a decision that an appeals court threw out in August. Still, they and other holdout creditors will probably have to be included in an eventual deal.

Torres, at Moody’s Investor Services, says that Argentina’s outstanding debt is relatively small for an economy estimated at $600 billion and that the country is capable of paying it. Until it’s paid off, Argentina won’t be able to get loans on good terms and will struggle to attract foreign investors.

“Reaching an agreement with the holdouts has some costs, but not doing so has huge costs,” Torres said.

By Clyde Haberman
October 11, 2015

Grandmothers, an old saying goes, are angels in training. If so, one contingent that has had a great deal of practice can be found in Argentina.

The chief pursuit of these women is more temporal than celestial. With focused anger, they have spent more than three decades seeking to unravel and, when possible, correct one of the more shocking human rights outrages of modern times.

This installment of Retro Report, a series of video documentaries chronicling major news stories of the past and their abiding consequences, delves into the theft of babies by the military junta that ruthlessly ruled Argentina from 1976 to 1983. Those were the years of the dirty war, as it was called. Thousands upon thousands of Argentines — at least 10,000 and possibly as many as 30,000, according to some human rights groups — became los desaparecidos, the disappeared. “Desaparecido” was a word that politically attuned people around the world came to recognize instantly, even if they spoke almost no Spanish.

Men and women whom the junta deemed leftist subversives were abducted by death squads, most never to be seen again. They were routinely tortured in secret detention centers and then murdered, their bodies cremated or buried in mass graves or dropped from airplanes into the Atlantic Ocean. The junta described its victims as terrorists, but its definition was, to put it mildly, expansive. “One becomes a terrorist not only by killing with a weapon or setting a bomb, but also by encouraging others through ideas that go against our Western and Christian civilization,” the junta’s leader, Jorge Rafael Videla, said in 1977. He died two years ago in a Buenos Aires prison, where he had been serving a life sentence for crimes against humanity.

The junta’s brutality had a twist: Some of the kidnapped women were pregnant. A few had small children. The pregnant captives were kept alive only long enough to give birth. Then, as described in a 2004 article in the Harvard Women’s Law Journal, the junta embarked on “an unprecedented and systematic plan to steal and sell the babies of its victims.” The mothers were killed. Many fathers were, too. And the babies — about 500 of them, in a widely accepted estimate — were handed or sold to military families and to others considered “politically acceptable.” Birth certificates were falsified. The infants’ true identities were effectively erased. In some instances, they went to the very people who had killed their parents.

As this nightmare unfolded, two Argentine rights groups came into being in 1977: Las Madres de Plaza de Mayo and Las Abuelas de Plaza de Mayo, the mothers and the grandmothers of a central square in Buenos Aires. Every Thursday, they marched in silent protest around the plaza. The mothers sought to learn the fates of their dead children, the grandmothers the whereabouts of their stolen grandchildren, known as los desaparecidos con vida, the living disappeared.

Not everyone was even aware at first that a grandchild existed. One such abuela was Estela Barnes de Carlotto, a school principal. She knew that the eldest of her four children, Laura, had disappeared toward the end of 1977. Only later did she learn that her politically active daughter had been pregnant. Laura was murdered after giving birth to a boy in June 1978. Still later, Ms. de Carlotto found out that the baby’s father was another activist, Walmir Montoya. He, too, was killed, and his remains were not identified until 2009.

Ms. de Carlotto, who turns 85 on Oct. 22, joined Las Abuelas in 1979 and became its president 10 years later. Her story is central to the Retro Report video. Identifying and finding missing grandchildren turned into her life’s mission, with every success representing one more blow against the murderous junta. “Each case,” she has said in interviews, “is a triumph of truth over lies, horrors and deceit.”

Yet as stolen babies were tracked down one by one, 113 of them by May 2014, the search for her own grandchild proved futile. Then, suddenly, in the summer of 2014, there was a turnaround. Genetic testing proved conclusively that a musician, Ignacio Hurban, was Laura’s child. Given Ms. de Carlotto’s national prominence, the discovery was a triumph that resonated emotionally across Argentina.

Mr. Hurban had long wondered if he was truly the biological son of the couple who reared him from infancy, farmers who had received him in 1978 from a powerful landowner with ties to the junta. He did not seem like them at all, either in appearance or in cultural interests. A year ago, on his 36th birthday, he learned that he had in fact been adopted. Wondering if he might be one of the living disappeared, he had a blood test. After the results confirmed his parentage, making him the 114th grandchild to be identified, he changed his name to Ignacio Montoya Carlotto. Since then, three more such identifications have been made, bringing the total to 117.

Forensic genetics, the key to discovering many of the lost grandchildren, has proved an indispensable human rights tool. Advances in DNA analysis make it possible to match a person with his or her biological grandparent; that has been happening in Argentina since 1984. In 1987, the National Bank of Genetic Data was created there, the first of its kind in the world, and it now stores several hundred family profiles. Roughly 10,000 young adults (babies snatched during the dirty war are typically now in their mid- to late 30s) have had themselves tested for possible matches. In that manner, dozens of them have found their biological grandparents.

In part because of the Argentine experience, international accords now recognize certain fundamental human rights. The Convention on the Rights of the Child, approved by the United Nations General Assembly in 1989, asserts that nations must “respect the right of the child to preserve his or her identity,” a requirement that extends to one’s name and family relationships. In 2006, the General Assembly affirmed that a “forced disappearance” that is part of a systematic attack on a civilian population qualifies as a crime against humanity.

The identification of abducted Argentine babies has not been without pain. Some children, on discovering their true identities, have resisted leaving the only parents they know. Also, some adoptive parents have been criminally charged, with the couple who reared Mr. Montoya Carlotto now also facing that risk. His newly found grandmother, focusing on such couples in general, told Retro Report, “Without exception, they have to be brought to justice.”

Then again, some grandchildren are comforted to learn that they were not abandoned by their biological parents, as they long believed. “Initially, most victims experienced psychological shock when their true identity was revealed,” Dr. Victor B. Penchaszadeh, a once-exiled Argentine geneticist who returned home several years ago, wrote this year in The Journal of Community Genetics. But in time, Dr. Penchaszadeh said, “knowledge of the truth, painful as it was, was emotionally liberating from the perversity, lies, concealment and violence that in many cases had surrounded their rearing.”

Ms. de Carlotto vowed to continue the search for those still missing and “for truth and justice.” She will do this, she said, “while I have life in me.” But she is well aware that the clock is ticking. Grandmothers may be angels in training. But unlike celestial messengers, they are not immortal.

October 10, 2015

The Trans-Pacific trade agreement signed last week between the United States and 11 other Pacific Rim countries will be another nail in the coffin of the populist governments of Brazil, Argentina, Venezuela and other countries that will be left even more isolated from the global economy — and poorer — than before.

Once ratified by the countries that signed it, the agreement — officially known as Trans Pacific Partnership (TPP) and heralded as the biggest trade deal in history — is expected to cover 40 percent of the world economy. It’s likely to be a major boost to trade and investments among the United States, Japan, Australia, Singapore, Canada, Mexico, Peru, Chile and the remaining Pacific Basin signatory countries.

But what has gone almost unnoticed is that it will further isolate the struggling economies of Brazil, Argentina, Venezuela and other countries on Latin America’s Atlantic coast, whose disastrous populist governments have refused to enter free trade deals with the world’s biggest economies.

And what’s even sadder, this is not even a major topic of discussion in Brazil, Argentina or Venezuela, whose leaders live in an ideological bubble, oblivious to the fact that the commodity price boom their countries benefited from in recent years was a stroke of luck that is not likely to be repeated anytime soon.

While their governments pretend that everything is fine, Brazil, Argentina and Venezuela are facing an economic tsunami that may worsen their current crises.

At last week’s annual meeting of the International Monetary Fund and the World Bank in Lima, Peru, the IMF projected that Venezuela’s economy will contract a whopping 10 percent this year, and that the country will suffer a 200 percent inflation rate this year, the world’s highest. Brazil’s economy will contract by 3 percent, and Argentina’s will remain flat at 0.4 percent this year, and contract by 0.7 percent next year, the IMF said.

These populist governments, which are already weakened by corruption scandals, face bad news everywhere: China’s economy is slowing, world commodity prices have plummeted, nervous investors are fleeing from emerging countries, the U.S. dollar is gaining strength while their currencies get weaker, and the U.S. Federal Reserve may soon raise interest rates, which will make it more expensive for developing countries to borrow abroad and pay their debts.

And now comes the Trans-Pacific deal, which will make international companies more likely to open up manufacturing plants in Latin America’s TPP-member countries than in non-member ones. Whereas investing in any TPP member country will alllow multinational corporations to export duty-free to the entire TPP market accounting for 40 percent of the world economy, investing in non-TPP members such as Argentina, Brazil or Venezuela will only allow them to export duty free to their Mercosur economic bloc, which accounts for only 5 percent of the world economy.

In addition, the Trans Pacific deal will allow member countries to export to one another under common regulations. By comparison, non-members will have to adapt their exports to the individual import regulations of each of the 12 TPP member countries.

All of this will lead to a formal partition of Latin America. There will be a Pacific bloc led by TPP member countries that will be linked to the world’s biggest trading bloc, and an Atlantic bloc led by Brazil, Argentina and Venezuela that will be linked to an economically troubled China. The division, which has already existed de facto, will now become official.

My opinion: South America’s populist cycle may soon come to an end in several countries, as a result of new economic realities. Whether they like it or not, Brazil, Argentina, Venezuela and their ideological allies will have to desperately seek investments to face the perfect economic storm that is heading toward them.

The Trans-Pacific agreement is just the latest reason why they should leave behind their unsustainable demagogic isolationist models, and seek new trade and investment agreements with the biggest world blocs as fast as they can.

By Walter Bianchi
Oct 11, 2015

The Argentinian ruling party’s candidate Daniel Scioli maintains a commanding lead in the presidential race but still lacks enough voter support to win outright in the first round, a poll by the Poliarquia consultancy showed on Sunday.

Scioli, a moderate Peronist from President Cristina Fernandez’s Front for Victory Party, has support from 37.1 percent of those who have decided how they are going to vote, according to the poll published in the daily La Nacion.

His nearest rival Mauricio Macri, the center-right mayor of Buenos Aires city, trails with 26.2 percent, while Sergio Massa, who defected from the ruling party in 2013, has 20.1 percent ahead of the Oct. 25 ballot.

Scioli owes much of his support base to Fernandez loyalists. While he has made new investment a pillar of his campaign platform he has given little away on how far he would unwind state controls in the economy.

That has limited his appeal to voters weary of capital controls, import restrictions, rampant inflation. Some polls show a united opposition would win a second round.

Macri promises swift reforms to open up markets in Latin America’s third biggest economy but many voters worry he would return Argentina to the neo-liberal policies of the 1990s that led to a devastating economic depression.

To win outright in the first round a candidate requires 45 percent of valid votes or 40 percent and a 10-point lead over their nearest rival.

“Scioli is near the 40 percent threshold but there is no certainty he will reach it,” said Eduardo Fidanza, director of Poliarquia.

The pollster said that if undecided votes were taken into account Scioli would poll between 38.5 and 41 percent, Macri between 27.5 and 30 percent and Massa 21 to 23.5 percent.

The poll was carried out from Oct. 2-7 and surveyed 1,838 people across the country.

By Charles Newbery
12 Oct 2015

Argentina’s state-run energy company YPF plans to ramp up unconventional natural gas production to help close the nation’s supply deficit and expand petrochemical output.

“Fifteen percent of our gas production comes from tight and shale,” CEO Miguel Galuccio said late Thursday at the Argentina Oil & Gas Expo in Buenos Aires. “We have a goal of getting 50% of our gas production from these formations by 2020.”

YPF is producing gas from tight plays like Lajas and Mulichinco, as well as from Vaca Muerta, one of the world’s most promising shale plays that has attracted the attention of majors like Chevron, ExxonMobil and Shell.

Argentina has 802 Tcf of shale gas resources, far more than its 12 Tcf of proved conventional reserves, according to the US Energy Information Administration.

There is room to meet domestic demand, given that the country is running a deficit in gas, which meets 50% of national energy demand.

Gas production has dropped by about 20% to 118 million cu m/d over the past decade, led by maturing output from conventional reserves.

This has left slack capacity on pipelines that can be filled without much infrastructure investment.

Galuccio said another incentive is that the government is subsidizing gas prices from new developments to encourage exploration and production. Producers get $7.50/MMBtu at the wellhead for such new output, more than a $4/MMBtu average for conventional production.

As the country pays about $7.50/MMBtu or more for imported gas in its liquefied form, there is an incentive to close the deficit with local production, he said, more so if global gas prices rise in the future.


With more gas supplies, YPF wants to expand its petrochemical production.

“There is an important opportunity to create a regional hub for petrochemical production in Argentina,” led by polyethylene, polypropylene and other polyolefins and derivatives, Galuccio said.

“This will make it possible to replace imports and become a net exporter of petrochemicals,” he said.

In August, YPF announced plans to buy stakes in two polymer producers in Argentina for $122 million by the end of 2015. The assets include an 180,000 mt/year polypropylene plant and another with 130,000 mt/year of capacity.

Galuccio said the petrochemical output will add between $1/MMBtu and $2/MMBtu to the revenue the company makes on its gas production.

With this additional revenue, YPF could widen its exploration and production to riskier locations that it can’t develop now because gas prices are not high enough, he said.

YPF produces 45 million cu m/d of gas, more than a third of national output.

9 Oct
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21 octubre, 2015

PBS News Hour Runs NYTimes Video History on Grandmothers of the Plaza

How the children of Argentina’s ‘disappeared’ are being reunited with their birth families
October 19, 2015 at 6:20 PM EDTDuring Argentina’s military dictatorship, as many as 30,000 people simply “disappeared,” including some young, pregnant women, whose babies were then given to couples deemed sympathetic to the regime. What happened to those children, who are now adults? Retro Report, distributed by The New York Times, offers a look at efforts by desperate grandparents to find their family members.

JUDY WOODRUFF: During the military dictatorship in Argentina, from 1976 to 1983, as many as 30,000 people simply disappeared. Some of those were young pregnant women. An estimated 500 of their babies were then given to couples who were often deemed sympathetic to the regime.

What happened to those women and their babies is explored by the documentary project Retro Report and distributed by The New York Times. We’re partnering with them to bring you a version of this piece here.

MAN: A three-man military junta has taken over the government of Argentina.
NARRATOR: The coup began in the early morning hours of March 24, 1976.
MAN: The action was swift and efficient, and the new ruling junta composed of coup leaders seemed in firm control.
NARRATOR: It wasn’t long before the military dictatorship started rounding up guerrilla groups and those believed to be left-wing subversives.
Housewife and school principal Estela de Carlotto was 47 years old back in November of 1977 when her 22-year-old daughter, Laura, disappeared.
ESTELA DE CARLOTTO, Mother of “Disappeared Child” (through interpreter): She was the first of my four children. Laura was a very respectful girl, but with a strong personality. She became politically active because she wanted change.
NARRATOR: Carlotto says she was frantic to find out what had had happened to her daughter.
ESTELA DE CARLOTTO (through interpreter): At that time I was the same as other mothers, very naive. We didn’t know that the military were coming to kill people. We were expecting the return of our children.
NARRATOR: But it wasn’t to be. Carlotto would never hear from her daughter Laura again.
In August of 1978, she was killed by her captors. Although devastated, Estela de Carlotto was one of the more fortunate ones. She was given her daughter’s body to bury. It was two years later that she learned something she had suspected: Laura had been pregnant and given birth to a son before she was murdered.
ESTELA DE CARLOTTO (through interpreter): I buried Laura. I knew where Laura was. But I didn’t know where my grandson was.
NARRATOR: Not long after, she joined the grandmothers, or abuelas, of the Plaza de Mayo.
ESTELA DE CARLOTTO (through interpreter): Being on my own was dangerous. I couldn’t share my sorrow. So, to find the grandmothers was to find company, to exchange ideas and to look after one another.
NARRATOR: The dictatorship lasted seven years. During that time, as many as 30,000 people were tortured and killed at detention camps all over the country. Many of the victims were buried in mass graves.
After the regime fell, the grandmothers were desperate to not only find out what had happened to their children, but to also recover their grandchildren, who had been stolen at birth.
ESTELA DE CARLOTTO (through interpreter): In the beginning, we were searching, but we didn’t have a way to prove which were our grandchildren.
NARRATOR: So they turned to science. And, in 1987, they began storing their profiles in a newly created national genetic bank. By May of 2014, Estela de Carlotto and the grandmothers had found or identified 113 missing grandchildren.
And, at the age of 83, her determination seemed stronger than ever.
ESTELA DE CARLOTTO (through interpreter): I will never stop doing what I do, because there is inside a very powerful strength that is love, love for our children and grandchildren.
IGNACIO HURBAN, Adoptee (through interpreter): I first heard of grandmothers and of Estela de Carlotto when I graduated from secondary school and went to study in a music conservatory.
NARRATOR: Ignacio Hurban was born in June of 1978, at the height of the dictatorship. His parents were farmers near the city Olavarria, some 220 miles from Buenos Aires. On his 36th birthday in 2014, Ignacio found out that he had been adopted.
IGNACIO HURBAN (through interpreter): It was a shock, yes. The parents who raised me didn’t tell me. When I asked them, they confirmed what I had been told.
NARRATOR: Not long after his discovery, Ignacio went to the grandmothers, who arranged for a blood test. In August of 2014, just days after taking the test, Ignacio got the results from the head of the commission.
IGNACIO HURBAN (through interpreter): She told me whose grandchild I was and that my grandmother was waiting for me, very excited. We met immediately, the next day.
ESTELA DE CARLOTTO (through interpreter): Given his good nature and nice character, he said, in jest, of course, “If I’m a grandson of the grandmothers, I hope Estela is my grandmother.” He seemed to have sensed it.
NARRATOR: Yuki Goni is an author and journalist.
YUKI GONI, Journalist: The country came together, I think, in this huge cry of joy. I went to the press conference where she appeared publicly with him for the first time, and there’s a room packed full of journalists all in tears, myself included, because she represented so much for us.
I mean, she had been so brave. She had put so much of herself at stake. And, finally, she had her reward.
NARRATOR: But it also meant something else: Her grandson’s adoptive parents would face a legal investigation.
ESTELA DE CARLOTTO (through interpreter): The people who raised my grandson committed a crime. It’s a serious crime, a crime against humanity. There are extenuating circumstances, in that they were farm people under a very domineering master, who one day brought them a child and told them, do not ask questions and never tell him he is not your own son.
I personally do not blame them or exonerate them. That is in the hands of the justice system.
NARRATOR: Ignacio Hurban is now Ignacio Montoya Carlotto. Although he has changed his name, he says his bond with the parents who raised him remains strong, and he is proud to be the 114th grandchild identified.
At the age of 84, Estela de Carlotto shows no sign of slowing down, taking her message and now her grandson around the world.
IGNACIO HURBAN (through interpreter): There is my public life with my grandmother and my private and emotional life with her, a life we’re building. In that sense, it’s just a grandchild and a grandmother.
ESTELA DE CARLOTTO (through interpreter): When I met my grandson, I could hug him. He doesn’t look like his mother, but I knew that in his blood was my daughter Laura. And it was like I got her back.
JUDY WOODRUFF: You can watch the full documentary by Retro Report, “The Disappeared,” on The New York Times Web site. That’s








19 October 2015

BUENOS AIRES, Oct 19 (Reuters) – Argentina’s peso weakened to a record low 16.10 per U.S. dollar on the black market on Monday, currency traders said, as investors and speculators bet on a devaluation after a new government takes office in December.

The peso has tumbled more than 21 percent on the black market since early June, weighed down by uncertainty over how the next president would deal with capital controls. Argentines go to the polls on Sunday.

“No one doubts that we will see a devaluation,” said one market trader who declined to be identified because he is not authorized to talk to media. “The question is when.”

The peso traded officially at 9.4950 on Monday, leaving a 70 percent margin between the official rate which is tightly controlled by the central bank and the black market. The wide margin suggests the official rate is over-valued.

Daniel Scioli, the candidate for the ruling Front for Victory party, talks of gradual monetary reforms and says shock measures like devaluation are not the solution to structural imbalances in the economy.

Scioli’s main rival, business-favorite Mauricio Macri, promises to begin lifting capital controls on his first day in office and to allow the peso to float freely. That has been widely interpreted by many Argentines as shock therapy.

Argentina’s next president will inherit a sovereign debt default, precariously low net foreign reserves, double-digit inflation and a widening fiscal deficit.

By Carolina Millan
October 19, 2015

* Currency weakens to 16.11 per dollar in street markets

* Argentines seek protection in dollar ahead of elections

Argentina’s peso fell to a record in unofficial street markets as demand for safe-haven assets increased before presidential elections this weekend that are expected to bring changes to the country’s monetary policy.

The currency weakened 1.1 percent to 16.11 per dollar in the black market, where Argentines go to avoid controls that limit their ability to buy pesos at the official rate, according to That surpassed a previous record low of 16.06 on Sept. 25.

Argentina’s official peso trades in a market that’s tightly controlled by the central bank, which has intervened to limit declines since President Cristina Fernandez de Kirchner’s government devalued the currency in January 2014. Demand for dollars has increased over the past few weeks as Argentines wager that the next government is likely to allow the peso to fall further, according to Ezequiel Aguirre, a strategist at Bank of America Corp.

“As the elections get closer and closer, people see the possibility of a currency adjustment approaching and seek refuge by buying black-market dollars,” Aguirre said from New York.
Front-runner Daniel Scioli has said he would make “gradual” changes to monetary policy if elected. Leading opposition candidate Mauricio Macri has pledged to allow the country’s exchange rate to float freely starting from his first day in office.

The peso weakened 0.1 percent Monday in the official market to 9.4951 per dollar. It has declined 11 percent this year, compared with a 19 percent drop for the Colombian peso and a 32 percent tumble for Brazil’s real.

By Charlie Devereux
October 19, 2015

* Ruling party’s Scioli needs at least 40% on Oct. 25 to win

* A second round against runner-up would be held Nov. 22

Argentina’s ruling party candidate Daniel Scioli is within a fraction of winning in the first round of presidential elections to be held Oct. 25, polls show.

An average of four polls viewed by Bloomberg show Scioli close to surpassing the necessary threshold of 40 percent with a 10 percentage point lead needed to avoid the first run-off in Argentina’s history.

Poll of polls

Poll of polls

While Scioli enjoys a comfortable lead, surveys also show the opposition would pose a bigger challenge in an eventual second round on Nov. 22. Some polls show Mauricio Macri, who has an average of 28.8 percent of intended votes for the first round, would close the gap to within the margin of error, while at least two polls show that dissident Peronist Sergio Massa would defeat Scioli.

After results took almost 12 hours to be confirmed in August’s primary elections, the electoral authority has said it will transport ballots from Buenos Aires province, which makes up about 40 percent of the electorate, as they come in to speed up the counting process. Still, if there are calls for a recount, it may take a week before the country knows whether there will be a second round, according to the electoral council.

Argentina’s Cristina Fernandez de Kirchner will hand over the presidency on Dec. 10 after two consecutive terms in office.

By Nathaniel Parish Flannery
October 19, 2015

Argentina is one of Latin America’s most confounding economies. It is a country with stately, European style cities such as Buenos Aires and Cordoba and an export base that remains trapped in the nineteenth century. It has been said that in Latin America, Argentina is turning into Venezuela and Venezuela is turning into Zimbabwe. Argentina has many positive attributes but it remains a very challenging market for investors. While Argentina remains an important market for companies such as Ford and GM and has experienced rapid growth in e-commerce, Argentina has missed out on a lot of the positive economic trends under way in other parts of Latin America. Because of the country’s complex political and economic problems, Argentina’s large market of credit-card holding online shoppers hasn’t attracted much attention from Amazon, Home Depot, and Wal-Mart, companies that are investing heavily in Mexico. To get a sense of what trends are worth following as Argentine voters go to the polls on October 25 I reached out to Carl Meacham, the director of the Americas program at the Center for Strategic and International Studies (CSIS), a bipartisan Washington D.C.-based think tank.

Nathaniel Parish Flannery: What trends are underway in Argentina as the country approaches its October 25 election?

Carl Meacham: Since President Cristina Fernández de Kirchner took office in 2007, Argentina’s policies have shifted far to the left and the ripple effects have not been great. The state has expanded throughout the economy, which is, at this point, largely stagnant. Despite a degree of growth recently, economists largely agree that it isn’t sustainable – and could be reversed by the implementation of tighter fiscal and monetary policies after the elections this fall. Meanwhile, the Kirchner administration has been engulfed by corruption scandals and allegations of impropriety which have eroded confidence in her, though she remains popular with a large segment of the population.

Politically, the run-up to the elections has been primarily dominated by three candidates: Daniel Scioli, a relative moderate from Kirchner’s party, Sergio Massa, a relative centrist, and Mauricio Macri, who most clearly articulates a market friendly agenda. Scioli is the clear frontrunner, with Macri and Massa in second and third place, respectively.

The three candidates differ on many points and although it’s not impossible, it is improbable to see the election resolved in a single round on October 25. The second round, if required, would follow on November 22. But the candidates have a few points in common, too. First, they agree that Argentina’s vast welfare system should remain largely unchanged, given its widespread popularity. Second, the dollar exchange rate must be liberalized eventually. Third, export taxes that target the country’s agricultural sector must be reduced. And fourth, and arguably most importantly, the fiscal deficit and inflation must be curbed.

So where we see a consensus – among the candidates and among Argentines – around this idea that some of Argentina’s fundamentals need a degree of reform. Some of this has been fueled by the scandals, sure, but plenty has grown out of the realization that mismanagement is to blame for many of the country’s economic troubles. But change works slowly in Argentina. Argentines’ desire for change is unlikely to manifest as a large-scale divergence from what we’ve traditionally seen in the country – largely because Argentina’s political system, dominated by the Peronist movement, overwhelmingly favors continuity.
Projected GDP Growth For 2015

Meacham: Economically, Argentina is stagnating. Politically, the country’s establishment is under intense public scrutiny. And internationally, Argentina has been increasingly isolated from global markets and systems.

The U.S.-Argentina bilateral relationship has suffered in part due to the South American country’s unsettled debt dispute with a group of U.S. bondholders, and because of the Kirchner government’s reticence toward the United States. Though the country has paid off most of its outstanding debt, a significant sum remains.

A complete thawing between the two countries is unlikely until Argentina begins a process to reach a settlement with remaining U.S. bondholders. This will ultimately prove an important component to rectifying the bilateral relationship.

All three candidates have demonstrated their awareness that the country’s fiscal situation is unsustainable, and all three are likely to come to some agreement to settle the debt dispute.

But this much is true for sure: whoever wins the election will inherit an economic mess, and it’s unlikely that the new administration will manage any big changes within the first 12 months, particularly since likely winner Scioli has a reputation for being deliberate and cautious – and more likely to follow many of Kirchner’s policies.

Broadly, the revival of Argentina – and of U.S.-Argentina relations – hinges on the new administration’s ability to evolve toward an embrace of economic reform and increased engagement. Despite the challenges, the country’s new president will enjoy plenty of diplomatic means to signal a willingness to strengthen bilateral and global ties and facilitate change. And even a small show of confidence could trigger a wave of support from Washington.

The rise in drug trafficking and associated criminal activity is a particularly salient issue in Argentina at the moment, but weak bilateral ties have largely stood in the way of a higher degree of bilateral cooperation on counternarcotics activities. DEA cooperation with its parallel law enforcement agencies in Argentina – particularly for security training – has the potential to serve both countries interests, while rebuilding trust in a less visible (and therefore lower stakes) environment.

Washington could also signal its renewed willingness to work with the incoming Argentine administration from day one: by sending a high-level delegation to the new president’s inauguration. In its ideal form, Vice President Biden and Secretary of Commerce Penny Pritzker would travel to Argentina to welcome in the new president – and to begin rebuilding the political and commercial ties that have languished for the past 12 years, under Fernández de Kirchner and her predecessor and late husband, Néstor Kirchner.

Inflation In Latin America’s Biggest Economies

Meacham: For investors, there are two elements to this election that matter: Will the winning candidate implement the reforms Argentina needs? And if yes, when and at what pace?

So what reforms does Argentina need? The country’s regulatory environment is in need of serious restructuring. As it currently stands, doing business in Argentina is largely based on private relationships forged between businesses and the elites – fueling perceptions of risk and a lack of transparency. This, in turn, generates a high degree of ambiguity around the movement of money and the allocation of investment funds. Meanwhile, those investors that do funnel money into the country face enormous barriers to repatriating profits and accessing dollars to pay for imported intermediate goods, such as auto parts – another in a long list of factors that discourage investment, such as judicial insecurity.

The elections are also likely to lead to a devaluation of the Argentine peso. Devaluation is nearly inevitable as is its blowback on the economy and its investors. It’s a step Argentina needs, but may be a hard pill to swallow especially for brave investors already in Argentina who have accumulated large peso holdings due to capital controls.

All of this has made many foreign investors hesitant to enter the market, despite the potential returns to be had. Still, many investors are eager to do business in Argentina and lend to its government, provided it take measures in the direction of reform. The fact remains that Argentina desperately needs access to lending and foreign direct investment – hopefully it will prove motivation enough for the new administration to make speedy progress.

By Greg Grandin
Oct 19, 2015

Cristina Fernández is despised by the neoliberal elite, but her government has improved the lives of many, many people.

Over the last few years, as Argentina has struggled with a sagging economy and its share of political crisis, opinion and policy makers in the English-speaking world have tended to treat its president, Cristina Fernández de Kirchner, as a hot mess, the Paula Abdul of Latin American politics. Secretary of State Hillary Clinton inquired about her mental health (as revealed in a WikiLeaked cable), and The Economist called her presidency a “psychodrama.” The Economist has devoted so much ink to pathologizing Fernández that it has created a new genre: stalking as political commentary. Anonymously written articles (as per the magazine’s house style) describe the Argentine president as a control freak whose “need to control extends to her image” (unlike, say, every other major politician in the Western Hemisphere), cattily noting that “she never appears in public without looking glammed up.” Peronism, of which Fernández is the standard bearer, is less about “ideas,” the magazine says, than a “set of political emotions.”

Just last year, Fernández, who survived brain surgery in 2013, was being written off as an unpopular lame duck. “Her approval-rating languishes at 30%”! Her economic populism is ruinous! She picked a fight with London over the Falklands to divert attention away from her failures! She had a historic naval ship seized by creditors in Ghana! She killed Alberto Nisman! “The Fairy Tale” is ending for “Argentina’s new Evita”! She “lashes out” against critics! She appointed a Marxist Keynesian, or a Keynesian Marxist, as minister of the economy! She’s “out of touch with reality”! She’s “destroying the Argentinian economy”!

Argentina’s economy has been tightening since 2010, largely the result of lowered commodity prices. And Fernández’s clumsy handling of the death of prosecutor Alberto Nisman last January sparked widespread protests. But her popularity over the last year has gradually increased, today reaching “unheard of levels for a president in her final term.” More importantly, her handpicked successor, Daniel Scioli–governor of the province of Buenos Aires–is predicted to win the presidency, either in this Sunday’s first-round vote or in a run-off. (To win on Sunday, Scioli will have to garner either 45 percent of the vote or 40 percent with a 10 point margin; if not, a second round takes place on November 22.)

Those emotional Argentines! If only they could index their feelings to the slumping price of soy, rather than their operatic nostalgia for Evita, they would understand that the rational choice this weekend would be Mauricio Macri, a conservative businessman and current mayor of Buenos Aires who, according to the Argentine economist Roberto Lampa, embodies “the most obtuse neoliberal orthodoxy of the 90s.” China is in crisis, damn it, and Argentines are voting like it is 2002.

The tribunes of the world’s financial markets have had their eyes on this Sunday’s election for a long time, hoping that voters would not just reject Kirchnerism but end the Latin American left’s nearly two-decade-long run of electoral success. They have done all they could to plump for Macri, just as they did all they could to plump for Bachelet’s opponent in Chile, Dilma’s opponent in Brazil, Vásquez’s opponent in Uruguay, Morales’s opponent in Bolivia, Correa’s opponent in Ecuador, yea unto when the nightmare started, with Hugo Chávez’s 1998 win in Venezuela.

There is no doubt that the Latin American left is in crisis, for many different reasons, some self-inflicted, others more structural. But it still wins at the polls because, compared with the disastrous Washington-backed economic policies of the 1990s, this generation’s governing left has managed to improve the material, everyday existence of many, many people.

Argentines have long called the 1990s the “lost decade” (“la década perdida”), when neoliberals put the whole country out for bid, driving the nation into an economic whirlwind that was biblical in its proportions. More recently, Argentines are calling the 12 years of Kirchnerism–eight presided over by Fernández and four by her predecessor and late husband, Néstor Kirchner–the “la década ganada” (the “won decade”), a period that witnessed the institutionalization of enormously popular social policies. Just as anti-Chavistas in Venezuela have to campaign promising to be better Chavistas than the Chavistas (that is, they promise to expand and better administer the social-welfare programs Chávez’s government put into place), in Argentina, according to Jennifer Adair, a historian of Argentina, “every single candidate has had to contend with the ongoing popularity of Cristina and the policies of this past decade. The most dramatic example of this has been in the campaign of Macri, who recently gave a speech that one-by-one listed off the achievements of the Kirchner years, vowing that his national government would continue them.”

These policies include an impressive array of new redistributionist programs, including a “universal payment per child” (“asignación universal por hijo,” best thought of as a basic, minimum income tied to size of family household); protection for domestic workers; pushing back against the IMF and the hedge funds; re-nationalization, including of energy production and of Aerolíneas Argentinas; legalization of up to 2 million migrants, in what might be the world’s most humane border policy; prosecution of military officers involved in human-rights abuses during the dictatorship; legalizing same-sex marriage; lowering of the voting age from 18 to 16; Fútbol Para Todos (Soccer for All, the free, live TV broadcast of soccer matches). There’s low unemployment and steady public investment in public works and infrastructure, though inflation remains a problem.

Many of these achievements were indeed made possible by the commodities boom, as The Economist never ceases to point out. But, as the historian Ernesto Semán says, when commodity prices declined and the peso began to lose its value, the government neither turned to the right (as Juan Perón himself did in 1949) nor enacted knee-jerk austerity. Instead, it struggled to figure out ways to maintain, and even expand, its accomplishments. Fernández stumbled, particularly in her early handling of the Nisman crisis. Enemies, especially in the corporate and supranational press, went on the offensive. Fernández’s “rhetoric became repetitive” and, to some, tiresome.

But after eight years in office–and 12 years of Kirchnerismo–her popularity, and that of her policies, is undeniable. Contrary to what was last year a nearly universally held consensus, she hasn’t capitulated to the vulture funds who have been circling the country since her husband’s death in 2010. Argentina returned to democratic rule in the early 1980s, and every single one of her presidential predecessors save her husband, Néstor, left office either early or in disgrace. In contrast, Fernández is not only leaving beloved, her preferred candidate is set to succeed her.

But that fact might be what undoes her legacy. Many supporters of Fernández do not trust Scioli. Semán describes him as a “terrible governor of Buenos Aires province with bad ratings for most of his administration.” Scioli is running on Fernández’s and Kirchner’s accomplishments, but Google his name, along with the word “pragmatic,” and you’ll be taken to scores of articles in places like The Economist, Barron’s, Foreign Policy, and so on predicting that he will be his “own man.” In this case, pragmatism means only one thing: He’ll break with Kirchnerism, align with Washington, and make peace with global markets. This would include, among other things, deregulation, giving in to the hedge funds, and liberalizing the currency, with a further devalued peso making austerity inevitable. Semán also points out that Scioli is significantly more socially conservative than Fernández, on issues such as gay rights, crime, and abortion.

In Argentina, as in Venezuela and Brazil, Latin America’s new left has outlasted its first generation of leaders. We’ll see if it can survive their successors.

POLITICAL PARODY at its best..

we deserve d a few laughs from this POLITICAL CIRCUS..

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20 octubre, 2015

Why the State Department Finally Confirmed Augusto Pinochet’s Role in International Terrorism
by Peter Kornbluh
Oct. 13, 2015
3 min read

In the fall of 1987, Secretary of State George Shultz faced a formidable challenge: to convince President Ronald Reagan that the time had come to jettison his favorite anti-Communist dictator, Gen. Augusto Pinochet, and openly align Washington with the forces of democracy in Chile. In September, Shultz sat down with CIA director William Webster, who briefed him on Pinochet’s direct role in the September 21, 1976, car-bombing in Washington, DC, that took the lives of the leading critic of Chile’s military regime, former Chilean diplomat Orlando Letelier, and his young colleague at the Institute for Policy Studies, Ronni Karpen Moffitt. The CIA had “convincing evidence,” Shultz learned, that “Pinochet personally ordered his intelligence chief to carry out the murders.”

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In a secret report titled “Pinochet and the Letelier-Moffitt Murders: Implications for US Policy,” Shultz made his case to the president. “The CIA has never before drawn and presented its conclusion that such strong evidence exists of [Pinochet’s] leadership role in this act of terrorism,” the Secretary of State informed Reagan. “It is not clear whether we can or would want to consider indicting Pinochet,” Shultz advised. “Nevertheless, this is a blatant example of a chief of state’s direct involvement in an act of state terrorism, one that is particularly disturbing both because it occurred in our capital and since his government is generally considered to be friendly.”

“The only clear case of state-supported terrorism that has occurred in Washington” —George Shultz to Reagan, 1987
Washington could not continue to support a mastermind of what was, before 9/11, “the only clear case of state-supported terrorism that has occurred in Washington, D.C.,” Shultz concluded his argument to President Reagan. “What we now know about Pinochet’s role in these assassinations is of the greatest seriousness and adds further impetus to the need to work toward complete democratization of Chile.”

This dramatic document was among 282 declassified records on the Letelier-Moffitt case that Secretary of State John Kerry turned over—on a ceremonial pen-drive—to Chilean president Michelle Bachelet during a visit to Santiago last week. “It was a surprising gesture,” Letelier’s son, the popular Senator Juan Pablo Letelier, noted in a radio interview in Chile. “I think this practice of declassifying documents is very positive.”

Indeed, Secretary Kerry and the State Department’s Policy Planning Staff deserve significant credit for practicing “declassified diplomacy”—using US documents as diplomatic currency to advance the cause of human rights and redress the dark, interventionist history of US-Chilean relations. The Clinton administration started this unique practice after Pinochet’s arrest in London in 1998, undertaking a special Chile Declassification Project on CIA covert operations in Chile and Pinochet’s repressive 17-year dictatorship. “Such information could assist in encouraging a consensus within Chile on reinvigorating its truth and reconciliation process,” stated an NSC tasker ordering the review and declassification of 23,000 never-seen-before CIA, NSC, Defense, and State Department records that were turned over to Chile’s National Library in the fall of 2000.

The just-released documents on the Letelier-Moffitt case—many carry declassification stamps of October 1, 2015, just days before Kerry’s trip to Santiago—were intended to be released along with those 23,000 records. But after the families of Letelier and Moffitt, along with the Institute for Policy Studies where they worked and my organization, the National Security Archive, pressed the Clinton White House to indict Pinochet as a terrorist, the administration decided to withhold these records as potential evidence in a future prosecution.

Before leaving office, Clinton’s attorney general, Janet Reno, received a recommendation from her Justice Department investigators to indict Pinochet for this act of political terrorism. She left the draft indictment for her successor in the incoming George W. Bush administration, John Ashcroft, to implement. But President Bush never lifted a finger to prosecute Pinochet—even as fighting international terrorism became the central theme of his presidential tenure.
Had the CIA evaluation of the dictator’s role in international terrorism been leaked or declassified, the pressure to bring him to justice—here or in Chile—would have been overwhelming. Instead, Pinochet died in 2006 without ever being prosecuted for the murders of Letelier and Moffitt. Their families, and the public, were left with the worst-case scenario: neither truth nor justice.

Earlier this year (with the support of the National Security Archive) the Chilean government of Michelle Bachelet—herself a victim of Pinochet’s human rights abuses—petitioned the Obama administration to finally release these key records. The State Department was receptive, and mobilized the declassification bureaucracy to locate the missing Letelier papers. Kerry’s trip to Santiago for an international conference on oceanic law provided a target date, and a golden opportunity, to declassify the documents and personally carry them to Chile. Headlines such as “Pinochet Directly Ordered Killing on US Soil of Chilean Diplomat, Papers Reveal” are now circulating around the world.

To be sure, there are key documents in the Letelier-Moffitt case that remain classified. The CIA has yet to declassify its “convincing evidence” on Pinochet’s culpability. Nor has the FBI released its investigative report to Attorney General Reno recommending that Pinochet be prosecuted. But with this model effort of “declassified diplomacy,” the Obama administration has opened a Pandora’s box of evidence—once again proving the power of declassified US documents to provide historical vindication, if not legal accountability.











By Andre F. Radzischewski
19 October 2015

BUENOS AIRES — He’s been to South Korea, Albania and Israel, spent time in Sri Lanka, Cuba and Bosnia. Just this month, the Vatican confirmed a trip to Mexico is planned for 2016, making it six Latin American countries Pope Francis will have visited — along with the United States — since his pontificate began in March 2013.

But there’s one nation notably missing from his itinerary to date: his native Argentina. It’s an omission that rankles but doesn’t surprise residents here, despite the popularity the pope enjoys and the national pride his surprise selection inspired.

While the Vatican insists the pontiff’s busy schedule dictates his travel schedule, the local Catholic faithful and analysts alike suspect it is Argentina’s complex political situation that is the main reason why the former Cardinal Jorge Bergoglio is steering clear of Buenos Aires, the city in which he was born and one he rarely left before being chosen pope.

And though he has smoothed ties with Argentina’s president, many recall the troubled relationship Cardinal Bergoglio had with Cristina Fernandez and her late husband and predecessor, Nestor Kirchner.

“I think he will come here when this government leaves,” said Martha Vera, a 64-year-old accountant who on a recent Sunday was studying a display detailing the future pope’s rise at Buenos Aires’ Metropolitan Cathedral. “He did not like the things [the Kirchners] said.”

As archbishop, Cardinal Bergoglio often clashed over social issues with his neighbors in the presidential Casa Rosada, which sits just feet away from the cathedral across the capital’s Plaza de Mayo. Tensions escalated, for instance, when Ms. Fernandez legalized same-sex marriage in 2010.

The Argentine president did meet with Francis in Rome in 2013 one day before he was formally inaugurated, the first head of state to meet with the new pope, and Ms. Fernandez also attended the Mass celebrated by Francis during his recent trip to Cuba.

But the president’s imminent departure — the term-limited Ms. Fernandez will leave office Dec. 10 — still does not smooth the way for a papal homecoming because Francis is worried about the bigger picture, said Mariano de Vedia, a commentator with the La Nacion daily and author of two books about the pope.

This year, the highly charged political atmosphere ahead of the Oct. 25 presidential election ruled out a papal visit from the get-go, Mr. de Vedia said. But with Argentina marking the bicentennial of its independence next July, a 2016 trip was long seen as almost certain.

Given that all main candidates vying to succeed Ms. Fernandez have sought to play up their ties to the first Argentinean pope, though, Francis apparently wants to see the electoral dust settle before he ventures onto Argentine soil. “He does not want his figure to be used,” Mr. de Vedia said. “He does not want to be taken advantage of” by whoever wins the election.

Francis also hopes that local leaders will first tackle key concerns of corruption, poverty and a rise in drug trafficking, said Gustavo Vera, a local opposition legislator and close personal friend of the pontiff’s. “Right now Argentina is pretty polarized; there is a lot of division,” Mr. Vera said. “When he comes to Argentina, it will be an inflection point, and he knows that.”

Coming home

Francis’ predecessors displayed none of the same qualms about returning home.

John Paul II made an epochal nine-day return to his native Poland in June 1979, eight months after his election as pope, generating wild enthusiasm and, many say, planting the seeds for the political revolt that would eventually end communist rule.

Now-retired German Pope Benedict XVI marked World Youth Day in Cologne in August 2005, four months after his elevation, and returned a year later for a lengthy, emotional tour of his native Bavaria.

The apparent cancellation of a papal bicentennial visit has caused disappointment in San Miguel de Tucuman, the northern Argentine city where delegates severed ties with Spain in 1816, and which next year will mark the anniversary with a major eucharistic congress.

Still, the Vatican maintains that logistics and protocol — not politics — made the journey impossible. Any trip to Argentina would necessarily include a visit to its neighboring countries in the Southern Cone, said Monsignor Guillermo Karcher, a Vatican protocol official and close Francis confidant.

“It does not just come down to the pope and Argentines’ wishes,” Monsignor Karcher said. “It also depends on the invitations from the Uruguayan and Chilean sides.”

And in the case of Chile, some damage control may in fact be needed, Mr. de Vedia said, as Francis, during his July visit to Bolivia, seemed to side with La Paz in the festering, century-old border dispute between the South American neighbors.

Monsignor Karchner recently told the Buenos Aires Herald an Argentina visit may be possible in 2017, but much of 2016 will be taken up with the duties of a Holy Year in Rome that Francis has declared.

Benedikt Steinschulte, an official at the Pontifical Council for Social Communication, also noted that Benedict XVI did wait six years before making an official state visit to Germany, even as he made more informal stops.

Francis, for his part, has not used opportunities for such “unofficial” trips to come home, even though his July visit to the Paraguayan capital of Asuncion put him a few miles from his home country’s border. But while Argentines may take it as such, his itinerary should not be mistaken for a political statement, Monsignor Karcher insisted.

“Germany and Poland are around the corner” from Rome, he said about Benedict and the German’s predecessor, John Paul II. But the city’s current bishop, Monsignor Karcher said, “can’t just get up, pack his bag and say, ‘Now, I’m going to Argentina.'”

By Benedict Mander
October 18, 2015

As Cristina Fernández steps down she leaves a slowing economy that will limit her successor’s options

Battered by gale force winds in the treacherous seas around Cape Horn, a crew of pro-government Argentine militants were last month forced to abandon a yacht they had sailed from the far north of the country. They were trying to spark national maritime pride but after a failed rescue attempt, the abandoned La Sanmartiniana — named after South American independence hero José de San Martín — drifted towards the Falklands. Only then, close to the islands Argentina calls Las Malvinas and which it unsuccessfully invaded in a 1982 war with the UK, was it brought to safety.

The irony escaped nobody in Buenos Aires. Critics of President Cristina Fernández de Kirchner saw the near-shipwreck as a metaphor for her government.

Over the past decade, Argentina has enjoyed a commodity price boom that has fuelled annual average economic growth of around 4 per cent. Ms Fernández has been quick to trumpet that success as her own. But as she prepares to exit office — after next Sunday’s presidential election — she will be leaving behind a country in dire economic straits saddled by a yawning fiscal deficit, double-digit inflation and critically low foreign exchange reserves.

“Argentina has run out of road,” says Patrick Esteruelas, senior sovereign analyst at EMSO Partners, an emerging markets asset manager. “It’s not a question of whether there will be an [economic] adjustment or not. The real question is whether the next government moves quickly, or whether the market ends up doing the adjustment for them.”

End of the Fernández reign

Constitutionally barred from running for a third term, many believe Ms Fernández’s departure offers a turning point for Latin America’s third-largest economy. For one it will end 12 years of leftist rule that Ms Fernández shared with her predecessor and deceased husband, Néstor Kirchner, who took power in 2003 as Argentina was reeling from an earlier economic crisis sparked by its $100bn default — at the time the biggest sovereign debt default in history.

Back then, other populist or centre-left leaders — such as Venezuela’s Hugo Chávez and Brazil’s Luiz Inácio Lula da Silva — were also being swept to power across South America. In a stroke of fortune, their rise coincided with a period of booming commodity prices.

Now, however, that boom has ended with tumultuous consequences for some of those most exposed. In Brazil and Venezuela, the successors of both Mr Chávez and Mr Lula da Silva are grappling with unprecedented economic and political crises.

Argentina is not in a comparably parlous state. But there is a broad consensus among the presidential candidates that whoever wins the race will need to move swiftly to untangle a thickening knot of economic problems and prevent a similar crisis in Argentina.

What distinguishes the candidates is the speed with which they promise to fix these problems. For now the race is too close to call, thanks to a voting system that requires the winner of the first round to scoop 45 per cent of the vote, or 40 per cent plus a 10 point lead over the next candidate. Failing that, there will be a run-off, on November 22.

Leading the polls, with around 37 per cent, is Daniel Scioli, 58, the so-called “continuity candidate” backed by Ms Fernández. The governor of Buenos Aires province, and a former vice-president under Kirchner, Mr Scioli has promised only “gradual” change.

His main rival is Mauricio Macri, the centre-right mayor of Buenos Aires, who has committed to restoring the credibility of institutions such as the judiciary, central bank and media — which have come under pressure from the Fernández administration — and to open the door to foreign investment.

Key to the final result, though, may be Sergio Massa, a former cabinet secretary under Ms Fernández who has split from the government. Although he is running a distant third, with 20 per cent, how his support base divides in a second round run-off vote between Mr Scioli and Mr Macri could decide the eventual winner.

“The election remains wide open, with a run-off . . . highly likely,” says Laurence Allan of IHS, the risk consultancy. “Scioli and Macri have vowed to improve the business environment, but Argentina’s serious macroeconomic imbalances will pose major challenges.”

These challenges are daunting though it is not mission impossible. They include tackling a fiscal deficit equivalent to 7 per cent of gross domestic product — currently financed by printing money; inflation that private forecasters estimate at about 20 per cent; an overvalued currency with a soaring black market rate; a fast-disappearing trade surplus; capital controls; and shrinking foreign reserves.

For financial markets, however, the bigger question is whether the new government can settle a long-running $1.3bn dispute with holdout hedge fund creditors, led by US billionaire Paul Singer’s Elliott Management, which has effectively locked Argentina out of capital markets for a decade.

The court case has resulted in Argentina having exceptionally low levels of debt — a plus as most other emerging economies have leveraged themselves up to the gunwales. But it has also made it a financial pariah. Many expect, or at least hope, a settlement could prompt a surge of capital inflows.

“We have been out of the markets for so long that there’s a lot of pent up demand for Argentine assets,” argues Federico Sturzenegger, economic adviser to Mr Macri, who has said he will seek a rapid solution to the holdout saga.

Mr Sturzenegger says one priority is to attract $20bn a year in upstream oil and gas investment to develop Argentina’s largely untapped shale reserves.

Late to the investment party

Others are less confident about the scale of financial interest. Even if there is a settlement, investors are no longer as interested in emerging markets as they were when commodity prices were high and ultra-low western interest rates prompted a search for extra yield. Securing investment in shale has been made all the more difficult by the dramatic fall in oil prices.

“We are arriving late at the party,” cautions Mario Blejer, a former International Monetary Fund economist and now adviser to Mr Scioli, who says he favours reopening talks with holdout creditors but has also been non-committal about how he would approach them — in deference to Ms Fernández, who has refused to negotiate a deal.

To Ms Fernández’s many critics, the end of this unyielding stance will be one of the most welcome changes when she leaves office. Yet despite leading a government that opponents often describe as proud, capricious, heterodox, vengeful and even corrupt, Ms Fernández’s approval rating is close to 50 per cent, which could restrict her successor’s room for manoeuvre.

Supporters say such relatively high ratings are thanks to government policies, which have put Argentina back on the path of prosperity after the crushing debt crisis of 2001.

“Above all, we have recovered the ability to control our own destiny, which we lacked when the country was excessively indebted and subjected to the IMF and financial markets,” says Aldo Ferrer, a prominent economist.

To explain her continuing popularity, backers also point to strong economic growth which peaked at 9.5 per cent in 2010, but fell to 0.5 per cent in 2014, with little improvement expected this year, and generous social programmes. Subsidised energy schemes, for instance, can make the cost of a household’s monthly energy bill equivalent to the price of a cup of coffee. The subsidies, they say, lifted millions out of poverty and reduced inequality, even if they fail to mention how high inflation has since eroded those gains. The Catholic University of Argentina calculates that the number of Argentines living in poverty — defined as someone earning less than $220 per month — rose to 29 per cent in 2014, from a low of 25 per cent in 2011.

Economists working for all of the main presidential candidates warn that the country can no longer afford the current level of subsidies. But her successor could also find themselves restricted by what Agustín D’Attellis, another economist close to the government, identifies as a lasting shift to the left in the prevailing economic doctrine. Indeed, even the market-friendly Mr Macri openly approves of the once-controversial 2012 nationalisation of the oil company, YPF.

But perhaps Ms Fernández’s biggest legacy will be herself. Although she is not running in the elections as a deputy, senator or governor — many speculated she would seek a seat to maintain political immunity in case of possible future corruption charges — few imagine her disappearing from public life altogether.

“The great unknown is whether Cristina is going to play a big role and remain a powerful figure,” says Juan Cruz Díaz of Cefeidas, a political consultancy.

He points out that this is particularly important for Mr Scioli, who has had to court Ms Fernández’s support by accepting one of her closest advisers as a running mate while distancing himself from her in order to attract swing voters. That has made for a delicate balancing act, “but I wouldn’t underestimate Scioli’s [independence],” Mr Díaz adds.

A long fall

A century ago Argentina was one of the most prosperous countries in the world, today it has the dubious distinction of being the only country to have lost its rich nation status.

“Our [recent] history is divided into two halves: Argentina was the country with the fastest rise between 1880 and 1930, and then the country with the most notorious fall,” says Dante Caputo, a foreign minister during the 1980s, who doubts that the next government will significantly alter the current downward trajectory.

On the asset side of the national ledger are some of the world’s largest reserves of shale oil and gas. Argentina also has abundantly fertile plains that have made it the world’s third-biggest exporter of soya — a sector that powered recovery after the 2001 crash. But prices have halved to around $320 per tonne since 2012 although some home the crop can avoid the worst of the end of the commodity super-cycle.

“The world is eating more and it is eating better, and that is a trend that will not be reversed,” says Gustavo Grobocopatel, a prominent Argentine farmer sometimes called “the king of soya”. “That is a great opportunity for Argentina, which is well positioned to benefit.”

But on the liability side of the national balance sheet lies a political class that has seemingly proven itself incapable of delivering long-term stability. High hopes greet each new administration. Yet no government has been able to successfully smooth out the country’s boom-and-bust cycles.

One disgruntled voter, Sonia Benedetti, a 69-year-old housewife, is pessimistic. “Sadly, I don’t think the next president will change this country. We don’t just need a new president, we need a whole new political class. Out with the lot of them!”

Profiles: ‘A wide open race’

The incumbent’s choice
Born into a middle-class family, Daniel Scioli negotiated his kidnapped brother’s ransom and release from leftwing guerrillas when he was just 18. But it was his sporting career that brought him fame. After losing his right arm in a powerboat racing accident in 1989, he went on to win several world championships over the next decade, alongside a business career selling electrical appliances for Electrolux. After being elected to congress in 1997, Néstor Kirchner chose him as his vice-president in 2003. Since 2007 he has been governor of Buenos Aires province, whose 17m population makes it larger than most European countries, as well as the president of the ruling Peronist party from 2010 to 2014.

The challenger
Mauricio Macri, the son of a powerful Italian business magnate, spent a decade running one of Argentina’s most popular football clubs, Boca Juniors, during one of its most successful eras. But he says it was a 12-day kidnapping ordeal at the hands of corrupt police officers in 1991 that convinced him to go into politics. He founded a centre-right political party, and later became a congressman before being elected in 2007 as mayor of Buenos Aires. After launching his presidential bid in 2013, he has seen his support rise dramatically over the past year as he campaigned for reform.

The outsider
Sergio Massa is a dissident Peronist hoping to capitalise on widespread discontent with the government. After being elected in 2007 as mayor of Tigre, a middle-class suburban district north of Buenos Aires, he was briefly Cristina Fernández’s cabinet chief in 2008-09, before splitting from the government. His candidacy has struggled to gain traction despite an impressive victory for his party in 2013 midterms that effectively barred the president from re-election by leaving her without the congressional majority needed to alter the constitution.

By Maximiliano Rizzi and Sarah Marsh
16 October 2015

BUENOS AIRES, Oct 16 (Reuters) – When Mauricio Macri, the conservative opposition challenger in Argentina’s presidential race, unveiled a statue of the late working class hero Juan Peron it signaled a late shift in campaign strategy: a push to attract moderate Peronist voters.

For months, Macri distanced himself from Peronism, the fragmented political movement which has dominated Argentine politics for 70 years, promising to liberalize the economy and stamp out a deep-seated culture of graft and nepotism.

But just days away from the election, the “Let’s Change” alliance leader is under pressure. His support has fallen and he cannot be sure of forcing front-runner Daniel Scioli of the Peronist ruling party into a run-off vote.

Third-placed Sergio Massa has also staged a comeback, weakening Macri’s bid to present himself as the only alternative to the government-backed Scioli in the Oct. 25 vote.

In need of more votes, the 56-year-old Macri has been forced to go head-to-head with Massa, a Peronist who defected from the ruling party two years ago.

“I am not a Peronist but I have social justice in my heart,” Macri said as he unveiled the statue of Peron last week. “I want to invite all Peronists to work with us to create the Argentina we all dream about.”

Peron served three terms as Argentina’s president and earned himself hero status for his fiery nationalism and defense of worker rights in the 1940s.

Since then, Peronism has become an ideological grab bag spanning the communist left to the neoliberal right and it retains a strong hold over Argentines. Peronist parties have won nine of the eleven presidential elections they have contested.

Fulvio Pompeo, a Macri campaign coordinator, said Macri’s priority in this campaign had been to consolidate his support base within his “Let’s Change” alliance following party primaries in August and that “now we have to set about working with as wide a focus as possible”.

Despite his slide in the polls, Macri is still in the hunt for the presidency. He has a good chance of taking second place and, if he can force a second round, Scioli could be vulnerable to a united opposition.

To avoid a runoff, Scioli needs 45 percent of votes, or 40 percent and a 10 point margin over his nearest rival in the first round. A Poliarquia poll this week projected he has between 38.5 to 41 percent support, with Macri on 27.5 to 30 percent and Massa 21 to 23.5 percent.

It is not clear if Massa, who once served as Fernandez’s cabinet chief before splitting with her, would back Macri in a second round and whether that would be enough for him to beat Scioli.


Some Peronist voters fed up with President Cristina Fernandez’s leftist populism and the ailing economy are listening to Macri.

“Macri understands he can’t win unless he has us thinking Peronists on his side,” said retired head-teacher Mariela Farias, a long-time Peronist militant who will now vote Macri.

Even so, Macri’s late shift in the campaign has lacked concrete policy proposals and also diluted his credentials as the candidate for change, said political analyst Graciela Romer.

“It seems more like electoral opportunism,” she said.

Macri kicked off his campaign promising to free-up Latin America’s third largest economy from capital controls and trade restrictions from his first day in office, to draw in foreign dollars and end double-digit inflation.

In contrast, Scioli plans to maintain Fernandez’s hefty social spending and making only gradual reforms to address the economy’s structural imbalances.

Macri’s support levels fell after a prominent party ally was embroiled in a graft scandal, undermining his promise to end endemic corruption.

He has also had limited success in connecting with the poor . His open-market reforms are a tough sell outside the urban middle class in a country where Peronist leaders have long protected national industry and worker rights.

Macri has rowed back on his criticism of nationalizations under Fernandez, but his opponents play up voter fears that he will put investors’ interests ahead of people’s needs and they mock his recent efforts to woo moderate Peronists.

“‘Let’s Change’ chose its name well, because it spends all its time changing according to what suits most at that moment,” quipped Marcelo Corti, a Massa ally running for Congress.

16 October 2015

BUENOS AIRES (Reuters) – Argentines vote on Oct. 25 for a new president to replace Cristina Fernandez whose two terms have been characterized by generous welfare benefits, state intervention in the economy and a debt default.

The three leading candidates all pledge to lure investment and boost the competitiveness of domestic industries. They differ, however, on the pace and depth of reforms to unwind state controls in Latin America’s No.3 economy.

Daniel Scioli, the ruling Front for Victory’s candidate, is ahead in the presidential race but is not sure of an outright win in the first round and could be vulnerable if it goes to a runoff.

Mauricio Macri, the center-right leader of the opposition PRO party, is running second. In third is Sergio Massa, who defected from the ruling party in 2013 to form the Renewal Front, still under the broad umbrella of the Peronist movement.

Below is a description of these three candidates and summary of their policy proposals:


* Scioli, a 58-year-old former businessman and ex powerboat champion who lost an arm in a crash in 1989, is the two-time governor of Argentina’s most populous province Buenos Aires.

He is a moderate Peronist who praises Fernandez’ leftist populism model but advocates “gradual change” and pro-business solutions to stimulate the sluggish economy.

* Scioli says that settling a legal battle with U.S. hedge funds suing over unpaid debt is not a priority. He says he will negotiate “with tenacity” for a just outcome. Fernandez refused to offer the funds better terms than those handed to creditors who accepted steep writedowns after the 2002 default.

Scioli’s advisors acknowledge a deal is needed to ensure access to international financing and say Scioli would “negotiate in good faith” with holdouts.

* He defends the central bank’s management of the exchange rate and has ruled out a sharp devaluation. He favors gradual reforms toward open markets over shock therapy and rejects spending cuts.

* Scioli has pledged to bring $30 billion in investment per year to Argentina and bring inflation down to single digits within his four-year term.

* He would review quotas and export taxes on grains and soy that have outraged farmers, but has not committed to cuts.


* Macri, 56, is mayor of Buenos Aires and leader of the non-Peronist PRO opposition party. He heads the broader “Let’s Change” alliance. Before entering politics, he climbed through the ranks of his father’s holding company and was president of Boca Juniors, one of Argentina’s most popular clubs.

He has campaigned on a platform for change and is favored by financial markets for promising to open up the economy. His opponents slam him as a neoliberal who would neglect the poor.

* Macri criticized the government’s failure to settle with the U.S. “holdout” creditors. A deal would be a priority, his advisors say, although he would haggle hard.

* He promises to begin removing capital controls on day 1 in office, with a view to allowing the peso currency to float freely and lifting restrictions on access to dollars. He would call for central bank president, Alejandro Vanoli, to resign.

* He pledges to bring inflation down to single digits within two years – faster than the other candidates.

* Macri promises to abolish quotas and taxes on wheat and corn exports, and to reduce the 35 percent export tax soybeans.

* He vows to root out corruption from public institutions but his campaign has been dented by graft allegations against a close ally political.


* Massa is a 43-year-old lawyer and career politician, who pitches himself as a middle way between Scioli’s gradual change and Macri’s shock therapy.

Massa served briefly as Fernandez’s cabinet chief before his defection dealt her a severe blow in the 2013 mid-term elections and scuppered her hopes to rewrite the constitution and stand for a third term.

* Massa has made fighting crime a pillar of his campaign, pledging to deploy the military to fight drug traffickers, create an Anti Drugs Agency and reform the penitentiary.

* Massa says he would return Argentina to global debt markets before negotiating with all holdouts, not just those suing the country, to avoid “extortion”.

* He promises to end currency controls within 100 days in office and haul inflation down to 4-5 percent by the end of a first term.

* He would gradually eliminate export curbs and reduce duties levied on the shipment of grains and soybeans.

* Massa says improving the credibility of government statistics and ensuring the autonomy of the central bank and judiciary are key for restoring investor confidence.

By Paula Diosquez-Rice
16 October 2015

Inflation rate expectations are on the rise, but we do not expect that to be reflected in the official data in the short term. Click through for more analysis and data.

According to Argentina’s National Statistical Office (Instituto Nacional de Estadística y Censos: INDEC), consumer inflation remained at 1.2% month on month (m/m) and 14.4% year on year (y/y) in September.

The category of other goods and services posted the quickest increase, up by 2.5% m/m, followed by the health and medical services sector, up by 1.6% m/m, and the equipment and household maintenance category, up by 1.5% m/m.

Inflation figures presented by the opposition in Congress point to a rise of 1.92% m/m and 25.9% y/y, contrasting with INDEC’s figures. With regards to inflation expectations for the next 12 months, Torcuato di Tella University reports a rise of 8 percentage points, placing it at 30%, according to the median, while average expected inflation in annual terms rose to 30.7%.

The price control scheme for selected products is expected to continue until early January 2016 thus reducing even more the chances of official data moving closer to private-sector estimates.

Argentina’s economic distortions are a result of the government’s interventionist approach to economic policy. Import barriers, currency exchange controls, wage ceilings, and red tape for companies were aimed at reducing capital flight, but have severely compromised the country’s economic flexibility and, therefore, a readjustment of the productive sector.

An adjustment of the official exchange rate is almost unavoidable for the next government and will prove more difficult than dismantling some of economic distortions currently in place and will be immediately reflected in observed prices even if not in the official inflation data.

16 October 2015

Argentina’s telecoms regulator Aftic has rejected the acquisition of Sofora Telecomunicaciones’ 68% stake in Telecom Argentina by investment firm Fintech Telecom after a two-year wait for a decision that has raised some suspicions about the political interests that lie behind it.

Aftic said that New York-based Fintech lacked sufficient experience in managing telecoms companies, which is a prerequisite under decrees 62/90 and 764/2000 and that it could not guarantee that Telecom Argentina would function as normal.

In a statement Aftic pointed out that Fintech Telecom LLC was incorporated in Delaware less than a month before Telecom Italia accepted the purchase offer.

“The board considers that [Fintech] is not in a position to operate and take control of Telecom Argentina’s services and infrastructure. Fintech has demonstrated neither experience nor expertise [in the area].”

In November, 2013, Telecom Italia agreed to sell its 68% controlling stake in Sofora Telecomunicaciones for US$960mn. Sofora in turn has a 51% stake in Nortel Inversora, the investment company that holds 55% of Telecom Argentina.

In October last year, Telecom Italia said it had amended the agreement and would only sell a 17% minority interest in Sofora, while awaiting regulatory approval in Argentina for the sale of the whole stake. The new agreement included an option to acquire the other 51% once the sale was approved.

Enrique Carrier, director of consultancy Carrier y Asociados, said in a research note that while it may be true that Fintech does not have experience in the telecoms sector, Telecom Argentina as a company clearly has.

“Telecom Argentina has been operating for 25 years, which would give its management the sufficient knowledge to operate the company,” Carrier said.

The analyst added that the two years that the government had taken to reach a decision was “excessive.”

As is common in Argentina’s telecoms sector, the decision may be politically driven. Last month, Aftic rejected Argentine multimedia giant Clarín’s proposed purchase of a 49% stake in mobile operator Nextel, arguing that such an acquisition requires prior approval from authorities.

However, market observers suspect that the decision was politically motivated due to Clarín’s ongoing seven-year feud with President Cristina Fernández de Kirchner, whose term is due to end when a new government takes office on December 10.

However, the resolution may come as a surprise considering that Mexican businessman David Martínez, head of Fintech, was seen as having a good relationship with President Fernández and supported her in the country’s battle against holdout creditors.

Carrier added that many have speculated that the reason for the long delay in rejecting the sale was due to the fear that Fintech’s purchase was “nothing more than a Trojan Horse” for Grupo Clarín to move into Argentina’s second largest operator via the back door.

The analyst also questioned why the decision was made public just a week before presidential elections are held on October 25 and two months before a new government takes office.

He suggested that Aftic’s decision will be contested in the courts to keep the issue alive and that, given the traditional blurred lines between politics and business in Argentina, some Aftic members might change their minds at a later stage. Aftic’s board will remain unchanged with the change in government.

Aftic’s decision was unanimous, but newspaper The Buenos Aires Herald quoted an Aftic board member as saying that he could change his vote if the investment fund files new evidence that would prove Fintech’s ability to manage a telecoms operator.

By Stuart Parker
16 October 2015

U.S. biodiesel producers are asking a federal appeals court to scrap EPA’s approval of imports of biodiesel from Argentina used as a qualifying renewable biomass fuel under the agency’s renewable fuel standard (RFS), claiming EPA failed to undertake necessary public comment on what they call a flawed tracking system for the biodiesel.

EPA Jan. 27 issued an approval of a tracking system designed to show that biodiesel from Argentina meets the criteria to be considered “renewable biomass” under the renewable fuel standard (RFS). The approval, in the form of a letter to the Argentine Chamber of Biofuels (CARBIO), constitutes a judicial reviewable “final agency action,” says an Oct. 8 opening brief filed in appellate court by the National Biodiesel Board (NBB). The brief is available on See page 2 for details. (Doc. ID: 185601)

NBB, representing U.S. biofuel producers, says the decision approves a flawed system that allows access to the U.S. market for biodiesel produced from Argentinian soybeans, and CARBIO’s tracking system cannot ensure that the imported fuel is truly renewable.

NBB says the decision should have been open to public notice and comment, and is also asking the U.S. Court of Appeals for the District of Columbia Circuit to vacate a separate agency action — a letter from the agency refusing their request to seeking public input on the plan.

Further, NBB says EPA’s approval of what the board sees as an inadequate tracking system alters the underlying RFS regulations governing biodiesel, and reopens them to judicial review. The board therefore also asks for remand of those regulations to EPA to address the shortcomings that allow the imports at issue.

“EPA failed to provide any notice of the CARBIO proposal it purports provides sufficient quality assurance to ensure that soybean oil from Argentina, a country that has seen a rapid expansion of agricultural lands, came from lands that were in production prior to December 19, 2007. Public comments were necessary for the first plan of its kind,” says the brief.

NBB, representing U.S. biofuel producers, says that the CARBIO tracking system relies on the identification of “go areas,” which are shown by satellite imagery to have been agricultural in 2007 and not newly cultivated areas that have been recently cleared of forest. However, it is unclear how CARBIO will define such areas, and EPA lacks the means to check that they are correctly identified, the brief says.

“EPA’s review of the CARBIO proposal was arbitrary and capricious in that it did not comply with its own regulations. There was no explanation or analysis to support the identification of ‘go areas’ as ‘existing agricultural lands,’ to ensure feedstock producers, handlers or importers are in compliance, or to even understand the scope of the program,” the filing says. “Indeed, EPA appears to have handed its authority over to third parties, one of which has clear conflicts of interest,” the group says referring to CARBIO. “Thus, EPA could not have ensured that the CARBIO proposal provides the adequate level of quality assurance in clear contravention of its regulations.”

By Agustin Mango
15 October 2015

The only A class festival in Latin America, Mar del Plata announced its main competition line up and special programs Wednesday night in a press conference held in Buenos Aires, led by festival president and veteran filmmaker Jose Martinez Suárez, artistic director Fernando Martin Peña, and Lucrecia Cardoso, head of the country’s Film Institute (INCAA).

Main entries in the festival’s international and LatAm competitions include Mexico, Colombia and Chile’s Oscar bids (Gabriel Ripstein’s 600 miles, Ciro Guerra’s Embrace of the Serpent and Pablo Larrain’s The Club, respectively), Federico Veiroj’s San Sebastian winner The Apostate, Venezuela’s Golden Lion winner at Venice From Afar, and Pablo Agüero’s Eva Doesn’t Sleep, a dream-like take on the fate of Eva Peron’s cadaver after it was kidnapped and hidden in the 1950s, starring Gael Garcia Bernal.

Mar del Plata’s guest list includes Hong Kong’s action kingpin Johnnie To, who will be presenting its musical Office, France’s Arnaud Desplechin (The Golden Days), and US cult director Trent Harris (Beaver Trilogy, recently featured in the Sundance doc Beaver Trilogy Part IV), as well as international distributors, producers and sales agents attending the festival’s new co-production meeting LoboLab.

With film historian Fernando Martin Peña returning to the driver seat for the festival’s 30th anniversary, Mar del Plata’s 380 films program draws heavily from the past, with a world premiere of the definitive restoration of David W. Griffith’s landmark Birth of a Nation, and a new 35mm print of Native Son, the adaptation of Richard Wright’s classic 1940 novel, which was shot in Argentina under director Pierre Chenal, featuring the author himself in the role of Bigger Thomas. At the time of its release in the US, the film was partially censored, causing the near absolute disappearance of its complete version, which only survived in a single and fragile 16mm print.

Hollywood censorship in the 1940s will also be the focus of the Pre-Hays Hollywood section, which will screen films from directors such as Michael Curtiz, Raoul Walsh and George Cukor, made during a short period (1929 to 1934) during which US film production was freed from the studios’ self-imposed censorship following the so-called Production Code established by 1930s US Postmaster General Will H. Hays.

The Mar del Plata International Film Festival runs Oct. 30 – Nov. 9.

The competitions line up is listed below.

International Competition

Eva Doesn’t Sleep (Argentina / France / Spain) – Pablo Agüero
Incident Life (Argentina / Uruguay / France) – Ariel Rotter
Popular Mechanics (Argentina) – Alejandro Agresti
Remember (Canada) – Atom Egoyan
The Club (Chile) – Pablo Larraín
Embrace of the Serpent (Colombia / Venezuela / Argentina) – Ciro Guerra
Koza (Slovakia / Czech Republic) – Ivan Ostrochovský
The Apostate (Spain / France / Uruguay) – Federico Veiroj
O futebol (Spain) – Sergio Oksman
The Island of Wind (Spain) – Manuel Menchón Romero
Tangerine (USA) – Sean Baker
The Measure of a Man (France) – Stéphane Brizé

Latin American competition

Samuray-S (Argentina) – Raúl Perrone
Campo Grande (Brazil / France) – Sandra Kogut
Beyond My Grandfather Allende (Chile / Mexico) – Marcia Tambutti Allende
The Monument Hunter (Chile) – Jerónimo Rodríguez
600 miles (Mexico) – Gabriel Ripstein
What We Never Said (Mexico / Argentina) – Sebastián Sánchez Amunátegui
Evilness (Mexico) – Joshua Gil
Santa Teresa & Other Stories (Mexico / Dominican Republic / USA) – Nelson Carlo de los Santos Arias
I Promise You Anarchy (Mexico / Germany) – Julio Hernández Cordón
Suspended Time (Mexico) – Natalia Bruschtein
From Afar (Venezuela / Mexico) – Lorenzo Vigas

Argentine competition

The Spider’s Lullaby (Argentina) – José Celestino Campusano
Road to La Paz (Argentina / Netherlands / Germany / Qatar) – Francisco Varone
How Most Things Work (Argentina) – Fernando Salem
Docile Bodies (Argentina) – Matías Scarvaci and Diego Gachassin
Easy Ball (Argentina) – Juan Fernández Gebauer and Nicolás Suárez
Hortensia (Argentina) – Diego Lublinsky and Alvaro Urtizberea
Kryptonite (Argentina) – Nicanor Loreti
El Movimiento (Argentina / South Korea) – Benjamin Naishtat
Paula (Argentina / Spain) – Eugenio Canevari
Pequeño diccionario ilustrado de la electricidad (Argentina) – Carolina Rimini and Gustavo Galuppo
The Football Boys (Argentina) – Jorge Leandro Colás
Our Last Tango (Argentina / Germany) – Germán Kral

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17 October 2015

Argentina’s dominant political brand is defined by power, not ideology

IF YOU can’t beat them, join them. That seems to be the thinking of Mauricio Macri. On October 8th he unveiled a statue of Juan Perón, the army colonel who gave his name to what remains, more than four decades after his death, Argentina’s dominant political movement. What made this ceremony remarkable was that, of the three main presidential candidates in the election on October 25th, Mr Macri is the only one who is not a Peronist.

Argentina finds it hard to live without Peronism. Of the presidential elections since 1946 in which Peronists were permitted to run, they won nine, losing only two. They have governed for the past 12 years, under Cristina Fernández de Kirchner since 2007 and before that under Néstor Kirchner, her late husband. Ms Fernández’s candidate, Daniel Scioli, leads the opinion polls; Mr Macri trails by about ten percentage points.

Peronism is a brand rather than a party. Its official vehicle is called the Justicialist Party (PJ). To the extent that it has an ideology it is a vague blend of nationalism and labourism, expressed in the PJ’s founding “three banners” of political sovereignty, economic independence and social justice.

This has not prevented Peronist presidents swerving between radically opposed policies. Perón himself, when in power from 1946 to 1955, gained the lasting gratitude of Argentine workers by granting wage rises and paid holidays. But he also helped industrialists. He forged a coalition of labour unions, conservative provincial political bosses and nationalist army officers. It was the closest to fascism–of the corporatist, Mediterranean variety rather than the German version–that Latin America ever saw. Re-elected in 1973 after exile in Franco’s Spain, Perón tolerated violence as a political tactic, which contributed to a renewed breakdown of democracy and a bloodier military dictatorship in 1976.

In the 1990s Carlos Menem, another Peronist, pursued a very different course, opening the economy, privatising state companies and aligning Argentina with the United States. The Kirchners returned to economic nationalism and near-autarky, and extended welfare benefits to those thrown out of work by Argentina’s economic collapse in 2001.

Rather than ideas, Peronism embodies a consistent set of political emotions and practices. Perón declared in 1951: “The masses don’t think, the masses feel and they have more or less intuitive and organised reactions. Who produces those reactions? Their leader.” His second wife, Eva Duarte, touched the hearts of the masses. Ms Fernández has proved to be an accomplished disciple: she has ruthlessly pursued popularity by postponing inevitable economic belt-tightening, by exploiting her widowhood and by associating herself with Pope Francis, an Argentine who has Peronist roots.

Sergio Berensztein, a political scientist, says that today Peronism is “a conception of politics–the idea of power as an end in itself”. That makes it like Mexico’s PRI or Brazil’s PMDB, the permanent holder of the balance of power in Brasília. Its exercise of power is characterised by the strong leader and by control of the Argentine street. Almost all Peronist presidents have concentrated power in their own hands, brooking no internal rivals. Mr Scioli, the governor of Buenos Aires province, has often had to bite his tongue to keep the backing of Ms Fernández. But nobody will be surprised if he breaks with her and many of her policies if he reaches the Casa Rosada, the presidential palace.

This exclusionary leadership, together with the ideological shifts, has contributed to Argentina’s notorious political and economic instability. It has also meant that Peronism itself has become increasingly fragmented. This is the fourth consecutive election that has seen two or three Peronist candidates. If that has not mattered, it is partly because the Peronists’ historical rivals, the Radicals, have all but disappeared, but mainly because the Kirchners had the good fortune to exercise power when high world prices for Argentina’s farm exports led to rapid economic growth, rising wages and a boom in middle-class consumption.

But now the economy has stalled. Whoever wins will have to devalue and cut subsidies. Mr Scioli seems tantalisingly close to the 40% and ten-point lead he needs to avoid a run-off. He is the favourite. But he is finding it hard to woo the middle class, which has fallen out of love with Ms Fernández. Mr Macri may have a chance, if he can only poach votes from the third candidate, Sergio Massa, a dissident Peronist. The Casa Rosada, it seems, is worth a statue to the founder of the most protean of political movements.

By Pablo Rosendo Gonzalez and Daniele Lepido
October 16, 2015

*Regulators rejected deal in unanimous decision by board
*Telecom Italia says it has `wide time margin, guarantees’

Argentine regulators rejected a bid by Mexican financier David Martinez to buy a controlling stake in Telecom Argentina SA from Telecom Italia SpA, arguing that his Fintech Group isn’t qualified to run a telecommunications business in the South American nation.

The Aftic regulator unanimously rejected the proposal for Fintech to buy a 68 percent holding in Sofora Telecomunicaciones, the company Telecom Italia uses to control Telecom Argentina. Fintech, an investment fund, couldn’t guarantee the normal functioning of a telecommunications company, according to the regulator.

“Fintech Telecom LLC was incorporated in Delaware less than a month before Telecom Italia accepted the bid,” Aftic said in its statement on Thursday. “It lacks expertise and qualifications to run the company.”

Telecom Italia struck the deal in November 2013 on the Argentine sale. After failing to win regulatory approval, Telecom Italia agreed in October 2014 to give Martinez 30 months to complete the purchase, at the same time transferring a 17 percent holding in Sofora to Fintech. The original deal was valued at about $960 million.

Martinez and a local representative of Fintech in Argentina didn’t reply to calls and e-mails seeking comment. In a statement, Telecom Italia said it has “wide time margin and guarantees” in the deal. If the sale of a controlling stake in Sofora to Fintech cannot be completed by April 29, 2017, Telecom Italia can seek another buyer, it said.

Telecom Argentina is one of the divestments sought by Telecom Italia Chief Executive Officer Marco Patuano in his strategic plan to cut debt and to restore the carrier’s investment grade. More recently, Telecom Italia is working with Deutsche Bank AG to sell its 1.6 billion-euro ($1.8 billion) stake in wireless-tower unit Inwit SpA, people familiar with the matter said last week. Telecom Italia had almost 27 billion euros in net debt at the end of June. French media company Vivendi SA this year became its largest shareholder.

Telecom Italia shares traded 0.5 percent higher at 1.06 euros as of 9:04 a.m. in Milan.

Martinez, 58, helped restructure corporate debt after Argentina’s 2001 economic crisis and currently owns a minority stake in Argentine cable television operator Cablevision SA as well as interests in the energy industry. He has also filed briefs in support of the Argentine government’s position in a battle with holdout creditors.

By Charlie Devereux
October 15, 2015

*Batakis chosen after heading economy in Buenos Aires province
*Batakis returned province to fiscal surplus in 2013 and 2014

Daniel Scioli, the ruling party candidate and front runner ahead of presidential elections on Oct. 25, said today he would name Silvina Batakis as his economy minister if he wins.

Batakis has served as economy minister for Buenos Aires province under Scioli’s governorship since 2011, managing to post a surplus in 2013 and 2014 after several years of deficits by carrying out a tax reform. Scioli frequently lauds her achievements, calling her the “Good Greek,” in reference to her cultural roots.

“Silvina has done a formidable job because the province of Buenos Aires seemed impossible, unviable,” Scioli said in an interview alongside Batakis on local TV station Channel 13.

Batakis, 46, studied economics at La Plata university and has a master in environmental economics from the University of York in the U.K.

Scioli, of President Cristina Fernandez de Kirchner’s political alliance, leads opposition candidates Mauricio Macri and Sergio Massa in polls ahead of the Oct. 25 vote. Scioli had 38.4 percent of intended votes against 28.8 percent for Macri and 20.5 percent for Massa, according to a poll of 1,200 people carried out by OPSM Sept. 25-Oct. 8.

By Nicolas Misculin and Valentina Za
October 16, 2015

Oct 16 (Reuters) – Argentina’s telecoms regulator has blocked the sale of Telecom Italia’s local business to investment firm Fintech, halting a $960 million deal that could help the Italian phone group cut its large debt.

Regulator AFTIC said late on Thursday that Fintech was “not in a position to operate and take control” of Telecom Argentina .

“Fintech has demonstrated neither experience nor expertise,” AFTIC said.

Telecom Italia said on Friday that Fintech had indicated it planned to appeal against the decision.

Shares in Telecom Italia shrugged off the news and were up 0.6 percent by 0724 GMT in line with Italy’s blue-chip stock index.

“In our view this represents a slight setback in Telecom Italia’s efforts to sell assets and raise cash in order to reduce debt,” Haitong Research said in a note.

The former Italian telecoms monopoly had 27 billion euros ($30.7 billion) in net debt at mid-year.

Telecom Italia agreed in November 2013 to sell its controlling stake in Telecom Argentina’s holding company Sofora to Fintech, the investment vehicle of Mexican financier David Martinez, for $960 million.

A 17 percent stake in Sofora was transferred to Fintech in October last year for $216 million, while the remaining 51 percent was to be sold after a green light from the regulator.

Under the terms of the accord, Telecom Italia and Fintech have until the end of April 2017 to close the sale.

If they fail to do so, Telecom has a six-month option to buy back the 17 percent already sold and attempt to sell the remaining 51 percent to a third party. Fintech had guaranteed Telecom must pocket at least $630.6 million for the deal.

If a sale to a different investor is not completed by the end of October 2019, Fintech will have to pay Telecom Italia $175 million. Telecom will still have six months to buy back the minority stake.

“Clearly the best option would be the transaction with Fintech as initially agreed,” Haitong said.

“That seems now a tougher scenario to materialize and although we expect Telecom Italia to give Fintech more time to try to convince local authorities over its capacity to acquire the asset, one could not exclude the possibility of TI trying to find other potential bidders for the asset.”

Telecom Italia’s board meets on Friday to discuss possible investments to develop a fibre-optic network.

By Jorge Otaola
October 15, 2015

Argentina’s automobile industry must improve its competitiveness in the wake of Brazil’s currency devaluation and look for new markets in Europe and the Pacific, the president of Fiat Argentina Cristiano Rattazzi said on Thursday.

Argentina and Brazil have made policy agreements over bilateral car trade in the last few years but the devaluation of the real has nevertheless hurt demand for Argentine products in Brazil and made Brazilian exports cheaper in other markets.

“We are in a situation similar to the end of the 1990s when Brazil devalued violently and we ended up totally lacking competitiveness with respect not only to Brazil but also to other countries,” Rattazzi told Reuters on the sidelines of a conference hosted by IDEA, Argentina’s Business Development Institute.

“Clearly we need to re-examine our competitiveness, because we likely cannot live with it as it is. We need to return to the world, and strike a deal with the Pacific area or Europe or both,” he said.

Argentine car production dropped 8.3 percent in September compared with the same month a year ago due to a 27.3 percent plunge in exports, the ADEFA automobile association said.

Brazilian demand for Argentine cars is down more than 30 percent in 2015 compared with the previous year, ADEFA said.

Rattazzi said Argentina’s car industry was also struggling with high inflation. Economists estimate that consumer prices are rising about 25 percent annually.

“Inflation is a drug in the system and we have to battle it hard to end it,” he said.

Meanwhile, a drop in production means car factories are likely to continue to suspend workers, Rattazzi said.

“The suspensions at carmakers will depend on the relationship with Brazil but there will certainly be some (new) suspensions,” he said.

Argentina holds a presidential election on Oct. 25, after eight years of interventionist policies by incumbent Cristina Fernandez that have sparked rampant inflation.

By Richard Lough
October 15, 2015

Argentina’s ruling party candidate Daniel Scioli said on Thursday he would appoint his trusted economy minister in the province of Buenos Aires to take the same role on a national level if he wins the Oct. 25 presidential election.

The next government will inherit a sovereign debt default, an acute dollar shortage, double-digit inflation and a gaping fiscal deficit. Analysts said Scioli’s comments would be viewed positively by financial markets.

Silvina Batakis, largely unknown outside of Argentina, took the helm of Buenos Aires province economy ministry in December 2011 and last year turned its chronic fiscal deficit into surplus, partly via tax reform.

“Silvina has done wonderful job,” Scioli said in an interview on local TV station Channel 13.

At stake in this month’s vote is the pace and depth of reforms to liberalize Latin America’s No. 3 economy and smooth its return to global credit markets after President Cristina Fernandez’s government defaulted last year.

Scioli, a moderate from the broad Peronist movement, talks of “gradual change”, promising pro-business policies to spur growth. But he rejects dismantling social welfare policies and worker rights measures that are popular with Fernandez’s core supporters.

Macri says investment and foreign financing will not flow into Argentina until currency and trade controls are dismantled, and promises swift reforms.

“We know there are things to correct,” Batakis said on a local television show on Wednesday night, adding it was clear Argentina needed to undertake structural reforms.

Echoing Scioli, she stressed that shock measures like devaluing the peso were not the solution. She said she would allow the central bank to continue managing the exchange rate rather than letting it float.

“We want competitiveness, and for this we need to resolve the structural problems, thinking in the medium and long term.”

Argentina’s fiscal deficit will widen sharply to 4.2 percent of gross domestic product this year from 2.5 percent in 2014 as spending outpaces revenue during the election year, according to a forecast by Jefferies.

“The fact she conducted a fiscal adjustment in the province so that it now has a surplus should be a positive from a market perspective,” said Ignacio Labaqui at consultancy Medley Global Advisors.

By Hugh Bronstein
October 15, 2015

Oct 15 (Reuters) – Argentine consumer prices rose 1.2 percent in September, official data showed on Thursday, a figure in line with market expectations for the report.

In the 12 months through September, Argentine inflation was 14.4 percent, the government said in a statement. So far in 2015, consumer prices are up 10.7 percent, it said.

Private economists say official inflation data is routinely underestimated. They see actual inflation running at over 25 percent annually.

October 15, 2015

( – Telecom Italia’s ([TIAOF.PK, TI) deal to sell its Sofora Telecomunicaciones business under Telecom Argentina to Fintech Telecom LLC was blocked on Friday by Argentia’s telecom regulator saying that Fintech lacks experience and expertise.

The deal was originally signed in November 2013 for $960 million, with an expected closing in April 2017. Fintech, an investment vehicle financed by David Martinez, a Mexican businessman, was planning to acquire 68 percent of Sofora.

The regulatory board noted that Fintech was incorporated in the Delaware on October 18, 2013, less than a month before Telecom Italia accepted the offer. In its decision, the Board said if the deal is approved the control of licenses of Telecom Argentina will be in the hands of investment companies.

By Manuela Mesco
16 October 2015

MILAN–Investment firm Fintech Advisory will appeal the decision by Argentina’s telecommunications regulator to reject its plan to buy Telecom Argentina from Telecom Italia, the Italian operator said Friday.

The sale, worth $960 million, was first announced in 2013.

Fintech wasn’t immediately available for comment.

Telecom Italia said under the terms of its agreement with Fintech it could look for another buyer if the sale wasn’t finalized by April 2017. In such a case, according to the terms, Telecom Italia would be guaranteed to receive at least $630.6 million in proceeds from any future sale to another buyer.

If Telecom Italia is unable to find another buyer, it would get $175 million from Fintech and the agreement would be terminated, the Italian operator added. It would also have the chance to buy back a 17% stake in the holding company that controls Telecom Argentina, Sofora Telecomunicaciones SA, which it sold to Fintech earlier as part of the deal.

In November 2013, Fintech agreed to pay $859.5 million for Telecom Italia’s 68% stake in Sofora. Under the agreement, Fintech said it also would pay $100.5 million for Telecom Italia to provide technical support to Telecom Argentina and other services for up to three years, among other conditions.

The sale was part of Telecom Italia’s effort to raise about EUR4 billion ($4.57 billion) by 2016 to bring down its EUR27 billion of debt.

Argentina’s regulator said on Thursday it had rejected the deal. It said that Fintech lacked experience in the telecommunications industry and that approving the deal would have left Telecom Argentina “in the hands of a company comprised merely of investors.”

By Taos Turner
15 October 2015

BUENOS AIRES–Argentina’s government on Thursday rejected plans by the investment group Fintech Advisory to buy Telecom Argentina from Telecom Italia for $960 million.

The decision comes nearly two years after the offer was made by Fintech, which is run by Mexican investor and distressed-asset specialist David Martinez.

Argentina’s federal communications agency said in a statement that Fintech lacked experience in the telecommunications industry and that approving the deal would have left Telecom Argentina “in the hands of a company comprised merely of investors.”

Neither Telecom Italia nor Mr. Martinez could be reached immediately for comment.

In an interview in 2013, Mr. Martinez described Argentina as a country of “incredible long-term growth opportunities.” He also said investing in an emerging market like Argentina entailed risk. Overcoming regulatory issues and other challenges “involves talking to the government and negotiating,” he said. “These environments are difficult and challenging but that doesn’t mean those bottlenecks can’t be overcome. I’m quite confident they will.”

Argentine officials did not respond to a request for comment and it was unclear why they took so long to reject the deal. “The fact that it took two years to make this decision raises questions,” said Enrique Carrier, a Buenos Aires-based telecommunications analyst. “This is taking place two months before a new government comes into power.”

Faced with term limits, Argentine President Cristina Kirchner is leaving office in December. Mr. Carrier said the deal could end up being litigated in court and eventually decided by an incoming administration.

Mr. Martinez holds a 40% stake in Argentine cable-TV operator Cablevision, a unit majority-owned by Grupo Clarin, Argentina’s biggest multimedia company. Mrs. Kirchner, who has longed accused the group of “coup-mongering,” approved a law in 2009 aimed at dismantling the group and reducing its influence.

By Charles Newbery
15 October 2015

Buenos Aires (Platts)–15Oct2015/926 pm EDT/126 GMT China’s Sinopec has halted some of its oil and natural gas production in southern Argentina as union workers stop operations at a field.

The Sinopec Argentina Exploration unit said the workers took control of its Las Heras 3 field and related facilities in the province of Santa Cruz.

“This is affecting the production of oil and gas,” it said in a statement late Wednesday.

Sinopec said the conflict started October 8, led by Ruben Uribe, a director of the Union of Private Oil and Gas Workers in Santa Cruz.

The company said the conflict has started to cut its oil production by about 7,000 b/d and gas by 190,000 cu m/d due to a lack of storage capacity.

The union could not be reached for comment.

Sinopec produces 28,800 b/d of crude in Argentina, or 5.4% of the 536,000 b/d national total, and 2.2 million cu m/d of gas, or 1.8% of the 118 million cu m/d national total. Most of its production is in the south.

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10 octubre, 2015
Pinochet directly ordered killing on US soil of Chilean diplomat, papers reveal

by Jonathan Franklin
Oct. 8, 2015
2 min read
General Augusto Pinochet was so concerned about covering up his involvement in the assassination that he considered murdering his own spy chief, Manuel Contreras.
General Augusto Pinochet was so concerned about covering up his involvement in the assassination that he considered murdering his own spy chief, Manuel Contreras. Photograph: Roberto Candia/AP

General Augusto Pinochet directly ordered the 1976 assassination of a Chilean diplomat who was killed in a car bomb in Washington DC, according top secret US intelligence documents declassified by the Obama administration.

The documents, which were handed to the Chilean president, Michelle Bachelet, on Tuesday in Santiago by the US secretary of state, John Kerry, also show that the former dictator was so concerned with covering up his role in the murder that he planned to assassinate his own head of intelligence, General Manuel Contreras.
Orlando Letelier, a former defence and foreign minister under President Salvador Allende, was tortured and incarcerated after Pinochet’s 1973 coup. He later fled to the US and worked at the Institute of Policy Studies in Washington DC.

Letelier, who had once been Chile’s ambassador to the US, was murdered on 21 September 1976 by a car bomb planted under the driver’s seat of his vehicle just a mile from the White House.

Ronni Moffitt, an American colleague, was also killed in the blast. Her husband Michael survived but was badly wounded.

Letelier’s son, Senator Juan Pablo Letelier, confirmed to the Guardian that he had received copies of the newly released documents, which are understood to include papers from the CIA.

Letelier described reading the declassified documents and discovering a memo from George Shultz, who served as secretary of state in the 1980s, to President Ronald Reagan.

“[Shultz] informs [the president] that there is a conclusive document from the CIA that shows Pinochet ordered the murder of my father. This is concrete information about how Pinochet covered up his responsibility,” he said.

According to Letelier, who is among the first to have read the newly released documents, they also included evidence that the dictator intended to have his own spy chief murdered to cover up his role in the assassination.

“In his [Pinochet’s] predisposition to defend his position he planned to eliminate Manuel Contreras to keep him from talking,” said Senator Letelier in an interview with the Mesa Central programme on Tele13 Radio. Asked to clarify, Letelier said “physically eliminate”.

Peter Kornbluh, author of The Pinochet File: A Declassified Dossier of Atrocity and Accountability, said the documents “help provide historical accountability in the killing of these two wonderful people” and called them “the missing documents” in the ongoing efforts to unravel one of the most notorious acts of international terrorism in the US capital.

Kornbluh, a senior analyst at the National Security Archives, called for the full release of all the intelligence documents on Pinochet’s role in the Letelier-Moffitt bombing.

Investigators in the US and Chile are poring through the records searching for evidence that CIA officials had forewarning but did not stop the assassination plan.

Speculation that the CIA was aware of the plot to kill Letelier is based on previously declassified records showing that Manuel Contreras was paid by the CIA before the bombing and was in regular contact with top officials at the spy agency.

The US eventually sought to extradite Contreras of the murder, but Chile’s supreme court blocked the extradition.

Pinochet removed Contreras from his post under US pressure and dismantled and replaced the Dina spy agency he had once run. After Chile returned to democracy in 1990 Contreras was indicted in the Letelier case and eventually served seven years for the assassination.

Contreras, who died in August, always denied responsibility and blamed the CIA for the bombing

“It is very important that these documents have been declassified,” said the Chilean foreign minister, Heraldo Muñoz. “It helps us to clarify a painful historical moment for our country.”






5. ARGENTINA RISK: RISK OVERVIEW (Economist Intelligence Unit – Risk Briefing)

6. ARGENTINA RISK: ALERT – RISK SCENARIO WATCHLIST (Economist Intelligence Unit – Risk Briefing)



By Rakteem Katakey and Daniel Cancel
October 7, 2015

*Company knows `real value’ of unit, price must meet criteria
*CFO declines to confirm or deny report that YPF dropped bid

YPF SA, Argentina’s largest company, knows the fair value of Petroleo Brasileiro SA’s local assets and will only proceed with an acquisition if the price meets its criteria, Chief Financial Officer Daniel Gonzalez said.

The executive declined to confirm or deny an article published Wednesday in La Nacion newspaper that said YPF abandoned a bid after Petrobras Argentina asked it to raise its reported $900 million offer for a 67 percent stake.

“We know what the real value is and we’re very disciplined about what price we will pay,” Gonzalez said in an interview at the Oil & Money conference in London.

Petrobras Argentina, which has a market value of $1.2 billion, is focusing mostly on unconventional exploration and production and has started drilling at the vast Vaca Muerta shale gas and oil deposit in Neuquen province, where YPF has sunk 400 wells.

YPF, which last year purchased natural-gas assets from Apache Corp. for $800 million, is concentrating on gas projects, Gonzalez said at the conference. Petrobras Argentina has pumped about 6.5 percent of the country’s total gas output this year, according to the Energy Secretariat.

Petrobras’s press department didn’t immediately reply to an e-mailed request for comment.
Petrobras sold more than 20 oil and gas fields to Argentine energy producer Cia. General de Combustibles in March for $101 million.

YPF’s American depositary receipts rose 7.5 percent to $19.03 at 3:20 p.m. in New York, boosting the company’s market value to $7.5 billion. Petrobras Argentina’s ADRs fell 1 percent to $5.45.

By Richard Lough
October 7, 2015

A fugitive former spy chief accused by the Argentine government of involvement in the murky death of a federal prosecutor in January flew from Brazil to the United States a month later, Argentina’s security ministry said on Tuesday.

The ministry said Interpol in Brazil provided the information on Antonio Stiuso, one-time operations chief of the now disbanded Intelligence Secretariat, after a “blue notice” seeking details on Stiuso’s location was issued last month.

Argentina suspects Stiuso is seeking refuge in the United States and has criticized Washington for failing to answer repeated enquiries about the spy master’s whereabouts.

“A similar report is required from Interpol in Washington,” the Security Ministry said in a statement.

Stiuso flew from Porto Alegre to Miami on Feb. 19 using an Italian passport, Argentina said, citing the report. Interpol declined to comment.

Relations between Argentina have the United States have soured under President Cristina Fernandez, who frequently rails against imperialist powers and gluttonous financial markets in the West.

Analysts say the latest rise in diplomatic tensions is a headache for the ruling party’s presidential candidate, Daniel Scioli, who is said by advisors to favor improving Argentina’s foreign relations. Argentina votes on Oct. 25

State prosecutor Alberto Nisman was found with a single bullet to the head days after accusing Fernandez of trying to cover up Iran’s alleged role in the 1994 truck-bombing of a Jewish center in Buenos Aires.

Fernandez and her ministers say Stiuso tricked Nisman into fabricating baseless allegations to destabilize the government and then needed him dead, and have previously questioned whether the spy chief was working for the United States.

The attack on the AMIA center killed 85 people, the deadliest in Argentine history. Iran has repeatedly denied any link to the bombing and an Argentine judge tossed out Nisman’s accusations.

October 7, 2015

The oil and gas exploration activities being undertaken by Noble Energy Falklands Limited in an area near the disputed Falkland Islands are “illegal” and “clandestine,” the Argentine government said.

Argentina claims sovereignty over the Falkland Islands, which Latin Americans call the Malvinas and are under British control.

The Energy Ministry said in a resolution published on Tuesday in the Official Bulletin that it notified the Foreign Ministry and prosecutors of the decision to outlaw Noble’s operations “to allow them to take the legal actions they consider necessary in their areas of jurisdiction.”

Federal Judge Lilian Herraez, who is based in the city of Rio Grande, ordered the seizure of $156.4 million worth of assets, as well as the impounding of ships and confiscation of other property, belonging to oil companies that operate illegally in Falklands waters.

Noble Energy Falklands Limited is not registered with the Energy Secretariat, which sent a strongly worded statement to the company via the Foreign Ministry in October 2014, the government said.

The oil company did not respond to the statement and the government declared its operations illegal, officials said.

In August 2013, the government barred four British oil companies carrying out exploration work in waters near the Falkland Islands from operating in Argentina.

The measure targeted Borders & Southern Petroleum, Desire Petroleum, Argos Resources and Falkland Oil and Gas.

In May 2012, Argentina’s Energy Secretariat declared the companies’ activities in waters near the disputed islands to be “illegal and clandestine.”

The South Atlantic archipelago was the object of a brief war in the early 1980s pitting Argentina against Britain.

Argentine troops invaded the Falklands on April 2, 1982, at the order of the military junta then in power in Buenos Aires.

Full-fledged fighting officially began on May 1, 1982, with the arrival of a British task force, and ended 45 days later with the surrender of the Argentines.

The conflict claimed nearly 1,000 lives – some 700 Argentines and 255 British soldiers and sailors.

Buenos Aires demands that Britain comply with a 1965 United Nations resolution describing London’s control of the Falklands – which dates from 1833 – as colonialism and calling on the parties to resolve the dispute through dialogue.

London has refused to discuss the question of sovereignty and says the Falklanders should decide their own future.

October 07, 2015

Miguel San Martin developed a passion for space exploration as a child, when he heard about missions to the moon and Mars while living on a ranch in Argentina, leading him to become an engineer who now works for NASA and specializes in navigation and robot descents on the Red Planet.

“I was part of the team that developed this new method for landing a vehicle on Mars,” the MIT graduate told EFE.

The 56-year-old San Martin is chief engineer for systems to guide and control spacecraft from the U.S. space agency’s Jet Propulsion Laboratory in Pasadena, California.

“The system is comprised of a set of propulsion engines and ropes that kept the robotic vehicle Curiosity hanging as if it was a hovering crane,” the Argentine-born engineer said.

Curiosity landed on Mars in August 2012 with the mission of finding water and signs of microbial life, among other tasks.

To land the nearly one-ton rover, engineers had to innovate and “instead of having a helicopter hovering, we used propulsion rockets,” San Martin said.

When he arrived at JPL in 1985, San Martin said he felt “it was a dream come true.”

“I had been following the Viking mission, the first craft to reach Mars (in 1976),” San Martin said, adding that the Apollo 11 moon landing in July 1969 also made an impression on him as a boy.

San Martin worked on the Pathfinder mission, whose Sojourner rover landed on Mars in July 1997, cushioned by airbags “that bounced without control until they settled down and deflated.”

“Because of that experience, I was hired to work on Spirit and Opportunity,” San Martin said, referring to other robots that landed on Mars using the airbag system.

The idea for a soft landing by Curiosity using a crane, called Skycrane, and ropes emerged in casual talks around coffee with colleagues, San Martin said.

The engineer has worked on all of the robots now on Mars, and he created the algorithms to program the spacecraft’s computers, a job that he admitted was done while listening to jazz and tango music.

“Since I was a child, I liked toys with batteries and movement,” San Martin said, recalling a time when his heroes were inventors like Thomas Edison and German rocket scientist Wernher von Braun.

“My father was also my inspiration since he had plenty of patience to explain how things worked to me,” San Martin said. “He is a civil engineer and encouraged me to come study in the United States.”

The expert on Mars landings said high schools should orient academic courses toward engineering careers, since there are plenty of jobs in the fields.

“At NASA, we need more Hispanics, and here the accent in your speech doesn’t matter if you do good work,” San Martin said.

5. ARGENTINA RISK: RISK OVERVIEW (Economist Intelligence Unit – Risk Briefing)
7 October 2015

RISK RATINGS Current Current Previous Previous
Rating Score Rating Score
Overall assessment D 64 D 65
Security risk C 43 C 43
Political stability risk C 50 C 50
Government effectiveness risk D 61 D 61
Legal & regulatory risk D 72 D 75
Macroeconomic risk E 100 E 100
Foreign trade & payments risk D 75 D 75
Financial risk D 62 D 62
Tax policy risk D 69 D 69
Labour market risk D 64 D 64
Infrastructure risk C 47 C 47

Note: E=most risky; 100 = most risky. The risk ratings model is run once a quarter.


Argentina remains D-rated. President Cristina Fernández de Kirchner faces many challenges in the form of rampant inflation and persistent pressure for peso devaluation, which has prompted the authorities to introduce stringent controls. Policy adjustments under a new administration from December 2015 will increase the risk of social unrest, keeping political stability risk high. Legislative gridlock will impair political effectiveness. Interventionism in response to economic distortions may decline in the medium term, but legal and regulatory risk remain high. Financial risk will also remain high, reflecting high market risk, weak confidence in banks and a recent history of sovereign default. Strong unions, frequent strikes and inflexible labour rules will heighten labour market risk, while a lack of investment in utilities will weaken infrastructure.

Security risk

Security risk is less of a concern than in much of Latin America, but the perception that the security environment is deteriorating is rising. Crime rose sharply during the 2001 crisis and has not come down since. Despite recent reforms, the police are still regarded as ineffective, or occasionally complicit in some crimes. On the hard left, foreign capital and the banking system are still demonised for the part they played in the historic 2001 crisis. But the risk of direct action against representatives of these groups has faded. The illegal drugs trade generally does not pose a direct threat to businesses but is a source of violence and corruption. Argentina’s large Jewish population makes it a potential target of terrorism perpetrated by Islamic extremists.

Political stability risk

Argentina continues to grapple with a high risk of violent social unrest, and fraught relations between the government and major political and economic actors (including the opposition, businesses and the media). President Cristina Fernández de Kirchner was re-elected by a record margin in October 2011 but her popularity has fallen rapidly since then as the economy has weakened and inflation has accelerated. Even after a new administration takes office in December 2015, risks to political stability will persist, given the likelihood of difficult austerity measures intended to rein in inflation and a polarised political environment. In this climate, frequent confrontations and halting progress on the legislative agenda are likely.

Government effectiveness risk

Weak institutions are a shortcoming of the political system. One by-product of a strong presidential system, reinforced by the dominance of the Peronist party, is weak congressional oversight of the executive. There is a long history of political interference with the judiciary, although in a recent positive development, the Supreme Court ruled a controversial reform-seen as an attempt by the administration of Cristina Fernández de Kirchner to exert greater control over the court system-unconstitutional. Ample budget resources have given the government the upper hand in managing relations with the provinces, although these have the potential to be disruptive in Argentina’s federal political system. The low quality of the bureaucracy is expected to persist, assuming a long-awaited public-sector reform is delayed indefinitely, and could hinder implementation of government policies. Increases in investment spending have been poorly targeted, as political considerations take precedence.

Legal & regulatory risk

Confidence in the rules of the game remains weak after almost a decade of populist policies intended to maximise voter support at the expense of trust in contract rights. A fresh sovereign default in July 2014 complicated the government’s efforts to make amends with creditors and investors in order to attract fresh inflows of much-needed dollars. Moreover, the government has not dismantled the distortionary controls implemented over the course of recent years. Price controls in the form of compulsory price agreements persist, as do risks of expropriation of foreign assets amid ongoing financing problems, although this risk seems likely to subside gradually, assuming a more business-friendly administration takes office in December 2015. Government regulation of private businesses in “strategic” sectors will remain intensive, at least in the short term.

Macroeconomic risk

Several years of expansionary fiscal and monetary policies have taken their toll in the form of rampant inflation, which has in turn caused sustained real peso appreciation, a deterioration in the current account, devaluation speculation and a fall in foreign reserves. Following a moderate peso adjustment in January 2014, we assume further substantial depreciation from 2016. This should allow the peso to weaken in real terms, and begin to provide a boost to export competitiveness and the current account. But without a commitment to macroeconomic-policy tightening, rampant inflation would rapidly erode any competitiveness benefits brought about by the adjustment of the peso. We expect such policy measures to start when a new administration takes office in December 2015, but the process will be a difficult one and the risk of currency crisis, which would prompt a deep recession, will persist in the short term.

Foreign trade & payments risk

Unpredictable and distortionary trade measures will persist in the short term as the Fernandez government resorts to protectionism to prop up the external accounts and maximise fiscal revenue from exports. A deterioration of the balance of payments-which apart from an increasingly overvalued peso, reflects persistently low foreign direct investment, negative portfolio flows and high levels of capital flight-heightens the risk of tighter foreign-exchange and capital controls being imposed. There is likely to be some improvement in the next administration, which takes office in December 2015, resulting in some reduction in distortionary trade measures and controls. But liberalisation will take time and will be vulnerable to setbacks.

Financial risk

Access to financing remains a weakness, as an history of crisis has reduced confidence in the domestic financial system dramatically and there is little prospect of an improvement in the forecast period. Regulation and supervision have been strengthened since the 2001-02 crisis, with weaknesses, including a high level of exposure to public-sector debt and a high level of dollar-lending not backed by dollar revenue streams, having been addressed. But this has not produced a recovery in longer-term deposits that would lead to growth in longer-term finance. This is against a background of adverse policy decisions (such as the 2008 nationalisation of the private pension funds), growing political uncertainty and a deterioration of the public finances. The latter makes crowding-out by the public sector a likely problem, at least until public-sector external financing constraints are removed via a negotiated settlement with holdout creditors.

Tax policy risk

Despite moderate marginal corporate tax rates, the tax system has serious deficiencies and is unduly complex. There is also an overdependence on consumption taxes (VAT, value-added tax), which makes tax collection highly procyclical. The introduction of a levy on financial transactions and on export taxes since 2002 has worsened structural distortions in the public finances. The government is reluctant to scale back export taxes, because they are partly exempt from the requirement to share revenues with the provinces. However, were these taxes to be eliminated, the government would need to find alternative sources of finance. A wholesale reform of the public sector and the tax system, including the fiscal relationship between the central and local administrations, has been delayed for years and the government appears to have no plans to address these issues. The revenue-sharing reform, in particular, is politically sensitive.

Labour market risk

Labour market strengths include a relatively well-educated, productive and flexible workforce, but they must be set against strong unions, relatively frequent strikes and rising real wages. Falling unemployment, and close political ties between the government and trade-union leaders have led to a full recovery in real wages over the course of the past six years. The incidence of strikes and protests, which has increased in recent years, will remain high, driven by politically powerful trade-union leaders and by workers seeking to bolster real incomes amid relatively severe inflation. As unemployment levels fall, skills shortages will become more of a problem for businesses, compounded by a lack of effective training programmes in both the public and private sectors. There seems little chance of reforms to improve labour market flexibility.

Infrastructure risk

Argentina’s strengths include a well-developed telecommunications and information technology network, and relatively low property rental costs, but the gains from upgrading physical infrastructure during the 1990s are being eroded. A long-standing failure to adjust a plethora of tariffs frozen during the 2001-02 economic crisis has discouraged private investment, and although the government has taken a more active role in public works, this has been insufficient to prevent bottlenecks from emerging, especially in energy. The 2010 sovereign debt restructuring notwithstanding, external financing constraints seem unlikely to ease anytime soon. This will delay improvements until towards the end of the forecast period, raising the prospect that infrastructure bottlenecks become a constraint on growth for the next few years.

6. ARGENTINA RISK: ALERT – RISK SCENARIO WATCHLIST (Economist Intelligence Unit – Risk Briefing)
7 October 2015

Scenario Category Probability Impact Intensity

Election-related violence erupts around the general election Security High Moderate 12

Social unrest increases amid government corruption allegations Political stability Low Very high 10
The Supreme Court becomes politicised
after new appointments are made Government effectiveness Moderate High 12
Government fails to secure negotiated settlement
with holdout creditors, leading to continued concerns
over rule of law and contract rights Legal & regulatory Moderate Moderate 9
Interventionism persists in institutions controlled
by Ms Fernandez and her allies Legal & regulatory Moderate High 12

Failure to tighten macroeconomic policy pushes
the economy into crisis Macroeconomic High Very high 20

Dollars are not made available for debt-servicing
amid tight controls Foreign trade & payments Moderate Very high 15

New barriers to trade are imposed to prop up
the current account Foreign trade & payments Very hig h High 20

The peso is devalued Financial Very high Very high 25

Corporate taxes are raised to help bolster the public finances Tax policy Moderate High 12

Deterioration of provincial finances forces further ad hoc
revenue-raising measures Tax policy High Moderate 12

Strike activity in the increasingly atomised union movement increases Labour market Very high Moderate 15

Businesses are hit by skills shortages Labour market Moderate Moderate 9

Intensity colour key: 1 to 4 5 to 8 9 to 12 13 to 16 17 to 25

Note: Intensity is a product of the probability and impact ratings, where ‘Very low’ scores 1 and ‘Very high’ scores 5.


Election-related violence erupts around the general election
High probability; Moderate impact; Risk intensity = 12

Local elections held on August 23rd in Tucumán province were marred by several serious incidents, including the burning of ballot boxes and a violent police response to protesters who claimed that the vote was tainted by fraud. Given allegations of widespread irregularities, opposition leaders refused to acknowledge their defeat (the candidate for the ruling Frente para la Victoria, FV, Juan Manzur, won the election) and called for a protest, held on August 24th and attended by around 10,000 people. José Cano, the candidate for the Acuerdo para el Bicentenario, a coalition of the main opposition parties (Unión Cívica Radical, Propuesta Republicana and Frente Renovador), took his argument to the courts in an effort to nullify the ballots and call a repeat election. The provincial Supreme Court rejected this appeal, arguing that irregularities did not amount to fraud. However, the ongoing scandal has stirred tension over the fairness and legitimacy of Argentina’s electoral system, even if it has been propelled at least in part by an opposition strategy of seeking to invalidate a probable victory in the October 25th presidential election for Daniel Scioli, the FV’s presidential candidate. The ruling has also shone a spotlight on problematic elements of Argentina’s democracy, including the outdated electoral processes of some provinces, political pressure on judges and prosecutors, and the resorting to clientelism—chiefly by Peronists—in the poor north of the country and the Buenos Aires conurbation. It also underscored the tense political climate, highlighting the possibility of unrest surrounding the national elections in October. Events in Tucuman suggest that violent social unrest surrounding what will be a relatively close general election (closer than any during the Kirchner administrations) remains a risk.


Social unrest increases amid government corruption allegations
Low probability; Very high impact; Risk intensity = 10

The lingering effects of a scandal that shocked the political establishment earlier this year present a risk to political stability. The scandal surrounded the death in January of Alberto Nisman, a federal prosecutor, in mysterious circumstances days after formally accusing the president of conspiring with Iran to cover up the latter’s involvement in the 1994 bombing of a Jewish centre in the capital, Buenos Aires—the country’s largest ever terrorist attack. Investigations have still not established whether Mr Nisman committed suicide or was murdered, but opinion polls suggest that a majority of the public believes that the latter is the case, highlighting a clear lack of faith in government and state institutions. Ms Fernández’s opinion poll ratings have started to recover after falling sharply in the immediate aftermath of the scandal, aided by a court decision to dismiss Mr Nisman’s accusations. Nonetheless, public frustration over a lack of answers regarding Mr Nisman’s death—as well as the continued failure to bring the perpetrators of the 1994 bombing to justice—will heighten the risk of social unrest. Even before the Nisman affair, the political outlook had been clouded by the state of the economy. Devaluation pressure has persisted and wage demands have skyrocketed amid rampant inflation. In this context—and given the country’s strong tradition of protest and powerful unions—risks to political stability will be high in the run-up to the October 2015 presidential poll. Argentina does have a relatively recent history of messy political transitions (most recently during the 2001-02 economic crisis, which saw four presidents in the space of a few months), and the threat of further triggers for social unrest impeding the October 2015 presidential election cannot be discounted altogether.


The Supreme Court becomes politicised after new appointments are made
Moderate probability; High impact; Risk intensity = 12

Carlos Fayt, a Supreme Court judge, announced in September 2015 that he would step down in December, leaving the next government to replace both him and another recently retired judge. The news has stoked debate about whether the court can remain free of political influence, but the backdrop to Mr Fayt’s resignation suggests that its independence is not under threat in the short to medium term. Mr Fayt, 97, has been a Supreme Court judge since Argentina’s return to democratic rule in 1983. Earlier this year, supporters of Ms Fernández sought to impeach Mr Fayt, accusing him of being mentally and physically incapable of the job. (Judges must retire when they reach 75 or seek legislative approval for a five-year extension. However, Mr Fayt’s situation represented a grey area because he was already 75 when the constitutional rule was introduced in 1994.) The attack was largely seen as a manoeuvre to oust Mr Fayt and substitute him for a government-friendly judge, particularly with Ms Fernández seeking to exert influence beyond her presidency. The government had already moved to replace Raúl Zaffaroni—a recent retiree of the Supreme Court, which comprises five judges—with Roberto Carlés. However, Mr Carlés was rejected by the opposition in Congress, which perceived him to be a political puppet of the ruling Frente para la Victoria (FV, a faction of the Partido Justicialista, or the Peronists), and the government placed his candidacy on hold. By deciding to retire on December 11th, a day after the new government takes office, Mr Fayt is widely viewed to have overcome the onslaught of Ms Fernández and her political supporters. The president has sought to protect herself and her political legacy by entrusting public institutions to her allies. However, the Supreme Court would seem to be beyond the president’s grasp. It is her successor who will now have to propose candidates to replace Mr Fayt and Mr Zaffaroni. Throughout Ms Fernández’s time in office, the Supreme Court has resisted government pressure and is viewed as largely impartial despite a broader politicisation of public institutions, including lower levels of the judiciary. Signals from the main presidential candidates suggest that upcoming Supreme Court appointments should be less politically motivated. Mr Carlés was proposed by the current administration with no cross-party consultation, but Daniel Scioli, the FV’s presidential candidate, has highlighted his preference for dialogue and consensus. Mauricio Macri, the presidential front-runner for the centre-right opposition Propuesta Republicana party, has also made institutional reforms and the separation of powers cornerstones of his election manifesto. In any case, the two-thirds majority approval of candidates required in the Senate (the upper house of Congress) is an effective check on politically motivated appointments to the Supreme Court. In this context, we do not view Mr Fayt’s resignation as capable of significantly increasing the risk of a weaker, less independent Supreme Court. However, any broader meaningful reform of the judiciary under Mr Scioli, who we expect to prevail in the upcoming presidential election, remains unlikely because of an historic tendency for executive-branch overreach among Peronists. As a consequence, the problems of corruption and inefficiency in the judicial branch as a whole will persist.


Government fails to secure negotiated settlement with holdout creditors, leading to continued concerns over rule of law and contract rights
Moderate probability; Moderate impact; Risk intensity = 9

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