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2006-08-06T10:07:00.000-04:00

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Despues Del Triunfo De Kirchner (The Economist)

2005-10-30T17:36:00.000-05:00

Following a successful electoral gamble, some hard decisions for the president

THE contest between Argentina's current first lady and her predecessor to represent the province of Buenos Aires in the national Senate was billed as “the mother of all the battles” in a mid-term election on October 23rd. When the votes were counted in this Amazonian contest, Cristina Fernández de Kirchner had won a crushing victory, by 46% to 20%, over Hilda González de Duhalde. Across the country, the candidates of Argentina's president, Néstor Kirchner, did almost as well, winning some 40% of the vote. What Argentines will now want to know is what Mr Kirchner proposes to do with his victory and whether it is the prelude to winning a second term in 2007.

Through the vehicle of his wife, the president can claim to have won the two things he wanted from the ballot. The first is a personal mandate from an election in which he was not a candidate. He had been denied such a mandate in the 2003 presidential contest when Carlos Menem, another ex-president, withdrew from a run-off ballot. The magnitude of his victory last weekend was not far short of that achieved by Mr Menem in his first mid-term election, in 1991. His candidates won 15 of a possible 16 senate seats, earning Mr Kirchner a comfortable majority in the upper house. In the 257-seat lower house, they will form by far the largest block, although he will have to negotiate with others, both inside and outside Peronism, to secure a legislative majority.

That task will be made easier by Mr Kirchner's second reason for satisfaction: he can now claim the undisputed leadership of the Peronist movement, no longer having to share this with Eduardo Duhalde, his predecessor. Buenos Aires province, home to 40% of Argentines, has long been Mr Duhalde's turf. Choosing the province as the venue for Ms Fernández's candidacy was a gamble, but one which paid off spectacularly. Mr Duhalde's congressional block has shrunk from 33 deputies to 25, and will probably decline further at the next election, for president and part of Congress, in 2007. “Kirchner hasn't killed the Duhaldes yet, but now it's a question of when, not if,” says Nicolás Ducoté of CIPPEC, a Buenos Aires think-tank.

But the election also legitimated new opponents. The strongest is Mauricio Macri, a businessman who runs Argentina's most popular football club, Boca Juniors. Mr Macri won the race for the lower house in the city of Buenos Aires, with a margin of a dozen percentage points over Elisa Carrió, a leftish lawyer, and Rafael Bielsa, Mr Kirchner's foreign minister. Mr Macri will now dispute the leadership of the centre-right with Jorge Sobisch, the governor of Neuquén province. Ms Carrió was hurt by a scandal—invented by the government, she claimed—over foreign bank accounts, but her party picked up three seats in the lower house.

Mr Kirchner, a populist nationalist, will doubtless prefer it if his main challenge in 2007 comes from the right than the left. He took office as the economy was recovering strongly from its collapse in 2001-02. He now faces a cloudier economic picture—and some unpleasant decisions that he has hitherto postponed. The biggest worry is inflation, which has crept into double digits. During the campaign, the president blamed price increases variously on Shell petrol stations and supermarkets. Keeping inflation in check probably requires either higher interest rates or allowing the peso to appreciate. Mr Kirchner has supported neither. The government will also have to deal with demands for wage increases from public employees.

A second thorny issue concerns prices charged by privatised utilities, frozen since 2002. Officials say they do not want to increase charges for residential users until 2007. Maintaining that stance may mean forgoing an agreement that would roll over some hefty debt payments to the IMF. The big question is whether, given the president's penchant for economic meddling, sufficient private investment will be forthcoming to maintain high growth.

It would be a mistake to read too much into Mr Macri's victory in Argentina's wealthiest enclave. But if the strongest challenge to Mr Kirchner does come from the right, that will give the president an incentive to tackle these issues. Starting with the selection of a new foreign minister to replace Mr Bielsa, Mr Kirchner's chances of a second term will depend on the decisions he takes in the next few months.

En Las Eleciones, Dos Que Pelean Por El Manto De Evita (The NY Times)

2005-10-23T09:24:00.000-04:00

October 23, 2005
In Argentine Election, 2 Battle to Wear the Mantle of Evita
By LARRY ROHTER

BUENOS AIRES, Oct. 21 - From Evita Perón onward, the Peronist movement has excelled at using women to try to mobilize its faithful. Gen. Juan Domingo Perón deployed his wife, during her life and after her early death, as his link to the masses, and more recently Carlos Saúl Menem even married a former Miss Universe, supposedly with an eye to reviving his flagging political fortunes.

But Argentina's dominant party may have outdone itself this time. Acting as proxies in their husbands' struggle for control of the party apparatus, the current first lady and her predecessor are facing each other in a bitter fight for a Senate seat.

In the hard-fought campaign leading up to the midterm vote on Sunday, a confrontation the press here is calling "the mother of all battles," both women have offered themselves as Evita's heirs. But Cristina Fernández de Kirchner, the wife of President Néstor Kirchner, and Hilda Beatriz González de Duhalde, her main opponent, differ markedly in background and political style and seem to agree on little, including the nature of Evita's legacy.

Until she died of cancer in 1952 at the age of 33 and was transformed into a martyr, Eva Duarte de Perón, known as Evita, was regarded as "the mother of the poor." She served not only as her husband's adviser and confidante, but also as the most visible agent of his government's largesse. She was the benefactress who pushed for, and delivered, low-cost housing, subsidized vacations and reduced working hours and capped food prices to help "los descamisados," the "shirtless" working masses.

On the trail in this campaign, Mrs. Duhalde, who was in charge of government social programs during the 17-month presidency of her husband, Eduardo Duhalde, has reminded voters of her own humble origins, her years as a homemaker and the fact that she, not her opponent, won the right to appear on the ballot as the Peronist candidate. At a rally on Monday in Lanús, a working-class Buenos Aires suburb, Mrs. Duhalde, known as Chiche, came close to calling Mr. Kirchner an apostate and his wife a carpetbagger.

"What is at stake is not Chiche, but the party founded by the genius of Perón and the soul of Evita," Mrs. Duhalde, 59, told the crowd. She harkened back to her childhood, when all Argentines benefited from a Peronist welfare state; that state, she charged, has been replaced by "growing indigence, a pinched retirement, and wealth that is more and more concentrated."

In contrast, Mrs. Kirchner presents herself as an Argentine version of Senator Hillary Rodham Clinton, whom she openly admires, and has sought to reach beyond the Peronist core voter. A 53-year-old lawyer whom polls show comfortably in the lead, Mrs. Kirchner already sits in the Senate, representing her husband's small home province, Santa Cruz, in Patagonia. But she would immensely enhance her own power, and her husband's, by winning the chance to represent Buenos Aires Province, home to nearly 40 percent of Argentina's 38 million people.

With a third of the seats in the Senate and half those in the lower house at stake on Sunday, Mr. Kirchner is hoping not only to put his wife into that seat and bolster his image, but also, at last, to get a loyal majority in Congress. There, Mr. Duhalde still controls the Buenos Aires delegation, the largest in Congress, and has blocked initiatives that would enhance his rival's popularity or political maneuverability.

Though neither Mr. Kirchner nor his wife has talked about their plans, the press is convinced that they are trying to build a dynasty to exceed the Peróns'. According to such speculation, Mr. Kirchner is certain to run for a second term in 2007 and then make way for his wife, who if elected twice, would leave office only at the end of the next decade.

"Our project is a wager on a new fatherland, a new history," Mrs. Kirchner, the president at her side, said Thursday night as her supporters waved posters of Evita Perón at a rally ending her campaign. "This is not just another election," she added, but an attempt to "close the page on the past and look to the future."

The Duhaldes, she said, are part of that tarnished past. Without mentioning them by name, Mrs. Kirchner criticized those who "devastated the province, and now they say they are going to do what for years they didn't do," while her husband, she said, "has lowered unemployment to its lowest rate in 15 years" through a program of "work, production, exports and consumption."

Putting his wife on the front line is just one step Mr. Kirchner has taken in his quest to push aside Mr. Duhalde.

From a cathedral altar, he recently asked for voter help and support, earning a bishop's criticism, and in a speech this week commemorating the 60th anniversary of the popular uprising that brought General Perón to power, he colorfully evoked his Patagonian roots - which have led cartoonists to depict him as the animal most closely associated with the region - to make a similar plea.

"There is a penguin who is all by himself and has come to ask for your help to continue changing the fatherland," he said. "Remember the penguin when it comes time to cast your vote."

The Duhalde-Kirchner Senate battle continues a recent tendency in which the Peronist movement seeks to resolve its internal disputes in public, at the polls, instead of through backroom negotiations, as was once its tradition. When Mr. Kirchner ran for president in 2003, for instance, he was one of three Peronist candidates, including Mr. Menem and another former president. He was sworn in having won only 22 percent of the popular vote.

In office, he has proved to be unpredictable but popular, casting himself as an iconoclast and unyielding force for change, not afraid to defy the armed forces, the International Monetary Fund or multinational corporations. He has an approval rating of more than 60 percent, down by 10 points from early in the year, but has chosen to cast the midterm election as a plebiscite on his performance.

"Popularity is one thing, but power is another," said Graciela Romer, a political consultant and analyst here. "And what this government needs is power, not popularity."

Mr. Kirchner's critics on the right charge that he has, like Peronist leaders in the past, subordinated sound economic policies to his personal political interests. Government spending on projects like roads and public housing has jumped, while requests from public utilities to compensate for losses they say they suffered in the huge currency devaluation of 2002 have been refused.

In addition, wage increases for government employees, retirees and some private sector workers have added to an inflationary spurt. The inflation target for the entire year has already been passed, and most projections for 2005 now put inflation above 10 percent, far from the four-digit annual increases Argentina has experienced in the past, but still worrisome in a country where real wages and investment have fallen.

As is often the case here, there have also been accusations of vote buying. This month, a Socialist candidate filed a complaint charging that the government has been giving away washing machines and other appliances to voters in Buenos Aires Province in return for pledges of support for the Kirchners' ticket.

As minister of social welfare, Mr. Kirchner's sister Alicia, who is running for the Senate seat in the family's home province in Patagonia that Mrs. Kirchner now occupies, is responsible for the distribution of goods and services to the poor.

She said she was merely continuing a program long in place, and Mr. Kirchner's chief of staff, Alberto Fernández, dismissed the vote-buying accusation as a campaign ploy of "a sector of the opposition dedicated to smear tactics."

Argentina: Tierra Del Peso Que Se Encoje Increíblemente (The Wall Street Journal)

2005-10-21T09:26:00.000-04:00

THE AMERICAS

Argentina: Land of the
Incredible Shrinking Peso
By MARY ANASTASIA O'GRADY
October 21, 2005; Page A15

Plus ça change, plus c'est la même chose, French journalist Jean-Baptiste Alphonse Karr observed in 1849. And when Argentina's consumer prices jumped 1.2% last month -- the largest monthly increase in two years -- those words resonated. A lot of change has occurred in Argentina since the hyperinflation of the 1980s, but as the developing economic story unfolds, much remains remarkably the same.

Inflation for 2005 is on track to top 10% and some Argentine forecasters are bracing for an annualized rate as high as 12%. Peronist President Nestor Kirchner, gearing up for this Sunday's mid-term elections, has blamed greedy supermarkets and threatens action if they don't stop taking "advantage of the fact that there is more demand to increase their profitability."

No wonder analysts are eyeing the pick-up in inflation, and the central bank's passive attitude toward it, like Floridians watching Wilma swirling about in the Caribbean. We already know what happens when this baby makes landfall. Batten down the hatches.

After a decade of monetary calm under the "convertibility law," which required dollar reserves to back up newly minted pesos and pegged the rate at one-to-one, Argentina pulled the plug on price stability in January 2002 and reverted to what it called a "float." The decision to "float," following a massive debt default, was cheered in ivory towers and by no small number of the world's supposedly sophisticated financial writers.

But the monetary strait-jacket was removed from Argentina's legendary machine politics, and any first-year political science student could have predicted the outcome: The Peronists have indulged in money mischief (to borrow a 1992 Milton Friedman title) and the inflation rate has gone up. The fact that the country's top central banker today is known more for his transparent political ambitions than his economic acumen is no confidence builder.

In 2001 and 2002, like revelers on a drunken tear the Argentine government seized bank accounts and dollar holdings, stiff-armed creditors, devalued the peso and tore up contracts. Argentine wealth was wiped out and the economy contracted 10.9% in 2002. In the two years after this debacle, the economy bounced off the bottom, turning in 8.8% growth in 2003 and 9% in 2004.

The trouble is that most of the take from this great heist has been spent now and the high is wearing off. To keep the party going the government is maintaining an artificially weak peso to ensure "export competitiveness" and, in the government's mind, continued prosperity. This, of course, is what is fueling the inflation.

One school of thought holds that the central bank was instructed by the government to shower the country with pesos to help the Kirchner claque win seats on Sunday. With GDP growth forecast close to 8% this year, the prospects for Mr. Kirchner's wing of the Peronist party are good. Had the bank pulled the punch bowl earlier this year, his supporters in Congress could well have faced more difficult contests.

Yet there is little in the government's rhetoric to support the theory that the bank -- which is clearly not independent -- will tighten the money spigots after Sunday. Indeed, the government's budget for next year forecasts double-digit inflation of 10%, sending a worrying signal of tolerance. Moreover, the 2005 inflation number has been held down by the government's refusal to adjust wages and by price controls in some sectors. During the crisis, workers were happy to keep their jobs. But labor seems unlikely to remain placid while inflation erodes purchasing power. Strikes are hitting across the board.

Economists I talked to in Argentina are worried that the bank will only take action when annualized inflation gets near 15%. But as experience teaches, by then momentum could make putting the inflation genie back in the bottle very difficult. As inflation expectations take hold, people flee from the currency, particularly in places like Argentina where politicians have destroyed the currency before.

The country's return to 1998 GDP levels this year occurred in a climate of hostility toward the market and amid a growing role for the public sector. Going forward, the divergence between investors concerns about property rights and a government ideologically opposed to respecting those rights will become a source of trouble.

This anti-market bias has damaged investment, which is now running (in constant dollars) at only 20% of GDP. Economists estimate that to achieve a long-term annual GDP growth rate of 3.5%-4%, a minimum investment rate of 23% of GDP is needed. To reach the 5% GDP-growth-rate that could meaningfully impact poverty and unemployment, the investment rate should reach 25% of GDP.

The strong growth of the past three years has occurred in an environment of underutilization of productive capacity, mainly in the tradable sector where investment is not so crucial and where the devalued peso helps rack up large exports. But infrastructure improvement is inadequate, which discourages ventures that need communications, transportation and other services. A high degree of uncertainty in the energy sector, again driven by the state's punishing attitude toward ownership and profits, has been most harmful.

Other problems are on the horizon. This week, Argentina magnanimously suggested that it might forgive the International Monetary Fund its sins and begin loan negotiations again. Could that have anything to do with $7 billion in total payments due the fund between now and the end of 2007? Meanwhile, the heavily taxed export sector is being squeezed as costs rise even while the government seeks a nominally weak exchange rate.

No one expects Argentina to return to the hyperinflationary terror of the early 1980s, when the central bank humiliated itself to the point of issuing one-million peso notes. But that is little comfort to Argentines who, in a nation of much promise, have experienced lots of change but little progress.

Copyright 2005 Dow Jones & Company, Inc. All Rights Reserved

La Eleccion Argentina (The Economist)

2005-10-20T09:32:00.000-04:00

Argentina's general election

Perennial Peronist power
Sep 1st 2005 | BUENOS AIRES
From The Economist print edition

The opposition once again fails to get its act together
AFP
AFP

Cristina: the president's greatest asset

LONG simmering, Argentina's fiercest political family feud has burst into the open with the official opening of campaigning for next month's legislative elections. Although neither Néstor Kirchner, the current president, nor his predecessor, Eduardo Duhalde, is running for office, their rivalry has grown more bitter than ever as their wives compete for a federal Senate seat in the province of Buenos Aires. Launching her candidacy, Mr Kirchner's spouse, Cristina Fernández, lambasted Mr Duhalde as a Mafia don, while her opponent, Hilda González, recently denounced the first lady's supporters as “traitors”.

Such theatre is hardly unusual in Latin American elections. But what makes the Kirchner-Duhalde family feud unique to Argentina is that it is being fought within the same political party. The Peronists have dominated Argentina for half a century, but rarely has their hegemony been more complete than now—despite their internecine duelling. This is largely because the Radicals, who form the main opposition party, have been in tatters ever since Fernando de la Rúa, Argentina's last Radical president, resigned during the 2001 economic crisis.

In the 2003 presidential election, three Peronist candidates ran against one another, giving the opposition a perfect opportunity to exploit their divisions. But they failed to unite and Mr Duhalde mobilised his Peronist party machine to propel Mr Kirchner, his chosen successor, into the Casa Rosada. Now that Mr Kirchner has turned against his former patron, the opposition has a new chance to take advantage of the Peronists' feuding, but it seems even less capable of coming together.

Indeed, in the Buenos Aires Senate race, the split Peronist ticket could even hurt it. In a bid to ensure minority representation in the Senate, the constitution grants two seats to the winning party and one to the runner-up in each province. However, since Mrs Kirchner, who is widely expected to win, is running on a “Front for Victory” ticket, the minority slot is likely to go to Mrs Duhalde's Peronists, shutting out the non-Peronists entirely in the most important constituency.

With enough time, the Radicals may be able to reinvent themselves by emphasising two of their traditional strengths—healthy public institutions and a separation of powers, both particularly salient issues given Mr Kirchner's overbearing style in government. But such hopes suffered a major setback in July in the Radicals' internal election for leader in the province of Buenos Aires.

For the next presidential election due in 2007, many liberals had pinned their hopes on Margarita Stolbizer, a Radical congresswoman who says she supports a market-friendly approach to improving income distribution while keeping the party's focus on good government. But she was defeated by Raúl Alfonsín, a former Radical president also tainted by an economic crisis—the hyperinflation of 1989. Although Mr Alfonsín, now 78, is not popular nationwide, his influence over mayors and party functionaries in the greater Buenos Aires region proved too much for the reformist Ms Stolbizer to overcome.

With the economy continuing to rip ahead, Mr Kirchner appears a political juggernaut. But unlike Mr Duhalde, who commands a vast network of support from local officials, Mr Kirchner's strength stems almost exclusively from steering ample federal largesse to politicians with contested loyalties. “Duhalde is a godfather,” says Luis Tonelli, a columnist for the magazine Debate, “but Kirchner can only be a contractor.” As soon as the economic pace slows—and, given worryingly low investment levels, some deceleration is likely before 2007—the president may find himself vulnerable, with neither sufficient cash nor the Peronist apparatus to grease the electoral wheels in his favour.

Without the cushion of a growing economy, Mr Kirchner's autocratic tendencies would become a greater political liability. But the opposition would have to convince voters that they are ready for power again. “Institutional quality is important but insufficient,” says Ms Stolbizer. “The only message people will hear is what will improve their own lives. We need to propose an alternative that can govern.” That could be a long time coming.

Cae Otra Peluca: El Poder Judicial En Argentina (The Economist)

2005-10-20T09:29:00.000-04:00

Argentina

Another wig falls
Oct 6th 2005 | BUENOS AIRES
From The Economist print edition

The removal of a fifth Supreme Court judge threatens the separation of powers

SHORTLY after assuming Argentina's presidency, Carlos Menem pushed through one of the brashest court-packing moves in recent memory. In a brief session in April 1990, his Congress added four more seats to the five-member Supreme Court. This, plus the replacement of one of the pre-existing justices, enabled Mr Menem to create a notorious “automatic majority” of mostly legally undistinguished loyalists, who religiously backed his executive initiatives of dubious constitutionality.

Since Néstor Kirchner became president two years ago, he has dedicated himself to ridding the government of Mr Menem's taint, particularly in the judiciary. Three justices from the bloc have resigned, while a fourth was forcibly discharged in December 2003. The Senate finally removed its last, Antonio Boggiano, from the court on September 28th after finding him guilty of arbitrary, biased and inconsistent rulings. Yet while Mr Kirchner has hailed previous reversals of Mr Menem's decisions, he has kept mum on the latest removal, fuelling speculation that he might have rather had Mr Boggiano stay.

Unlike the other members of the “automatic majority”, Mr Boggiano was a respected jurist before joining the court and, while indubitably a tool of Mr Menem in the 1990s, has more recently demonstrated his independence. To Mr Kirchner's delight, he voted with the majority in June to overturn Mr Menem's pardons of military officers for human-rights violations. He further endeared himself to the government by ruling conclusively in favour of the constitutionality of “asymmetric pesification”—the decision by Mr Kirchner's predecessor, Eduardo Duhalde, to convert Argentine banks' dollar-denominated deposits into pesos at a 1.40 exchange rate, while swapping over their loans at the old one-to-one figure, during the January 2002 financial crisis. This won him the backing of Mr Kirchner's chief of staff, Alberto Fernández, as well as the support of the economy and foreign ministers.

Along with the recent voluntary retirement of another justice, Mr Boggiano's departure has created two more vacancies on the court in addition to the four that Mr Kirchner has already filled. Although the president has won widespread praise for making the nomination process more transparent and selecting eminent and independent judges, the possibility of his naming two-thirds of the country's highest court hardly bodes well for the separation of powers.

Congress's Justice Committee, chaired by a loyalist of Mr Duhalde (Mr Kirchner's former political patron and current rival), has proposed that the president reduce the court to seven members rather than select two more nominees. To reject the plan, which has broad support from Argentina's leading think tanks and advocacy groups, would endanger Mr Kirchner's legacy as a benevolent judicial reformer. But to go along with it would deny him an opportunity to plant reliable votes on the court. Although Mr Kirchner has not yet rejected the proposition, Mr Fernández, his preferred mouthpiece, has left little doubt as to the president's views, calling the plan a “wicked move intended to destabilise the government”.

Meanwhile, Mr Boggiano has not given up hope of regaining his seat on the court. He plans to appeal to the Inter-American Court of Human Rights. Despite Mr Kirchner's distaste for meddling by such international bodies—and his desire to cleanse Argentina of any Menemist footprints—a lifeline for the ex-justice, however unlikely, might do the president a favour.

Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.

La Economia Argentina (The Economist)

2005-10-20T09:27:00.000-04:00

Argentina's economy

As Suez packs up, the locals dive in
Sep 29th 2005 | BUENOS AIRES
From The Economist print edition

President Kirchner's government wants new investors to sustain Argentina's recovery. But only some need apply

LAST month, Argentina's president, Néstor Kirchner, intimated that he hoped to attract new foreign investors to his country during a visit to New York. His economy minister, Roberto Lavagna, met managers from foreign car firms, stressing the need for fresh investment to sustain a strong recovery from the country's economic collapse of 2001-2. So a decision on September 9th by Suez, a French conglomerate, to walk away from its contract to run the Buenos Aires water company could hardly come at a less opportune time. For the issue raised by Suez's dispute with the government is whether Argentina offers sufficient guarantees of the rule of law to attract new money.

Suez's problems arose from the decision of a previous government, in 2002, to convert water tariffs from dollars to devalued pesos and freeze them. Aguas Argentinas, the water company in which Suez has a controlling 46% stake, accepted that as an emergency measure, and maintained its service and workforce. But in years of talks with Mr Kirchner's officials, it could not strike a deal on new rules of the game. The government refused to raise tariffs as much as Suez wanted, or to share responsibility for some of the firm's dollar debts; new investment projects were derailed because the government insisted on the right to choose the contractors who would execute them. Suez invested $1.7 billion in Argentina; it had already written off €700m ($840m) of losses there.

Mr Kirchner wished Suez good riddance; a senior official threatened legal action if it did not serve out the remaining year of its contract. Mr Lavagna, who has often said that the government should be more flexible with privatised utilities, insisted that Suez's departure would have no effect on other potential investors. Many others are less sanguine. “Argentina will pay a cost for this,” says Daniel Artana of FIEL, an opposition-leaning Buenos Aires think-tank. Foreign investors “will see that they didn't settle a dispute.”

But Argentina's recovery has consistently confounded the naysayers. The economy is set for a third straight year of growth of over 7.5%. Luck, in the form of high prices for farm exports, has played a part. But despite Mr Kirchner's penchant for economic intervention, and his tough approach to foreign firms, investment has recovered almost to its level of the late 1990s (see chart)—a level high enough to allow the economy to grow at a steady 3.3% a year, says Mr Artana.

The problem is that faster growth is needed to help the 38.5% of Argentines who still live in poverty in a once-rich country. And luck can turn. According to Mr Lavagna, the share of investment in GDP needs to rise by two percentage points to sustain healthy growth.

Much recent investment has been in housebuilding and by small firms reinvesting profits—“too many bricks and too few machines” as Claudio Loser, an Argentine former IMF official, puts it. Larger firms remain cautious, especially about long-term projects. Several things hold them back. They include doubts about the government's intentions; an annual inflation rate which is creeping towards double figures; and the still partly unrepaired state of Argentine capital markets. In addition, continuing price controls restrain investment in energy infrastructure, raising fears of power and fuel shortages next year.

Foreigners, in particular, will need reassurance on many of these points. But does Mr Kirchner really want them? Only in some businesses, seems to be the answer. The evidence is that he would prefer utilities to be controlled by locals. Earlier this year, another French utility, Electricité de France, sold 65% of Edenor, a big electricity distributor, to Dolphin, an Argentine private equity fund, for some $100m.

Dolphin's boss, Marcelo Mindlin, is well-connected with the government, although many of his investors are foreigners. On taking over Edenor, he obliged Mr Kirchner by accepting a smallish tariff rise and dropping the company's claim against the government at the World Bank's International Centre for the Settlement of Investment Disputes (where foreign firms are demanding almost $20 billion in compensation from Argentina). In return, the government may provide Mr Mindlin with cheap loans for new investment. Officials say that after a congressional election on October 23rd they will move to settle disputes with other energy providers.

Some of Argentina's privatisations of the 1990s were flawed by corruption and monopoly, but electricity and water were successful, with tariffs falling and coverage expanding under arms-length regulation. The new model looks more like criollo capitalism, in which favoured businesses operate in close partnership with government. It may work, for a while at least. But foreigners, even in other businesses such as manufacturing, may want firmer guarantees before banking on it.

Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.

No Voto Por Mi (Financial Times)

2005-10-20T09:22:00.000-04:00

Observer: Don't vote for me
Published: October 20 2005 03:00 | Last updated: October 20 2005 03:00

Cristina FernaÃ‚Â´ndez, Argentina's first lady and candidate in this weekend's vital legislative elections, is busy putting the final touches to her campaign to become senator for the province of Buenos Aires.

But don't expect to see pictures of her placing her ballot in the box come Sunday morning. In fact, don't expect to see her vote at all.

Observer has discovered that FernaÃ‚Â´ndez forgot to register her name with the Buenos Aires election authorities in time.

In theory, she could still vote in Santa Cruz, the province she represents in the Senate. But it is a three-and-a-half hour flight from Buenos Aires.

In practice, that will mean one vote less for her camp. But without voting duty on Sunday morning at least she can have a lie in.

Plantas Electricas Deben Usar Gas Natural Hasta Abril (Dow Jones Newswires)

2005-10-20T09:18:00.000-04:00

Argentina Directs Power Plants To Use Gas Until April

DOW JONES NEWSWIRES
October 19, 2005 12:13 p.m.

BUENOS AIRES -- Argentina's Energy Secretariat has ordered the nation's power grid to use natural gas until April in a bid to ease a ballooning deficit in a fund that subsidizes generators' operating costs when they switch to more expensive fuel oil during winter gas shortages.

The resolution, published in Wednesday's official bulletin, reactivates a gas-only directive first published last year that covered September 2004 through April 2005.

Under the resolution, generators are authorized to the use non-gas alternatives - namely fuel oil and coal - only in four instances: lower-than-average temperatures; "extraordinary or unusual" demand for natural gas and electricity; "operational emergencies" in natural gas supply; and emergencies with SADI, as the power grid is known. SADI comprises all the thermal generators in the country.

The plan bets that the Southern Hemisphere summer will see normal temperatures, therefore not threatening natural gas supplies. Hedging its bet, however, the government opened a call last week for bids to supply another 120,000 metric tons of No. 6 fuel oil through the end of January.

The Argentine government has been forced to import expensive fuel oil to make up for gas shortages that first began to appear a year and a half ago, when energy demands began to overtake supply during colder winter months. The Argentine winter runs from June to September.

This year, electricity generators began using fuel oil in March, allowing energy planners to shift natural gas to industrial and residential clients, as well as compressed natural gas, or CNG, to filling stations. Despite this, many industrial clients faced sporadic gas restrictions during the winter, leading some companies to buy their own fuel oil or to seek out other sources of energy.

Under normal circumstances, the stabilization fund run by the wholesale power market operator, Cammesa, compensates generators for the higher operating costs that they incur when they switch to use fuel oil in the winter. The fund was designed to draw extra income from distributors at other times of the year, then use that money to subsidize generators' winter costs.

However, the stabilization fund began running a deficit in July 2003 as Cammesa was unable to cover generators' increasing use of the more expensive fuels. The government's 2002 decision to convert utility rates into devalued pesos and freeze them also complicated the energy sector's efforts to restore the fund to the black.

As of the end of August, the stabilization fund's deficit had grown to ARS2.2 billion ($755.4 million), up from ARS638.5 million in July 2004, according to Cammesa.

A power sector official familiar with the stabilization fund said that "the plan is to return to normalized prices and market conditions upon the inauguration of the new Foninvemem generators." He was referring to two new 800-megawatt power plants that will be partially funded by a state-run investment fund that siphons profits from power generators, called Foninvemem. The government set up the Foninvemem fund in July 2004, but the plan initially met with resistance from private companies that argued they would better invest the money on their own.

The power sector official said that all but three companies confirmed this week their participation in the plan to build the two new generators. The government has set Dec. 1, 2007, as the deadline to have gas turbines up and running, and June 1, 2008, as the date to have combined cycle generators operating.

-By Drew Benson, Dow Jones Newswires; 5411-4311-3127; andrew.benson@dowjones.com

Buenos Aires Muestra Ambicion de Bonos (Financial Times)

2005-09-29T14:21:00.000-04:00

Buenos Aires shows bond ambition
>By Adam Thomson
>Published: September 29 2005 18:43 | Last updated: September 29 2005 18:43
>>

In a few weeks, if everything goes smoothly, Argentine government officials will invite bondholders around the world to accept a restructuring offer involving billions of dollars of defaulted debt.

If all that sounds familiar it is hardly surprising. Barely six months after the Republic of Argentina concluded the world’s largest sovereign debt restructuring, the province of Buenos Aires, the country’s richest and most populous, is trying to pull off a similar deal.

So what is different? After all, even the list of characters is similar: thousands of mainly Italian retail investors and institutional investors on one side, and on the other a provincial administration under the watchful eye of the national government.

One simple difference is size. With $2.9bn in defaulted provincial bonds, the intended restructuring is hardly small. But it is dwarfed by the $82bn in defaulted bonds that were the subject of the republic’s successful debt restructuring in February.

Another is how much the province is prepared to repay. Last week, Buenos Aires officials formally presented an offer that most analysts value at 47-52 cents on the dollar. That is roughly seven cents more than the nation offered in its February restructuring.

Pending approval from Consob, the Italian regulatory body, provincial authorities say they intend to issue three new types of securities – available in either dollars or euros – to replace the 16 defaulted bonds.

One is a so-called discount bond that carries a 60 per cent reduction in the nominal value, matures in 2017 and has fixed interest rates on the dollar-denominated option of 9.25 per cent, and 8.5 per cent on the euro-denominated papers.

The other two securities are “par” bonds with no reduction in the face value but with much longer maturities – 2020 and 2035, respectively – and considerably lower rates of interest. The long-term bond, for example, starts paying interest of 2 per cent a year, climbing gradually to a ceiling of 4 per cent.

Analysts say the par bonds are designed for retail investors who tend to place a premium on preserving the nominal value of their original investment, in contrast to institutional investors who focus on market value.

The offer, which will probably be launched at the end of October and remain open for six weeks, will include an early acceptance period in which individual investors will be able to demand up to $50,000 of the discount bond and the medium-term par bond.

Provincial authorities say they will issue a maximum of $500m of the discount bonds and $750m of the medium-term par bonds. The idea, say experts, is to get investors to tender their old bonds early to create momentum.

One bondholder representative told the Financial Times this week that he had been “pleasantly surprised” by the offer, though he did not say whether he would accept it.

Nicola Stock, who heads Task Force Argentina, a group claiming to represent Italian retail investors holding about $750m of the defaulted provincial debt, goes further.

While admitting that he has yet to study the offer in detail, he says it proves that the republic could have paid its creditors considerably more. Mr Stock is quick to point out the difference between the two administrations’ approach. “The province was always friendly, and there was never any of the arrogance we saw from the national government,” he says.

Whether that will be enough to persuade investors to accept the offer is still unclear.

Several mainly US hedge funds have been buying the defaulted bonds – institutional investors now hold about half the debt, compared with just a third 12 months ago – and some people think they may try to hold out for better terms.

But barring any radical changes in market conditions there are three reasons they and other creditors might ultimately decide to accept the province’s offer. The first is that many think the offer will succeed – they recall how the republic’s much tougher offer attracted an overwhelming number of bondholders – and do not want to be left out.

As one creditor puts it: “The republic softened the whole market up.”

The second reason is the potential lack of an alternative. Creditors who rejected the republic’s offer, for example, have employed skilled and subtle legal strategies to recover their investments but have so far got nowhere.

The third reason investors could accept the offer, of course, is profit. At least $700m of the defaulted bonds are now thought to be in the hands of a small group of hedge funds that bought the securities at between 25 cents and 28 cents on the dollar – implying juicy margins for those who participate.

As the bondholder representative says: “Those guys are not going to hold out for a few cents more – it’s not their mentality. They are just going to take the money and move on.”

Telecom Argentina Se Presenta En Quiebra En US (Dow Jones Newswires)

2005-09-13T14:42:00.000-04:00

Telecom Argentina Files For Creditor Protection In US

WASHINGTON (Dow Jones)--Telecom Argentina SA filed Tuesday for protection from creditors in U.S. Bankruptcy Court in Manhattan.

The Buenos Aries-based telecommunications company said it filed for bankruptcy in the U.S. to protect its assets from creditors who haven't signed off on the Argentina company's debt restructuring, according to court papers.

As reported, Telecom Argentina completed a $2.63 billion debt exchange Aug. 31 following approval by the Argentine court. It was the largest corporate restructuring in Argentina since the country's 2002 economic crisis.

According to court papers, Telecom Argentina wants to protect its assets from creditors who didn't sign off on the debt restructuring. Creditors, including the Argo Fund Ltd., owed about $80 million under the old notes didn't agree to the restructuring.

As reported, Telecom Argentina will issue $1.8 billion in new bonds, with $877 million in step-up 2014 bonds and $995 million in step-up 2011 bonds with a 5.5% reduction in capital in exchange for cancellation of its old debt.

Last month, an Argentine court approved Telecom Argentina's debt restructuring.

The company filed its U.S. petition under Bankruptcy Code Section 304, which allows a court to prohibit and stay actions against both a company involved in a proceeding outside the U.S. and its property.

Telecom Argentina will be represented in its U.S. bankruptcy case by the New York office of Davis, Polk & Wardwell.

The case number is 05-17811. A judge has yet to be assigned to the case.

-By Patrick Fitzgerald, Dow Jones Newswires; 202-862-3544; patrick.fitzgerald@dowjones.com

Monsanto Evalua Soja Argentina En Europa (St. Louis Business Journal)

2005-09-13T14:16:00.000-04:00

St. Louis Business Journal - 9:42 AM CDT Tuesday
Report: Monsanto testing Argentine soy in Europe

Monsanto Co. is reportedly testing some shipments of soy from Argentina in Europe in an effort to make Argentine farmers pay royalties on its Roundup Ready trait, according to published reports.

Monsanto's Argentine unit announced plans earlier this year to charge $15 per ton on shipments of Roundup Ready soy from Argentina in countries where its seeds are patented. The company has patents on its Roundup Ready soy in five European countries, which together imported more than 9 million tons of Argentine soybean products last year. However, the company hasn't been able to reach an agreement with government negotiators.

The Argentine government is working on a resolution to limit farmers' legal right to cull their own seeds and replant them without having to pay royalties, a government official told Reuters news service.

In March, Argentine farmers traveled to the European Union in an effort to prevent Monsanto Co. from forcing them to pay royalties on its soybean seeds. They said because Monsanto doesn't have a patent on Roundup Ready soy in Argentina, it should not be able to collect royalties on soy imported into Europe from Argentina.

St. Louis-based Monsanto (NYSE: MON) stopped selling the Roundup Ready soybean seeds in Argentina last year because it was unable to collect royalties and said the business was unprofitable. The company has been unable to obtain a patent on its soy, so most farmers use it without paying royalties.

Argentina is the world's third-largest soybean producer behind the United States and Brazil. An estimated 95 percent of the crop in Argentina is planted from genetically modified seeds, most of which are bought in the black market.

© 2005 American City Business Journals Inc

La Aviacion Civil en Argentina No Es Segura (The Wall Street Journal)

2005-08-31T16:42:00.000-04:00

The U.S. Federal Aviation Administration reviews whether civil aviation authorities in foreign countries set and enforce standards recommended by the International Civil Aviation Organization, a part of the United Nations. Those standards are comparable to the standards the FAA sets for U.S. air carriers.

The FAA publishes the results of those reviews on its Web site; go to FAA report and click on the link labeled "Results." Some countries that didn't pass the FAA review (marked "category 2"): Argentina, Bulgaria and Ecuador.

La Provincia De Bs. As. Authorizaria Aumento en Tarifas Electricas (Dow Jones Newswire)

2005-08-22T12:43:00.000-04:00

Buenos Aires Govt To Hike Argentina Power Co Rates -Report

DOW JONES NEWSWIRES
August 22, 2005 11:13 a.m.

BUENOS AIRES -- The government of the province of Buenos Aires, which surrounds Argentina's capital city, is expected this month to authorize a rate hike for three power distributors and some 200 electricity cooperatives, a company official confirmed Monday.

The hike would lift rates the cooperatives and distributors Eden, Edes, and Edea charge commercial and industrial clients by 5% to 6%, business newspaper Infobae reported Monday.

A company official, who asked not to be identified, said the rates increase was outlined last week at a meeting between provincial planners and company officials. Residential users remain protected from higher rates.

"Officially, there is still nothing, but it looks like the increase will be published this week or next," the company official told Dow Jones Newswires.

The rate hikes will vary by company, but will still remain short of the increases companies want to offset lower profits seen since rates were converted into devalued pesos and frozen amid the nation's economic meltdown in January 2002, the company official said.

Eden and Edes are controlled by U.S. based AES Corp. (AES), while Edea falls under Camuzzi Gas.

Earlier this year, power distributor Edelap, which operates a national-level concession in and around the city of La Plata in Buenos Aires province, became the first energy company to reach a new contract with government regulators. That deal lead to a 15% average rate increase for commercial and industrial users, but also continues to shield residential clients.

Edelap is controlled by AES.

-By Drew Benson, Dow Jones Newswires; 5411-4311-3127; andrew.benson@dowjones.com

El Embrollo de La Soja En Argentina (Syngenta Media)

2005-08-22T11:35:00.000-04:00

Monday, August 22, 2005
By Taos Turner

Monsanto, the leading producer of genetically modified plant seed, is having trouble in tango territory.
The St. Louis-based company has spent the past decade watching Argentine farmers embrace one of its premier products, Roundup Ready soybeans.

The seeds are herbicide-resistant, so by using them farmers can easily kill weeds to boost yields and profit margins. Argentine soybean output has tripled to 39 million metric tons since 1996, when Monsanto started selling Roundup Ready in Argentina and the U.S. Argentina is now the world's No. 3 soybean producer and exporter and the No. 2 modified-crop producer.

Ironically, however, revenue from Roundup Ready has evaporated. Around 95% of Argentine soybeans are Roundup Ready, but each year fewer farmers pay Monsanto royalties. The company says that it received royalties on just 18% of the Roundup Ready crop planted this season in Argentina, costing it millions of dollars in lost revenue.

In the U.S., where Roundup Ready accounts for about 91% of soybeans, Monsanto gets paid via sales at more than 200 seed companies. "These companies pay Monsanto a royalty when growers purchase their seed," says Monsanto spokeswoman Lori Fisher. "Hundreds of thousands of farmers have signed agreements since 1996 to use Monsanto's technology, and growers understand that they may only benefit from the technology for the season for which they are purchasing their seed."

Argentina lacks such accords. Moreover, because the seeds reproduce each season, farmers can replant them without paying the royalties. U.S. law prohibits this; Argentina's doesn't.

Meanwhile, Monsanto has been unable to patent Roundup Ready in Argentina, as it has elsewhere. So, early last year, Monsanto stopped selling Roundup Ready in Argentina. That spurred heated debate among farmers and public officials and led to multiparty talks to solve the problem.

However, negotiations achieved little, so Monsanto began playing hardball. This year, it told Argentine exporters it would seek a $15 per-ton fee on soybean shipments to compensate for unpaid royalties. The fee would be collected on exports to countries recognizing Monsanto's patent.

This infuriated farmers, who assumed they would end up paying the fee. Farm groups called Monsanto a greedy monopoly, and Argentina's Agriculture Secretary Miguel Campos, slammed the multinational for its "thug-like attitude." He said Monsanto was betraying a nation that has long been a "strategic ally of biotechnology."

Last month, Monsanto dropped a bombshell by confirming it had filed lawsuits in Denmark and Holland over soybean shipments to those countries. Campos reacted angrily and called Monsanto "a national embarrassment. "Argentina exported $1.6 billion of soybean products to the European Union in 2004.

The Economy Ministry, which oversees the Agriculture Secretariat, is also concerned. It collects some $2 billion annually from soybean export taxes and doesn't want trouble. And with congressional elections in October, government officials don't want to alienate farmers, who are already upset about high export taxes.

Campos says Argentina will participate as a third party in the lawsuits and that it will prevail in court. However, another Argentine official familiar with the issue says Monsanto has the upper hand. In the end, E.U. buyers will ask Argentine exporters to bear additional import costs, and these will be passed onto farmers. Monsanto, the official says, will eventually get its royalties. It's unclear how much Monsanto might collect. If recent agreements between Monsanto and farmers in Brazil and Paraguay are any guide, Argentines could end up paying around $3-to-$5 a ton.

However, the problem could still be resolved without E.U. courts, which could take years to settle the issue. "We expect to get an agreement," says Federico Ovejero, a spokesman for Monsanto Argentina. Meanwhile, investors, other biotech firms, and farmers in neighbouring Brazil and Paraguay, where Monsanto has been negotiating similar deals, are watching to see what happens.

Crude oil prices rose Friday after a volatile week marked by Mideast terror fears and a production outage in Andean producer Ecuador. New York Mercantile Exchange September crude oil rallied $2.08, to $65.35 a barrel.

Copyright © 2005 Dow Jones & Company, Inc.

Kirchner Echa A Barda (Bloomberg)

2005-08-22T11:31:00.000-04:00

Argentina Kirchner Fires Central Bank Official Branda (Update2)

Aug. 18 (Bloomberg) -- Argentine President Nestor Kirchner ousted central bank board member Ricardo Branda, who was charged this month with taking bribes as a senator in 2000.

Branda, 55, a deputy vice president and one of nine directors at the bank, said on Radio Mitre today Kirchner fired him to gain more control of the bank and said he's innocent of any wrongdoing. Luis Corsiglia, a Buenos Aires stock exchange official Kirchner put on a state-company board, will replace Branda, Cabinet Chief Alberto Fernandez said in a televised speech from Buenos Aires.

``This decision by the president was related to a difference in political visions with Branda,'' said former central bank vice president Orlando Ferreres, who now runs Ferreres y Asoc. in Buenos Aires. ``An official can serve until proven guilty of a crime and that happens in Argentina all the time.''

An Argentine congressional committee, headed by Vice- President Daniel Scioli, last week found a judicial investigation had uncovered enough evidence in a bribery case to warrant Branda's removal. Federal judge Daniel Rafecas on Aug. 6 charged Branda and five other former senators with taking bribes in 2000 in exchange for their support of a law that let companies cut workers' benefits and made firing employees easier.

Corsiglia, who helped the government restructure $104 billion of debt in May from his post as head of the local exchange agent, was appointed by Kirchner to the board of the state-run energy company Enarsa.

'Look Weak'

``He is an able economist and knows the market well but the move shows a central bank board member can be changed easily,'' economist Miguel Kiguel, a former under secretary of finance and central bank official, said by phone in Buenos Aires. ``This is a politically-motivated decision. It makes the institutional quality of the central bank look weak.''

Branda, at the bank since 2002, was part of the nine-member central bank board. The central bank has lost independence by aligning its policies with the government's, said Jose Maria Barrionuevo, director of emerging markets strategy at Barclays Capital Inc. in an interview Aug. 3.

The bank is independent, although under the law the president can remove board members found to be unfit for office.

The central bank has helped the government maintain the currency trading at around 2.9 pesos per U.S. dollar by intervening daily in currency markets to buy U.S. dollars. The policy has increased pesos in circulation and helped annual inflation rise to a two-year high in July, Barrionuevo said.

Inflation quickened to 9.6 percent in the 12 months through July from 9 percent in July and 8.6 percent in May.

Judge Rafecas said, in an interview today, he has evidence Branda received a bribe and said the case will go to trial next year.

Lavagna Se Va Resisitir a Incrementos Presupuestarios En 2006 (Dow Jones Newswires)

2005-08-12T12:27:00.000-04:00

Argentina Lavagna: Will Resist Growing '06 Budget Demands

DOW JONES NEWSWIRES
August 11, 2005 6:54 p.m.

BUENOS AIRES -- Argentine Economy Minister Roberto Lavagna was quoted by his top press official Thursday saying he will cut heavily into mounting demands for a higher 2006 budget in order to protect the government's fiscal surplus.

In comments that Economy Ministry spokesman Armando Torres said were made during a pre-recorded television interview to be broadcast later Thursday, Lavagna said "overbudget" demands had run to ARS30 billion for next year's federal budget. That tally takes into account different government departments and provincial governments, which at this time of the year routinely put in requests for the following year's disbursements.

"In agreement with...President (Nestor Kirchner), we are committed to maintaining the surplus and our fiscal independence, which is a fundamental element of our economic policy," Lavagna said. "We will make all the cuts it takes" to achieve that.

Torres said "overbudget" demands ran to ARS17 billion in last year's bidding for the 2005 budget and ARS8.5 billion in 2003 for the 2004 budget.

For the past two years, Argentina has run a primary fiscal surplus of around 4% of gross domestic product. This result has played a fundamental role in the country's stabilization and economic recovery from its crisis of 2002.

However, economists note that public spending has been growing at around 30% this year. Some fear that if this trend isn't kept in check, and especially if the current growth in tax revenue is held back, it will push the fiscal accounts back into the red, challenging Argentina's capacity to meet its still heavy debt servicing payments.

-By Michael Casey, Dow Jones Newswires; michael.j.casey@dowjones; 54-11-4313 1918

(Alberto Messer contributed to this article.)

Bancos de Venezuela y Argentina Forman Fondo Comun (Dow Jones Newswires)

2005-08-12T12:24:00.000-04:00

Argentine, Venezuelan Banks Form Joint Fund

DOW JONES NEWSWIRES
August 12, 2005; Page A7

BUENOS AIRES -- The largest state-owned banks of Venezuela and Argentina signed an accord to set up a joint trust fund aimed at providing export financing to small businesses, according to a news release from Argentina's Banco de la Nacion.

The trust fund is intended to "strengthen the poorer sectors of the economies of both countries, the cooperatives and the microenterprises, to facilitate trade between these sectors," the statement said.

The deal comes during a visit here by Venezuelan President Hugo Chavez in which he and President Néstor Kirchner signed a series of bilateral accords. The most important of these allows the expansion of imports of Venezuelan fuel oil for use by Argentine power generators, which face the threat of a gas-supply crisis. Advances also are expected on some pre-existing agreements relating to the development of Argentine shipyards to service Venezuelan ships.

Earlier, Mr. Kirchner thanked his Venezuelan counterpart for the purchase of $500 million of Argentine government bonds over the past few months. In a small way, that move helped Argentina survive without financial assistance from the International Monetary Fund, an institution that has attracted much criticism from both men and with which Argentina is facing a difficult negotiation over a new financial agreement.

He said "the bond purchases by Venezuela are a clear gesture of confidence in our country and a public recognition of the effort made by the Argentine people to put behind them one of the worst economic crises we have ever suffered."

Juez de Salta Prohibe La Venta De Nuevos Celulares (Dow Jones Newswires)

2005-08-10T11:28:00.000-04:00

Argentina Salta Province Crt Bans Mobile Phone Line Sales
DOW JONES NEWSWIRESAugust 8, 2005 3:42 p.m.
BUENOS AIRES -- A federal judge in the northwest province of Salta has prohibited all three of the country's wireless operators from selling new cellular lines, citing the companies for insufficient service.
Cicomra, Argentina's telecommunications industry group, confirmed in a Monday press statement that the companies in question have been notified of the Salta court decision. The judge's ruling halts sales by Personal, the mobile unit of Telecom Argentina (TEO); CTI Movil, which belongs to Mexican operator America Movil (AMX); and Movistar, the company launched in April from Spanish concern Telefonica Moviles' (TEM) acquisition of BellSouth Corp's (BLS) Latin American assets.
According to a report by state news agency Telam, Salta has 300,000 cellular phone users. The court ruling allows the companies' stores in the province to stay open to handle current clients' service problems and sell handsets that don't come with a new line.
Cicomra emphasized that the companies have already invested $300 million this year out of a total planned $500 million. The industry group also said inadequate regulation is complicating expansion plans and said it "reiterates the necessity of making different norms compatible with each other to permit the development of this infrastructure."
Mobile phone providers face intense competition to expand their networks and capture new users. The companies have also attracted substantial ire from users that say coverage is inadequate even within Buenos Aires city.
Complaints about the wireless operators routinely top the government's consumer watchdog agency's toll-free hotline. In December, the government banned CTI Movil from running two promotions that officials deemed false advertising. One of those campaigns claimed that the company had 100% coverage in Argentina.
-By Wailin Wong, Dow Jones Newswires; 5411-4311-3125; wailin.wong@dowjones.com

El BCRA No Tiene Compradores Para LEBACs De Largo Plazo (DOW JONES NEWSWIRE)

2005-08-10T11:25:00.000-04:00

Argentina Ctrl Bk Again Has No Buyers For Long-Term Notes
DOW JONES NEWSWIRESAugust 9, 2005 7:18 p.m.
BUENOS AIRES -- Argentina's central bank Tuesday once again failed to place longer-dated securities in its latest weekly auction, signaling further problems in its cycle of expirations of Lebac notes.
The monetary authority held an auction for ARS1.649 billion ($1=ARS2.875) in peso- and dollar-denominated Lebac and Nobac notes. It received ARS2.229 billion in bids, with ARS2.154 billion of that amount opting for peso Lebacs maturing in one year or less. The central bank ultimately issued ARS1.915 billion in notes, covering the ARS1.621 billion in Lebac expirations it had this week.
But the overwhelming interest in short-term Lebac notes points to the central bank's increasing difficulty in keeping up with future expirations. Some analysts have warned that if the monetary authority is unwilling to pay higher rates for longer-dated securities, it will have to engage in an increasingly tighter cycle of issuance and reissuance. The central bank relies partly on the weekly auctions to contain monetary expansion, a task that has been complicated in recent months by an inflation resurgence and the central bank's continued aggressive intervention in the local foreign exchange market.
The central bank offered ARS1.4 billion in peso Lebacs and received ARS2.154 billion in offers. It issued ARS1.85 billion, with ARS1.825 billion in series of 189 days or less. The remaining ARS25 million was for 364-day notes, while the 539- and 707-day tranches received no offers.
The remaining ARS65 million that the central bank issued this week was in 728-day Nobac notes with a floating rate. The bank had offered ARS100 million but received just ARS75 million in bids.
No market players made bids for the ARS20 million in fixed-rate Nobac notes offered, nor was there interest in the $100 million offered in dollar Lebacs payable in U.S. currency. As for the ARS129 million offered in dollar Lebacs payable in peso equivalent, the central bank rejected the totality of the ARS913,000 in bids it received.
Last week, the central bank called for bids for ARS1.599 billion in peso-denominated notes and received offers for ARS1.511 billion, all of which were in short-dated paper.
-By Wailin Wong, Dow Jones Newswires; 5411-4311-3125; wailin.wong@dowjones.com

Criminal De Guerra de Bosnia Arrestado En Argentina (The Guardian)

2005-08-10T11:21:00.000-04:00

Bosnian war criminal arrested in Argentina

Warlord convicted by Serbian court faces extradition to Hague
Ed Vulliamy, Nerma Jelacic in Sarajevo and Uki Goni in Buenos AiresWednesday August 10, 2005 Guardian

Milan Lukic, one of the most wanted war criminals from the carnage in Bosnia, was due to appear before a judge in Buenos Aires yesterday after being captured on Monday.
After seven years on the run from war crimes tribunal in The Hague, Lukic was seized outside his apartment in Argentina, after collecting his wife and daughter at the airport.
"When he got out of the taxi, police appeared everywhere," said the superintendent of the building. "He had lots of money on him - dollars, euros."
Lukic is unlikely to be transferred to the tribunal for several weeks. Argentina is not party to the fast-track transfer agreements that former Yugoslav and some European countries have agreed with the tribunal.
Lukic was first named and his alleged crimes detailed in the Guardian in 1996, and he was charged two years later. The indictment accuses him of the "extermination of a significant number of Bosnian Muslim civilians, including women, children and the elderly".
The crimes were committed in the town of Visegrad in the Drina river valley in eastern Bosnia, and include transporting Bosnian Muslim civilians on to Visegrad's famous Ottoman bridge and killing them. He is further charged with locking scores of Bosnian Muslims, including babies and children, into houses and incinerating them.
Lukic's chosen hiding place has fuelled investigators' suspicions that Argentina is becoming a safe haven for Serbian fugitives, as it was for Nazi war criminals. Most of Lukic's fellow indictees have hitherto gone underground in Bosnia, Serbia or Russia, but he is the second alleged war criminal from the former Yugoslavia to be found in Buenos Aires. In June, extradition from Argentina to Serbia was agreed for Nebojsa Minic, wanted for war crimes in Kosovo. "There may be a network there," said one official close to the investigation.
The tribunal's hunt appears to have succeeded with the belated cooperation of Serbian authorities. Rasim Ljajic, president of the Serbian Council for Cooperation with The Hague, said that Lukic's arrest had followed "increased operational activities of our security services in cooperation with the international community".
Florence Hartmann, spokesperson for The Hague's chief prosecutor, Carla del Ponte, said yesterday that the tribunal was "happy with the cooperation of the Serbian special services, and the Argentinian police were also co-operative".
For years, neither Serbia nor Bosnian Serbs showed an interest in handing over Lukic, who was seen around Visegrad and in Serbia, allegedly running criminal and extortion rackets.
He was arrested and tried three times in Serbia, but released. But in September 2003, a Belgrade court sentenced him in absentia to 20 years for the massacre of Bosnian Muslims. "Unlike some war criminals, he was never a hero," said a source close to the hunt. "He was a criminal, he became trouble wherever he went, even in Serbia."
Then, in April 2004, the Sarajevo-based Balkan Investigative Reporting Network (Birn) published an account, based on intelligence sources, that claimed Lukic had enjoyed - but lost - the protection of the so-called Preventiva network, which hides the fugitive leader Radovan Karadzic.
Lukic replied to Birn, in an email from hiding. The server from which the email was sent was traced to Brazil.
Guardian Unlimited © Guardian Newspapers Limited 2005

Los Sindicatos Argentinos: El Manto Pesado De Moyano (Council For Hemispheric Affairs)

2005-08-07T20:17:00.000-04:00

Argentina's Labor Unions: Moyano’s Heavy Mantle

As if reflecting the comparable divisive events now afflicting the U.S. labor movement, Hugo Moyano was officially installed on July 14 as the Secretary General of Argentina’s largest trade union conglomerate, the General Confederation of Workers (CGT). This broke the leadership troika agreed upon when the CGT was reunited in 2004. The crowning of Moyano as the de facto leader of Argentina’s labor movement marked the culmination of a power struggle with fellow CGT titan Susana Rueda. In retaliation, Rueda has threatened to pull the eight unions loyal to her leadership out of the CGT. Moyano must also deal with a liberalized labor market in which high unemployment is a volatile component. Moyano insists he will fight for increased labor protections, but his close relationship with President Nestor Kirchner indicates that he will most likely follow the same corporatist path that characterized union leadership in the 1990s when the movement acquiesced to former President Carlos Menem’s damaging reforms. In order for unions to remain influential, Moyano must take bold steps to unite the CGT under his firm leadership, without the seemingly intrusive help from the nation’s president.

Lea el resto del articulo aqui

Huelgas Masivas Devastan Infraestructura Argentina (Chicago Tribune)

2005-08-07T20:05:00.000-04:00

Mass labor strikes crippling Argentina's domestic infrastructureBY COLIN MCMAHONChicago Tribune

BUENOS AIRES, Argentina - (KRT) - If it's Thursday, the train workers must be on strike. Or maybe the nurses, or the pilots, or the teachers. Or, don't even think it, all of them at once.
On any given day in Argentina lately, some group somewhere seems to be striking for higher pay, more jobs or better working conditions. And it's exasperating even those Argentines sympathetic to the legions of workers who have seen their purchasing power slashed by the nation's economic collapse.
"These strikes have always gone on, but there are more now," said Maria Paredes, a 36-year-old nanny. "For working people like us this is a total mess, especially for those of us who have to make it on time."
Paredes was killing time Thursday evening waiting for service to resume on the Mitre train line, which takes her from her home in Bernal to her job in the Buenos Aires neighborhood of Belgrano. Her normal commute is bad enough, but Thursday's nationwide rail strike stretched it to two and a half hours.
The strike derailed the estimated 1.8 million people who ride the nation's train lines daily, and it made a muddle of traffic in Buenos Aires. People seeking alternative transportation endured long lines for buses and taxis. And highways snarled with 250,000 extra cars on the road, about a quarter more than usual, according to government estimates.
"The train strike means a lot more traffic, a lot more people in the streets, and so many delays for everyone," said Valeria Pisani, 27, an official translator of English who, unlike many of her fellow would-be train passengers, learned of the strike Wednesday night and not upon arrival at the station Thursday morning.
Striking airline pilots and airport workers have grounded thousands of domestic and international flights in recent weeks. Teachers have canceled university classes. Hospital workers have delayed surgeries and redirected patients. Court workers have disrupted trials and other judicial business. And that's not to mention the roving bands of pickets who regularly block streets, businesses and public buildings to air a litany of political and economic grievances.
Like all those groups, the train conductors and machinists who struck Thursday can make a sympathetic case for their demands. Union leaders say members have been losing ground against inflation since 1991, with the hardest times coming after Argentina's economy collapsed in 2001-2002.
La Fraternidad, which called Thursday's strike and was later joined by other rail unions, is Latin America's oldest labor group, having been founded in 1887 in Buenos Aires. Its leaders are demanding a monthly base salary of 1,820 pesos, or a little more than $600. The rail companies are offering 1,500 pesos.
Union leaders say the company's offer, while a significant raise, falls short in a country where inflation has crept into the double digits and households still have not recovered from the drastic devaluation of the peso.
"They are right to protest, but their method hurts all the rest of the people who have to go to work and fulfill their obligations," said Pisani, who lost 45 minutes to the strike Thursday while commuting to her translating job. "This is too drastic."
At the same time, many Argentines see the strikes as an extension of the nation's complex political squabbling.
Some unions are seen as loyal to President Nestor Kirchner. Some are seen as tools of other parties or even of rivals within Kirchner's own Peronist movement. This tears at the sympathy the workers might otherwise hope to gain.
Thursday's rail strike, like most of the other work stoppages throughout the Argentine winter, cost time and money. But at Garrahan hospital, the main pediatric-care center in Argentina, families are worried that an intermittent strike by nurses and other medical professionals will cost someone's life.
Already doctors have been forced to suspend more than 160 surgeries this year, hospital officials said. On days when workers are striking, Garrahan sees a third of the usual 150 children it treats, the officials said.
"I put myself in the place of the doctors and the nurses who have to live as well, but there has to be some kind of solution," said Maria, who works at a small food and beverage shop in Buenos Aires. "What is happening is terrible. It is an embarrassment that there are no operations for these children with problems who have to be hospitalized and are not."
Maria, who gave only her first name, was waiting for the trains to start running again Thursday night. The strike was supposed to go on all night, but Kirchner himself appealed to the leaders of La Fraternidad, and the union went back to work almost in time for the evening rush.
Passengers were relieved, but wary. Even as they lifted Thursday's strike, union leaders threatened another one - this time for 36 hours - in the coming week.
---
© 2005, Chicago Tribune.

Latinoamerica Tiene Su Propia CNN...O Al Jazeera? (Radio Holanda)

2005-08-01T06:36:00.000-04:00

Telesur is the name of the new Latin American satellite television station which went on the air on Sunday 24 July, but opponents of Venezuelan President Hugo Chávez have already dubbed it 'Telechávez'. They're predicting that the president will use the station to promote his own ideas and as a propaganda tool to advance his 'Bolivarian revolution'.

Aram Aharonian, a Uruguayan journalist and now managing director of Telesur (English translation: TeleSouth), is annoyed about these accusations. "I'm going to ask Chávez to do a weekly programme," he commented ironically during the station's opening broadcast, "He'll be allowed to talk about everything except politics, and it must be called 'Telechávez', so at least something will have that name, and the moaning can stop."

The concept of Telesur came from Mr Chavez; his country is providing 50 percent of the funding, and the studios are in Venezuela's capital, Caracas. But it's actually a joint project, in which Argentina, Uruguay and Cuba are already involved, and it's hoped that other countries will follow.

Argentina's President Néstor Kirchner is a passionate supporter of the new station, which has the primary objective of breaking the hegemony of powerful international broadcasters, such as US-based CNN. Picture distortionThose behind Telesur believe its existing competitors give a distorted picture of the real situation in Latin America. Telesur hopes to counterbalance this with information for the people of South America, produced by South Americans. 'Nuestro norte es el sur' is the station's slogan; a play on words which basically means: the South is our guiding principle.

Telesur's goal is become an international station which promotes integration among the nations of South America. Its news director is Colombian journalist Enrique Botero. The station also has a team of international advisors, including well-known figures such as Uruguayan writer Eduardo Galeano, US actor Danny Glover and British journalist Tariq Ali, who's commented that it is vitally important there's a clear dividing line between the station's owners and the journalists who work there.

The new station has not exactly been welcomed with open arms in the United States. Republican Congressman Connie Mack has even described it as threat to the US, saying it will undermine the balance of power in the western hemisphere.
The US House of Representatives has adopted Mr Mack's idea of setting up stations to counter the influence of Telesur, along the lines of the US-based Marti TV and radio stations which target Cuba. President Chávez has warned, however, that should Washington try to revive the use of jamming transmitters, this will result in an 'electronic war'.

Telesur appeared to make a point of demonstrating its independence on its very first day on the air, by broadcasting a film featuring transvestites, scavengers and street children in Caracas. Not exactly the most positive images of Mr Chávez's 'Bolivarian Revolution'.
© Radio Nederland Wereldomroep, all rights reserved

Venezuela Estudia Comprar Mas Deuda Argentina, Ecuatoriana (The Wall Street Journal)

2005-07-26T11:56:00.000-04:00

Venezuela Studies Buying More Argentine, Ecuador Debt

DOW JONES NEWSWIRESJuly 25, 2005 4:08 p.m.
CARACAS -- Venezuela's government may purchase more Argentine government debt than originally expected and is pondering a proposal to buy bonds from Ecuador, a finance ministry official said Monday.
"Initially we budgeted a $500 million purchase but it will depend on market conditions if we decide to buy more than originally planned," Rudolf Romer, head of the finance ministry's public credit office, told Dow Jones Newswires Monday. He didn't give details of how much more the government could buy.
The government of President Hugo Chavez has purchased $300 million in Argentine debt so far this year and another $200 million purchase is pending.
Officials have suggested that Venezuela also could buy Ecuadoran bonds soon but no final decision has been made, Romer said.
"Ecuador has asked us to make a purchase similar to that of the Argentine debt but we're evaluating that proposal right now," Romer said. He declined to say when the government plans to make a final decision on the matter.
Ecuador's deputy finance minister, Magdalena Barreiro, last week said she is negotiating the sale of $200 million in Ecuadoran bonds with maturities as long as three years to Venezuela.
Ecuadoran officials are visiting Venezuela this week for oil talks, but it isn't clear if they intend to discuss the debt purchase with Chavez as well.
Romer made it clear that for the moment Venezuela isn't looking into buying debt from other South American neighbors aside from Argentina and Ecuador.
Finance Minister Nelson Merentes recently said that South American countries should try to erect a market for their debt in the region, to rely less on U.S. banks and investors.
Chavez also has long called for the creation of a central bank for the Southern Cone in which all central banks can keep their reserves. He also has voiced plans to create oil companies such as Petrosur, Petrocaribe, and Petroandina to promote regional economic integration.
-By Raul Gallegos, Dow Jones Newswires; 58-212-564-1339; raul.gallegos@dowjones.com
Corrected July 25, 2005 16:10 ET (20:10 GMT)
Ecuadoran officials are visiting Venezuela this week for oil talks, but it isn't clear if they intend to discuss the debt purchase with Chavez as well.
(In "=Venezuela Studies Buying More Argentine, Ecuador Debt," published at 3:03 p.m. EDT, it was incorrectly stated that Ecuadoran officials are visiting Venezuela for an oil conference.)

La Provincia de Bs. As. Lanza El Canje De Su Deuda (The Wall Street Journal)

2005-07-26T11:49:00.000-04:00

Argentina Buenos Aires Province Starts Debt Swap Roadshow

DOW JONES NEWSWIRESJuly 26, 2005 11:14 a.m.

BUENOS AIRES -- The Argentine province of Buenos Aires has started an international roadshow to prepare for a September launch of its restructuring of $2.9 billion in defaulted debt.
A team of five officials led by provincial Economy Minister Gerardo Otero and four representatives of Citigroup Inc. (C), the province's financial adviser, began a tour of the U.S. and Europe with creditor meetings in New York Monday, ministry spokesman Enrique Velazquez said Tuesday.
He said details of the debt swap proposal won't be unveiled at these meetings and that bondholders will have to wait until the offer is launched in September to discover its details. The purpose of the meetings, he said, "is to inform creditors of the current financial situation of the province and of the outlook for the next few years, and to get a sense of the creditors' mood."
The team will be in London Wednesday, Zurich Thursday and Rome on Friday, and there are tentative plans to travel to Boston, Frankfurt and Milan next week, Velazquez said.
He added that a document leaked to the press last week was nothing more than one of many works in progress in preparation for the final offer. "No final decision has been made, not in terms of the percentage (debt reduction sought from bondholders) nor in terms of the type of bonds we are going to present."
That document, which lacked details on the maturities of the bonds on offer and the cuts in interest rates planned, nonetheless suggested that the province is considering imposing some very tough terms.
According to that document, one of the bonds in a menu of choices that would be offered to bondholders would contain a 65% reduction in face value.
The document addressed plans to acknowledge past-due interest accrued before and after the province's January 2002 default. However, the terms applied would not translate into a big payout to bondholders.
Interest accrued before the default date would be capitalized into the "eligible amount" to be claimed by each bondholder, meaning it would be subject to the same "haircut" as the outstanding nominal amount. Interest acknowledged after that would be reduced to a 2% maximum rate - down from coupons that were mostly above 10% originally - and then would also be rolled into the capitalized "eligible amount" to be subject to the restructuring.
The province's tough stance is thought to have been influenced by the similarly harsh terms applied by the national government in its $103 billion debt restructuring earlier this year.
Before that deal was launched, bondholders had been generally happy with the way the province was handling the preparation for the restructuring and with Citigroup's open, consultative approach toward creditors.
However, that process came to a halt early last year when Provincial Governor Felipe Sola stepped in and said the restructuring would have to wait until the government had completed its offering, which would then be used as a "guideline" for the province's offer. This was widely interpreted as a response to pressure from President Nestor Kirchner, who didn't want the province to come to market with a debt restructuring that offered a higher payout to bondholders than the national government was planning in its deal.
Many of the same central figures are represented among the bondholders in the provincial debt workout as those that went to battle with the national government over its offering.
Velazquez said the provincial team will on Friday meet with Nicola Stock, the Italian banker who heads up Task Force Argentina, a group of hundreds of thousands of small Italian bondholders with a stake in Argentine sovereign, provincial and corporate debt.
The team is also expected to meet with representatives of Greylock Capital, the hedge fund whose managing partner, Hans Humes, is co-chairman of the steering committee of Global Committee of Argentine Bondholders. That group, which is co-chaired by Stock, became the national government's principal adversary during its debt restructuring and ended up advising its members to reject the exchange offer when it came to market in January.
-By Michael Casey, Dow Jones Newswires; michael.j.casey@dowjones; 54-11-4313 1918

Se Intensifica El Contrabando De Combustible Desde Argentina (MercoPress)

2005-07-22T15:14:00.000-04:00

Fuel smuggling from Argentina intensifies

Chilean Customs authorities have detected and warned about a considerable increase in the smuggling of cheap Argentine fuel into Magallanes region.

With fuel prices up to 40% cheaper on the other side of the border a growing number of Magallanes residents have been tempted to fill their tanks in Argentina and even try to bring back significant volumes hidden in cars, trucks and the regular bus services.
Hector Briceño head of the Customs department in Magallanes has warned about the danger of transporting fuel in improvised recipients plus the fact that it is an offence meaning the fuel will be confiscated and a hefty fine imposed on the smuggler.
The traffic is particularly intense in the Puerto Natales-Rio Turbio crossing where Customs have accumulated large volumes of confiscated fuel, but do not have the appropriate storage facilities.
Puerto Natales fuel distributors have complained about a 35% drop in sales and are now demanding similar prices to the other side of the border to make Chileans desist from trying to smuggle back fuel.
Authorities in Punta Arenas admit the seriousness of the problem and the difficulty of controlling such traffic but are confident that following October elections in Argentina, “things will return to normal, as markets dictate”.

Las FARC Extienden Su Influencia (Miami Herald)

2005-07-22T15:05:00.000-04:00

Colombian rebels widening reach
BY STEVEN DUDLEY
Knight Ridder Newspapers
[Subrayado en rojo agregado por La Papa]
BOGOTA, Colombia - (KRT) - A series of recent arrests around Latin America have revealed that the FARC, Colombia's oldest and largest leftist guerrilla group, is involved in everything from political lobbying to kidnappings and drug and weapons trafficking.
The discovery of links that allegedly are focused in Venezuela but extend from Argentina to Mexico has created new worries in Colombia, its immediate neighbors and other parts of Latin America.
FARC leader Raul Reyes suggested earlier this year that the rebels would try to create ''refuges of coexistence'' inside their neighbors' territories. ''The FARC hopes to build on the borders ... with Ecuador, Venezuela, Brazil, Panama and Peru,'' he said in an interview with Colombian television.
With an estimated 17,000 fighters, the FARC - the Spanish acronym of the Revolutionary Armed Forces of Colombia - is the largest rebel group in the hemisphere. Its humble beginnings - as a small group of communist-backed rebels in the early 1960s - belie its now sophisticated international logistical and political support networks.
The bare bones of this network began to emerge with the capture of Rodrigo Granda in Venezuela last December by bounty hunters paid for by the Colombian government. Granda, whose capture caused a brief diplomatic rift between Bogota and Caracas, was ferried to Colombia, where he awaits trial on charges of rebellion.
Granda is an admitted member of the FARC's International Committee, a small group of members who go quietly to places like Mexico and Europe to win support for their insurgency and seek alliances with like-minded organizations and governments. Colombian authorities say their job also includes brokering arms purchases, establishing a ''Latin American revolutionary movement,'' and possibly facilitating kidnappings.
Documents held by Colombian government intelligence agencies, for instance, include a report that a former FARC member had testified that Granda also trained guerrillas in explosives. Colombian authorities say that he trafficked guns from points abroad. Paraguayan and Colombian authorities also claim they intercepted e-mails linking Granda to the kidnapping of Cecilia Cubas, the daughter of former Paraguayan President Raul Cubas, and they allege that Granda met with Cubas' kidnapper in Caracas. Cecilia Cubas' body was found earlier this year.
''Granda isn't just international political spokesman of the FARC,'' said Col. Oscar Naranjo of the Colombian police intelligence unit known as DIJIN. ``He's involved in arms trafficking. ... Granda also ends up consulting on that kidnapping. Granda also facilitates a number of encounters, promoting the establishment of various armed groups in Latin America.''
For his part, Raul Reyes, a top FARC leader inside Colombia and head of its International Committee, acknowledges that the rebels have numerous contacts abroad but denies that his envoys are involved in kidnapping or other criminal activities.
''Sure, the FARC has relations with Paraguayan revolutionaries. We don't deny it,'' Reyes said in a recent interview published on the rebels' Web site. ``We also have relations with Brazilian revolutionaries, with Venezuelans, with the Communist Party of Cuba, and with different governments that for obvious reasons I won't name here.''
Investigators in Colombia and the United States say that Venezuela has become the FARC's most important hub of activity abroad. Venezuelan President Hugo Chavez has often expressed sympathy with revolutionary movements like the FARC throughout Latin America, but knowledgeable U.S. officials say there has been no evidence linking Chavez personally to the rebels.
These officials nevertheless say that Venezuela has become the FARC's principal route for trafficking guns in exchange for drugs. Venezuelan authorities have detained several FARC members involved in kidnapping and drug trafficking in recent months, and a Western anti-drug official said FARC members were linked to a seven-ton load of cocaine seized last year in the state of Guarico.
Venezuela is equally important as a political hub for the rebels. At a 2003 meeting in Venezuela, according to Colombian intelligence agencies, an international conglomerate of left-of-center organizations, including the FARC, formed the Bolivarian Continental Coordinator as part of a regionwide plan to foment resistance to U.S. policies.
With offices in Venezuela, Guatemala, El Salvador, Ecuador, Peru, Brazil, Panama and Honduras, the Coordinator is the FARC's means of reaching out to other Latin American organizations like Brazil's Movement of the Landless, the Popular Front in Peru, the Mothers of Plaza de Mayor Movement in Argentina, and Chile's Manuel Rodriguez Patriotic Front, authorities in Colombia say.
This network may be tied together in part by money as well as political sympathy. According to a report by Veja magazine in Brazil earlier this year, intelligence agents there witnessed FARC emissaries offering donations to the Workers' Party for its 2002 campaign. The agents could not prove whether the money actually entered the coffers of the party. Both the Workers' Party and the FARC are part of the so-called Sao Paulo Forum, another leftist conglomeration that meets yearly in different parts of Latin America. Brazilian President Luiz Inacio Lula da Silva is a member of the party.
Brazil and Ecuador have also become extremely important supply lines for the guerrillas, investigators claim. Both largely jungled borders serve as transit points for guns and drugs, and rest and recreation areas for FARC fighters. Some investigators fear that Ecuador has become more than a refuge for the FARC. Last month, guerrillas launched an attack from Ecuador that killed 19 Colombian soldiers and led Colombian military officials to call for their neighbors to beef up their border patrols.
FARC operatives also are alleged to have been extending their reach into the drugs and arms trafficking along the so-called Triple Frontier area where the borders of Brazil, Argentina and Paraguay meet.
In May, Argentine authorities captured Alberto Galvalisi, an alleged FARC member accused of kidnapping at least a dozen Brazilians since 1994.
And late last month, Paraguay extradited alleged FARC member Ivan Carlos Mendes-Mesquita to the United States to face drug charges. He was captured last November on his ranch in northeastern Paraguay, along with a twin-engine aircraft loaded with 500 kilograms of cocaine.
''Mendes-Mesquita operated a powerful cocaine, currency and weapons smuggling enterprise,'' the U.S. Drug Enforcement Administration said at the time. ``He was the source of supply for numerous Brazilian trafficking organizations, including several with strong ties to the Middle East and Europe.''
But the FARC's increasing international presence has also cost it some of its top leaders. Early last year, Ecuadorean authorities arrested a FARC chieftain, Ricardo Palmera, also known as Simon Trinidad, as he strolled the streets of the capital city of Quito - with his wife and daughter, according to Colombian military sources.
One of the sources said that when Palmera was detained, he ``said he was on a diplomatic mission for the FARC.''
The highest-ranking FARC commander ever captured, he was quickly deported to Colombia and then was extradited to the United States early this year to face charges of drug trafficking, kidnapping and terrorism.
---
© 2005, The Miami Herald.

Washington Se Asegura Base AntiTerrorista (Council On Hemospheric Affairs)

2005-07-22T10:32:00.000-04:00

COHA MEMORANDUM TO THE PRESS

Washington Secures Long-Sought Hemispheric Outpost, Perhaps at the Expense of Regional Sovereignty

• On June 1, 2005 the Paraguayan National Congress entered into an agreement with Washington that allows U.S. troops to enter into Paraguay for an 18-month period.

• The troops will help train Paraguayan officials to deal with narcotrafficking, terrorism, government corruption and domestic health issues.

• The agreement grants the U.S. troops legal immunity from possible offenses committed during their stay.

• Washington has long sought similar immunity for its troops in the Southern Cone, but Argentina and Brazil have firmly restricted granting such judicial liberty to U.S. troops.

• Bolivian officials and its press are also speaking out against the agreement, fearing the U.S. presence as a means to control the petroleum and natural gas sources in their country.

• Though Asunción and Washington claim that the U.S. has no intentions of establishing a permanent base in Paraguay, history shows a strange resemblance between the current situation in Paraguay and the development of the Manta base in Ecuador from a “temporary” facility into a major base.

Lea el resto del articulo en aqui

Bielsa vs. O'Grady (The Wall Street Journal)

2005-07-20T14:39:00.000-04:00

Bielsa v. O'Grady
July 20, 2005; Page A12

It's not every day that one of our columnists is attacked in print, and by name, by a leading official of an important country. So we thought our readers might like to know that the editor of our Friday Americas column, Mary Anastasia O'Grady, was accorded this distinction by Argentina's foreign minister, Rafael A. Bielsa, last Saturday.

Writing in Argentina's La Nacion, the influential Buenos Aires newspaper, Mr. Bielsa accused Ms. O'Grady of "neoliberalismo," which in the context of his article was not intended as a compliment. He linked her with such subversive organizations as the American Enterprise Institute, the Cato Institute and others who believe in what he called "the right to property."

And it's true that Ms. O'Grady freely admits to a fondness for classical liberalism, presumably the ancestor of "neoliberalismo." As we define it around here, that is someone who believes in free trade, limited state interference with market processes, observance of the law by public officials and soundly based economic policies. Some of our best friends, not to mention some of the world's best rulers, are classical liberals.

Argentina's ruling Peronists clearly have a different philosophy, judging from their recent history of breaking contracts, destroying dollar holdings through "pesofication," freezing prices and marking down Argentine bonds to 34 cents on the dollar.

But what touched Mr. Bielsa off was a column by Ms. O'Grady on July 8, reprinted in La Nacion July 12, accusing the Argentine government of being soft on terrorists. She cited two examples of fugitives who had found shelter in that country. The column also mentioned that some members of the present government were once themselves members of the so-called Montoneros, who waged an unsuccessful guerrilla war against the Argentine government in the 1970s.

This has not been denied, although Mr. Bielsa in his article claimed it was courts, not the government, that have so far refused to extradite the fugitives to Spain and Chile. That would be a good point were it not for the fact, cited by Ms. O'Grady, that President Nestor Kirchner packed the Argentine supreme court by replacing existing justices with his own favorites -- which might have just possibly had some effect on Argentine jurisprudence.

Ms. O'Grady has been tough on the Kirchner government, though she is not quite as devilish as Mr. Bielsa imagines. He complains that when he visited the Journal last January, Ms. O'Grady didn't attend the meeting, but was observed "several times peering menacingly into the room." He used the Spanish word acechante to describe her mien, which can translate either to "threatening" or "menacing," as in a tiger lying in wait for its prey.

Ms. O'Grady may seem menacing to Mr. Bielsa, but to us she's a journalist who cares about the plight of ordinary Argentines and wants to promote ideas that will improve their lot in life. And, oh yes, she was somewhere else entirely when Mr. Bielsa thought he saw her peeking into the meeting room. It must have been some other Journal tiger, or tigress if you prefer.

URL for this article:
http://online.wsj.com/article/0,,SB112182480080190364,00.html

Copyright 2005 Dow Jones & Company, Inc. All Rights Reserved

Bono Argentino en U$S Recibido Calidamente (Financial Times)

2005-07-20T13:41:00.000-04:00

Issue by Argentina is greeted warmly

By Peter Hudson in Buenos Aires
Published: July 20 2005 03:00 | Last updated: July 20 2005 03:00

The Argentine government this week made a triumphant return to the dollar-denominated debt market, only three and a half years after staging the largest default in world history and less than two months after restarting payments on its private debt.

In the first issue in foreign currency since the default at the end of 2001, investors, led by foreign investment banks, oversubscribed the $500m offer by more than three times. The government set a cut-off point of 7.99 per cent interest on the 2012 bonds, barely more than the price being paid by neighbours Brazil and Uruguay - neither of which have Argentina's recent history of missed payments.

Argentina has managed to attract so much foreign interest that the treasury expects to make a similar issue in coming months.

But Miguel Angel Broda, a local economic consultant, was unsurprised. With world interest rates currently low, "everyone is starving for high yields", he said, adding that the coupon of 8 per cent in dollars was too good for investors to miss. "Greed always outweighs prudence and memory," he said.

After restructuring, the net present value of Argentine debt is lower than that of Brazil or Uruguay.

"The offer has been valued on the basis of solvency and liquidity in the future," he said.

Argentina is running an unprecedented primary budget surplus of over 4 per cent of gross domestic product, has a current account surplus and is bringing down its overall stock of debt with repayments that exceed new issues. These factors have convinced some investors that the risk of default is small.

No Cuenten Con Argentina En La Lucha Contra El Terrorrismo (The Wall Street Journal)

2005-07-11T10:16:00.000-04:00

THE AMERICAS

Don't Count on Argentina to Help Fight Terror

By MARY ANASTASIA O'GRADY
July 8, 2005; Page A11

(See Corrections & Amplifications item below0.)

Is Argentina becoming a "national sanctuary for foreign terrorists?" That's the question posed on the Argentine Web site Ambitoweb.com this week. As suggested by the provocative commentary, it's a possibility that alarms more than a few Argentines these days.

It is also a question worth the attention of U.S. policy makers. More and more, Argentina is looking like the pre-9/11 Saudi Arabia of South America. While official engagements between the U.S. and Argentina are cordial, what is being cultivated on the Southern Cone home turf hardly qualifies Argentina as an ally in the war on terror. Having been served the fruits of Saudi double talk four years ago, the U.S. would be well advised to be twice shy.

The concern raised on Ambitoweb.com came on the heels of a decision by an Argentine judge to reject Chile's request to extradite Sergio Galvarino Apablaza. Otherwise known by the nom de guerre Commandante Salvador, the Chilean is a former leader of a left-wing extremist group called the Manuel Rodriguez Patriotic Front. He stands accused of the assassination of Chilean Senator Jaime Guzman in 1991 and the kidnapping of Cristian Edwards, the son of the owner of Chile's El Mercurio newspaper.

The Chilean government of Socialist Ricardo Lagos is hardly a right-wing junta out to nail political enemies, particularly anyone of Mr. Apablaza's persuasion. Mr. Lagos is famous for once having challenged Gen. Augusto Pinochet publicly to step aside. Nevertheless, according to Ambito, the Argentine judge who rejected the extradition request "took the view that the crimes attributed to Mr. Apablaza were political in nature" and ordered his immediate release.

On Wednesday, Mr. Apablaza appeared at the headquarters of an Argentine human rights group in Buenos Aires, proclaiming that his only regret is "not having done more to cut short the [Pinochet] tyranny."

That sounds brave until you take note of the fact that Guzman was assassinated long after Gen. Pinochet had voluntarily handed power over to an elected civilian government. His killer obviously had some goal in mind other than the liberation of the Chilean people. Not surprisingly, Chile's Communist Party celebrated the Argentine decision. Commandante Salvador maintains his innocence and on Thursday asked the U.N. for political refugee status.

Sadly, the federal court decision to protect a wanted Chilean terrorist is not an isolated event but rather part of an ethos now prevailing at high levels in Argentine politics and jurisprudence. In May the Supreme Court rejected the extradition of an alleged terrorist belonging to the Spanish Basque group known as ETA, which has claimed more than 850 lives since 1968. Jesús Maria Lariz Iriondo stands accused of a 1984 car bombing in Eibar. Yet the court ruled that the terrorist act attributed to him is not a crime against humanity. Therefore the statute of limitations applies and he cannot be held accountable.

In an editorial titled "Crimes Against Humanity," yesterday's La Nacion newspaper pointed out that this is directly contrary to the 1996 U.N. resolution which defines crimes against humanity as "criminal acts with political ends committed or planned in order to provoke a state of terror among the population in general or a specific group."

A literal reading of the U.N. resolution is however inconvenient for the Kirchner government. The Argentine terrorists known as "Montoneros," along with the Castro-backed ERP, committed ETA-like atrocities against innocents for a decade, before and during the 1976 military government takeover, racking up over 1,500 victims. Today, Argentina allows many known Montoneros to go about Argentina with impunity. Some are even in government. This, of course, gets to the heart of the problem for the Kirchner set: How can ETA or Chilean terrorists be prosecuted while former Montoneros enjoy complete freedom?

Mr. Kirchner's base is a hard-left, anti-American sect and in the past two years he has moved swiftly to pack the Argentine high court with similarly-inclined judges. In the name of justice the court recently lifted the amnesty granted to the military in 1986 and 1987 for its crimes during the "dirty war." But it has said nothing about prosecuting former Montonero and ERP terrorists who practiced the kind of tactics observed in London yesterday morning until they were put down by the military takeover.

Today Argentina has less in common with serious countries like Chile and more in common with Nicaragua, which is again under the sway of Sandinistas. Nicaraguan judges in May refused to extradite Alessio Casimirri to Italy to stand trial for the 1978 kidnapping and murder of former Italian Prime Minister Aldo Moro.

To understand the sympathies of the Kirchner government it is worth turning attention to one of its most important political supporters, Hebe de Bonafini of the Mothers of the Plaza de Mayo, who celebrated 9/11. Buenos Aires press reports say that she lobbied hard for political asylum for Mr. Lariz Iriondo. Last month she was in Havana with Fidel, Hugo Chávez and Salvadoran guerrilla Shafik Handel to complain that the U.S. has not extradited anti-Castroite Luis Posada Carriles to the Cuban province of Venezuela to be tried on terrorism charges.

Argentina has a history of harboring the world's darkest figures, including Nazi fugitives after World War II. The Iranian and Syrian sponsored Hezbollah is widely suspected of orchestrating the Buenos Aires bombing of the Israeli Embassy in 1992 and the Jewish community center in 1994. No one was ever brought to justice in those horrific events. Mr. Kirchner claims to be investigating those attacks again, but 11 years leaves a rather cold trail.

Despite that promise, Mr. Kirchner refuses to condemn Chávez even though in 1994 the Venezuelan bad boy verbally attacked the country's Jewish community and approved a raid on a Jewish day school in Caracas. According to a U.S. State Department Web site, in 2004 printed anti-Semitic leaflets were "available to the public in an Interior and Justice Ministry office waiting room."

When Secretary of State Condi Rice met with the Argentine foreign minister in April, civil rights in Venezuela was on the agenda. But an Argentine foreign ministry spokesman said that instead the conversation centered on what Argentina wants: more handouts from the IMF, presumably to keep the Kirchner base supplied with American flags to burn. The U.S. ought to have learned more from the Saudi experience.

Corrections & Amplifications:

The July 8 Americas column misstated the year in which Venezuelan President Hugo Chávez verbally attacked the country's Jewish community and approved a raid on a Jewish day school in Caracas. It was 2004.
URL for this article:
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Robo de Propiedad Intelectual Aumenta 193% Desde Abril (pressbox UK)

2005-06-29T07:55:00.000-04:00

Piracy & Counterfeiting Report: IP Theft Skyrockets 193% from April
Added: (Mon Jun 27 2005)

Counterfeit and piracy seizures and losses, related to intellectual property theft, for May jumped 193% ($49 Million) to $103 Million (USD) from April, as reported by Gieschen Consultancy.

Monday June 27, 2005 -- Calgary, Canada -- Based on worldwide counterfeit enforcement activity (investigations, raids, seizures, arrests, charges, convictions, sentences, civil litigation, public announcements) for month of May 2005, as reported through the DOPIP Security Counterfeit Intelligence Report, more than 300 incidents valued at $230,308,305 (US Dollars) were analyzed from 41 countries.

The top 10 countries reporting intellectual property violations:

1. China, $64 Million (USD) seizures and losses.
2. Hungary, $13 Million.
3. USA, $6.9 Million.
4. Argentina, $6.0 Million.
5. Thailand, $2.3 Million.
6. Philippines, $2.0 Million.
7. Malaysia, $2.0 Million.
8. Canada, $1.9 Million.
9. UK, $1.5 Million.
10. Italy, $0.7 Million.

Other countries include Algeria, Australia, Brunei, France, Greece, India, Ireland, Malta, Pakistan, Singapore, South Africa, Turkey, and UAE.

The top 20 countries pursuing all forms of counterfeiting and pirate activity (documents, identification and intellectual property):

1. Canada, $75 Million (USD) seizures and losses, 10 incidents.
2. China, $64 Million, 6 incidents.
3. USA, $53 Million, 139 incidents.
4. Hungary, $13 Million, 1 incident.
5. Peru, $6.7 Million, 1 incident.
6. Argentina, $6.0 Million, 1 incident.
7. Thailand, $2.3 Million, 2 incidents.
8. Philippines, $2.1 Million, 8 incidents.
9. Malaysia, $2.0 Million, 11 incidents.
10. Italy, $1.9 Million, 3 incidents.
11. UK, $1.8 Million, 27 incidents.
12. India, 34 incidents.
13. Pakistan, 6 incidents.
14. Australia, 6 incidents.
15. Japan, 6 incidents.
16. South Africa, 3 incidents.
17. Singapore, 1 incident.
18. Greece, 2 incidents.
19. Turkey, 2 incidents.
20. UAE, 1 incident.

Other countries include Algeria, Angola, Bahrain, Bangladesh, Botswana, Brunei, Czech Republic, France, Germany, Guam, Ireland, Jamaica, Latvia, Malta, Mauritius, Nepal, New Zealand, Russia, Taiwan, Vietnam, Zimbabwe.

For more information: http://www.goldsec.com/Security_Research.htm

The most popular items to counterfeit:

1. Financial Instruments, 121 incidents worth $52.6 Million.
2. Entertainment & Software, 64 incidents worth $9.1 Million.
3. Identification, 42 incidents worth $73.6 Million.
4. Clothing & Accessories, 24 incidents worth $84.3 Million.
5. Other Documents, 23 incidents.
6. Drugs & Medical, 11 incidents.
7. Cigarettes & Tobacco Products, 3 incidents.
8. Industrial Goods & Supplies, 3 incidents.
9. Computer Equipment & Supplies, 2 incidents worth $6.2 Million.
10. Electronic Equipment & Supplies, 2 incidents worth $1.3 Million.
11. Food & Alcohol, 2 incidents.
12. Perfume & Cosmetics, 2 incident worth $2.3 Million.
13. Jewelry & Watches, 1 incident.

The top 10 (of 79) brands counterfeited:

1. Nike.
2. Adidas.
3. Louis Vuitton.
4. Gucci.
5. Microsoft
6. Prada.
7. Puma.
8. Burberry.
9. Chanel.
10. Cialis.

The top 10 (of 209) items counterfeited:

1. DVDs.
2. CDs.
3. Drugs.
4. Software.
5. Currency (US), 20s.
6. Checks.
7. Currency (US), 100s.
8. Passports.
9. Drivers Licenses.
10. Credit Cards.

In summarizing the activity for the month of May, Glen Gieschen, Managing Director of Gieschen Consultancy stated "Intellectual property enforcement during May was particularly strong with countries such as Canada, Peru, and Argentina raiding large counterfeiting operations involved in the distribution and manufacturing of knockoff items. In particular Canada, accused by the United States of being soft on IP enforcement, has come alive with a significant number of raids and seizures of bogus entertainment, software and clothing products. This activity marks a departure for Canada from its narrow focus on pirated health and safety products to a more balanced approach.

The manufacturing hub for these products remains in Asia with China, Malaysia, and Thailand being traced as the source in most cases. China remains the worst offender as more than $4.4 Million in fake products were exported to other countries such as Italy, Japan, the Philippines, and UK. The range of products seized and traced back to China was also very broad including clothing and accessories, cigarettes and tobacco products and industrial goods. Other countries were more focused on producing specific types of counterfeits such as entertainment and software in Malaysia and clothing in Thailand."

29 de junio de 1974: Isabel Martinez de Peron Presidente (BBC News)

2005-06-29T07:49:00.000-04:00

1974: First female president for Argentina

Maria Estela Isabel Martinez de Peron has been sworn in as interim leader of the Argentine Republic.
Her husband President Juan Peron delegated responsibility after doctors said he required 24-hour medical attention and rest.

Mrs Peron, a former cabaret dancer, is now Argentina's first female president and at 43 the youngest Latin American head of state.

Her 78-year-old husband has not been seen in public for two weeks and is reported to be seriously ill with bronchitis and influenza.

In a state broadcast, Mrs Peron said her husband was "conscious that his state of health prevents him from directly attending to government affairs until his recovery".

Mrs Peron, known to the Argentine public as 'Isabelita', is Juan Peron's third wife and became vice-president after his return to power in September 1973.

The couple met in a night club in Panama during Juan Peron's years of exile after being ousted from power in a military coup in 1955.

Argentina's main power groups, including the armed forces and labour unions, are understood to have pledged Mrs Peron their support.

But regional experts say Isabelita will be inheriting a weak economy in a country suffering from political violence and civil unrest.

Huelgas en Buenos Aires por Salarios Cierran el Teatro Colon, Dejan de A Pie a Pasajeros (Bloomberg)

2005-06-17T07:42:00.000-04:00

Buenos Aires Strikes Over Wages Shut Opera, Strand Commuters

June 16 (Bloomberg) -- Argentine workers are striking more than they have in 15 years to pressure President Nestor Kirchner to boost wages to compensate for quickening inflation.

Argentina had 71 work stoppages in May, more than double the monthly average of 34 over the past 26 years and the most since May 1990, when the government was trying to rein in annual inflation of more than 10,000 percent, according to pollster Nueva Mayoria in Buenos Aires.

The strikes have caused traffic snarls throughout Buenos Aires, left thousands of train commuters stranded and forced jazz trumpeter Wynton Marsalis to change venues for concerts this week. They may also prompt Kirchner, 55, to risk accelerating inflation by increasing spending before the 2006 presidential election.

``The government knows that if it keeps pushing salaries up, inflation will take off and the economy will slow,'' said economist Jose Luis Espert, who heads economic consultancy Espert & Asociados. ``But if Kirchner doesn't like the polls prior to elections, he may well pay the price in lost growth to ensure a good electoral results.''

Kirchner's approval rating declined to 46 percent last month from 63 percent in March, according to a poll by Buenos Aires- based pollster Carlos Fara of 442 people from May 20 to May 24. The poll has a margin of error of 4.6 percentage points. Economy Minister Roberto Lavagna said on May 27 that Kirchner's government won't give into the demands and ``spend beyond our means.''

Airline, Auto Workers

Airline flight attendants, auto workers and musicians have all gone on strike in recent weeks to demand pay increases. Train workers started a 24-hour work stoppage in Buenos Aires yesterday while civil servants in the municipal government of Avellaneda, a city on the outskirts of Buenos Aires, took over city hall demanding a pay increase.

A two-week strike by symphonic orchestra members, choir singers, ballet dancers and set workers at the Teatro Colon opera house forced Marsalis, a New Orleans-born trumpeter, to move his performances to the smaller Teatro Gran Rex.

``Our salaries have not kept up with inflation,'' said Luis Otaso, a set worker, who has been at the Teatro Colon for 28 years. Workers and performers at the Colon agreed to a 250-peso ($87) increase and ended their strike on June 10.

Inflation surged in South America's second-biggest economy after the government defaulted on almost $100 billion of bonds and devalued the currency weeks later. The annual inflation rate jumped to an 11-year high of 41 percent in 2002 as the currency sank 70 percent. In the past three years, Argentines' purchasing power has dropped by 22 percent, even after Kirchner raised the average worker's salary 38 percent since taking office in 2003.

Wage Rises

The wage increases along with a rise in government spending have driven up inflation: The annual rate doubled to 8.6 percent in May from 4.3 percent in the year-earlier period. Concern about the pickup in inflation has led investors to push up benchmark government yields. The yield on 90-day central bank debt has risen to 5.69 percent from 4.44 percent three months ago.

Eduardo Ovalles, an analyst at Nueva Mayoria, said the worker unrest stems in part from the widening gap between rich and poor following the default and devaluation. He said the richest 10 percent of Argentines make 40 times what the poorest 10 percent makes. Three decades ago, the richest made 13 times what the poorest made, he said.

`More Unequal'

``The social situation is more unequal today than it ever has been, even after a two-year recovery,'' Ovalles said.

Nueva Mayoria started tracking labor strikes 20 years ago in response to the rise in unemployment in the country, said Rosendo Fraga, director of Nueva Mayoria.

``We perceived more than 20 years ago that strikes and road blocks would become a growing social conflict considering the country was developing what we see as structural unemployment,'' Fraga said. ``We saw that the political weight of these social manifestations would be huge.''

Aerolineas Argentinas, the country's biggest airline, may stop flying this month if the company doesn't reach a wage agreement with its biggest union, said Daniel Biro, secretary of the airline union. Workers are demanding a 45 percent raise.

At state news agency Telam, journalists cut work shifts in half to put pressure on the company to raise wages. Auto workers at Ford Motor Co.'s local unit last week blocked off the Panamericana highway, the main route into Buenos Aires, to demand pay increases.

``In six months we went from paying 600 pesos to 800 pesos per month,'' said Leandro Liberman, president of electronic maker Athuel Electronica SA. `Unions are being very feisty but if this process continues we won't be profitable anymore. The only way out is continue raising prices and that will lead to a crack in the economy.''

To contact the reporter on this story:
Daniel Helft at dhelft@bloomberg.net

Last Updated: June 16, 2005 00:02 EDT

La Corte Suprema Deroga Las Leyes de Amnistia (The Wall Street Journal)

2005-06-16T16:56:00.000-04:00

2nd UPDATE: Argentine High Crt Overturns Military Amnesty

DOW JONES NEWSWIRES
June 14, 2005 4:00 p.m.

--

(Updates with reaction; adds more details from ruling and background.)

BUENOS AIRES (AP)--Hundreds of people could be charged with torture, disappearances and kidnapping babies during Argentina's "Dirty War" after the Supreme Court on Tuesday struck down amnesties passed in the 1980s.

For victims, the ruling revived the possibility of justice. For military officers, policemen and doctors with ties to the dictatorship, it stoked fears that they would be brought back to court.

Officially, 13,000 people are listed as dead or missing from the 1976-83 dictatorship's crackdown on dissent, although human rights groups say the toll is closer to 30,000.

Some 3,000 officers, about 300 of whom are still serving in the armed forces, could be called for questioning, according to human rights groups, which estimated that up to 400 of them could face new charges.

The Supreme Court, by a 7-1 vote with one abstention, struck down laws passed in 1986 and 1987 forbidding charges involved in disappearances, torture and other crimes during the dictatorship, a court spokesman told The Associated Press.

The ruling came in the case of Julio Simon, a former police officer accused in the disappearance of Jose Poblete and Gertrudis Hlaczik and of taking their daughter, Claudia Poblete, as his own. Under Argentine law, the decision can be taken as precedent in other cases.

President Nestor Kirchner called it a major step toward healing the wounds of one of Argentina's most turbulent chapters.

"The court's decisions has restored our faith in justice," Kirchner said jubilantly. "This is a blast of fresh air that signifies the end of impunity."

In August 2003, the House and Senate voted to repeal the 1986 and 1987 laws. But activists had waited for the Supreme Court to make a final decision on the constitutionality of the laws, which effectively ended trials for officers accused of human rights abuses.

After the dictatorship, many ranking military officers were tried on charges of abducting, torturing and executing suspected opponents of the regime. They were imprisoned in 1985 - before the amnesty laws went into effect - but were pardoned by then-President Carlos Menem in 1990.

Those officers were accused of waging a systematic crackdown on leftist and other political opponents who were kidnapped off the streets, tortured in clandestine centers and "disappeared."

Many were detained naked and blindfolded in chains while they were tortured with electric prods and drugged before being tossed into the South Atlantic on so-called "death flights."

The Dirty War inspired Luis Puenzos' 1985 drama "The Official Story," about a couple's adoption of a baby they later learn was taken from one of the disappeared. The movie captured for worldwide audiences the horrors of the dictatorship.

Many of the junta's top leaders and other officers are now under house arrest on charges of kidnapping children belonging to mothers who "disappeared" during the military's rule - facing prosecution under a loophole in the amnesty laws that allowed for prosecution in ongoing crimes.

Legal experts said they now expected the ruling would open the floodgates to more prosecutions beyond the baby-kidnapping charges.

"This is a historic decision that the Argentine court has taken today," constitutional law expert Ricardo Gil Lavedra said. "This is going to reopen investigations, with all the difficulties that that entails after having the cases closed all these years."

Gen. Roberto Bendini, Argentina's top military commander, called the ruling a step toward "national reconciliation that all Argentines desire."

But there was unease in the military ranks. Hours before the verdict was delivered, Defense Minister Jose Pampuro said there was apprehension in the armed forces about the possibility of reopening trials.

Human rights groups rejoiced.

The Center for Legal and Social Studies said in a statement that the ruling would clear the way for "punishing those responsible for state terrorism."

Tears flowed among the Mothers of the Plaza de Mayo, who have been marching for more than a quarter-century with white handkerchiefs on their now-graying heads. Every week, they circle outside the pink Government House to demand an accounting for sons and daughters who went missing.

"One cannot explain the emotion we are feeling. It's just so overwhelming after so many years of pushing for this," said Tati Almeida, one of the mothers. "There were so many cases and so much evidence presented ... now those cases are going to have to be reopened."

URL for this article:
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Cuando "El Futuro Estaba en Venezuela" (Tech Central Station)

2005-06-10T12:39:00.000-04:00

When 'the Future Was in Venezuela'
By Carlos Ball Published 06/09/2005

MIAMI -- I first visited Miami with my parents in the early 1950s. Actually, we went to Miami Beach since Miami was then a small, backwater town, with little more than the airport and a fine conservative newspaper, The Miami News... long gone!

Miami has been built mostly by Cubans, Colombians, Mexicans, Central Americans, and other Latin immigrants of the 60s, 70s, and 80s. Many of them arrived without a penny, but were able to accomplish in this country what had been denied to them at home.

The Venezuela of my youth could not have been more different from what the country has become. In the 1950s there was more U.S. investment in Venezuela than in the rest of Latin America combined. By 1958, we had an income per capita equivalent to 76% of the U.S. per capita income, which placed Venezuela ahead of many European countries.

Not unlike Hong Kong later on, Venezuela in the 1950s had lots of immigrants, little political freedom, and great economic growth.

The Spanish Civil War, the Nazis, and the Second World War provoked a Diaspora of many nationalities from Central and Southern Europe. The prosperity of countries like Cuba and Venezuela was greatly enhanced by the immigration of hard-working people that soon felt very much at home in Latin America. In the 50s, quite a few of my schoolmates in Caracas were Italian, Portuguese, Spanish and from Eastern Europe. Many of the foreign engineers and executives working for the international oil companies stayed on after their retirement because Caracas was then a beautiful modern city, with a great Spring-like climate year around, hardly any crime, and low taxes. Only the climate and the beauty of Venezuelan ladies have not been destroyed by socialism.

When I graduated from an American college in 1962, I had several job offers from U.S. companies to stay here. I didn't take them seriously because the future was in Venezuela.

But he last time I was in Caracas, the European consulates were filled with the children and grandchildren of former immigrants wanting to go back to their old countries. In Uruguay, Venezuela, and Argentina, the drop in living conditions have been disgraceful. And in countries such as Brazil, Bolivia, Peru, Ecuador, and Paraguay, the apparent take-off of the 1990s didn't go very far.

In the 1960s and 70s most of the old Latin American military regimes were replaced by democracies. It was a time of great optimism and hope. After more than a century of life as independent nations, we finally had a chance to elect our governments. Unfortunately, most of our intellectuals and politicians were socialists that became strong followers of the nationalist dogma and social engineering then dictated by the U.N. Economic Commission for Latin America.

Even the U.S. Alliance for Progress, which replaced President Roosevelt's Good Neighbor Policy, prescribed that foreign aid depended on tax increases by the local governments, very much what the International Monetary Fund keeps on pushing even today.

Practically all political parties, including the Mexican PRI, Venezuela's Acción Democrática, Chile's Christian Democrats and Argentina's peronistas strongly supported the so-called "dependency theory" enunciated by the Argentinean economist Raúl Presbich and the Brazilian sociologist Fernando Cardoso. It maintained that Latin America was poor because of unfair terms of trade: it exported cheap raw materials while importing expensive finished products from the U.S. and other rich countries. Their development strategy was economic nationalism, import substitution, government subsidies, and tariff protection for national industries.

Politicians everywhere pretend to ignore that a tariff is a tax on their own people. Since key positions in the multilateral agencies are usually filled by recycling former politicians and bureaucrats, high tariffs, import quotas, exchange controls, and periodic devaluations of the currency had the blessing of those international institutions.

Latin American businessmen quickly learned that success had little to do with serving the consumer and a lot with pleasing the authorities in charge of setting tariffs and prices, distributing subsidies, and running the development banks. In Venezuela, the 12 wealthy businessmen closest to President Carlos Andrés Pérez were nicknamed "the 12 apostles." And through the hemisphere, innovation and technology became of little importance compared to having access and friends in the right places.

A very significant difference that is not often understood by analysts and even historians is that the old Latin American military regimes, as bad as some of them were, had no particular interest in economic affairs, and thus tended to be much less harmful to our national economies than the new leftist democratic governments.

The businessmen of my father's generation fought hard to balance the excessive power of military governments, and since those generals were not too concerned with the economy, the central bank was run by private bankers, and Venezuela suffered no inflation because under the gold standard the bolívar was worth exactly one gram of gold from 1879 until 1961. But in the 70s, a Social Democrat administration politicized the central bank and nationalized the oil industry, two key economic decisions that started the slippery slope towards Chávez: the bolívar has been devalued 77,000% and total economic power now rests in the hands of politicians and bureaucrats.

I'm using Venezuela's recent history to describe Latin American decadence because similar tragedies took place all over the hemisphere. Argentina, for example, erased 17 zeroes of its currency between 1971 and 1991.

We know that protectionism kills efficiency and hurts the poor. With political and economic power concentrated in the same hands, governments grew incredibly fat. Politicians soon decided that the so-called basic and strategic industries had to be run by the government. Those included not only oil, minerals, banking, telephones, and fisheries but also airlines and hotels. By 1982, the Mexican government owned more than a thousand corporations and in practically every Latin country corruption and black markets became a way of survival, unless you wanted to wait 2 or 3 years to have a telephone in your new house or office.

The justification for these policies was economic growth and a higher standard of living for the population, but exactly the opposite took place, and the middle class was devastated during what Mario Vargas Llosa has called the lost decade of the 1980s, when capital flight in Latin America reached some $92 billion.

The 90s brought the "neoliberal" revolution. The economic role of the state was to be reduced through privatization, welcoming foreign investments, eliminating import quotas, and reducing tariffs. Unfortunately, politicians wanted to extract as much cash as possible from the sale of public corporations and the best way to accomplish that was to sell them as private monopolies, either to friends of the presidential palace, like Carlos Slim of Mexico who became Latin America's richest businessman, or to foreign corporations.

Efficiency generally improved, but private companies require fewer workers, prices increased sharply, and the common people soon hated the new system that they were told was called "capitalism" even more than the old, corrupt mercantilism. The result has been the new century's backlash of extreme socialist and communist electoral victories throughout most of the Latin world.

Chile and El Salvador are practically the only exceptions, but I am skeptical of the Chilean future, seeing that Socialist President Ricardo Lagos has chosen to undermine the successful policies of the Chicago Boys by a brutal campaign to destroy the good names of those associated with the Pinochet regime. Allende's terrorists are now being officially converted into democratic martyrs, receiving monetary compensation for their "patriotism and courage," while former military officers and civilians close to Pinochet are accused of crimes they did not commit. It can be done because the Socialists control the judiciary, and the American media plays along.

So now we have South America ruled by the likes of Chavez, Kirchner, and Lula. Lula succeeded Brazilian President Fernando Cardoso, the same Cardoso I mentioned before alongside Presbich, but who considered Lula too far to the Left. Kirchner has presided over the largest default and robbery in the history of the world, and Chávez, who was kept in power by the open support of the Organization of American States and of former President Jimmy Carter after a fraudulent referendum last August, is turning Venezuela into a new Cuba, but with billions of petrodollars to finance his uninhibited hate of free markets and the United States.

I believe that Washington has never being a very strong defender of free markets in Latin America, often giving the impression that capitalism is fine for this country and for Western Europe, but a different system is better applied south of the border.

On the other hand, the current Latin American situation is so alarming that perhaps we are approaching the day when the U.S. government will stop pushing its own protectionism through export subsidies and false anti-dumping measures, as well as discontinuing its support of labor unions-induced fantasies regarding environmental standards and a leveled playing field.

Yes, free trade is not enough, but Arthur Seldon, of the London Institute of Economic Affairs, has given us the key to understanding our most serious challenge: "Political democracy is not enough. The market is a better guarantee of popular freedom." With the unilateral elimination of tariffs and quotas, the United States would once again show the world what individuals can accomplish when they are free.

Editor's note: The preceding remarks were made at a speech delivered recently in Miami at the Heritage Foundation's Resource Bank.

Copyright © 2005 Tech Central Station - www.techcentralstation.com

Despues del Corte de Pelo, La Argentina Prepara la Afeitada (The Wall Street Journal)

2005-06-02T13:56:00.000-04:00

After the Haircut, Argentina Readies the Shave

By MARY ANASTASIA O'GRADY
May 27, 2005; Page A13

It's taken almost three and a half years, but Argentina is close to completing the restructuring of most of the $80 billion -- face value -- in debt that it defaulted on in December 2001. Some 24% of bondholders refused to participate, yet the restructuring, which trades the original bonds for new paper at a haircut of roughly 70%, is widely considered a success.

The bond swap closes only the latest chapter in a dismal financial history, checkered with debt moratoriums and bouts of pernicious inflation. But the epic tragedy of Argentina's slow and tenacious decline from a world-class economic power to world-class basket case remains a work in progress.

Any hope that the 2001 crisis might have been used to bring about constructive reform has been lost. Argentina has enjoyed two years of strong rebound growth from the 2002 recession but, going forward, growth won't come so easily. With competition for capital around the world heating up, a mediocre ability to raise funds is now the optimist's vision for Argentina's future.

President Nestor Kirchner greeted the bond swap with qualified enthusiasm. "Consolidation of the debt exchange will result in growing investment," he reportedly told Argentina's Radio Diez on Tuesday. "It's not going to be an explosion, but more like a gradual process."

That's not exactly a ringing endorsement of his own economic program -- and no wonder. By now even Mr. Kirchner and his atavistic Peronist Party must understand the link between government policy and investment. Making Argentina a prime destination for international investment would require an economic restructuring inconsistent with populist Peronism -- thus the need to keep expectations low.

It is always at least moderately amusing to listen to this government parse its own economic agenda. On the one hand it denounces the savagery of market economics -- so as to keep its labor base and its hard-left, picketing militants happy -- and on the other hand it flirts with investors by insisting that it does not endorse statism.

Last week Economy Minister Roberto Lavagna awkwardly tried to define his place on that continuum. As Dow Jones Newswires' Michael Casey reported from Buenos Aires, the minister said that he is neither a "prophet of chaos" from the 1990s (a reference to market economics) nor an "alchemist[s] of a prosperity without cost," who supports 1970s "populism."

Had Mr. Lavagna made a distinction between the half-hearted so-called market reforms of the 1990s and true, competitive markets, there might be cause for optimism. But these comments appear more like an apology for the "Third Way" of watered-down socialism.

A May 24 report from the Economist Intelligence Unit described the government's internal conflict, which, despite Mr. Lavagna's denial, seeks prosperity but not at the price of allowing creative destruction to alter the economic status quo. It "heralds a departure from the free-market policies of the 1990s which are now widely criticized in Argentina, but it will also try to attract new investment by gradually re-establishing stable rule and property rights," the EIU wrote.

The EIU's advice to investors was, don't get your hopes up. "Business should plan on a return to smooth government operations taking a long time. In the transition period they should be prepared for uncertainty, substantial delays and red tape in dealing with the Argentine government."

Ditto for tax policy, where the EIU expects corporate tax increases will be sought as a way to close the fiscal gap and says the system carries a "high risk" of "frequent changes." Depressed personal incomes make the probability of personal tax rate hikes low, therefore "companies -- particularly foreign entities -- could bear the brunt of any hikes in marginal tax rates. Foreign companies should plan for the possibility of higher tax rates."

The government is also utilizing price controls to combat inflation, and not only on transportation and utilities. There are also "tacit" price-control agreements with "dairy producers, petrol retailers and some pharmaceutical companies," a separate EIU report noted the same day.

Nor is Argentine trade policy up-to-date. Heavy reliance on the protectionist South Cone customs union known as Mercosur to expand Argentine export markets has resulted in extensive trade diversion with Brazil. But, without access to imports from the rest of the world, Argentine producers have little hope of discovering comparative advantages in new value-added businesses or gaining competitiveness. Argentines have to be satisfied with being Third World commodity exporters and brace for the next downturn in world prices.

As other competitors for global capital race along the highway of liberalization, Argentina risks slipping further behind, even if it just stands still.

As The Wall Street Journal's George Melloan detailed in this space on Tuesday, Egypt is just such a liberalizer. During a visit to our offices last week, Egyptian Prime Minister Ahmed Mohamed Nazif and his economic team said that reform is required because 3-4% gross domestic product growth is not sufficient to reduce poverty. Acknowledging the link between economic freedom and rapid growth and development, Egypt is doing what Mr. Kirchner rejects: moving to reduce the drag of big government on the economy.

Egyptian Finance Minister Youssef Boutros-Ghali could have been describing Argentina when he told us that under the traditional state system, "Government is a predator and the citizen is the prey. You pounce on him and you squeeze him all you can." Egypt wants to break with that tradition so as to attract capital and boost economic activity. Speaking like a Reagan supply-sider, Mr. Boutros-Ghali offered that any revenue loss under his tax plan to cut rates and provide an amnesty would be offset by higher growth and more taxpayers coming into the formal economy.

This sort of thing isn't rocket science. It's Reality 101 and it underscores not only the universality of economic law but also the global competition that Argentina faces. Granted, pro-market reforms would create an uproar among Mr. Kirchner's anti-market, anti-American constituency and he would have to exert some leadership. But he could tell the left that he is simply copying the economic policy of a Middle Eastern country with a socialist tradition. That ought to energize his base.

Standar & Poor's Eleva el Rating Crediticio de Argentina (Bloomberg)

2005-06-02T07:54:00.000-04:00

Argentine Credit Rating Boosted 6 Levels to B- by S&P (Update3)

June 1 (Bloomberg) -- Argentina's credit rating was raised six levels by Standard & Poor's, clearing the way for the country to borrow again on international capital markets more than three years after it defaulted on almost $100 billion of debt.

S&P raised the country's rating to B-, six levels below investment grade and in line with countries such as Bolivia, Ecuador and Lebanon. Argentina had an SD, or selective default, rating since its default in late 2001.

``The new credit rating brings some respectability to the country in terms of being able to access the market,'' said Boris Segura, who helps manage $500 million in emerging market debt at Standish Mellon Asset Management in Boston and participated in the recent debt exchange. He said he has bought some domestic bonds Argentina has sold since the default.

Argentina has given signals that it's preparing a return to the bond market as it nears completion of a restructuring of the defaulted debt. Finance Secretary Guillermo Nielsen told reporters on May 13 in Miami that the government ``could go back to the markets sooner than people expect.''

Investors are in the process of exchanging their defaulted bonds for new securities worth about 30 cents per $1 face value of old debt. The government offered 11 new securities denominated in exchange for 152 old bonds.

Economy Ministry spokesman Armando Torres declined to comment today on the credit rating increase.

Argentina's rating from S&P remains three levels below Brazil's BB- rating and seven levels below Mexico's BBB rating. Moody's has rated Argentine debt Caa1, seven levels below investment-grade, since August 2003.

`Challenges Ahead'

``A B- rating is still a very low rating and means there are more challenges ahead than positive factors, but that said, growth has improved, and the levels of education, health and infrastructure all suggest strong potential for future growth,'' Marta Castelli, director of S&P's Buenos Aires office said in a telephone interview.

Argentina's dollar-denominated 8.3 percent bond maturing in 2033, one of the new securities being issued in the exchange, climbed to 87.75 cents on the dollar today from 87 yesterday, according to Buenos Aires-based Banco Mariva. At that price, the bond yields about 10 percent, or 6 percentage points above U.S. Treasuries with a similar maturity, said Rafael Ber, an analyst at Argentine Research brokerage in Buenos Aires. The bonds are trading in a when-issued market before the swap is completed.

``Argentina is still paying a high price for its past situation,'' said Ber.

The extra yield investors demanded to hold Argentina's dollar-denominated bond due in 2008 instead of a comparable maturity U.S. Treasury was 4.3 percentage points in April 2000. That grew to 12 percentage points by September 2001 and jumped to above 70 percentage points after the default.

Confirmation

Argentina defaulted in 2001 after borrowing more than any other developing nation in the 1990s on international markets to finance higher spending. A one-to-one currency link to the U.S. dollar also made local companies uncompetitive after neighboring Brazil devalued its currency in 1999, pushing Argentina into recession. After the 2001 default, Argentina abandoned its currency system and the peso tumbled.

In February, the government persuaded creditors holding $62.3 billion of defaulted bonds, or 76 percent of the country's $81.8 billion of defaulted principal, to accept the new securities. The government said it won't recognize another $20 billion in past-due interest.

The restructuring is ``good news because it confirms from a market viewpoint the debt restructuring has been achieved,'' said Fernando Losada, a Latin America economist at ABN Amro Inc. in New York.

S&P said the bonds held by creditor holdouts who didn't accept the swap terms will keep a default rating. Even after the restructuring Argentina's debt-to-gross domestic product ratio will stay about 70 percent, and climb to 81 percent if the holdouts are included, S&P said.

``Although the new sovereign bonds will only modestly pressure the budget in future years, the government will still bear a heavy burden in servicing other market debt that has not been in default as well as obligations to official creditors,'' S&P said in a statement.

To contact the reporter on this story:
Andrew J. Barden in Buenos Aires barden@bloomberg.net

Last Updated: June 1, 2005 16:48 EDT

Como UK Previno Invasion de Malvinas en 1977 (The Guardian)

2005-06-02T07:47:00.000-04:00

How Britain averted a Falklands invasion in 1977

Press Association
Wednesday June 1, 2005

Guardian

Details of how a Royal Navy mini-task force was secretly despatched to the Falklands to defend the islands from Argentinian attack are revealed in documents made public for the first time today.
The tiny flotilla, led by the nuclear-powered hunter-killer submarine HMS Dreadnought and accompanied by two frigates and two support vessels, was credited with deterring a full scale invasion in 1977.

The then foreign secretary David (now Lord) Owen later claimed that if Margaret Thatcher's government had taken similarly robust action, the Argentinians would not have invaded in 1982. James Callaghan's Labour government ordered Operation Journeyman, as it was codenamed, after a party of 50 Argentine "scientists" landed on the island of South Thule, prompting fears of a wider attack.

The papers, released to the National Archives, show that Lord Owen insisted the mission be conducted in intense secrecy, with not even the crews being told where they going.

While the Argentinian government was privately warned by the British that there was a nuclear submarine in the area, the rest of the world was unaware of what was going on.

The papers show a high degree of nervousness within Whitehall over the operation - not least about its legality.

Ministers wanted to be able to declare an exclusion zone around the islands - as was done in 1982 - but the suggestion was met with concern among officials. A handwritten note by one warned that it could be "politically escalatory, probably illegal and could set an unwelcome precedent" as well as possibly requiring British ships to fire the first shot. The problem was, he warned, was that it would be "dependent on intelligence" that an actual Argentine invasion force was approaching the islands.

He suggested they could get round some of the difficulties by not calling it an exclusion zone and not making it public, with the Argentinians being told only when they were told of the presence of the submarine. In the event, the issue was "deliberately fudged", while the then attorney general Sam Silkin was only asked for his advice on the legality of the operation after the ships had sailed.

The concerns were such that HMS Dreadnought was told in its rules of engagement that if it was attacked by Argentine anti-submarine weapons it should "surface or withdraw at high speed submerged, whichever will be of least risk to life".

Guardian Unlimited © Guardian Newspapers Limited 2005

El Trafico de Mujeres - Un Problema Invisible (Inside Costa Rica)

2005-06-02T07:44:00.000-04:00

ARGENTINA:
Trafficked Women - an Invisible Problem

Marcela Valente

BUENOS AIRES, (IPS) - "They simply vanish, as if the earth had swallowed them up," said activist Juan Carr, referring to the girls and women who fall prey to trafficking rings in Argentina that sell them into forced prostitution.

According to activists like Carr, the head of the Red Solidaria (Solidarity Network), and the families of missing women and adolescents, the victims are kidnapped by organised crime networks that operate with the complicity of political and judicial authorities and the police.

Thirteen-year-old Fernanda Aguirre was kidnapped in July 2004 in San Benito, a town in the northeastern province of Entre Ríos. While the legal investigation has been focusing the search on finding a buried body, Fernanda's mother has come across evidence that her daughter fell into the hands of a prostitution ring.

People who claimed to have taken the girl demanded 600 dollars. But although the small ransom was paid, Fernanda never reappeared.

Fernanda's mother, Maria Inés Cabrol, told IPS "I believe she was taken away to be forced to work as a prostitute."

The desperate mother, whose search has taken her to seven different provinces, said "there are no words" to describe the pain of a mother whose young daughter was suddenly whisked away from a street near her home.

"Every day that goes by, the suffering is worse. I can't imagine how she might be doing, my little girl who was so attached to me, who has no one she can trust now," said Cabrol.

Although the police arrested a suspect with a criminal record, in connection with the case, he reportedly hung himself in the police station lock-up a few days later.

The suspect, whose death was reported as a suicide, was the cousin of a well-known pimp from Entre Ríos who is in prison, but has provided no information that would assist the investigation.

In December, a hand-written letter asking for help was found in the town of Las Termas, in the northern province of Santiago del Estero. Although the expert analyses came up with contradictory results, Fernanda's mother said she has no doubts: "It's my daughter's handwriting."

The police and legal authorities have carried out a number of searches and raids in Las Termas that have led to arrests in connection with the sexual exploitation of minors, but there has been no sign of Fernanda.

Cabrol has made two trips to Santiago del Estero. "In Las Termas, local residents, chauffeurs, the police, everyone told me my daughter was there, but that the mayor's brother had her, and the federal police were involved," she said almost in a whisper, as if she were afraid of being overheard.

In her desperation, Cabrol has met with President Néstor Kirchner, government ministers, lawmakers, governors, judges, the police and non-governmental organisations. "They have all told me that they'll give me whatever I need, but all I want is my little girl," she said.

Sara Torres, a representative in Argentina of the international Coalition Against Trafficking in Women, told IPS that "For nine years we have been trying to draw attention in Argentina to the trafficking of women, but society does not want to open its eyes because it sees prostitution as a necessary evil, and prefers to blame the victims."

The nature of the phenomenon makes it impossible to obtain reliable statistics, and whatever information is available is based on the missing person reports that are filed by families.

Carr told IPS that the Red Solidaria is currently seeking 190 missing persons. Of that total, 67 percent are girls and women, and 63 percent are girls between the ages of 13 and 18.

He added that in the past seven years, of the more than 300 missing adolescents reported, 90 percent have been found, and "Among those who have shown up were 10 girls who said they had been sexually exploited."

The cases occur only sporadically, in an isolated fashion, and the media draw no links between them. After a short fruitless search, the stories fade from the headlines. Nor do police and legal investigators or government authorities talk about a pattern.

The most recent case was that of 24-year-old Florencia Penacchi, who was seen for the last time leaving her Buenos Aires apartment on Mar. 16. Her smiling face shines out from posters plastered all over the city. There have been no requests for ransom or any other signs that she may still be alive.

Another case involves Marita Verón, 23, who was kidnapped in 2002 in the northwestern province of Tucumán. A woman who escaped from a prostitution ring in that province reported that she had seen and talked to Verón. But as usual, the police arrived late to the place where she was reportedly being held.

Young tourists have also gone missing, like Nikola Henkler, a 28-year-old from Germany, who disappeared in Bariloche, a ski resort in the southern province of Rio Negro, in December 2002, or 23-year-old Annagreth Wirgler from Switzerland, last seen in the northwestern province of La Rioja in August 2004.

Torres pointed out that in 2002, Argentina signed the United Nations Convention against Transnational Organised Crime, as well as its Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children.

"The sale of people for sexual exploitation purposes has become widespread, and is tolerated," she said. "There are even judges, prosecutors and police who admit the existence of brothels that are theoretically illegal under local legislation and the conventions signed by the country at the international level."

"Society has the impression that these places are legal, but they aren't," noted Torres, who accused certain media outlets of acting as "accomplices" in the "flesh trade." She pointed out that the newspaper Clarín publishes classified ads selling sex in the "useful services for men and women" section.

Women's groups hold workshops and seminars to give visibility to the question of the trafficking of women, but they have not made contact with th e families of missing girls and women, who often have more clues, information and knowledge on the issue than the professionals who have received training in that area.

Cabrol has been in permanent contact with Susana Trimarco, Marita Verón's mother. Thanks to Trimarco's unstinting efforts, a number of clues were found pointing to the existence of a network of pimps that operates in the provinces of La Rioja, Tucumán and Buenos Aires, the central province of Córdoba and the southern province of Santa Cruz, and that has ties in Spain as well.

In an open letter published in April, Verón's family, with backing from human rights organisations, reported that their investigation, along with police work, led to the rescue of 17 young women in the hands of this network, in the cities of Bilbao and Burgos in northern Spain and Vigo in the northwest.

"In Argentina those who commit these crimes enjoy impunity, and thanks to the complicity of the justice system, the police, and many politicians, these mafias operate in a huge area where they are free to negotiate the lives of our daughters and sons," adds the letter.

The police intelligence commissioner in the province of Tucumán, Jorge Tobar, has played a key role in investigating the trafficking in women, although he has sometimes been reprimanded by the police force for his outspoken declarations. His zeal in fighting the phenomenon appears to be the result of a personal commitment.

"In Argentina there is a system of organised crime that captures women, sells them, and puts them to work as prostitutes in slave-like conditions," Tobar said in an interview with the Buenos Aires daily Página/12. "They are sold as cattle, taken away, exploited, and all of this is done with complicity."

Tobar has taken part in the Verón case and in joint operations carried out by Interpol (international police), which have led to the rescue in Spain of a total of 25 women from Argentina who were being sexually exploited.

The police commissioner said there was an enormous difference between Spain and Argentina in the resources available for cracking down on the trafficking of women.

Referring to the case of Fernanda Aguirre, he said "I tracked her down in Santiago del Estero and reported the exact spot where she was being held. But the legal authorities and police carried out 19 raids before finally going to that spot." And when they did eventually arrive, he added, the girl was no longer there.

In April, a report by the U.S. State Department warned that Argentina had serious problems with respect to trafficking in people for sexual and labour exploitation purposes.

The Kirchner administration issued an angry denial, with Interior Minister Aníbal Fernández saying the report was extremely damaging to Argentina's image, and that the authorities are working hard to clamp down on trafficking.

He also said the report may have been linked to offers by U.S. companies working on computer programmes for migration security, which the Argentine government had refused to purchase.

Serbio Sospechoso de Crimenes de Guerra Detenido en Argentina (KosovaReport)

2005-05-31T16:16:00.000-04:00

Deadlock over Serb war suspect
© Copyright 2005. The Observer. All rights reserved.

AN alleged Serbian war criminal who went under the name of 'Mrtvi' (Death) during the ethnic cleansing in Kosovo has been arrested, Interpol confirmed yesterday.

Media reports have linked Nebojsa Minic, 40, to crimes against ethnic Albanians in the city of Pec, where he led a paramilitary squad that reportedly raped, killed and looted its victims, including children, as Nato bombers attacked Serbia in the spring of 1999. His alleged crimes have also been documented by Human Rights Watch, which has been campaigning since 1999 for him to stand trial in Serbia.

Held two weeks ago in Mendoza on charges of carrying fake documents under the alias of Vlada Radiojevic, he is being held in expectation of an extradition request from Serbia, although this may be slow in coming.

'We have no warrant pending for his arrest,' said Argentina's Interpol chief, Luis Fuensalida. 'The only charge against him concerns the fake alias he was living under. We know he has a criminal record in Belgrade for drug and arms trafficking, but there is no request for his capture related to this or on charges of crimes against humanity.'

Minic arrived in Argentina from Chile in September 2003. Since his arrest, he has been in hospital under armed guard, said to be suffering from cancer and undergoing treatment for an Aids-related condition, but he could be released if an extradition order does not arrive. 'There is no reason to keep holding him,' said his lawyer, Alejandra Ruiz. 'I expect him to be released under house arrest.'

According to press reports, Minic was turned in by an Argentinian lover furious at having contracted HIV from the fugitive. 'This woman had been harassing my client with death threats before she revealed his presence to the police,' Ruiz said.

The heavily tattooed Minic at first claimed his name was Vlada Radiojevic. But police sources said that he later confessed to one of his captors: 'I was a much tougher policeman than you are.'

In Kosovo, Minic sported a tattoo on his chest with the Serbian words for 'dead' and 'dead man', but has had it erased, according to sources in Mendoza.

His history as a gangster back to his teenage years, but his name first turned up associated to war crimes during the mass killings in the Bosnian town of Srebrenica in 1995, where Bosnian Serb soldiers murdered more than 7,000 men and boys. Media reports state that Minic was seen escorting truckloads of civilians to mass execution sites.

But the accusation against him by Human Rights Watch involves the killing of the family of a Kosovar Albanian butcher from Pec named Isa Bala in June 1999.

'We are the men with no names. We're probably going to die ourselves, but first we are going to have our fun,' Minic is said to have told Bala, demanding a large sum of money in exchange for sparing his family. Bala handed over his life's savings, but Minic's men murdered four of his children, his niece and his sister-in-law.

Con la Caida de los Precios de Granos Caen las Ventas de Maquinaria Agricola (Bloomberg)

2005-05-31T16:09:00.000-04:00

Argentine Farm Machinery Sales Fall on Grain Prices (Update1)

May 31 (Bloomberg) -- Argentine farm machinery sales will drop about 15 percent this year as a slide in commodity prices shrinks farmers' profit, Jorge Medica, president of the Chamber of Producers of Farm Machinery, said.

Sales of harvesters, seeding machines and tractors are expected to fall to about 21,700 units from 25,600 units last year as declining prices and rising fuel costs erode growers' profit margins, Medica said. Equipment makers Deere & Co., Agco Corp., and Claas KgaA mbH forecast lower 2005 sales in Argentina, the world's third-largest soybean producer.

``Last year demand for machinery was exceptional and if commodity prices had remained stable, we would have had a similar year in sales,'' Medica said in a telephone interview in Buenos Aires yesterday.

The cutback in farmers' investment signals agriculture, which accounted for about a fifth of Argentina's economic growth last year, will no longer lead the country's recovery from its deepest recession on record, said analysts such as Rodrigo Da Fonseca, an economist with Dresdner Kleinwort Wasserstein in London. Argentine farmers reduced the amount of land planted in soybeans this year by 1 percent even as the government expects a record grain crop because of good weather.

Soybean prices fell to $6.83 a bushel today at 10:33 a.m. New York time from a 15-year high of $10.56 a bushel on March 24, 2004 on the Chicago Board of Trade.

``Higher commodity prices last year led farmers to increase consumption of not only machinery but also a chain of goods such as trucks and fertilizers,'' Da Fonseca said. ``Less purchasing power in the farm sector is likely to contribute to slower economic growth due to less demand from other industries.''

About 53 percent of farm machinery sold in Argentina is produced domestically.

Trade Surplus

Argentina's trade surplus in April widened to the most since May last year as exports rose to a record, the National Statistics Institute said today in Buenos Aires. The surplus grew to $1.2 billion from $830 million the previous month. Exports in the month rose to $3.6 billion from $3.03 billion in March while imports grew to $2.4 billion from $2.2 billion.

Exports rose even as prices for Argentine grains decline. Argentina's average export price for a ton of wheat fell to $113 in the first quarter, compared with $154 in the year-ago quarter, the agency said. The average export price of corn fell to $85 a ton from $113 a ton and soybeans fell to $215 a ton from $303 a ton a year ago.

Agricultural goods accounted for 25 percent of Argentina's total exports in 2004 and as much as 23.5 percent of export duties. The country last year exported $8.9 billion in wheat and soybeans, 11.3 percent more than the $8 billion exported in 2003.

U.S. Imports

Agriculture is also Argentina's biggest source of foreign currency earnings and reserves, a key to bolstering investor confidence, while commodity exports have helped the government post budget surpluses in the past two years.

Manufacturers such as Moline-Illinois-based Deere, the world's largest maker of farm machines, said South American sales are expected to slump about 40 percent this year, led by declines in Argentina and Brazil where a weaker U.S. dollar, lower commodity prices and rising costs are damping demand.

The Argentine peso strengthened 2.8 percent against the dollar this year, while Brazil's real rose 9.7 percent. Fuel oil prices in Argentina jumped about 20 percent in the last year.

Agco, the world's third largest farm-equipment maker, reported on May 3 that first-quarter profit fell 14 percent because of slow sales in Brazil and Argentina. Operating profit in South America plunged 60 percent as Duluth, Georgia-based Agco cut prices amid shrinking demand.

'Engine'

``Last year, some cattle ranchers dedicated more of their land to grains,'' said Damian Fiorito, manager of foreign trade at Claas, the world's third-largest maker of harvesters.

Claas, which imports equipment from Germany, sold 150 harvesters last year in Argentina, up from 110 in 2003, Fiorito said in an interview in Buenos Aires.

Executives such as Juan Cestari, head of Cestari SRL, a producer of trailers for grains, said the impact of the country's 20 percent tax on exports grows as commodity prices fall, discouraging farmers from making investments.

``Farm production is the engine of the Argentine economy and is a source of wealth for the country and for the world,'' Cestari said. ``The government should encourage farm producers to increase production, instead of fleecing them.''

Tax Revenue

Argentina's tax revenue rose 36 percent last year from 2003 to 98.3 billion pesos. Taxes on exports rose to 10.2 billion pesos from 9.2 billion pesos in the same period.

``Our main problem now is the export duties, which take 20 percent of the farmers' money from their pockets,'' said Rosana Negrini, head of Agrometal SA, a producer of harvesters in an interview.

Agrometal last year invested $3.5 million in a new plant to boost production. ``If we had to invest that today, we couldn't do it,'' she said.

To contact the reporter on this story: Eliana Raszewski at eraszewski@bloomberg.net

Last Updated: May 31, 2005 13:22 EDT

La Argentina de Nestor Kirchner: Un Viaje Desde el Infierno (Open Democracy, UK)

2005-05-31T15:06:00.000-04:00

Néstor Kirchner’s Argentina: a journey from hell
Ivan Briscoe
25 - 5 - 2005

President Kirchner has led Argentina from economic collapse to mini-boom, faced down the army, stood up to the IMF – and stayed popular. But is his achievement miracle or mirage? Ivan Briscoe reports on two years of surprises.

A contrast between two events on successive days in Buenos Aires’ central Plaza de Mayo in March 2005 reveals that two years of President Néstor Kirchner’s economic boom and therapeutic bad temper have not healed Argentina’s social wounds.

At the first, on March 23, Juan Carlos Blumberg led a service at the city cathedral in honour of his son, Axel, killed a year earlier following a botched kidnapping for ransom, and since then the face of a vigorous campaign against the lawless underclass. A day later, a much larger and recognisably Argentine multitude – middle-aged couples wearing Combative Classist Current headgear, youngsters in scrappy t-shirts, bereaved mothers in white headscarves – gathered to remember the military coup of 24 March 1976 which propelled into power the country’s most brutal dictatorship. (The painted slogan on a nearby wall neatly summed up the hours of strident haranguing from the rally’s PA system: “They are the insecurity.”)

Between the two gatherings stretches Argentina’s ageless political divide – fearing the state versus distrusting the poor. It is a gulf materialised in the ever-advancing fences around private estates (countrys) in the richer suburbs of Buenos Aires, but it is also one that the current president is proving miraculously (and perhaps momentarily) able to bridge.

Two years after being sworn into office on 25 May 2003, Kirchner stands high in the roll-call of Latin American left-wing leaders – Hugo Chávez, Luis Inácio Lula da Silva, Tabare Vazquez – who in their various ways are seeking to bring about the most significant feat of social reengineering on offer in the world today. But that is not all: he is also supported, according to opinion polls, by around 70% of the population – this in a country which in 2001-02 flirted with its own annihilation.

How has Néstor Kirchner managed it, and what does his achievement reveal about the kind of democracy that the structures of power in Argentina and Latin America make possible?

Kirchner’s project

As the offspring of a strict Catholic mother in a windswept Patagonian outpost, it is perhaps no surprise that Kirchner invokes hell and the Passion to illustrate his undertaking: “we are coming out of the deepest crisis step by step in what has been and still is Argentina’s calvary,” he told Congress in his 2005 state of the nation address.

Not unlike Venezuela’s Hugo Chávez, Kirchner’s most irascible spasms and snubs to protocol are aimed at those who can be blamed for leading the country into the pit. Target number one, which few Argentines would dispute, has been foreign business and finance. Thanks to the vast export potential of Argentina’s land expanse following the devaluation of the peso, Kirchner and his economy minister, Roberto Lavagna, appear to have swiped three-quarters off the value of $100 billion in private bonds (barring the 24% of holdouts), forced the renegotiation of over sixty contracts with privatised utilities, and reduced the International Monetary Fund (IMF) to a whimper. Kirchner even took the liberty of comparing IMF chief Rodrigo Rato to the devil hours before they met to review the debt burden in late 2004.

At the same time, the local architects and vested interests of the pre-Kirchner system (where, the president says, “genocide, theft and corruption proliferated”) have been hauled off-stage – excluding, of course, the Argentine electorate that voted for Carlos Menem in 1989 and 1995. Kirchner, twice arrested for his Peronist youth movement affiliation during the “dirty war” of the 1970s, has thrown himself into the cause of justice for its victims; he dressed down the army at one gala dinner, and secured a repeal of the two bills (Full Stop and Due Obedience) that protected death squad officers from prosecution. Meanwhile, the Supreme Court, the army, the police and a feudal province were drained of their most notorious racketeers.

To anyone acquainted with the neighbourhood assemblies that sprouted across a cashless and pot-banging Buenos Aires in early 2002, these initiatives will sound somehow familiar. Then, tirades against corrupted, self-serving institutions were a staple of everyday communication, while the shuffle of presidents (five in a fortnight) and scramble for new economic policies conveyed the death of an entire political order. “What interests me is the nature of power and how to take power,” Luis Zenko, coordinator of an assembly in the down-at-heel barrio of San Cristóbal explained at the time.

Three years on, Zenko has other things on his mind. “I’ve bought a house,” he tells me proudly. “Economically, I’m doing very well out of the tourists, and I just don’t have time for politics any more.” Near the San Telmo market stall where Zenko displays his paintings every Sunday afternoon, the Movement of Unemployed Workers, two of whose young piquetero (picketer) leaders were gunned down by police in a 2002 roadblock, exhibits its own produce: largely home-made jam.

The days when the outcry surrounding those murders could force the then president, Eduardo Duhalde, to cut short his presidential mandate are long gone. “For the last year, the government has insisted that we can’t carry out any more road-blocks, especially in the capital,” declares Axel Castellano, one of the movement’s activists, who explains that the government has forged alliances with the more moderate picketers so as to isolate and cripple the more radical. “We can no longer grow by demanding more unemployment subsidies. It’s virtually impossible now to sustain the struggle.”

Two consecutive years of 9% economic growth, combined with a public sector surplus unprecedented in recent Argentine history (at around 4% of GDP in the first five months of 2005), have certainly laid the groundwork for a pacification of society. As poverty rates have fallen to around 40% of the population (from 57% in late 2002) the clamour of people on the verge of destitution has subsided: no longer do the middle classes sell their possessions, or the poor huddle so assiduously around giant stew cauldrons. The sediments of economic collapse are still visible – tiny children living in city streets, wafer-thin scavengers searching through rubbish – but there is some hope that the promising economic trends may one day trickle down to their depths.

“Obviously there’s still a long way to go,” argues Luis D’Elía, head of one of the largest picketer groups, the Federation of Land and Housing (FTV), which claims 150,000 members, and is now closely tied to Kirchner after years spent harassing the state for food and homes. “But in contrast to the 1990s, we feel we’re on the right path. And it we stay on this path, in eight or ten years we’ll get back to what Argentina once was.”

Under other leaders, a boom of these proportions might have induced complacency, or at least spurred reconciliation with foreign lenders. But Kirchner is intransigently proactive: commentators in the Argentine press speak frequently of his regular scrutiny of opinion polls, his obsessive interference in ministerial minutiae, or his lust for “opening new battlefronts.” No sooner had the debt swap been settled in early March, for instance, than Kirchner publicly berated price rises at Shell and Esso service stations; within hours, picketers belonging to D’Elía’s federation had occupied several of their service stations, and the day’s news was decided.

A source from the president’s close circles, quoted in the magazine Veintitrés, offers a strategic insight: “Power is consensus and authority. Kirchner needs to be centre stage as a matter of survival. Once he has imposed his authority and has the people’s backing, then he negotiates.” One crucial electoral fact helps account for this: Kirchner won only 22% at the ballot box in April 2003, coming second to “fellow” Peronist Carlos Menem. A week later, Menem withdrew from the second round of voting as opinion polls revealed that his core vote – an alliance of the very rich and very poor, demanding public order and cheap dollars – would be thrashed by a landslide majority clinging desperately to Kirchner, who thus became president by default.

What kind of president?

Yet explaining the Kirchner regime through its supposed lack of legitimacy – similar to many analyses made of Zapatero’s post-11 March administration in Spain – fails to do justice to Argentina’s rich, recondite and utterly exceptional political culture. Ideologically, Kirchner is widely regarded as progressive, nationalist and a supporter of tougher state intervention: as he put it to Congress, “we are once again giving the state the neurons that have been taken away from it.” But he is first and foremost a Peronist, a member of that party’s warring nomenclature, and a caudillo from Patagonia who governed his province of Santa Cruz – where there are more square kilometres than inhabitants – as if it was his back garden. Many in the business community are even said to admire him for spiriting $500 million out of province coffers and into Switzerland just months before devaluation.

To his critics, Kirchner is therefore a shining example of that authoritarian tradition excoriated by Domingo Sarmiento in his classic work on the tyranny of Juan Manuel de Rosas, Facundo (1845): the vastness and vanishing horizons of Argentina gives rise to “a well of poetry,” but also to “the dominance of brute force, preponderance of the strongest, authority without limits.”

And just as Menem effected almost all his privatisations without consulting Congress, Kirchner is accused of rolling out the state, his state, without noticing those who believe differently: “He only wants to concentrate power,” argues Sergio Berensztein, a political scientist from Torcuato Di Tella University. “He takes decisions alone, or with a very limited group of people. He doesn’t have cabinet meetings or engage in dialogue with other political leaders. He has no disciples or teachers.”

For those who stand to benefit, of course, little harm is done. In the Brukman textile factory, whose struggle for workers’ control starred in Naomi Klein & Avi Lewis’ film The Take, they recall the president’s intervention vividly. “He put his big arm on my shoulder and said: ‘what can I do to sort this out’” recounts one of the seamstresses, Mathilde Adorno. “Three days later, the padlocks on the door of the plant had been removed.” The same tactile behaviour – slapping backs, grasping shoulders – is said to have enjoyed less favour with Roberto Lavagna, who allegedly demanded that the manhandling cease.

Yet the thin line Kirchner has trodden between authority and authoritarianism has significance far beyond the anecdotal, and raises two vital structural concerns about the direction his rule is heading in.

First, the crisis of December 2001 manifested above all else that Argentina’s institutions were in grave disrepair, and corroded by personal or partisan interests at almost all levels: how else could most of an $8 billion financial injection into the country’s financial system that August end up leaving once again as capital flight? But if these institutions are to be restored – and with them the public’s faith in their neutrality and fairness – then can this be done by a hyperactive, hyper-interventionist head of state?

This quandary is all the more compelling now that the country’s economy has effectively been restored to its pre-crisis level of 1998. Should Kirchner build on this economic achievement by seeking to accumulate political power – and he clearly hopes to acquire part of the Peronist party machine in Buenos Aires province in October’s legislative elections – then the likelihood of disengaging the judiciary, the security forces and bureaucracy from their political masters would appear to be diminished, and the same crisis in Argentine society doomed to be repeated.

Yet should Kirchner dare to stand back and cultivate an independent state apparatus, he faces the dangers that it will fall into the hands of rivals or criminal networks (as happened recently to the airport police, infiltrated by drug-trafficking gangs). In this context, Kirchner’s liking for the occasional institutional purge is understandable, even as it exacerbates the very tendencies it seeks to eradicate.

A second, closely related dilemma stems from Kirchner’s own attacks on the errors of the past. His declared aim is to steer the state toward a more social function, in which it can guarantee “dignity” and public services and impede the ever-widening breach in wealth. His avowed enemies include big business and the mass media, whose status is echoed by UNDP surveys on perceptions of the real power-holders in Latin America; Kirchner has accused them of forging the favourable deals and “easy earnings” of the Menem years of the 1990s, while the state withered on the branch.

True or not, the fact is that inequality, and with it the decline in public services, has yet to be reversed: indeed, the economic recovery has gone hand-in-hand with an even greater breach in income, while over half of the new jobs created in Argentina are on the black market. Pugnaciously redistributive Kirchner’s rhetoric may be, but the country’s economic vitality has rested on intensive agriculture, high-cost tourism and local industry protected behind a weak peso – none of which would appear suited to cure this failing, even if they have salvaged a bankrupt state.

No alternative?

These two concerns are bound to dog Kirchner and whoever succeeds him, just as they will most of the left-leaning cohort now governing the continent. But the president’s immediate future is more likely to be determined by the evolution of a coalition that embraces almost all it sees – from Blumberg’s “zero tolerance” to the picketer masses – at a time when the excuses of hellfire and national crisis may no longer bind everyone together.

A series of salary-related protests, unsurprising in a country where real wages have fallen on average 20% since 2001, have already mounted an inflation scare, and exposed the stark differences between economy ministry orthodoxy and the clamour from what Lavagna calls “the populist sectors.”

D’Elía, for his part, is keen that the president decisively flushes out “the conservative elements and recalcitrant right in his government’s entrails,” and is pledging that “the next fight” will be against the privatised utilities. “No way do I think we should renationalise companies or anything of the sort,” Lavagna tells the Financial Times. “Democracy or dictatorship of the market” respond the thousands of posters stacked up in D’Elía’s campaign offices.

At some stage, economists warn, the recovery will end and new doses of foreign investment will be required, mandating an end to Kirchner’s purple ire. In the meantime, the president’s show will surely continue to draw from the wellspring of “populism”, patching over the conflicts that will not go away in the name of simple, nationalist, even bellicose leadership; the recent spat with supposed ally Brazil appears to have fitted the bill.

To be “populist,” in the eyes of the west, is to forsake what is sensible or desirable for what attracts popular support, muddle-headed as that may be; in the worst cases in Argentine history, such as 1982, it has led to war and disaster. But perhaps, in this case, the greater harm would have been done in the last three years by legal purity and democratic propriety. “When he rules like a one-man show, you have to see him as the child of his country,” argues sociologist Julio Godio. “He has two souls, and history will say which wins. But we have to support him all the same – otherwise we’d be on the edge of a precipice.” Imperfect, demagogic and obsessive: it would seem like an ideal combination for dictatorship, were it not also the best bet for a stable democracy in Argentina.

Copyright ©Ivan Briscoe 2005. Published by openDemocracy Ltd. You may download and print extracts from this article for your own personal and non-commercial use only. If you are a library, university, teaching institution, business or media organisation, you must acquire an Academic License or Organisational License from openDemocracy, or seek permission directly from the author, before making copies, circulating or reproducing this article for teaching or commercial.

Venezuela Quiere Colaborar con Iran (United Press International)

2005-05-23T14:42:00.000-04:00

Venezuela wants to team up with Iran

Caracas, Venezuela, May. 23 (UPI) -- Venezuela President Hugo Chavez said he is interested in nuclear energy for his country and would like to partner with Iran on nuclear projects.

Chavez also said other Latin American countries should do more to develop nuclear programs in search of alternative sources of fuel, El Nacional reported Monday.

"We are interested. We need to start to work in nuclear energy with Brazil, Argentina and other countries," said Chavez, who added he would like to seek Iran's help in developing Venezuela's nuclear capabilities.

Iran -- considered by the Bush administration to be a member of the "Axis of Evil," which also includes Iraq and North Korea -- said last week it was considering restarting its uranium enrichment program for energy production purposes.

Washington denounced the move. Three EU nations are currently in talks with Iran on the nuclear issue.

Venezuela has also come under fire from the Bush administration, which accuses the leftist Chavez of trying to create a Cuba-style regime.

Chavez Corteja a La Nueva Izquierda Latinoamericana (Associated Press)

2005-05-23T14:38:00.000-04:00

Chavez Courting Latin America's New Left

Monday May 23, 2005 7:01 PM

AP Photo XCAR101

By BILL CORMIER

Associated Press Writer

BUENOS AIRES, Argentina (AP) - Hugo Chavez stood dockside as 900 dairy cows plodded onto a ship bound for Venezuela. Then the Venezuelan president raced across Buenos Aires for the opening of a gas station, where leftists mobbed him like a celebrity, chanting his name and releasing balloons. You'd think Chavez was running for something, more than 3,000 miles from home. And in a way, he is.

Across Latin America, the fiery Chavez is courting a growing bloc of moderate leftist presidents, doling out oil deals and - to Washington's dismay - urging less dependence on the United States and greater unity among Latin American nations.

The Venezuelan leader's no-nonsense style, his criticism of the United States and his advocacy of revolutionary changes to benefit the poor have made him a hero to many in Latin America's resurgent left.

Chavez, 50, seems to be positioning himself as Washington's chief detractor in Latin America, a role long played by Cuba's Fidel Castro, Chavez's 78-year-old mentor.

And while few Latin leaders are willing to go along with Chavez' harsh anti-U.S. rhetoric, fewer still are willing to criticize him.

``Venezuela has the right to be a sovereign country, to make its own decisions,'' Brazilian President Luiz Inacio Lula da Silva said. Responding to criticism from Washington, he added: ``We won't accept defamations against friends.''

Across the region, left-leaning political leaders have voiced support for Chavez's ``Bolivarian Revolution'' aimed at bringing down a decades-old oligarchy and helping the poor. The Venezuelan president frequently invokes independence hero Simon Bolivar when he speaks of a more politically integrated South America.

Evo Morales, a leader in Bolivia's urban Indian slums, calls himself a ``follower'' of Chavez. Chavez drew ovations when he showed up at the March 1 inauguration of Uruguay's first leftist president, Tabare Vazquez.

Even former Ecuadorean President Abdala Bucaram invoked Chavez when he tried to return from exile and make a comeback last month.

``I've come to Ecuador to copy Chavez's style with a great Bolivarian revolution,'' Bucaram said to cheers. His comeback fizzled, and renewed unrest forced him to flee the country.

Chavez, whose nation is the world's fifth-largest oil exporter and a top supplier to the United States, has the money to deal.

He has signed oil agreements with Argentina and Brazil, pursuing a joint venture called Petrosur for collective oil projects. At regional summits, he greets his counterparts with bear hugs and calls them ``hermanos'' - Spanish for brothers. He talks up regional projects, such as a pan-Latin television news channel with a leftist bent.

After a recent Latin American tour, Secretary of State Condoleezza Rice refrained from pointed comments about Chavez but urged Latin Americans to resist what she called the growth of antidemocratic populism in the region. The statement was widely seen as a reference to Chavez.

Michael Shifter, at the Washington think tank Inter-American Dialogue, said the United States is concerned about Chavez's ``broader hemispheric project.''

``He has a lot of ambition and a lot of money, and the United States is interested in stability in the region,'' Shifter said. ``They see a potential for Chavez trying to fuel an agenda opposed to the U.S. on every issue.''

As Washington increasingly voices concern about Chavez, the Venezuelan president has taken to calling Rice ``the imperial lady,'' and uses ``Mr. Danger'' to refer to President Bush. On Sunday, he said Venezuela might break diplomatic ties with Washington if the United States doesn't extradite a Cuban exile wanted for a 1976 airplane bombing.

Chavez also said Venezuela is interested in beginning talks with Iran on the possibility of developing nuclear energy as an alternative power source, a plan that could draw more concern in Washington.

Chavez has stepped up his criticism of Bush's proposed Free Trade Area of the Americas. To counter it, Chavez has teamed up with Castro to lobby countries to join the ``Bolivarian Alternative for the Americas,'' calling it a competing trade plan to resist U.S. economic domination.

It is a message that resonates in Latin America.

At the gas station opened by Chavez in February, 24-year-old Romina Guilli manned the pumps in a blue baseball cap and praised Chavez effusively, saying the joint venture between the two countries gave her a job to help feed her 2-year-old daughter. Recalling his visit, she said Chavez is not the man his detractors make him out to be.

``Chavez is a very warm person,'' she said. ``When he came he spoke to me for a few minutes, pumped some gas and told me I should not only work, but also study. He was talking about unity, and everyone was applauding him.''

---

Associated Press writers Ian James in Caracas, Venezuela; Alvaro Zuazo in La Paz, Bolivia; Monte Hayes in Lima, Peru; and George Gedda in Washington contributed to this report.

Se Abre el Museo de la Deuda Externa en Buenos Aires (ABC Online)

2005-05-23T14:31:00.000-04:00

Correspondents Report - Buenos Aires opens Museum of Foreign Debt

Correspondents Report - Sunday, 22 May , 2005

Reporter: Brian Byrnes

HAMISH ROBERTSON: There's certainly no shortage of unusual museums around the world, from displays of vintage toasters to a German collection of depictions of asparagus in paintings, silver and porcelain.

But perhaps the most unusual of them all is a museum dedicated to debt, and it's located, perhaps appropriately, in the Argentine capital of Buenos Aires.

In 2001, Argentina declared the largest debt default in modern history, triggering a period of unprecedented poverty, crime and unemployment.

The Argentine economy is now recovering, but as Brian Byrnes reports from Buenos Aires, that doesn't mean Argentines want to forget their difficult past.

BRIAN BYRNES: The Museum of Foreign Debt takes visitors on a chronological tour of Argentina's tumultuous economic history, from its first default in 1827 to the golden years of the early 1900s when Argentina was one of the world's wealthiest nations, to the chaos of 2001, when a $100 billion debt default sent the country into a "Great Depression" of its own.

Since opening its doors last month in the Economics Building at the University of Buenos Aires, the free museum has attracted about 80 visitors a day, like 21-year-old student Mariana Suarez.

(sound of Mariana Suarez speaking)

MARIANA SUAREZ (translated): I came here to try to understand why we are in such deep debt and why we have spent so much and where our investments and money went. Then I can form my opinions about who is responsible.

BRIAN BYRNES: Many of the exhibits take a tongue-in-cheek approach in addressing Argentina's foreign debt.

Photocopies of old currencies hang in long strands from the ceiling; Argentina has had a variety of different bills come and go over the years like the austral, the patacone, the real and the peso.

Throughout the museum, tables are covered with scores of ceramic figurines of Argentina's patron saint of work, San Cayetano. Each colourful statue represents the fluctuating unemployment rate of the last 30 years. In 1975, it was two per cent. In the wake of the 2001 crisis it hit 22 per cent. Currently, about 13 per cent of the Argentine population is unemployed.

(sound of song "You've Got a Friend in Me")

Meanwhile, the song "You've Got a Friend in Me" plays on TVs showing old footage of former politicians making promises that were never kept.

(sound of Carlos Menem speaking)

That's former President Carlos Menem vowing to wipe out corruption and impunity in Argentina.

One wall features photos of the flamboyant Menem during his heyday in the 1990s, when Argentina was considered a poster-child of the International Monetary Fund, and a strong currency sent Argentines to Florida for South Beach shopping sprees and holidays with Mickey and Minnie. Many blame Menem for the 2001 meltdown, and since leaving office in 1999 he's been investigated on various corruption charges.

Then there's the Black Hole exhibit. In a dark corner, black felt covers a wall full of holes. Inside each hole, there's a card attached to a pulley string that represents an aspect of Argentine society affected by its foreign debt. When you try to pull the card out, it immediately snaps back in and is "swallowed" by the "Black Hole."

Museum Director Juan Manuel Vazquez Blanco demonstrates.

VAZQUEZ BLANCO: It's a black hole that we can take all the things that the external debt take over from us, for example, national industry. The things that we lose with the external debt, the security. The rational economy, defence, national defence, education.

BRIAN BYRNES: Having the world's first Foreign Debt Museum is a dubious honour, indeed, but one that economist and museum worker Santiago Cogorno says will encourage Argentines to learn from their past mistakes of over borrowing, over spending and graft.

(sound of Santiago Cogorno speaking)

"We know that this situation is our fault," Cogorno says. "Some of us might put part of the blame on the International Monetary Fund or the World Bank or the United States, but I think this museum is more of an internal critique that asks Argentines, "What did we do and how did we get to this?"

BRIAN BYRNES: Argentina's financial woes have left 40 per cent of the population below the poverty line.

On the streets of Buenos Aires these days an all too common sight is that of the "cartoneros" or "cardboard men" who scour the trash for recyclable paper and plastic.

The final stop inside the Argentina Foreign Debt Museum is one of the real-life rickshaws used by the cartoneros to carry their goods. It sits on an elevated platform, painted in sparkling gold, a chariot of the impoverished – a painful reminder, museum organizers say, of what Argentina once was during its golden years and what it has become today.

For Correspondents Report, I'm Brian Byrnes in Buenos Aires.

Washington y la cuestion Chavez (The Financial Times)

2005-05-20T14:32:00.000-04:00

Washington and the Chavez question
By Patrick EsteruelasPublished: May 20 2005 18:17 Last updated: May 20 2005 18:17

Capitalising on the arrival of a new generation of leftist leaders in Brazil, Argentina, Uruguay and elsewhere in Latin America, Venezuelan president Hugo Chavez has made every effort to foster an alliance of governments modeled on his so-called “Bolivarian revolution” – a mix of leftist militarism, populism and state-centrism – to raise Venezuela’s profile abroad and roll back Washington’s influence in the region. As dangers of social and political instability break out in Ecuador and Bolivia, and pressures build to raise social spending, fears abound in Washington that President Chavez’s free-spending, semi authoritarian policy formula will gain traction in and outside the Andes, and form the basis of an anti-US, radical leftist block. How likely is Chavez to succeed and how concerned should Washington be?
//
It is widely believed that Chavez’s government has given small donations and strategic advice to radical leaders and groups in Latin America, including coca growing champion and Bolivian presidential aspirant Evo Morales, Sandinista movement leader Daniel Ortega in Nicaragua and the Farabundo Marti National Liberation Front (FMLN) in El Salvador, a former rebel movement turned legitimate political force. While Venezuela’s sponsorship has been modest, Chavez has played a more direct role in counseling these movements and strengthening their political platforms and leadership ambitions. Other budding radical leaders throughout the region have similarly found in Chavez an inspiration and an example to follow, and use their association with Chavez as a means of solidifying their own revolutionary credentials.
However, none of these movements have gained any significant traction within their countries, and with the possible exception of Ortega, their presidential aspirations are so far rather limited. Morales became one of Bolivia’s most influential and visible political figures through his role at the centre of former President Gonzalo Sanchez de Losada’s removal in October 2003, but won a disappointing 18 per cent of the vote in December 2004’s municipal elections and has yet to carry his appeal beyond Bolivia’s coca growing, rural communities. In El Salvador, the FMLN suffered a crippling defeat at the hands of center-right candidate Tony Saca last year, while Nicaragua’s Sandinista political movement threatens to dissolve under the weight of a leadership battle between party leader Ortega and more moderate Managua mayor Henry Lewittes ahead of the November 2006 presidential elections.
Venezuela’s oil wealth has proven to be a much more effective diplomatic tool, securing strategic alliances with Brazil and Argentina while buying the support of oil-dependent Central American and Caribbean clients. Recent joint-infrastructure agreements between Venezuela’s state oil company Petroleos de Venezuela (PDVSA) and Brazil’s state-owned Petrobras have helped support Brazil’s production diversification strategy, while Argentina’s newly created state company Energia Argentina (Enarsa) has come to rely on PDVSA almost exclusively to help build future production and distribution networks. Venezuela would like to take these alliances further, and has proposed integrating all three state-oil companies to form the basis of a regional oil company (Petroamerica) that would command more than 11 per cent of the world’s oil reserves and raise Venezuela’s diplomatic and commercial clout. Legal complications and Brazil’s refusal to endorse the project will however prevent Chavez’s ambitious project from making much headway.
Other than the direct commercial benefits Brazil and Argentina are likely to derive from partnering with Venezuela, leaders in Latin America’s Southern Cone are not likely to lend their support to Chavez’s radical agenda. Unlike oil-rich Venezuela, Brazil’s and Argentina’s exposures to the international capital market and heavy debt burdens will encourage cautious, fiscally conservative economic policy choices. Both countries will for the most part combine a commitment to social change with increased fiscal responsibility in order to generate stability and avail themselves of the capital they need to fund their social projects. Thus, instead of seeing Chavez as a beacon for the left in the region, Brazilian President Luiz Inacio “Lula” da Silva and his Argentine counterpart Nestor Kirchner are likely to act as a moderating influence and will probably make every effort to stabilise regional relations with the US over the short to medium term. US Secretary of State Condoleeza Rice and Assistant Secretary of State for Western Hemisphere Affairs Roger Noriega are counting on Lula and other moderate regional players to help stave off more radical behaviour in Venezuela while avoiding any more direct diplomatic confrontations with Chavez.
In contrast, oil sales have proven to be a much more effective leveraging tool in Central America and the Caribbean, where discounted oil sales from Venezuela constitute a sizable percentage of oil imports. Chavez’s government supplies over 160,000 barrels per day (bpd) to 11 Central American and Caribbean countries under the terms of the 1980 San Jose accord and the 2000 Caracas Energy Accord, and over 100,000bpd on average to Cuba. Venezuela has regularly used the threat of an oil sale freeze as a means to pressure its commercial partners, including most recently the Dominican Republic over its failure in 2004 to investigate allegations that former Venezuelan president Carlos Andres Perez was conspiring against Chavez from Santo Domingo.
Venezuela’s commercial partners are not likely to import Chavez’s ideals and support the creation of an anti-US, anti-market coalition, but current oil exports and investment agreements combined with Chavez’s popularity among radical leftist constituencies throughout the region will give Chavez’s partners pause before condemning Venezuela’s increasingly anti-democratic practices or siding with Washington’s efforts to isolate Venezuela in the region. As a result, Chavez’s oil partnerships throughout the region should buffer Venezuela against any diplomatic attacks in the near term provided oil prices continue to be high enough to satisfy domestic fiscal demands and Venezuela’s export commitments. A sharp fall in oil prices on the other hand could leave Chavez with substantially less room to maneuver as his government is faced with a choice between supporting Venezuela’s wide array of social projects and supporting Chavez’s allies through discounted sales. While Chavez’s rhetoric will hide some or all of these weaknesses, his government’s limited room for action should help assuage some of Washington’s deepest fears.
esteruelas@eurasiagroup.net

El FMI permite la postergacion de pagos (Bloomberg)

2005-05-19T07:35:00.000-04:00

IMF Lets Argentina Delay $2.5 Billion of Payments (Update1)

May 18 (Bloomberg) -- The International Monetary Fund today agreed to let Argentina defer payment on loans for a third time since 2001, helping ensure the country has funds to pay bondholders more than $4 billion coming due this year.
The fund said the country will have a year to pay $2.5 billion of obligations due between May 20 and April 28, 2006, according to a statement from the Washington-based lender.
Argentina needs the extension as growing debt payments may lead to a budget deficit of as much as 14.3 billion pesos ($4.9 billion) this year, after surpluses in 2003 and 2004. The government, which owes the fund $14 billion, needs a new IMF accord to help meet debt payments due next year, said Claudio Loser, a former director of Western Hemisphere for the IMF.
``This helps Argentina as it was the necessary condition for the country to be able to make payments on debt maturities coming due the rest of this year,'' said Martin Apaz, an economist at Deloitte & Touche LLP in Buenos Aires. ``The major test however will be the negotiation of a multi-year loan agreement.''
The lender probably agreed to the government's request to signal to investors it is satisfied with the nation's progress in a four-year restructuring of $104 billion of debt, said Rafael de la Fuente, senior economist at BNP Paribas in New York.
2001 Default
Argentina defaulted in 2001 after borrowing more than any other developing nation on international debt markets in the 1990s to finance higher spending. Argentina's economy slipped into recession in 1999 after Brazil devalued its currency, as Argentina's one-to-one currency link with the U.S. dollar undermined its competitiveness on export markets.
The extra yield investors demanded to hold Argentina's dollar-denominated bond due in 2008 instead of a comparable maturity U.S. Treasury was 4.3 percentage points in April 2000. That grew to 12 percentage points by September 2001 and jumped to above 70 percentage points after the default.
Argentina's dollar-denominated 3 percent Boden bond maturing in 2012, the country's most-traded security, rose to 86.5 cents on the dollar at 9 a.m. New York time today, from 84.5 cents on the dollar on Friday, before a U.S. court ruling allowing Argentina to move ahead with the exchange.
Yields
At current prices the bond yields about 9.5 percent, or 5.5 percentage points above U.S. Treasuries of comparable maturity, said Rafael Ber, a bond analyst at Argentine Research in Buenos Aires. Standard & Poor's in February said it would raise Argentina's rating to B-, six levels below investment grade, from selective default once the country completes its restructuring.
The IMF last year put on hold a $13.3 billion loan agreement with Argentina that enabled the country to push back debt payments through 2006 as the fund waited for the country to restructure its defaulted debt.
A U.S. appeals court ruling on May 13 lifted a barrier to the debt restructuring by allowing the government to exchange $7 billion of defaulted bonds for new securities, sparking a rally in the nation's stocks and bonds.
The decision allowed Argentina to go forward with a planned debt exchange. The country in February persuaded creditors holding 76 percent of the nation's $81.8 billion in face value of defaulted bonds to accept a restructuring that will give them new securities worth about 30 cents on the dollar.
Argentina has won IMF approval for two postponements in debt payments since its default in late 2001. Other countries such as Turkey and Uruguay have received similar deferments in payment.
`First Test'
``This is the first test of this negotiation with the IMF,'' Finance Secretary Guillermo Nielsen said at a conference in Buenos Aires yesterday.
Argentina will need to secure a new IMF loan program to push back payments with the fund over the next several years, as it will need to set aside money to make payments to creditors that accepted new bonds for defaulted debt, said Apaz a Deloitte & Touche.
The payment extension gives ``Argentina some breathing space,'' said Loser, the former IMF official who now works as an economic consultant, in an interview from Washington. ``But it's only temporary relief because it will have to face up to it next year.''
No Program
IMF Managing Director Rodrigo de Rato said April 20 the lender doesn't have a program with Argentina and it's ``up to Argentine authorities to decide whether they want to have a program with us. Anybody who looks at Argentina for not very long realizes the challenges are very important.''
In total, Argentina owes the IMF about $4 billion this year.
Argentina's foreign currency reserves have more than doubled since January 2003 to $21.6 billion, helped by growing exports of soybeans and other agricultural goods.
Argentine Economy Minister Roberto Lavagna said in February the government would sell 5 billion pesos of domestic bonds this year. Nielsen said in Miami last week the government also may try to sell international bonds, without specifying when. Argentina earlier this month sold 1 billion pesos of domestic bonds to help repay maturing debt.
Argentina has 12.5 billion pesos in debt payments due this year, mostly on so-called Boden bonds, domestic securities the government gave bank clients in compensation for deposits that were frozen after the country's default and subsequent currency devaluation.
A Signal
``The market will see this rollover as a signal that the parties are closer to an agreement,'' said de la Fuente at BNP Paribas. Argentina's economy has grown more than 8 percent the past two years. The government forecasts the economy will grow 6 percent this year.
Lavagna last week said the IMF, as part of a new accord, is requesting the country renegotiate contracts with utility companies, which invested more than $20 billion in the 1990s, by allowing them to increase rates and return to profitability.
Argentina froze the rates of utilities in 2002 in a bid to cap inflation forcing most companies to default on their debts. As a result, companies such as Repsol YPF SA and Total SA, reined in investment and the country faced energy shortages last year. To contact the reporter on this story:
Daniel Helft at barden@bloomberg.net
Last Updated: May 18, 2005 18:55 EDT

España molesta por el fallo sobre el etarra Jesús Lariz Iriondo (Europa Press)

2005-05-17T16:57:00.000-04:00

BUENOS AIRES, 16 May. (EUROPA PRESS) -

El Gobierno español ha trasladado su "malestar" al Ejecutivo del presidente argentino, Néstor Kirchner, por la decisión de la Corte Suprema de Justicia de rechazar la extradición del supuesto miembro de ETA Jesús Lariz Iriondo, según informó hoy la prensa local.
El presidente José Luis Rodríguez Zapatero ha comunicado a través de canales oficiales al Gobierno argentino su desagrado por la decisión del máximo tribunal de rechazar el pedido de extradición de Lariz Iriondo, que fue reclamado por el juez de la Audiencia Nacional Baltasar Garzón, según informa el diario 'La Nación', que cita a fuentes diplomáticas españolas.
"Entendemos que la internacionalización de la justicia todavía está en discusión y respetamos la decisión de la Corte, aunque no la compartamos en absoluto. Es verdad que muchos de los argumentos de los jueces son de procedimiento y no tienen que ver con el fondo del asunto, pero entre todos debemos ser muy claros en que los delitos de terrorismo que han afectado la vida de personas no pueden quedar sin su correspondiente pena", dijo el embajador de España, Carmelo Angulo Barturén.
Ocho jueces de la Corte Suprema consideraron que no se podía conceder la extradición de Lariz Iriondo porque los delitos imputados en España han prescripto según las leyes argentinas. Sólo un juez del Supremo sostuvo que la extradición debía ser concedida.
"Esperamos que se tomen medidas políticas que dejen en claro que este país no apoya ni alberga ni facilita ninguna operación de personas que supuestamente tengan que ver con el terrorismo", agregó el embajador español. El Gobierno de Rodríguez Zapatero espera, según el diario, que el gobierno de Kirchner decrete la expulsión de Lariz Iriondo.
"Pasamos de una relación amistosa e histórica a una relación de carácter estratégico para fortalecer todos los sectores posibles de cooperación; incrementar los intercambios; hacer un seguimiento preciso de los temas que pueden ser de interés común, incluso de aquellos en los que puede haber diferencias de criterio, y preparar juntos una agenda internacional", agregó Angulo Barturén.
Lariz Iriondo fue acusado por Garzón de haber intervenido en un atentado en 1984 contra un vehículo de la Policía Nacional de España en el que resultaron heridas dos personas en Eibar, Guipúzcoa.
También se le acusa de robo con intimidación, estragos y depósito de armas.
Fue expulsado el 22 de noviembre de 2002 de Uruguay y desde entonces permaneció detenido en Buenos Aires hasta que el año pasado el juez federal Claudio Bonadío sostuvo que no correspondía conceder su extradición. Esa decisión fue convalidada el martes pasado por el fallo de la Corte.

Caballos Sudamericanos seran reconocidos como raza pura Arabe (The Denver Post)

2005-05-17T16:44:00.000-04:00

S. American horses win Arabian status

A deal with the Arabian Horse Association, based in Aurora, recognizes the animals as purebred.
By Alicia Caldwell Denver Post Staff WriterDenverPost.com
Finally, recognition is theirs.
For decades, a group of Arabian-horse owners from South America has been fighting with the leading breed registry to have their animals accepted as purebreds.
The rhetoric had gotten ugly.
Half-breed. Unpure blood. Questionable ancestry.
In a settlement made public Friday, the South American owners who had sued the Arabian Horse Association in federal court announced that they had gotten what they wanted: status.
The agreement means that thousands of horses from Argentina, Brazil, Chile and Uruguay can compete and be bred as purebred Arabians, which will significantly increase their value and prestige.
"The South American folks are ecstatic," said Michael Streater, a Minneapolis lawyer who represented the horse owners.
The dispute had revolved around four so-called foundation horses imported into Argentina in the early 1900s from one of the most prestigious stud farms in Europe, the Babolna Stud of the House of the Hungarian Empire.
Officials with the U.S. registry long had contended that the horses, which produced thousands of descendants, were of "proven crossbred ancestry."
The settlement, which takes effect immediately, requires the association to accept the offspring of the four horses as purebred, as long as they meet the usual registration requirements.
"Most of the South Americans are interested in their ability to show their horses and get that recognition worldwide that they are purebreds," Streater said.
The president of the Arabian Horse Association, based in Aurora, sent a letter to association members Friday in which he wrote that the issue had been "divisive" and urged members to accept the settlement as a way to move on.
"By reaching this decision, we have eliminated the possibility of a court dictating to us what we must do or not do," Myron Krause wrote.
No money changed hands, Streater said. But that's not what his clients wanted. They were asking Denver's U.S. District Court to enforce a 2001 agreement signed by members of the Arabian Horse Association's predecessor organization.
That agreement would have given the horses full recognition, but the association, facing a firestorm of criticism, had refused to honor it.
Staff writer Alicia Caldwell can be reached at 303-820-1930 or acaldwell@denverpost.com

El Canje todavia puede demorarse mas (Reuters)

2005-05-16T20:43:00.000-04:00

Argentine debt swap could face further delays

Mon May 16, 2005 05:19 PM ET By Greg Brosnan

NEW YORK, May 16 (Reuters) - Argentina's long-awaited debt swap could face further delays as holdout creditors, dealt a blow last week by a New York appeals court, consider pushing their case higher up the U.S. justice system.
"We're considering our options," said Dennis Hranitzky, lawyer for EM Ltd, one of two large-scale holdout creditors who gained through the courts a freeze on $7 billion in old Argentine bonds was lifted by the 2nd U.S. Circuit Court of Appeals on Friday.
The frozen bonds were part of a much larger amount of defaulted Argentine debt which had been turned in by creditors who agreed to accept new bonds and take a loss of about 70 cents on the dollar as part of Argentina's $102 billion debt restructuring plan.
Argentina, which had said it could not proceed with the exchange with the freeze in place, said on Friday the appeal court's ruling meant it would "immediately" issue the new bonds.
However, the tendered bonds for the time being are stuck in a sort of legal limbo.
The freeze remains in place until U.S. District Court Judge Thomas Griesa formally lifts the freeze as a result of the appeals court's decision. He has presided over the wider three-year court battle between Argentina and a handful of creditors.
But Griesa himself is powerless to lift the freeze until the appeals court formally hands him an official decision in the form of a 'mandate', a process that can be stalled for weeks in order to give appellants a chance to further appeal.
"It's an odd circumstance because there's no court that at this point wants to enforce the stay," said Samuel Issacharoff, a law professor at New York University familiar with the case.
APPEALING THE APPEAL
Hranitzky, who said he was "disappointed" with Friday's ruling, said EM Ltd had two options: it could either seek a review of Friday's three-judge panel ruling by the wider appeal court, or try to take the case to the U.S. Supreme Court.
Both processes are discretionary, meaning the appeals court or the Supreme Court must agree to conduct a review.
Neither lawyers for Argentina or NML Capital, the other large-scale creditor that had won a freeze on old bonds, returned calls seeking comment on Monday.
Participation in Argentina's debt exchange reached 76 percent. Of the 24 percent of holdout creditors, only a fraction are so far suing for their cash. EM Ltd and NML Capital began court action long before Argentina launched its restructuring.
EM Ltd and NML Capital have said Argentina can pay them the full amount owed or settle and still issue new bonds through the swap as planned, but Argentina has chosen not to do so.
The appeals court said in its written ruling on Friday that it was "unnecessary to rule definitively on any of the legal issues disputed by the parties," citing as a main reason for lifting the freeze the economic damage Argentina could suffer if the swap did not go through as planned.
While the court was widely expected to rule in Argentina's favor, Friday's decision drew ire on Wall Street.
"Friday was a sad day for American jurisprudence," wrote Walter Molano, head of research at BCP Securities, in a research note on Monday. "There was a glimmer of hope that the court would examine the legal aspects of the argument."
"The plaintiffs have a legal right to appeal," he said. "Hence, we could be in for more delays."

Las penurias de los camioneros resaltan los problemas de infraestructura en Argentina (DJ Newswires)

2005-05-16T16:11:00.000-04:00

Truckers' Plight Underscores Argentina Infrastructure Woes

By TAOS TURNERMay 16, 2005 3:55 p.m.
Of DOW JONES NEWSWIRES

ROSARIO, Argentina -- Tired, hungry and in need of a decent bathroom, thousands of Argentine truck drivers are losing their patience after spending hours - sometimes days - stuck in long lines of bottlenecked traffic. And that's just part of the story.
"We get robbed all the time," said Daniel La Palma, a trucker from the province of Santa Fe.
The truckers' plight begins in Argentina's fertile interior, where farmers are producing a record amount of corn and soybeans. Truckers like La Palma carry most of that production to ports in and around this city, located 170 miles northwest of Buenos Aires.
These days as many as 30,000 trucks are converging within a 25-mile radius of Rosario to unload grains for export, according to Rogelio Ponton, chief economist at the Rosario Cereals Exchange. This has overwhelmed the local transportation infrastructure, causing traffic jams, fist fights and, according to truckers, fatal accidents.
Truckers often have trouble during the harvest. But the situation worsens every year as the harvest expands and increases the burden on roads, ports, trains, trucks and storage facilities. It symbolizes the problems that Argentina faces as it tries to balance a growing economy with a dilapidated infrastructure.
"Two weeks ago I waited in a line of 1,000 trucks to get to a quality control station near the port," said La Palma. "After I got in, they said my grains were too humid and needed to be dried. After dealing with that, I had to enter another line and wait behind another 340 trucks before I finally reached the port. I wasted four days waiting in lines."
Argentina expects to produce 82 million metric tons of grains this year, up 13 million tons from last year and 36 million from a decade ago.
Yet investment in roads, trains and trucks has been minimal, analysts say.
"I've been a trucker for 38 years," La Palma said. "With a few exceptions, (road) conditions now are the same as when I started driving. Earlier this year it took me four hours to cross just 44 kilometers in Santiago del Estero (Province) because there were so many potholes in the road. This is typical of Argentina."
This is a serious constraint given that 85% of Argentina's grains travel by truck.
Argentina uses trains to move just 15% of its grain exports, compared with 35% in the U.S. and 45% in the European Union, according to the local Cereal Exporters Chamber, or CEC.
"This is one of the biggest bottlenecks of the system," says the CEC. "The cargo fleet is limited and needs renovation. It is estimated that there are 37,500 trucks that date back to at least 1980 and the replacement rate is very low."
"We need to use more trains," said the Exchange's Ponton, who argues that boosting train usage to 25% of grain shipments would save $80 million a year.
Building new roads and deepening river ports - to boost the cargo capacity of ships - could bring annual savings to $500 million, according to the Exchange.
Meanwhile, only 70% of the Belgrano Cargas cargo rail network, which covers 9,800 kilometers and 10 provinces, is operational. And just 10% of it is in shape to allow trains to run at their maximum speed of 38 miles per hour, says the U.S. Commerce Department.
Argentina planned to open bidding for the Belgrano Cargas network last year and attracted interested buyers, including multinational food company Cargill. Inexplicably, the government postponed its plans.
The transportation burden is borne by truckers, who are stuck in an uncomfortable relationship of dependency with big multinational buyers and oilseed processors, which also happen to run Argentina's biggest ports.
Companies such as Bunge and Cargill are spending more than $700 million to build new ports and processing plants, but the lives of the truckers waiting in the interminable queues haven't yet gotten any easier.
"These companies treat us like dogs," said La Palma, referring to conditions truckers face while waiting on the shoulders of roads and in control station parking lots. "It's like being in jail. We have no bathrooms. No showers. No places to eat. There are potholes even the lots."
Outside the lots, things can be worse.
"Guys will come up and steel your grains," said Juan Rosales, a trucker from Buenos Aires. "It happens all the time. If you're stuck on the road you can get robbed or worse, especially if you're stuck near a shantytown."
Yet improving transportation infrastructure is ultimately a government responsibility, given that railways and roads are publicly owned.
The problem is "governments have had other priorities in recent years," said Ponton, referring to the political and economic crises that have rattled Argentina. "They've been trying to put out fires and haven't been able to focus on other problems."
One such fire: a looming energy crisis. As with transportation limitations, this reflects a similar failure to expand capacity at a time when demand - in this case, for natural gas and power - is growing rapidly. Consumption of both has surged while the economy has grown at rates of 9% in the two years since the financial crisis of 2002.
Power and gas industry officials complain that an antagonistic government approach toward business, exemplified by a three-year utility-rates freeze, has generated great uncertainty in the energy sector. And that has stopped companies from making badly needed investments.
While Argentine consumers have so far avoided serious outages, private factories - including oilseed producers that convert soybeans into soymeal and other products - have seen their gas supplies rationed. And economists predict far greater problems in the years ahead.
What differentiates the problems currently faced by the agricultural sector from the energy crisis is that infrastructure bottlenecks are not new. Critics say that a country with such a long history of dependence on food exports - and with such a large territory - should long ago have come up with a long-term vision to prepare the regional infrastructure for boom periods.
"Large countries like Argentina, Brazil and the U.S. depend on an efficient transportation network," Ponton said. "It's the vertebrae of the country. It's fundamental to a country's economic development."
In 2003 think tank Fundacion Producir Conservando warned that transportation problems would limit Argentina's ability to keep boosting agricultural output.
Given that the farm sector is estimated to provide jobs for 36% of Argentina's workers, agricultural growth is key to broader economic growth.
However, two years after the foundation issued its warning, much remains to be done.
"Undoubtedly this will continue to be an important restriction that will negatively influence farmers' incomes," the foundation said, calling for up to $8 billion in infrastructure investment.
Whatever happens, La Palma plans to keep on trucking.
"This is what I know how to do," he said. "I'm a trucker. When I go home I don't think about these problems. I just think about my family."
-By Taos Turner, Dow Jones Newswires; 5411-4314-2757; taos.turner@dowjones.com
(Michael Casey contributed to this article.)

Argentina se prepara a apelar ante el CIADI (the Financial Times)

2005-05-15T06:11:00.000-04:00

Argentina prepares to appeal on utility case ruling

By Adam Thomson in Buenos Aires Published: May 13 2005 19:10 Last updated: May 13 2005 19:10

Argentina's lawyers were scrambling to prepare an appeal on Friday after the World Bank's arbitration tribunal ruled against the government in a case involving one of the country's privately owned utility companies.

The ruling, delivered on Thursday afternoon, orders President Néstor Kirchner's administration to pay $133m (€105m, £71m) to US-based CMS Energy over the government's handling of the 2001 financial crisis.
It is the first of more than 30 cases before the World Bank's International Centre for Settlement of Investment Disputes (Icsid), with claims totalling almost $20bn.
Most of them were filed by Argentina's privatised utility companies for the devastating effects of the financial crisis, which culminated in December 2001 with the biggest sovereign default in history followed just days later by a swingeing devaluation.
Analysts agree that the ruling is potentially a big blow for the populist Mr Kirchner.
“It sets an important precedent for the other cases,” said Carola Sandy of Credit Suisse First Boston in New York.
They also said one likely effect would be to place greater pressure on the government to speed hearings that are under way with many of the privatised utility companies over the terms of new contracts.
Among other things, the companies are demanding permission to increase the prices they charge, most of which have been frozen since they were forcibly converted from dollars into devalued pesos in January 2002.
The government is demanding greater levels of investment in infrastructure and, significantly, that the companies withdraw their claims before Icsid.
Both the government and CMS were guarded on Friday. Dan Bishop of CMS Energy told the FT, “We cannot say much at this time. Our lawyers are analysing the ruling.”
Meanwhile, state attorneys were locked in discussions all morning, following an emergency Thursday night meeting between Mr Kirchner, Roberto Lavagna, Argentina's economy minister, and Horacio Rosatti, justice minister. Mr Kirchner said his government would refuse to pay, and would instead file an appeal, according to local press reports.

El Canje descongelado (Bloomberg)

2005-05-15T06:07:00.000-04:00

Argentina Defaulted Debt Freeze Lifted by U.S. Court (Update3)

May 13 (Bloomberg) -- Argentina won a U.S. appeals court ruling that allows the government to exchange $7 billion of defaulted bonds for new securities and complete the biggest debt restructuring ever.
``We plan to move right away with the swap,'' Economy Minister Roberto Lavagna said in an interview in Buenos Aires after the 3 to 0 ruling by the Second Circuit Court of Appeals panel in Manhattan. ``Argentina will now have a manageable debt situation.''
The judges decided in favor of a lower court ruling that holders of defaulted debt have no rights to the bonds being held at the Bank of New York Co., the exchange agent for the swap. Kenneth Dart, the billionaire investor who owns the world's largest foam- cup maker, was among plaintiffs who sought to freeze the bonds so they could collect compensation from the government's 2001 default.
The decision clears the way for Argentina to go forward with its $104 billion debt restructuring, delayed since April 1 pending the outcome of the case. Completing the exchange is a condition for a new International Monetary Fund loan agreement and will help Argentina restore investor confidence and return to international capital markets, said Miguel Kiguel, a former undersecretary of finance.
The nation's benchmark stock index jumped 4 percent after the decision.
``This unlocks the debt exchange and allows Argentina to move forward with plans of tapping credit markets which it needs,'' said Kiguel, who runs the Center for Financial Stability in Buenos Aires. ``It's excellent news for the Argentina.''
`Critical Importance'
Argentina in February persuaded creditors holding 76 percent of the country's $81.8 billion in defaulted bonds to accept a restructuring that will pay them about 30 cents per $1 of defaulted debt. Investors, such as Dart, representing about $20 billion of defaulted bonds rejected the offer. The government said it won't recognize another $20 billion in past-due interest.
The ``restructuring is obviously of critical importance to the economic health'' of Argentina, the appeals court said.
Ruling
The panel of the Second Circuit Court of Appeals in Manhattan decided to uphold an earlier decision by U.S. District Judge Thomas Griesa on March 31 against the creditors. In his decision, Griesa said creditors couldn't seize the bonds because they are owned by the bondholders until the swap takes place. After the exchange, the bonds will be canceled under the terms of the exchange, leaving them without value to the plaintiffs, Griesa ruled.
``The ruling breaks the logjam for those who accepted the government offer and is a huge relief for the country,'' said Manuel Solanet, a former treasury secretary who is now president of Buenos Aires-based INFUPA economic research company. ``It puts the country in a much stronger position when it comes to plotting a path for negotiations with holdouts.''
David W. Rivkin, a lawyer for Dart's EM Ltd., said in an interview last month that Dart will go after other Argentine assets should the court rule against him. Rivkin declined to comment after the ruling.
Bonds
Argentina's dollar-denominated 8.3 percent bond maturing in 2033, one of the new securities to be issued in the exchange, fell as low as 76 cents on the dollar April 27 from 90 cents on March 9 as the lawsuit delayed the exchange. The bond traded today at 81.75 cents, according to Buenos Aires-based Banco Mariva. The bonds are trading in a when-issued market ahead of the swap.
Plaintiffs have the right to appeal today's decision and ask for review by all the judges on the Second Circuit Court of Appeals or appeal directly to the Supreme Court.
``To close the exchange is very important for Argentina as it will finally be able to leave the default behind, consolidate consumer confidence, stimulate investment and facilitate the emission of international debt,'' said economist Julio Piekarz, a former central bank general manager.
Argentina's economy is growing for a third after a four-year recession.
Finance Secretary Guillermo Nielsen said today the country may advance plans for an eventual international bond sale as demand for the country's debt climbs.
``We could go back to the markets sooner than most people expect,'' Nielson told reporters on the sidelines of a conference in Miami. ``We perceive growing appetite for Argentine debt,'' from foreign investors, he said.
Nielsen also said talks with the International Monetary Fund to resume a $13.3 billion loan program that was put on hold are ``moving forward.'' To contact the reporter on this story:
Andrew Barden at barden@bloomberg.net
Last Updated: May 13, 2005 17:28 EDT

Argentina pedira la anulacion del fallo del CIADI (AFX News)

2005-05-13T07:40:00.000-04:00

AFX News Limited
Argentina to seek annulment of arbitration court ruling in favour of CMS Energy

05.13.2005, 07:31 AM BUENOS AIRES (AFX) - The Argentine government said it will try to annul a ruling by the World Bank's International Centre for Settlement of Investment Disputes (ICSID) in favour of US company CMS Energy Corp. CMS Energy Corp, like many other foreign companies, is seeking compensation for the losses incurred as a consequence of the financial and economic crisis that hit Argentina in 2002, after the 1-for-1 peg of the peso with the US dollar was dropped and utility tariffs were frozen at a time when inflation was running high. CMS is seeking about 300 mln usd in compensation. Government officials said that Argentina will ask the ICSID to declare the award null and void because CMS is a minority holder of TGN, the company affected by the government measures taken in 2002. The Argentine authorities allege that the US government is able to overturn rulings by NAFTA's arbitration tribunal on these grounds. NAFTA is the North American Free Trade Agreement, which includes Mexico and Canada, along with the US. ICSID's ruling cannot be formally appealed. According to CSFB analysts, 'annulments or revisions can be requested only in specific circumstances, for example, if a party can show that the ICSID's tribunal exceeded its powers, was not properly constituted or that there was corruption on the part of the tribunal's members'. CSFB analysts Lacey Gallagher and Carola Sandy noted that should the Argentine government 'be perceived as breaching the bilateral investment treaty with the US, this could strain the bilateral relations between the US and Argentina'. They added that this ICSID ruling should create an incentive for the government to speed up negotiations with the utilities and, perhaps, to agree to more realistic rate increases.

Sudamericanos atacan sanciones de US contra Siria (The Financial Times)

2005-05-11T10:08:00.000-04:00

S Americans attack US sanctions against Syria
By Raymond Colitt in Brasília
Published: May 10 2005 18:56 | Last updated: May 10 2005 18:56

Leaders from 33 South American and Arab nations on Tuesday moved to criticise US economic sanctions against Syria and question Britain's claim to the Falkland islands.

In a draft statement to be formally approved late on Thursday at a Brasília summit of South American and Arab heads of state, the leaders also called on Israel to abandon occupied Arab territories.

The unprecedented meeting between the two regions, which included Jalal Talabani, the new Iraqi president, as well as about 1,000 businessmen, is a further attempt by Luiz Inácio Lula da Silva, Brazil's president, to foster economic and political ties among developing nations and help create a more equitable world order.

“Our big challenge is to design a new international economic and trade geography,” said Mr Lula da Silva. “We defied the sceptics who said [our two regions] could not work together.”

After Mr Lula da Silva visited Arab countries in 2003, Brazil's trade with the region grew more than 50 per cent to $8.1bn (€6.3bn, £4.3bn) in 2004. “It is not just China, there is also enormous potential in that region and others,” Celso Amorim, the foreign minister, told the Financial Times on Monday.

In the statement, agreed in principle on Monday, the leaders expressed their extreme concern over US “unilateral sanctions against Syria”, saying they violated principles of international law. Washington applied the diplomatic and economic measures in late 2003 , alleging Syria aided terrorist activities.

The document also calls on the UK and Argentina to “retake negotiations as soon as possible to find a just, peaceful and lasting solution to the controversy over the question of the Falklands”. Last week Buenos Aires formally complained that the proposed constitution of the European Union sought to seal Britain's claim to the South Atlantic islands by calling them “British overseas territories”. Arab leaders renewed calls for Israel to withdraw from occupied Arab territories.

The strongest summit ovation went to Hugo Chávez, Venezuela's leftwing president, and Mahmoud Abbas, the Palestinian leader. Mr Lula da Silva praised the Palestinian people for their “patience” in the Middle East peace process. Mr Amorim said the summit was not intended to be an anti-US forum. “On the contrary, [the US] congratulated us for holding it,” he said. “The idea is not to replace ties with our other partners,” he said in reference to the US and Europe.

Cumbre Sudamericana-Arabe unida contra Israel, USA (The Wall Street Journal)

2005-05-11T10:04:00.000-04:00

South American-Arab Summit Rails Against Israel, US Policy

DOW JONES NEWSWIRES
May 11, 2005 9:18 a.m.

BRASILIA, Brazil (AP)--Banding together to dampen the international dominance of the United States, South American and Arab leaders railed against the global influence of wealthy nations and Israel at a summit aimed at empowering developing countries.

As the two-day Summit of South American-Arab Countries drew to a close Wednesday, officials were poised to endorse an accord giving Arab leaders backing against Israel.

In return, South America was to win support for its push to make sure the U.S. does not end up dominating the global economy.

Venezuelan leader Hugo Chavez, a socialist, and U.S.-backed Iraqi President Jalal Talabani were set to join dozens of other nations and endorse a "Declaration of Brasilia" at odds with U.S. policy on a number of fronts.

The summit brought 9,000 troops to the Brazilian capital in the tightest security seen here in years. Tanks were posted outside the convention center ringed with barbed wire where 15 heads of state and top officials from 34 South American, Middle Eastern and North African nations were meeting.

Brazilian President Luiz Inacio da Silva called the event an "historic opportunity to build the foundation for a bridge of solid cooperation between South America and the Arab world."

Pushing a goal he has pursued since becoming the country's first elected leftist leader, Silva urged participants to fight for free-trade rules that help the developing world's masses who live in misery, instead of benefiting only rich countries and multinational corporations.

Arab states, under pressure from Washington to reform their authoritarian regimes, chose to focus their energy on the Palestinian crisis.

The declaration calls for tighter political and economic links between the regions but demands that Israel disband settlements and retreat to its borders before the 1967 Mideast war. It also lashes out at U.S. economic sanctions against Syria.

The summit lost luster with the absence of the strongest voices in the Arab world, including the leaders of Egypt, Saudi Arabia, Jordan and Syria.

And Argentine President Nestor Kirchner jetted out Tuesday night in a move interpreted as a snub to Silva. Argentina and Brazil, the continent's two largest economies, have historically jockeyed to be South America's leading power - and Kirchner is reportedly upset with Silva's insistence that Brazil should be given a permanent seat on the U.N. Security Council.

Only seven of 22 Arab heads of state attended, while eight of the 12 South American leaders came to Brasilia. The U.S. requested to attend as an observer, but Brazil refused.

Despite the summit's anti-American undertones, U.S. State Department spokesman Tom Casey said the Bush administration welcomes "the idea of dialogue between these two regions."

Moussa took pains to downplay the declaration's controversial elements, saying the summit's main point is to strengthen regional ties.

"This summit, in its idea, its initiative, is not directed against anyone," he said.

Silva, however, singled out for criticism agricultural subsidies for U.S. and European farmers, saying they must be slashed to ensure that "poor countries receive the benefits of globalization."

"We want to take concrete and lasting steps in the struggle for development and social justice," Silva said.

Guyanese President Bharrat Jagdeo said ongoing trade liberalization talks by the 148-nation World Trade Organization will not succeed unless they lift living standards in poor countries.

The WTO, currently in the midst of a leadership race, must be headed by a citizen of a developing country and a new world economic order is needed to solve the problems of developing nations, he said.

"We have economic systems that have kept us on the periphery," said Jagdeo. "We will forever remain on the periphery if we don't change the system."

Moussa said South America and the Arab League countries, with more than half a billion people, lie far apart but share strong cultural links that should lead to closer cooperation. About 10 million South Americans are of Arab descent.

"More than 600 million people are looking with hope to the summit of hope, the Brasilia summit," he said.

The document denounces terrorism but asserts the right of people "to resist foreign occupation in accordance with the principles of international legality and in compliance with international humanitarian law."

The clause was a clear reference to Israeli and American condemnation of the Palestinian militant group Hamas and Lebanon's Hezbollah, and drew condemnation from Jewish groups.

"By including language legitimizing the right 'to resist foreign occupation' they encourage every insurgent in Iraq, every al-Qaida operative and every Hamas terrorist," said Rabbi Abraham Cooper, the group's associate dean.

The draft does support international efforts for Mideast peace, including the U.S.-backed "road map" peace plan. On Iraq, it stresses respect for the "unity, sovereignty and independence of Iraq and of not interfering in its internal affairs."

Iraqi President Jalal Talabani told summit leaders he wants their help to fight terrorism, which he described as "an international curse."

"For every one American killed, 300 innocent Iraqis are killed," he said.

URL for this article:
http://online.wsj.com/article/0,,BT_CO_20050511_004183,00.html

Argentina va abrir embajada en Ramallah (Xinhua China)

2005-05-11T08:37:00.000-04:00

BUENOS AIRES, May 10 (Xinhuanet) -- Argentina is prepared to open an embassy in the West Bank city of Ramallah, Palestinian ambassador to Argentina Suhail Akel said Tuesday.
Argentine President Nestor Kirchner will meet with Palestinian leader Mahmoud Abbas in Brasilia within the framework of the firstSouth American-Arab Summit. Akel did not reveal specific date or venue for the talks.
The two leaders will address the initiative of Kirchner about opening the embassy. It is unknown now when Kirchner will make theannouncement.
Akel admitted that an Argentine diplomat has been informed he will head the diplomatic representation in Ramallah, but declined to give further details.
In the second half of the 1990s, Chile became the first Latin American country to have opened an embassy in Ramallah. Argentina maintains diplomatic relations with the Palestinians who have an embassy in Buenos Aires. Enditem

Los aumentos en el gas reducen ganancias (The Wall Street Journal)

2005-05-09T10:51:00.000-04:00

Argentina Gas Shortage Erodes Cos' Pfts

DOW JONES NEWSWIRESMay 6, 2005 6:59 p.m.
(This Corrects the item timed at 22:12 GMT throughout to read liquefied petroleum gas and LPG instead of liquified natural gas and LNG.)
By Drew Benson
Of DOW JONES NEWSWIRES

BUENOS AIRES -- The Argentine government's new plans to expand the nation's five main pipelines in 2006 - after expanding two of them this year - aim to deliver an additional 20 million cubic meters of natural gas per day.
But it appears that the gas isn't coming fast enough to plug the holes that already have begun to erode profits for some of the nation's leading energy companies.
Argentine President Nestor Kirchner announced the new expansion plans in a news conference Friday. They would follow ongoing expansions of two pipelines this year that are expected to increase the gas flow by 4.7 million cm/d, beginning in late June.
But in the meantime, the limited gas supply is starting to take a toll on companies that are struggling ever since the government converted utility rates into devalued pesos and froze them in January 2002 amid a national financial meltdown.
In first-quarter earnings statements released this week, natural gas pipeline operator Transportadora de Gas del Sur (TGS) and generator Central Costanera (CECO2.BA) both reported results that showed that the nation's energy woes have begun to drag on profits.
TGS Thursday reported a first-quarter net profit of 93.2 million Argentine pesos ($1=ARS2.90), but noted that revenue from liquefied petroleum gas production slid to ARS107.6 million from ARS129 million on the year because of "insufficient natural gas offer from the producers."
As a result, the contribution of LPG to overall revenue fell to 46% from 53% on the year, the company said. Meanwhile, gas transportation as a percentage of total revenue in the first quarter rose to 47% from 43% on the year.
The shift has generated an opportunity cost for TGS.
LPG production is more profitable in Argentina because, unlike natural gas, its prices haven't been held down by government decrees aimed at protecting residential natural gas users.
As TGS's earnings statement illustrated, "natural gas restrictions affected the company's non-regulated LPG business," said Luciano Eremone, a local analyst at Standard & Poor's.
TGS both exports LPG and sells it in butane and propane canisters to Argentines living in areas not served by domestic natural gas grids.
"After the devaluation, (the LPG) unit became a very profitable and important source of earnings for TGS," Eremone said. "Gas transportation rates have been frozen since January 2002, while the (LPG) segment doesn't have regulated prices. And those prices have gone up in recent years."
Similarly, Central Costanera reported on disruptions to a more profitable part of its operations in its first-quarter earnings statement posted Friday.
Last week, the generator said it was forced to reduce supply to Brazilian power distributors after temporarily losing a generator to maintenance. Central Costanera would normally purchase excess Argentine electricity to meet its contractual obligations, but a government decree designed to protect domestic supply prevented the company from doing so.
In the earnings statement, Central Costanera said the Brazilian contract disruptions will cut its April revenue by $2.5 million.
More broadly, the generator's profits also were undermined by the distorted accounting that is applied to their power sales by government regulators seeking to keep the national power market liquid during these difficult times.
Although Central Costanera posted a net profit of ARS34.8 million in the first quarter, it noted that operating costs shot up to ARS126.3 million from ARS68.4 million in the same quarter of 2004.
The power generator's revenues have been squeezed by an August 2003 government measure that requires the country's grid operator to calculate spot power prices as if generators were using natural gas, when they have actually been increasingly using more expensive fuel oil due to the gas shortfall.
Central Costanera reported that fuel costs rose to ARS92.7 million in the first quarter of 2005, more than double ARS41.7 million a year earlier.
Costs could rise even further in the second and third quarters as cold winter weather sends residential users, who the government has vowed to protect from price increases, to turn on their gas-powered heaters.
-By Drew Benson, Dow Jones Newswires; 5411-4311-3127; andrew.benson@dowjones.com

Produccion petrolera decrece en Enero-Febrero. Produccion de Gas aumenta (The Wall Street Journal)

2005-05-09T10:49:00.000-04:00

Argentina Jan-Feb Oil Output Down 4.4% On Yr; Gas Up 0.3%
DOW JONES NEWSWIRESMay 9, 2005 10:43 a.m.

BUENOS AIRES -- Argentine oil production during the first two months of 2005 slipped 4.4% on the year, while natural gas output climbed a slight 0.3%, according to a private industry group.
Data released Sunday by the Argentine Oil and Gas Institute, IAPG, showed that oil production during January and February dropped to 107,717 cubic meters a day from 112,680 cm/d during the same period last year. Meanwhile, natural gas output rose to 137.66 million cm/d from 137.25 million cm/d.
Oil production, down for five of the past six years, has ebbed in Argentina after an influx of heavy investment in the 1990s that doubled output within a decade. Investment in exploration and production was set back, in part, by Argentina's 2001-2002 economic crisis, a 20% duty on oil exports, and the rising popularity of compressed natural gas by Argentine car owners.
Meanwhile, gas output has steadily overtaken oil production, despite a government-decreed utility-rates freeze in place since January 2002. The artificially lower prices have boosted interest in gas.
The government has since allowed for some utility-rate increases, but they have fallen on industrial users and so far spared residential users, the nation's biggest energy consumers.
With demand for gas outpacing production increases, Argentina endured an energy crunch last year at the onset of the South American winter, which begins in June.
A repeat energy pinch is expected this year.
The first indications of another tight winter season arose late last month during an early cold spell. The series of cold days forced gas distributors to briefly restrict gas shipments to some industrial customers and compressed natural gas stations holding interruptible contracts.
-By Drew Benson, Dow Jones Newswires; 5411-4311-3127; andrew.benson@dowjones.com
URL for this article:http://online.wsj.com/article/0,,BT_CO_20050509_004460,00.html

Todo en juego por inversiones...(Fiancial Times)

2005-05-09T10:42:00.000-04:00

All to play for on investment as leftwing leadership revisits a decade of disposal

By Adam Thomson
Published: May 9 2005 03:00 Last updated: May 9 2005 03:00

In a makeshift tent in Mataderos, a run-down neighbourhood on the fring- es of Buenos Aires, meetings are taking place between Argentina's populist government and the private companies that provide the country's public services.
The encounters aim to set the terms of new contracts for public services after the previous regime crumbled in the financial chaos of December 2001, along with Argentina's pegged ex-change rate and its promises to honour sovereign debt.
The two sides are battling over specific grievances and demands. But behind the detail lies a fundamental question that has surfaced since Argentina's economic collapse and, more recently, since the election of Néstor Kirchner, the leftwing president: was the privatisation process in the 1990s a failure?
Analysts and businesses believe much rests on the answer. The government is under pressure from Argetina's left to take on a bigger role in the economy, including in the provision of public services, and it is much more likely to respond to that pressure if there is an overwhelming perception that the privatisations were bad for Argentina.
Since coming to power two years ago, Mr Kirchner has rarely lost an opportunity to attack the mainly European-owned companies that snapped up Argentina's state-owned utility companies during that period.
The message seems to have worked. In a poll conducted last month by Fara y Asociados, a consultancy in Buenos Aires, two-thirds of Argentines living in the capital and surrounding areas believe the state should once again become the provider of public services.
On the surface, all this may appear a little strange. After all, Argentina's state-run public utility companies were inefficient, corrupt and haemorrhaging money.
Local telephone exchanges were filled with obsolete electro-mechanical machinery - some were acquired by museums as antiques soon after the privatisations. Crossed lines were an everyday nuisance and demand for new lines far outstripped supply.
"You either had to slip a public employee $2,000 or wait between two and three years for a new line," says Fernando Navajas of Fiel, a think-tank in Buenos Aires. "Even the property market suffered because it was so difficult to sell your flat if it didn't already have a telephone."
Today, and about $20bn of private investment later, Argentina's telephone network is fully digital, and telephony extends to the furthest corners of the country. This is no mean feat given that Argentina has a population of just 36m but is almost the same size as India.
"Privatisation was what enabled Argentina to be-come a country with modern infrastructure," says a telecommunications industry executive. "The state would never have been able to do it because it was penniless."
Most experts believe the truth lies somewhere between the two extremes.
There is no doubt that the privatisation process produced a huge increase in investment - about $100bn during the 1990s. The country's road infrastructure improved significantly, ports became efficient and competitive after decades of decline and new airport facilities were built to meet the fast-growing international appetite for Argentina.
Defenders of privatisation point to electricity and gas as the most successful examples of Argentina's privatisation process. In electricity generation, for example, the cost of a megawatt of energy fell to just $20 compared with about $45 when the state ran the sector.
Daniel Montamat, former energy secretary, says that was possible first because a clear regulatory framework was established that separated the sectors into generation, transmission and distribution. Second, the government set up a regulatory body to avoid abuses by the companies. And finally, because the bidding process for the contracts was competitive and transparent.
Yet he concedes that regulatory issues were often left aside. "We came from a policy of import substitution, which failed dramatically, so we placed all our faith in the market believing it could and would resolve everything," he says. "In many cases, that was just naïve."
Javier González Fraga, a professor of economics and former central bank president, agrees. While he maintains the decision to privatise was correct, he says there was insufficient regulation. One result, he says, was a sharp decline in oil and gas exploration in the mid 1990s.
He also says there were serious mistakes in pricing structures, notably the decision to allow companies to charge in dollars with prices indexed to US inflation. That caused some prices of public services to increase 35 per cent in real terms.
Experts say that in spite of the vast improvement in quality, those elevated prices, as well as mass redundancies in companies such as YPF, the former state oil company, help explain Argentines' cool attitude to the companies today.
But while the government created Enarsa, a new state energy company, it appears unwilling to bow to popular pressure and go a step further. Roberto Lavagna, Argentina's economy minister, recently told the FT: "In no way do I think we should renationalise companies or anything of the sort."
That, at least, will come as an immense relief to those companies. Next in the series: Ukraine
>>>

Carta del embajador argentino en UK al Financial Times

2005-05-09T10:39:00.000-04:00

A growing economy is Argentina's best guarantee of honouring its obligations
By Federico Mirre
Published: May 9 2005 03:00 Last updated: May 9 2005 03:00

From Mr Federico Mirre.

Sir, In response to your editorial "Argentina's duty" (April 29), allow me to point out the following elements.
Argentina is emerging from the worst economic, social and institutional crisis in its history. In 2003, one of the first priorities of my government was to face the reality of the default and start negotiations with its creditors. The negotiations may be considered tough but not unfair. With 76.15 per cent of acceptance by bondholders, it is clear that the offer was accepted by the market. Better than any theoretical analysis, this shows that the market realised that it was the best sustainable offer possible considering long-term economic prospects of Argentina.
When comparing the restructuring of Argentina's debt with other recent cases, one should bear in mind that it is a leading case of a market-oriented process, instead of the more traditional mechanism of a bailout with public funds. The government's primary responsibility, with regard to its debt, is now to service those creditors that tendered - after six weeks of a transparent and well-publicised submission period - their non-performing bonds, together with its previously performing debt, including that with multilateral agencies.
The offer was not accepted by a minority, including: a) some speculative funds (hedge funds) that aim to profit from distress debts, and b) ill-advised groups of retail bond holders.
President Kirchner never said that Argentina has considered defaulting on its obligations with the International Monetary Fund.
Regarding structural changes, it is worth considering that Argentina's gross domestic product grew 8.8 per cent in 2003 and 9 per cent in 2004 - this sustainable growth is supported by the strong recovery in investment which, at 21 per cent of GDP (measured in current prices), has already surpassed 1990s levels.
One must also consider the unprecedented level of federal and provincial fiscal surplus attained in 2004 (near 6 per cent of GDP), that the central bank has accumulated more than $20bn in reserves and that the 2004 surplus in the trade balance was close to 8 per cent of GDP; and that tariff negotiations with public utility companies are well under way - some have already reached contractual agreements, including a rise in tariffs.
Unemployment is declining and poverty is also strongly decreasing. A growing economy with a fairer income distribution is the best guarantee for Argentine creditors of our commitment to honour our obligations.
Federico Mirre, The Ambassador, Embassy of the Argentine Republic, London W1Y 1YE
>

Pescarmona gana contrato para construir turbinas para Malasia (The Wall Street Journal)

2005-05-04T14:12:00.000-04:00

Impsa Wins Contract to SupplyTurbines for Malaysia Dam Project
By LESLIE LOPEZ Staff Reporter of THE WALL STREET JOURNALMay 4, 2005 6:56 a.m.

KUALA LUMPUR, Malaysia -- Argentina's largest power-plant builder Industrias Metalurgicas Pescarmona SA has won a $122 million contract to supply turbines for the huge Bakun hydroelectric dam in Borneo, a deal energy-industry executives said underscores the Malaysian government's commitment to completing the controversial project.
The yet-to-be-announced contract for four turbines was completed last month after Impsa and its Malaysian partner, Muhibbah Engineering Bhd., defeated Alstom SA of France in bidding for the deal, according to people familiar with the award.
Alstom, which won a contract to supply turbines for the first phase of the Bakun project three years ago, was widely considered to be the front-runner in the latest round of bidding. Although the French company submitted a bid that was 10 million ringgit ($2.6 million) lower than its Argentine rival, industry executives said the Malaysian government opted for the Impsa-led joint-venture because it guaranteed that a higher proportion of the contract would be Malaysia-sourced.
A senior Impsa official based in Kuala Lumpur confirmed the turbine award, but declined to elaborate.
Construction of the nine-billion-ringgit Bakun project, originally slated for completion in early 2007, is running 18 months behind schedule. Industry executives involved in the construction of the hydroelectric dam said the turbine-contract award will help limit further delays. But the project still faces hurdles, particularly the need to secure long-term buyers for the power Bakun will generate.
"There isn't a problem completing it [the project]. It's just finding takers for the electricity," said an executive involved in the project. Negotiations with potential investors who have expressed interest in building an aluminum smelter that would consume much of the power have been stymied by disagreements over the pricing for the electricity and concerns over whether the dam will ever be completed, he said.
Potential investors are eyeing the dam as an inexpensive and stable source of power for an aluminum smelter. They include mining giant Rio Tinto Ltd., Chinese power producer Shandong Luneng Group, Cahaya Mata Sarawak, a Malaysian company controlled by the family of Sarawak Chief Minister Abdul Taib Mahmud, and Smelter Asia Sdn. Bhd., a private concern jointly controlled by Malaysian entrepreneur Syed Mokhtar Albukhary and Dubai-based businessman Mohamed Ali Alabbar.
A Malaysian government official said the Finance Ministry is currently evaluating proposals for a smelter and negotiations are expected to begin with potential investors later this year. He said that without a guaranteed outlet for the power, the project isn't expected to be commercially viable in sparsely populated Sarawak and surrounding parts of Borneo.
The Malaysian government initially awarded a concession to build and operate the Bakun dam, on the upper reaches of Sarawak state's Rejang River, to a Malaysian company called Ekran Bhd. in 1994. The initial plan called for most of the project's electricity to be transmitted by underwater cable to peninsular Malaysia to feed the country's national power grid. When the expensive and technologically untested plan was derailed by Asia's 1997-98 financial crisis and by debt problems at Ekran, the Malaysian government took over the uncompleted project.
In 2000, Kuala Lumpur announced it was proceeding with a scaled-down version of the project. The dam's planned generating capacity of 2,400 megawatts was maintained, but the plan to transmit power to peninsular Malaysia was scrapped.

Argentina en lista negra de violacion de propiedad intelectual (The Reporter)

2005-05-04T14:07:00.000-04:00

US reveals intellectual property blacklist
By OUT-LAW.COM (feedback at theregister.co.uk)
Published Wednesday 4th May 2005 10:48 GMT

The US has published a blacklist of those of its trading partners that are most ineffective when it comes to protecting intellectual property rights (IPRs). The "Special 301" report from the Office of the US Trade Representative (USTR) fingers the Ukraine as the worst offender.
The report, published annually by the Office of the USTR, identifies those countries that deny adequate and effective protection for IPRs or deny fair and equitable market access for those that rely on intellectual property protection.

It places countries into a hierarchy of categories, with the ranking of Priority Foreign Country reserved for the worst situations ? described by the USTR as "countries that fail to enter into good faith negotiations or make significant progress in bilateral or multilateral negotiations to provide adequate and effective protection of IPR".
Such nations face the possible threat of trade sanctions. Currently, the Ukraine is the only country in the category, and is subject to sanctions valued at $75m.
The second highest ranking is the Priority Watch List, followed by the Watch List. Countries are placed on these Lists when there are particular problems in that country with respect to IPR protection, enforcement, or market access for those relying on intellectual property.
This year's report puts 14 US trading partners on the Priority Watch List: Argentina, Brazil, China, Egypt, India, Indonesia, Israel, Kuwait, Lebanon, Pakistan, the Philippines, Russia, Turkey, and Venezuela.
Thirty-six trading partners have been placed on the Watch List, meriting bilateral attention to address the underlying IPR problems: Azerbaijan, Bahamas, Belarus, Belize, Bolivia, Bulgaria, Canada, Chile, Colombia, Costa Rica, Croatia, Dominican Republic, Ecuador, European Union, Guatemala, Hungary, Italy, Jamaica, Kazakhstan, Korea, Latvia, Lithuania, Malaysia, Mexico, Peru, Poland, Romania, Saudi Arabia, Slovakia, Taiwan, Tajikistan, Thailand, Turkmenistan, Uruguay, Uzbekistan, and Vietnam.
The report also announced the results of a special Out-of-Cycle Review of China's intellectual property regime, concluding that infringement levels remain unacceptably high throughout China, in spite of Beijing's efforts to reduce them.
"This year, we are elevating China to the Priority Watch List for failure to effectively protect intellectual property rights and to meet its commitment to significantly reduce infringement levels, despite efforts by China's senior leadership to do so," said Acting US Trade Representative Peter Allgeier. "China must take action to address rampant piracy and counterfeiting, including increasing the number of criminal IPR cases and further opening its market to legitimate copyright and other goods."
Copyright © 2005, OUT-LAW.com (http://www.out-law.com)
OUT-LAW.COM is part of international law firm Pinsent Masons.

La Argentina todavía enfrenta desafíos según USA (Reuters)

2005-05-04T14:03:00.000-04:00

U.S. says big challenges still ahead for Argentina
Tue May 3, 2005 07:15 PM ET By Laura MacInnis

WASHINGTON, May 3 (Reuters) - Argentina has several hurdles yet to clear as it seeks to entrench economic stability and foster growth three years after its huge debt default, a senior U.S. Treasury Department official said on Tuesday.
"Argentina faces some significant challenges in the near term," Randal Quarles, Treasury's acting undersecretary for international affairs, told a Washington conference.
"While the general macro situation has been good -- growth has been strong, inflation has been contained -- the issue for Argentina will be addressing what we think are the obstacles to sustained economic growth."
Such obstacles, Quarles said, include a need to improve the country's business environment and to encourage more banking sector competition.
"While the debt restructuring has accomplished an important step in this process, these other elements are very significant," he said.
Argentina defaulted on $81.8 billion in public debt in 2002 at the height of an economic crisis in which millions sank into poverty and the country's banking system collapsed.
In February, about 76 percent of creditors accepted an Argentine government offer to exchange nearly $103 billion in defaulted bonds and interest for new debt, a deal giving them about 30 cents for each dollar first invested.
Argentina has signaled it will not negotiate with the bondholders who rejected the swap, but has come under pressure from International Monetary Fund and creditor countries to chart a course toward reconciliation.
The IMF and Argentine authorities are in early stages of talks toward a resumption of a $13 billion accord which was suspended last year to let the country focus on restructuring its defaulted debt.
In Washington on Tuesday, Argentine Central Bank President Martin Redrado said he had discussed Argentina's monetary policy strategy with IMF officials as well as the country's Congress in order to foster confidence.
"We know we have to invest in our credibility," Redrado told the Council of the Americas conference, held at the U.S. State Department.
The central bank chief said believed the recent jump in Argentine consumer prices, which rose 4 percent in the first three months of 2005, was a temporary trend and would not raise year-end inflation forecasts.
"We clearly know that this is not a permanent factor," Redrado said, adding tax collection in the second quarter of the year would help absorb excess money supply in the economy.
Redrado said he did not anticipate seeing a monetary policy impact once Argentina issues new bonds to swap participants, a long-awaited transaction that has been delayed pending a ruling in a U.S. court case.
Still, he said foreign exchange values might be impacted if U.S.-based portfolio managers choose to trade in their new peso-denominated debt for dollars after the bonds are issued.
"I see more volatility in the foreign exchange market than in the monetary market," Redrado said.
While some analysts have raised concerns that rising U.S. interest rates could constrain Latin American output, Redrado said Argentina's growth prospects might be more closely tied to conditions in its trading partner China.
"I think we are more China-dependent than interest rate dependent," he said, noting Argentine exports to China have grown at a blistering clip in past years. "In terms of growth, the China factor is a critical element."
Though Redrado stressed at several points the independence of Argentina's central bank from the governing executive, his speech was interrupted partway through by an aide holding a mobile phone who said President Nestor Kirchner needed to speak with the central banker at once.
Redrado returned to the podium a few moments later and apologized to the audience, explaining that when Kirchner wants a piece of information, he typically wants it right away.
"Everything is all right," he added.
(Additional reporting by Doug Palmer)
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La inflación se acerca a un récord de los últimos 22 meses (Bloomberg)

2005-05-04T13:59:00.000-04:00

Argentine Inflation Probably Held Near 22-Month High (Update1)

May 4 (Bloomberg) -- Argentina's annual inflation rate probably held near a 22-month high in April as rising wages fueled consumer demand and pushed up costs at companies such as automaker DaimlerChrysler AG.
Consumer prices rose 9 percent in the 12 months through April after increasing 9.1 percent through March, which was the highest since June 2003, according to the median estimate from seven economists surveyed by Bloomberg. Argentina's annual inflation rate is the second-highest among the nine biggest economies in Latin America, trailing only Venezuela.
The pickup in inflation has prompted President Nestor Kirchner to rebuff workers' demands for higher wages and call on Argentines to boycott companies such as Royal Dutch/Shell Cos. that raise prices. The central bank lifted the benchmark lending rate three times this year and drained money from the economy in a bid to rein in inflation.
``Inflation has to be lowered right now,'' said Miguel Kiguel, a former Argentine undersecretary of finance who runs the Center for Financial Stability, an economic research organization in Buenos Aires. ``It has not yet spun out of control but if it does, we've seen its effects too many times: permanent confrontations with labor over wages and continuous price increases, which then are very difficult to stop.''
Argentina, South America's second-biggest economy, had annual inflation of as high as 20,000 percent in March 1990. A year later, the government pegged the peso one-to-one with the dollar, helping drive the inflation rate under 100 percent by the end of 1991 and under 2 percent by 1995. The government scrapped the currency peg and devalued the peso in 2002, sparking another surge in inflation. Consumer prices rose 41 percent that year.

Wages, Income Taxes
The central bank targets inflation of between 5 percent and 8 percent this year, following inflation of 6.1 percent in 2004.
Consumer price rises have quickened this year after Kirchner, 55, granted all non-state workers a monthly wage increase of 100 pesos ($35) in January and allowed people to defer income tax payments that were due in December. He has raised the average salary 38 percent since taking office two years ago in a bid to bolster the country's recovery from its worst recession on record.
``The main challenge for the government now is to stop inflation,'' said Pablo Morra, an economist at Goldman, Sachs & Co. in New York. ``If it fails to contain it, purchasing power will be cut and that will hurt economic growth.''

`Worried'
President Nestor Kirchner said yesterday the monthly inflation rate probably fell to 0.5 percent in April from 1.5 percent in March, which would leave the 12-month rate at 8.7 percent. The median estimate from a Bloomberg survey of nine economists was for the monthly inflation rate to drop to 0.8 percent. The government is scheduled to release the April consumer price report today at 3 p.m. New York time.
Jorge Tobal, owner of Extra Large, the country's biggest maker of leather bags, said he raised prices 8 percent late last year to offset the rise in his costs caused by the wage increases. He said he is considering another price increase to compensate for the January wage rise and may shelve plans to expand factory output on concern about rising costs.
``This is Argentina; you have to be worried,'' Tobal said in a phone interview from Buenos Aires. ``The impact of salaries in our costs is very big.''
Hospital workers, port workers, university professors and auto workers are demanding new wage increases. The largest number of labor protests took place in March in 15 years as workers, more secure about their jobs as the economy recovers, sought to protect their wages from being eroded by inflation, according to Nueva Mayoria, an economic research organization.

`Not Reasonable'
The economy expanded 9 percent in both 2003 and 2004, rebounding from a four-year recession that was deepened by the government's default on $95 billion in bonds in late 2001. The nation's currency, the peso, has climbed 2.6 percent against the dollar this year and the benchmark stock index is up 5 percent.
Manfred Muell, president of DaimlerChrysler AG's local unit, said the 42 percent wage increase auto workers are demanding would make the industry unprofitable.
``It's just not reasonable,'' Muell said at a news conference on April 21 in Buenos Aires.
Interior Minister Anibal Fernandez said as recently as April 20 that the government doesn't plan to grant any across-the-board wage increases this year for all workers.
Cabinet Chief Alberto Fernandez said the government is concerned that the pickup in inflation will prompt people to worry about a return of hyperinflation the country experienced through the early 1990s.
Shell Boycott
``Argentina is a recovered alcoholic in terms of inflation, and you shouldn't show alcohol to a recovered alcoholic,'' Fernandez told congress on March 30.
Kirchner called a national boycott of the Royal Dutch Shell Group, Europe's second-largest oil company, on March 10 after the company boosted gasoline prices at the pump by as much as 4.2 percent to offset the rise in international oil prices. A month later, Shell scrapped the increases, saying the boycott had curbed its sales as much as 60 percent.
Kirchner last month started a national advertising campaign on radio, television and newspapers, pushing people to refrain from buying from retailers that increase prices.
The central bank boosted May 3 the seven-day call rate --the rate it borrows from commercial banks at -- half a percentage point to 3.75 percent, leaving it up 1.25 percentage points since Jan. 9. The bank has also cut the money supply -- as measured by the monetary base -- by 4 percent this year to 36.1 billion pesos, following a 24 percent surge in 2004.
``We will win the battle, the battle of justice, of fair profits, the battle to defend people's purchasing power,'' Kirchner said in a speech on April 6 to union leaders. ``If people have the right behavior, we will put a lid on that perverse behavior that says that when people gain in purchasing power, prices go up.'' To contact the reporter on this story:
Daniel Helft in Buenos Aires
dhelft@bloomberg.net; Andrew J. Barden in Buenos Aires
barden@bloomberg.net
Last Updated: May 4, 2005 09:34 EDT

El deber de Argentina (Financial Times)

2005-04-29T10:42:00.000-04:00

Argentina's duty
Published: April 29 2005 03:00 Last updated: April 29 2005 03:00>>

A truce of sorts is holding between Argentina and the International Monetary Fund, for now at least. Following meetings in Washington last month there is talk of a new IMF programme later this year. But much could go wrong between now and then. Feelings are still raw. There are many obstacles to a new programme. The core dispute remains: what to do with the creditors who refused to sign up to Argentina's brutal debt restructuring deal?
The holdouts hold debt worth $25bn (£13bn) on paper, including interest. Many would tender if the deal was reopened. This would be in Argentina's interest. But Nestor Kirchner, Argentina's president, refuses. He says that as far as Argentina is concerned this debt no longer exists. Mr Kirchner warns that if the IMF made reopening the deal a condition of a new programme, Argentina could default on the $13bn it owes the fund as well.
The IMF must shrug off such blackmail. It is in a difficult position due to past policy mistakes. But it is not helpless. If Argentina did default on its multilateral debt it would lose access to World Bank and Inter-American Development Bank credits and many sources of private finance - and risk a broader clash with the entire membership of the IMF.
This is not to propose that the IMF act as a debt-collection agency for the holdout creditors. They took the risk of lending to a serial defaulter with sovereign rights. The IMF's responsibility is to the international financial system as a whole. But there are system interests at stake here. The smooth flow of capital to emerging markets via the bond market relies, in the absence of a global bankruptcy authority, on certain norms, including orderly conduct and negotiation in good faith.
Argentina flouted all these norms. If it can then ignore holdouts with impunity, the incentive for other sovereign defaulters to negotiate in good faith in the future diminishes dramatically. This should push up the cost of borrowing for all emerging markets and reduce the flow of credit. A sharp reminder that sovereigns are sovereign and dollar loans are risky might be a very good thing. But this could impose serious costs on borrowers with existing big debts.
If Argentina wants to impose the law of the jungle, it is within its rights to do so. But it cannot expect the IMF to endorse and subsidise this course by rolling over part of its debt. There are other conditions the fund must insist upon: including structural reform and multi-year primary surplus targets. But a genuine effort to settle with the holdouts must top the list. The original offer need not be reopened. However, the new offer must be broadly comparable, with only a token penalty to preserve the incentive to tender. Were he so minded, Mr Kirchner could treat this as in keeping with his pledge. He might even be savvy enough to stop depicting full settlement as a defeat, and start selling it as the completion of a political triumph.
>>>

Find this article at: http://news.ft.com/cms/s/1a1735b4-b851-11d9-bc7c-00000e2511c8,ft_acl=,s01=1.html

Acreedores acusan a la Argentina de jugar "una guerra de nervios" en el juzgado de USA

2005-04-28T11:16:00.000-04:00

Creditors say Argentina 'playing chicken' in court

Wed Apr 27, 2005 06:18 PM ET

NEW YORK, April 27 (Reuters) - Bondholders suing Argentina told a panel of U.S. judges on Wednesday that the country was "playing chicken" with their court by arguing that a freeze on $7 billion of bonds would scuttle a long-awaited debt swap.
Argentina was due on April 1 to issue $35.3 billion in bonds in exchange for $62.3 billion in old defaulted bonds in a swap aimed at turning the page on its 2002 sovereign default.
But it delayed issuing new bonds until the 2nd U.S. Circuit Court of Appeals in New York rules on a request by holdouts to freeze $7 billion of old bonds tendered in the exchange.
After the hearing on Wednesday, the appeals court adjourned without issuing a ruling. Estimates on when the ruling will come range from a few days to months.
The case "could still go either way," said Carola Sandy, an emerging markets analyst with Credit Suisse First Boston who attended the Manhattan hearing in a courtroom packed with Wall Street bankers and investors.
On March 21, U.S. District Court Judge Thomas Griesa froze $7 billion in defaulted bonds at the request of disgruntled creditors EM Ltd and NML Capital.
A week later the judge temporarily lifted the freeze, but then minutes later decided to keep it in place pending a final ruling by the appeals court.
LAST CHANCE TO GET PAID?
During three years of hearings, investors suing Argentina have failed in attempts to seize Argentine property including real estate and cash. Many observers see the bond freeze as a last chance to get something back.
David Rivkin, a lawyer for EM Ltd., asked the court to order the freeze on the bonds kept in place, saying that Argentina could take all the old paper except for the $7 billion. Griesa's court may order the old bonds sold on the secondary market and the proceeds given to bondholders, he said.
But Argentina's lawyer Jonathan Blackman said the country cannot issue new debt unless all the old paper is canceled. Neither could it settle with EM Ltd and NML Capital, he said.
"If we paid them 100 (cents on the dollar) we'd have to pay everyone 100," he said. "We can't pay everyone 100, that's why we had a debt crisis in 2001."
"We think that Argentina can go ahead with the exchange tomorrow if it chooses," said Rivkin. "They're essentially playing chicken with this court."
Blackman said the sum of frozen bonds amounted to much more than $7 billion, saying that claims by EM Ltd, NML Capital and a host of other creditors seeking to attach bonds bumped up the amount to at least $28 billion.
"MASSIVE DEBT EXPLOSION"
He said the courtroom was full of creditors who would immediately jump in with similar claims if the court ruled in favor of the bondholders, and that uncanceled old paper and new issues would combine to form a "massive debt explosion."
Much attention during the hearing focused on a key split-second during which ownership of the old paper will seemingly pass from bondholders to Argentina before they are canceled, possibly offering a chance to seize the bonds.
Blackman said the bonds could not be attached because they were currently the property of bondholders and challenged the concept of attaching the right to receive them after the swap.
The three-judge panel noted, however, that if a bond could be sold for a price on the secondary market, it would appear to be an asset.
In a reflection of increasingly high stakes, NML Capital brought in as an attorney legal big-hitter Charles Fried, a Harvard Law School professor who served as U.S. Solicitor General under former U.S. President Ronald Reagan.
"Argentina is holding the innocent third party bondholders hostage," Fried told the court, regarding Argentina's claim that it cannot proceed with the swap with the freeze in place. "This is simply a scare tactic and you should not be impressed by it," he said.
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Hay esperanza que Argentina recupere la cordura (The Miami Herald)

2005-04-28T11:12:00.000-04:00

Posted on Thu, Apr. 28, 2005

THE OPPENHEIMER REPORT

There's hope that Argentina may come to its senses

By ANDRES OPPENHEIMERaoppenheimer@herald.com

BUENOS AIRES -- While many international economists say Argentina is embarked on a populist path that will further scare away investors and generate more poverty, an interview with Economy Minister Roberto Lavagna left me with a glimmer of hope that things may change for the better.
Before we get into Lavagna's encouraging statements, let's agree that there are still many reasons to be skeptical about Argentina's future.
First, following its worst crisis in modern history in 2001, and the subsequent default on $88 billion of its foreign debt, Argentina is seen by much of the outside world as a high-risk place to invest. Argentine governments change the rules of the game constantly, and always blame their predecessors -- and the outside world -- for their periodic financial crises, critics say.
Second, despite a swift recovery -- the economy has grown by an average 9 percent for the past two years and is scheduled to grow by 6 percent this year -- international financial institutions predict a 3.6 percent growth in 2006 and even slower growth afterwards.
There is anxiety about the future because much of the recovery has been due to external factors, such as low international interest rates, high commodity prices and soaring soybean purchases from China. But these outside conditions may soon change, economists say.
Third, left-of-center President Néstor Kirchner has shown a knack for confronting, rather than courting, foreign investors. His fiery rhetoric against international creditors and orthodox free-market recipes is keeping many multinational companies away from Argentina, at a time when neighboring Brazil and Chile are going out of their way to attract foreign investments.
NEW FOCUS
But in a one-hour interview with visiting Herald editors last week, Lavagna told us that Argentina will refocus its attention on attracting foreign investments and will scrap a controversial ''heads of household'' state subsidy that critics have long described as populism at its worst.
The ''heads of household'' subsidy was created in 2002 to give monthly financial aid to 2.1 million people. It does not require recipients to do any work, nor go through any job training program, and it is not subject to congressional oversight or other outside controls.
A recent World Bank study said the fact that the subsidy is given out by local governments ''favors political patronage'' and ''corruption,'' and that the plan in general creates a culture of dependence on state subsidies.
And a separate study by the Atlas Foundation, a pro-free-market nongovernmental group, said nearly 20 percent of the Argentine people are ''captive voters,'' dependent on these government-controlled subsidies.
But, in the interview, Lavagna said the number of people who receive the subsidy has already been cut to 1.6 million. He added that the program is likely to be turned into U.S.-style unemployment benefits, with strings attached.
''I expect to change this system,'' Lavagna said. ``I'm trying to convince the government to convert this emergency measure into an unemployment program, which would offer aid for a limited time, let's say one year, and in which recipients would be required to look for a job and to receive job training.''
KIRCHNER AGREES
Interesting! But is President Kirchner on board, I asked. Lavagna nodded, and responded, ''The president accepted the idea. The only question now is when we will start doing it.'' Most likely, this would happen after October's mid-term legislative elections, an economy ministry source told me afterwards.
In addition, Lavagna suggested there will be a new push to draw foreign investments. To sustain 6 percent annual growth rates over a long period of time, Argentina needs to increase investments to the equivalent of nearly 24 percent of its gross domestic product, Lavagna said. Currently, the investment rate is about 21 percent of GDP.
To be sure, when I left Lavagna's office and enthusiastically told several friends that Argentina may soon reverse some of its populist policies, many of them gave me a skeptical look and asked, ``And you believe them?''
Perhaps we shouldn't. But the mere fact that Lavagna is talking about the need to draw foreign investments and scrap politically tainted government subsidies is good news.
If the government goes ahead with it, Argentina's outside-driven growth of the past two years may become the start of a long period of prosperity.

Santa Fe se prepara para la salida de Suez de la provincia

2005-04-27T14:09:00.000-04:00

Argentina Province Preps For Suez Water Concession Exit

DOW JONES NEWSWIRES
April 27, 2005 10:40 a.m.

BUENOS AIRES -- The governor of Argentine province Santa Fe has drafted a law creating a state-run water company, part of a contingency plan developed in expectation that French utility Suez (SZE) will leave its concession to run water services in the province.

Suez owns a majority stake in Aguas Provinciales de Santa Fe, which has about 1 million clients in the province. An adviser in the provincial public works ministry said Wednesday the company set a Friday deadline for officials to respond to a final request for a 60% increase in rates. The adviser, who asked not to be named, said the government is planning to reject the company proposal and expects Suez to pull out when that happens.

"Everything indicates they're leaving," the adviser said.

According to the official, the draft law creating the provincial water company should be sent to the local legislature sometime this week. The new utility's first priority would be providing service to areas currently not reached by the Suez unit. But the government is analyzing several alternatives, including full provincial control of the concession or a mixed company with participation from a private operator.

A month ago, the Santa Fe government issued a resolution calling for an external audit of provincial resources "to see what materials, staff and equipment would be needed under a worse-case scenario in which the company leaves and the province takes charge on May 2," the adviser said. "We have to have the umbrella open."

The adviser added Suez' exit would be an "orderly" one, with both sides agreeing on terms of a smooth transition if the French utility does leave. The province expects that period to last between three and six months.

Suez' Santa Fe holding is a small one compared with its other concessions, Aguas Cordobesas in Cordoba province and its main holding, Buenos Aires utility Aguas Argentinas. The French company has been locked in difficult negotiations with the national government over Aguas Argentinas' contract and company officials have signaled in the past they might pull out of the South American country.

However, negotiations continue and Suez has said it would be open to the Argentine government taking a partial stake in Aguas Argentinas. The government is renegotiating more than 60 public service contracts. At the heart of those talks are utility rates, which were converted into devalued pesos and frozen in 2002.

-By Wailin Wong, Dow Jones Newswires; 5411-4311-3125; wailin.wong@dowjones.com

URL for this article:
http://online.wsj.com/article/0,,BT_CO_20050427_006823,00.html

Petrobras pide exenciones impositivas (AP)

2005-04-26T19:10:00.000-04:00

Associated PressBrazil's Petrobras Wants Oil Tax Breaks
Tuesday April 26, 6:23 pm ET

Brazil's Petrobras Wants Tax Breaks for Offshore Argentine Oil Production

RIO DE JANEIRO, Brazil (AP) -- Petrobras, Brazil's state-run oil company, said Tuesday it is in talks with Argentina's government about offshore oil exploration, but wants tax breaks to offset the cost.
Areas off the coast of Argentina that could be tapped for exploration "are almost virgin, they've never been explored," Petrobras President Jose Eduardo Dutra said after a meeting of 22 state-owned oil companies meeting in Rio.
But he said Petrobras, whose full name is Petroleo Brasileiro SA, wants tax breaks to "render these activities in Argentina more attractive."
Dutra said Argentina taxes offshore and onshore exploration and production at the same rate, makes expensive offshore activities even more costly because companies must gather seismic and geological data for unexplored fields offshore.
Petrobras, through its Argentine subsidiary, produced an average 64,694 barrels of oil a day from onshore fields in Argentina, making it its largest operation outside Brazil.

Posible Venta de EDENOR (Bloomberg)

2005-04-26T19:06:00.000-04:00

EDF Hires JP Morgan to `Evaluate' Argentina Options (Update1)

April 26 (Bloomberg) -- Electricite de France hired JP Morgan Chase to ``evaluate strategic alternatives'' for its Argentine unit Edenor SA, Edenor said in a statement sent to the Buenos Aires Stock Exchange.
EDF has initiated preliminary talks with possible buyers, the statement said, without further explanation. Argentina froze utility rates in 2002 following the country's $95 billion bond default and currency devaluation. The decision made most utilities unprofitable by leaving them with dollar debts and revenue in pesos, after the currency lost 70 percent of its value in 2002.
EDF decision underscores the risks of President Nestor Kirchner's policy of price caps, which results in companies leaving and infrastructure decaying, said analysts such as Juan Ignacio Gomez Vega, at InvertirOnline.com brokerage in Buenos Aires.
``We'll see lot more announcements such as this,'' Vega said in an interview. ``Utilities will likely be acquired by local business groups that are closer to this government.''
Argentina faced energy shortages last winter as utilities slowed investment. Argentina last year cut exports of gas to Chile and Uruguay and reduced the energy available to about 35 of the country's largest companies.
More than 20 foreign-owned utilities, including Eletricite de France, filed complaints in a World Bank court saying their contracts allowed them to raise prices in the event of a currency devaluation, which the Argentine government has not allowed.
Some companies such as Public Service Enterprise Group Inc., the owner of New Jersey's largest utility, and France Telecom SA have left the country. Utilities invested more than $20 billion in the country in the 1990's.
The government in January imposed a 3 million pesos ($1 million) fine on water utility Aguas Argentinas SA, a unit of France's Suez SA, and electrical utilities Edenor, Edelap SA and Edesur SA for service cuts during a heat wave in Buenos Aires. To contact the reporter on this story:
Daniel Helft in Buenos Aires at dhelft@bloomberg.net;
Eliana Raszewski in Buenos Aires eraszewski@bloomberg.net
Last Updated: April 26, 2005 16:42 EDT

La importancia de distinguir una izquierda de la otra (The Washington Post)

2005-04-22T07:31:00.000-04:00

La importancia de distinguir una izquierda de la otra

Por Marcela Sanchez
Especial Para washingtonpost.com
Thursday, April 21, 2005; 10:30 PM

En su discurso ante la Sociedad Estadounidense de Directores de Periódicos la semana pasada, la Secretaria de Estado Condoleezza Rice repitió una de sus frases favoritas: "Tenemos que lidiar con el mundo como está, pero no tenemos que aceptar el mundo como está". Esas palabras se han convertido en una especie de lema central para su idea de una "diplomacia transformadora" en la que Estados Unidos coopera con otras democracias para construir "un mundo mejor, más seguro y más libre."
Aunque esta filosofía debiera tener el entusiasta apoyo de la mayoría de los latinoamericanos, muchos en la región estiman que Washington no la práctica. Líderes sudamericanos en especial probablemente dirían hoy que más que interesados en cooperar, los políticos en Estados Unidos parecen estancados en esa mentalidad de la Guerra Fría que les hace ver una creciente amenaza monolítica de la izquierda al sur de la frontera.
Apenas horas antes del discurso de Rice, un asesor cercano al Presidente chileno Ricardo Lagos me recordó lo distante que está la percepción en América Latina. Lagos, el líder del país latinoamericano más próspero y el único en Suramérica con un acuerdo de libre comercio con Estados Unidos se ocupaba en preparar una campaña para "romper ese eje bipolar" entre la izquierda de la derecha. Según cree Lagos, funcionarios en Washington y en Caracas están creando esa división artificial en la región.
Lagos acababa de decidir que viajaría a encontrarse con su contraparte brasileño Luis Inácio Lula da Silva con la esperanza de que una imagen de ambos líderes, uno al lado del otro, enviaría una clara señal al mundo de que en Sudamérica hay una izquierda moderna, sensata y progresista -- mundos aparte de la del polémico Presidente venezolano Hugo Chávez.
Los esfuerzos de Lagos estaban, en principio, destinados a reforzar el apoyo al Ministro del Interior chileno José Miguel Insulza quien empata con el Canciller mexicano Luis Ernesto Derbez en la contienda por la secretaría general de la Organización de Estados Americanos. Pero en forma más amplia, buscaban refutar las insinuaciones hechas por funcionarios estadounidenses de que un voto por Insulza sería un voto por Chávez y su cruzada izquierdista.
Por su parte, Chávez ha usado la contienda de la OEA para impulsar su retórica anti estadounidense y presentar el voto por Insulza como un voto contra la influencia "imperialista" de Estados Unidos en la región. Después de su escala en Brasil, Lagos voló a Caracas para pedirle a Chávez que moderara sus excesos frente a Washington sobre la OEA y otros asuntos.
A la diplomacia transformadora de Rice parece faltarle un largo camino para superar aprensiones de la Guerra Fría en esta capital. Obviamente no ayuda que uno de los últimos vestigios de esa guerra esté apenas a 90 millas de Estados Unidos en Cuba, ni tampoco que Chávez haya encontrado en el dictador cubano Fidel Castro a su mejor aliado. Tampoco ayuda que haya aprendido tan rápidamente la habilidad de Castro para generar tensiones entre sus adversarios en Washington y muchos de sus aliados más naturales en capitales latinoamericanas.
Sin embargo, caer en la vieja trampa de la izquierda contra la derecha, solo favorece a Chávez al avivar el sentimiento anti estadounidense con que el venezolano intenta aumentar las divisiones regionales. Esta visión cerrada de las cosas también perjudica a naciones sudamericanas que quieran ensayar su propia diplomacia transformadora acercándose a Chávez, y no aislándolo.
Claro que Chávez ha dejado a los funcionarios estadounidenses con pocas opciones distintas a una línea dura en su contra. Se burla de Estados Unidos y cada insulto contra miembros del gabinete de Bush es casi tan infame como el que usó contra la propia Rice.
Su beligerancia entristece y da rabia pero no puede justificar la extrapolación estadounidense de que todo el que comparta algunas de las creencias izquierdistas de Chávez -- o acepte su apoyo -- comparte igualmente su insensato deseo de dividir al hemisferio entre su bando y el de Washington.
En Suramérica, las nobles metas de Estados Unidos de esparcir libertad y democracia dependerán de su habilidad para diferencias entre dos izquierdas. El éxito de una asegura el fracaso de la otra. En otras palabras, el camino más seguro para socavar lo que Chávez representa, es la cooperación con la izquierda moderna que se esfuerza por respetar las reglas democráticas y del capitalismo al tiempo que intenta satisfacer las mayores expectativas de quienes pusieron a esos líderes de izquierda en el poder.
Rice tiene programado hacer su primer viaje como secretaria de estado a América del Sur la próxima semana. La pregunta de cuánto apoyo obtendrá de los sudamericanos para su "diplomacia transformadora" dependerá de su capacidad para convencerlos de que en Washington la hora de temerle a una izquierda monolítica ya pasó.
© 2005 Washingtonpost.Newsweek Interactive

La expansion industrial de marzo es la menor en 27 meses (Bloomberg)

2005-04-18T10:11:00.000-04:00

Argentine March Output Likely Grew at Slowest Pace in 27 Months

April 18 (Bloomberg) -- Argentina's industrial production probably expanded at its slowest pace in 27 months in March as manufacturers and miners approached capacity limitations.

Output rose 4.8 percent in March from a year ago after increasing 5.3 percent in February, according to the median estimate from five economists surveyed by Bloomberg. The National Statistics Institute is scheduled to release the figures at 3 p.m. New York time today.

Argentine companies are running up against production limits because executives, concerned about a freeze on utility rates and delays in the government's efforts to restructure defaulted debt, are hesitant to invest in their plants, said Rodrigo Da Fonseca, an economist with Dresdner Kleinwort Wasserstein. A lifting of the government's three-year freeze on electricity, telephone and water rates may spark a surge in costs for businesses, Da Fonseca said.

``Argentina is not providing a market friendly environment for investment,'' Da Fonseca said in a telephone interview.

Capacity utilization rates have surged in industries such as steel, oil-refining and paper and cardboard after two years of economic growth in South America's second-biggest economy.

In the steel industry, capacity utilization soared to 96 percent in February from 34 percent in February 2003. Factory usage in oil-refining jumped to 93 percent from 79.5 percent three years ago and utilization in the paper and cardboard industry increased to 85 percent from 81.1 percent.

Inflation Pickup

Jorge Iriberri, who owns Chemic SA, a producer of steel machine parts, said he is also reluctant to invest in increasing capacity at his plant because sales growth has sputtered after climbing in 2003 and 2004. He forecasts zero sales growth this year after growth of 15 percent in 2004 and 40 percent in 2003.

Demand is weakening in the Argentine economy as quickening inflation erodes workers' purchasing power, said Nicolas Bridger, an economist a Jose Luis Espert & Asociados research company in Buenos Aires. Inflation accelerated to 9.1 percent in the 12 months through March, the fastest pace since June 2003.

``Our sales are not growing as fast as they did last year, so we have no plans for new investments or hiring new workers,'' Iriberri said. ``We made some improvements in our plant in the last two years, but with stable sales, we can manage to keep working without disbursing new funds.''

Investment in Argentina rose to 21 percent of gross domestic product last year from about 10 percent in 2002, a year after the government defaulted on $95 billion of bonds. The investment rate is still less than half the 46 percent rate in China, said Ricardo Amorim, chief of Latin America research for WestLB AG in New York.

``Investments in the country rose but it's still not enough to offset the lack of investments during the crisis,'' Amorim said in a telephone interview. ``It will be very difficult for Argentina to maintain the pace of growth it had in the past two years.''

Amorim predicts Argentine economic growth to slow to 6.4 percent this year from 9 percent in 2004 and 8.8 percent in 2003.

To contact the reporter on this story:
Eliana Raszewski in Buenos Aires  eraszewski@bloomberg.net

To contact the editor responsible for this story:

Laura Zelenko in New York at  lzelenko@bloomberg.net

Last Updated: April 17, 2005 23:01 EDT

Argentina es la cuarta economia mas dolarizada (Pravda)

2005-04-15T10:31:00.000-04:00

Russia among most dollarized countries in the world
15:14 2005-04-15
Russia has become one of the highly dollarized economies. Izvestia reports that this can be seen in the partial dollarization rating of developing countries drawn up by the Moscow International Institute of Econometrics, Information Technology, Finances and Law using methodology of the U.S. National Bureau of Economic Research. The dollarization level shows the share of funds held by households and companies in foreign exchange and the amount of foreign exchange loans taken out by the government and the corporate sector. Foreign currency bank deposits in Russia account for about a third of the money supply, foreign debt comprises a third of GDP and private sector debt makes up a half of the country's external debt. In terms of these indicators, Russia is a highly dollarized economy like Croatia and Indonesia. A higher level is demonstrated only by over-dollarized economies led by Ecuador: its consolidated index (25) exceeds Russia's index (12) by two times. Bank of Russia chief Sergei Ignatyev announced a de-dollarization process two years ago in connection with ruble gains. However, the data on foreign exchange operations in 2004 show that this process was not making great headway. Last year, Russians paid more willingly with U.S. dollars than in 2003, and also purchased the U.S. currency in larger amounts than they sold it. In general, they bought more foreign currency than they sold. In dollar terms, Russian households purchased 1.5 times more foreign currency than in the previous year ($33.165 billion as against $22.670 billion). Experts put dollarization in Russia down to fears of ruble depreciation and macro-economic instability. "The main factor affecting the level of dollarization is the predictability of the government's policy," says Anton Struchenevsky, an analyst with Troika Dialog. That the dollarization rating leaders are Latin American countries, such as Ecuador, Bolivia, Uruguay and Argentina (from 25 to 20), illustrates this idea. Saudi Arabia (4) and China (2) are last on the list.

Region retrograda (Forbes)

2005-04-15T10:24:00.000-04:00

Retrograde Region
Tim Ferguson, 04.25.05

Brazil is the only country in Latin America where Portuguese is spoken and not Spanish. Soon it may be about the only one to play willingly in the commercial marketplace. Everywhere else, nations are gravitating (if fitfully) toward globalization. But most Latin nations are in a crosscurrent, leaning toward a kind of autarkic socialism at the least and proto- communism at the worst. Che Guevara's revolutionary pan-Andean ambitions seem to be back in style. For the supposedly hegemonic U.S., this backlash against neoliberalism in its own hemisphere is mockery. But for Latin Americans and for those who want to do business with them the consequences could be worse. Another "lost decade," maybe. It isn't just the Ecuadors, Perus and Bolivias that are at risk. Mexico, after the failed presidency of Vicente Fox, risks a lurch back to the populist stridency that took it down for much of the 20th century. If it now turns away from foreign investment, a chance to piggyback on North American prosperity will have been squandered. As for Argentina, riding a temporary lift from farm exports and a cheap currency, the latest Peronist regime is likely to lead where the earlier ones did-to a deadbeat dead end. A few exceptions to the miasma exist: Colombia and El Salvador remain tight with the U.S., a source of precious aid. Chile continues to mix a soft socialist bent with free trade, a model that U.S. protectionists had best not upset. The big holdout is Brazil, where President Luiz Inácio Lula da Silva, a lifetime leftist, realizes that sharing the wealth among 184 million countrymen requires creating it first. He has surprised foreign capitalists by maintaining a market structure, allowing Brazil to gain from a commodities and basic materials boom. But Lula has to contend with his own political and ethnic uprisings (legitimately resisting central government power, in some cases). In contrast to the Chilean and Lula models is the Venezuelan one, which is really the Cuban model blessed with a legacy oil industry to pay the short-term bills. In the globalized world Venezuela is a retrograde symbol. To the budding Che's of Latin America it is a beacon. When the antithesis is so often the continent's corrupt old commercial elites, romantic socialism has understandable appeal. Perhaps a consistent and honest free-market champion will emerge from this regional muck to offer a better alternative. Right now the best answer is to do business with Brazilian and Chilean pragmatists and to watch one's back in this part of the world. When this international edition of Forbes was begun seven years ago, we said a world readership was ready for the kind of business journalism we do: unabashedly exploring free capitalism's endless creations and follies. Events have confirmed our belief. Hundreds of millions of new souls are joining the wealth-accumulation quest. But that doesn't mean the whole planet is open to the kind of reporting we do. Often it takes extraordinary effort to get routine information. See Deborah Orr's roundup of Metro AG's foreign expansion in this issue: Even where a multinational company is willing to open up, its local partners (in skittish places like China) may not be. But count on our crew to keep knocking on the doors.

Presidente del BM: "Mi deseo es que Argentina desee y este ansiosa por ser parte del sistema financiero internacional."

2005-04-14T16:27:00.000-04:00

Extracto de la conferencia de prensa dada por James Wolfensohn, presidente saliente del BM.

QUESTION: [Inaudible] from La Nacion Argentina.
After dealing with several crises and challenges in Latin America and other developing regions in the last ten years, what have you learned, and what would you recommend, for example, in the case of Argentina, a middle-income country that can't take off, not to mention, for example, Bolivia also in Latin America?

MR. WOLFENSOHN: Well, I wish there was a single solution to crises. They come in different forms. And since you are from Argentina, you would know that the Argentine crisis and resolution is different from any other crisis and resolution, and I don't have a menu for Argentina at this moment. I'm leaving that to my colleagues at the Fund to try to develop.

My hope would be that we could have Argentina willing to be and anxious to be part of the ongoing international financial system and that recognition of its both potentialities and problems is something that we can get a negotiated answer on.

You know that it is the Fund that is discussing this with Argentina, not the Bank, and so I would defer that question to Rodrigo Rato when you have a chance to ask him; and I can only say that the Bank is ready to work on social issues, on the issues of utilities, on the issues of investment programs in Argentina, when we know what the rules are and what the arrangements are.

Rato: Argentina tiene que tratar con los que quedaron afuera del canje (Bloomberg)

2005-04-14T16:15:00.000-04:00

Argentina Must Address Unrestructured Debt, IMF's De Rato Says

April 14 (Bloomberg) -- Argentina needs to address creditors who chose not to participate in the nation's $104 billion debt swap earlier this year before the International Monetary Fund can resume lending, IMF Managing Director Rodrigo de Rato said.

Argentina in February persuaded 76 percent of its bondholders to exchange their holdings of the nation's defaulted debt for new securities. The remaining amount still needs to be addressed, de Rato said at a press conference ahead of the institution's semi- annual meetings on April 16 and 17.
`
`The question, of course, for not only Argentina, but for any member who has experienced a restructuring process in his relationship with us is to comply with our lending into arrears policy,'' de Rato said. That affects both the restructured and unrestructured part of the debt, he said.

Finance ministers from the Group of Seven industrialized countries on April 16 may call on Argentina to give back money to creditors who didn't sign onto its debt-restructuring plan, Dow Jones reported on April 12, citing a G-7 official it didn't name.

``The Argentinean authorities have to put forward a realistic approach, a realistic strategy regarding the unrestructured debt,'' de Rato said. ``Whatever solution there is to debt'' will have to take into consideration the nation's debt sustainability as well as the IMF's lending into arrears policy.

De Rato said the IMF's 24-member executive board has yet to discuss Argentina's loan program with regard to its lending into arrears policy, which requires the nation to make ``good faith'' negotiations with creditors.

To contact the reporter on this story:
Julie Ziegler in Washington at jziegler@bloomberg.net
To contact the editor responsible for this story:
Kevin Miller in Washington at kmiller@bloomberg.net
Last Updated: April 14, 2005 11:30 EDT

Argentina apela en NY y los G7 presionan (reuters)

2005-04-13T10:08:00.000-04:00

Argentina to contest New York debtholder appeal

Tue Apr 12, 2005 03:04 PM ET By Greg Brosnan

NEW YORK, April 12 (Reuters) - Attorneys defending Argentina in New York against angry creditors, who are owed money from a 2002 default, will on Wednesday file a reply to a court appeal that has led the country to postpone its massive debt swap.
Argentina was due on April 1 to issue $35.3 billion in bonds in exchange for $62.3 billion in old defaulted bonds in a swap aimed at turning the page on its 2002 sovereign default.
But it delayed issuing new bonds until the 2nd U.S. Circuit Court of Appeals in New York rules on a request by holdouts to freeze $7 billion of old bonds tendered in the exchange.
U.S. District Court Judge Thomas Griesa in New York on March 21 froze $7 billion in defaulted bonds at the request of disgruntled creditors EM Ltd and NML Capital.
A week later he temporarily lifted the freeze but within minutes ruled to keep the freeze in place pending a final ruling by the appeals court.
Since NML Capital and EM Ltd filed to the appeals court, some 18 other creditors have done the same, sources in the appeals court said on Tuesday.
Lawyers for Argentina said on Tuesday they would file their reply to the appeals on Wednesday. Sources in the appeals court said a hearing was set for April 27.
The court sources said an appeals court panel had asked creditors who had filed appeals for information on cases that were related, suggesting court interest in seeing a consolidation of cases which could facilitate a single ruling.
PRESSURE FROM THE G7
At the peak of a serious economic crisis in 2002, Argentina defaulted on debt worth $81.8 billion, which now totals $102.6 billion with past due interest.
After three years of delays, 76 percent of creditors agreed to swap their old Argentine bonds for new debt, a deal which results in an estimated 70 percent loss on their holdings.
How to treat the holdout creditors could be a hot topic when finance ministers from the Group of Seven industrial nations hold talks in Washington on Friday and Saturday ahead of the International Monetary Fund and World Bank meetings.
Dow Jones on Tuesday cited an unnamed G7 official as saying a draft of a G7 statement due for release at the meeting would ask Argentina "not to forget that there's still a considerable number of investors who haven't signed up for the swap offer."
Italy and Japan have harshly criticized Argentina over the way it has conducted its swap, but the United States, crucial because of its influence over IMF lending decisions, has so far maintained that the issue should be resolved between Argentina and its creditors.
However, Treasury Undersecretary John Taylor said at the Inter-American Development Bank's (IADB) annual meeting on the southern Japanese island of Okinawa that the United States would maintain that position, and that there were no major differences of opinion among members of the G7 on the subject.
A bondholder source involved in the restructuring said the G7 had likely planned to commend Argentina on its restructuring in a statement but had been forced to temper its optimism because the process was now on hold in the New York courts.
The source said many holdouts suing Argentina in New York aimed for bigger prizes and had never planned to enter the restructuring, and that a G7 attempt to force Argentina to improve a deal to creditors would likely be counterproductive to drawing in holdouts.
"The whole point is to get a large amount of the debt to come in," said the source. "The best way to go about it is certainly not to tell the market "we are going to pressure (Argentina) continuously and never give them any funds until they get to (an acceptance level of) 90 percent.'"
An Argentine official said on Tuesday any solution for holdouts would be dealt with in the long term by future administrations.
The comment was aimed at clearing up confusion over remarks made in Okinawa by Argentine Economy Minister Roberto Lavagna, which some took to mean the swap could be re-opened.
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El Nestor de Argentina contra el mundo (Los Angeles Times)

2005-04-13T10:02:00.000-04:00

http://www.latimes.com/news/nationworld/world/la-fg-argentina13apr13,1,2844821.story?coll=la-headlines-world&ctrack=1&cset=true

Argentina's Nestor Takes On the World

The president is playing tough with the foreign financial community. Is it a turning point for developing nations, or a recipe for disaster?
By Héctor TobarTimes Staff WriterApril 13, 2005

BUENOS AIRES — He doesn't have the innate charisma of Venezuela's populist president, Hugo Chavez, or the compelling life story of leftist struggle and sacrifice that Brazil's Luiz Inacio Lula da Silva can claim.But the president of Argentina, Nestor Kirchner, is outdoing both leaders when it comes to willingness to play hardball with international bankers and corporate executives.A longtime Patagonian governor who became president in 2003 after months of political uncertainty following Argentina's economic collapse, Kirchner has made the defense of the country's sovereignty in the face of foreign interests a central theme of his presidency.For months he has tangled with the World Bank, the International Monetary Fund and various European-owned utility companies. And last week Kirchner won an important concession from his latest foe, Shell Oil Co. About a month after the president called for a boycott of the firm, Shell lowered the price of its gasoline. "Let's make this a national crusade and not buy anything from them," Kirchner said March 10. "Not even a can of oil."Last Wednesday's 3.3% price drop in Shell gas, to about $2.65 per gallon, was "a victory for the Argentine people," said Kirchner, whose approval rating stood at 71% even before the latest face-off. "The companies have had to see reason."Shell drew the attention of the president when it became the first company to increase its prices in response to the rising price of oil on global markets. The government fears that higher fuel prices will accelerate the country's already rising annualized inflation rate, which hit 9.1% this month.Hours after Kirchner called for the boycott, a group of unemployed activists allied with the government vandalized two Shell stations in Buenos Aires, the capital.Even though other companies have also raised prices, Shell has borne the brunt of consumers' wrath, with sales down about 30%.Esso lowered its prices after the government threatened to revoke its tax exemption on imported diesel fuel.Early this year, Argentina completed a renegotiation of about $103 billion in defaulted debt. Under the new terms, bondholders received on average one-third of their original investments. Many of the bondholders were Europeans and Americans. Kirchner argued that a more generous settlement would have been a burden on Argentine taxpayers.Larry Birns, director of the Council on Hemispheric Affairs, a Washington think tank, said Kirchner's tough stance with creditors could mark a turning point in the relationship between developing nations and the financial community."Kirchner has gone from being an obscure governor of a minor province to being one of the most transformative figures in Latin America since Fidel Castro," Birns said.Dissenting voices have been limited mostly to the financial press, with some economists expressing concern that Kirchner might be scaring off foreign investment."You can't run an economy by slapping people," Carlos Rodriguez, a former official in the Economy Ministry, told the newspaper El Cronista Comercial. "These are demagogic acts, bread and circuses for the people, like Nero and Hitler. We are distancing ourselves from the Western nations. Every two days we have a new enemy."Today the government is facing off against another foreign entity: the World Bank's International Center for Settlement of Investment Disputes.The arbitration board is hearing several utility company complaints, filed in the wake of Argentina's devaluation of its currency, the peso, in 2002, before Kirchner became president. A government decree ordered that utility bills would be priced in pesos instead of dollars, in violation of their contracts, the companies said.The devaluation cost the firms billions of dollars. By treaty, Argentina must accept the arbitration board's verdicts. But the government is backing a proposed law that would give the country's Supreme Court the right to overturn the verdicts. Leaders of the ruling Peronist party as well as the opposition Radical party support the bill.These days, only a few conservative voices dare speak critically of the government, and they usually do so indirectly.Last week, just before he left for Pope John Paul II's funeral in Rome, Buenos Aires Cardinal Jorge Mario Bergoglio criticized Argentina's "adolescent progressives" and "democratic gurus of unitarian thought." His comments were widely seen here as an attack on Kirchner."For some, having convictions makes you an adolescent," Kirchner responded a few hours later. "I prefer to be an adolescent for the rest of my life."

Metamensaje conciliador de Lavagna para el FMI (The Wall Street Journal)

2005-04-12T07:46:00.000-04:00

Hidden In Argentina Econ Min's Anger, A Softening On IMF

By MICHAEL CASEYApril 11, 2005 4:49 p.m. Of DOW JONES NEWSWIRES
BUENOS AIRES -- It might not have been immediately evident, but Argentine Economy Minister Roberto Lavagna's fiery public statements at the meetings of the Inter-American Development Bank in Okinawa Sunday contained a subtle sales pitch to the International Monetary Fund.

Setting aside his attacks on the IMF's "discriminatory" treatment of his country and his angry dismissal of Japanese criticisms of the $103 billion Argentine debt restructuring, analysts have zeroed in on a brief statement that bondholders who didn't participate in the debt workout "will be dealt with at the appropriate time."
That was the first time that a government official has publicly talked about resolving the problem of the so-called "holdouts," the 24% of bondholders who chose not to participate in the recent restructuring.

IMF officials, unwilling to see the debtor nation with $25 billion in legal claims hanging over its head indefinitely, have in recent weeks called for a "realistic strategy" for dealing with the holdouts. But until now, the government had given no indication it would waver from its much-hyped position that these people's opportunity to exchange their defaulted debt had passed.
So, Lavagna's reference to an eventual solution - even with his attempts to water it down in a subsequent radio interview - marks something of a concession to the IMF. Even in that radio interview, he talked of "eventual liabilities," an acknowledgment that the holdouts can't simply be ignored forever.

Crucially, this modest convergence with IMF thinking comes as Lavagna begins rounds of meetings with Fund officials in an attempt to break what appears to be an impasse in the two sides' negotiations to sign a new financing accord.
Lavagna met with the IMF's Western Hemisphere Director, Anoop Singh, on the sidelines of the IDB event in Okinawa and heads to Washington later this week for the Fund's Spring meetings, where he is expected to hold further meetings with Fund officials.
Meanwhile, President Nestor Kirchner is in Germany this week, a country whose support in the Group of Seven is considered crucial if the IMF board is to back a new agreement with Argentina. Both he and Lavagna will be trying to soften the conditions that countries such as Japan and Italy would want the Fund to impose in a new accord, be it working out the holdout problem or fixing unresolved tax reform and utility sector pricing arrangements.

For all Argentina's bluster about ridding itself of Fund money and the tough policy prescriptions that are tied to it, the country is still not in a position to free itself entirely from the relationship, economists say. It needs both the financial help - even a partial rollover of its outstanding debts would be valuable - and the IMF stamp of approval to help it attract foreign investment.
Currently, the government has no agreement with the IMF, following the suspension of the last program midway through 2004. That has put it into a situation in which it is continually paying down its $13 billion debt to the Fund without receiving reimbursements to roll over those debts. Nor is it receiving certain expected payments from the World Bank, while it continues to pay down its debt there, too, along with that of other multilaterals.
Former finance secretary Daniel Marx says the government can continue with this arrangement until the third or fourth quarter of this year, "depending on its fiscal performance." But after that it will need to find other sources of finance.

Around the time of the debt exchange, when optimism about the restructuring's higher-than-expected acceptance rate and a benign global interest rate environment combined to make Argentine debt attractive, this wouldn't have seemed a problem. The government was then boldly talking about issuing new debt to a hungry market.
But a month later and the "market accessibility has become a more volatile issue," says Marx, who notes that the upward trend in global rates has combined with Argentina-specific factors, such as a court-ordered freeze on defaulted bonds that has in turn held up settlement of its debt exchange, to drive up yields.

Alberto Bernal, economist at IDEAglobal estimates that Argentina needs to come up with $7.5 billion in total to cover its multilateral and domestic private debt between now and year-end. But even if those funds are found - Bernal notes that in a highly liquid but low credit generation environment, Argentine "banks have nothing better to do than to invest in such instruments," - Argentina is far worse off, he argues, without an IMF agreement.
That's because the benefits of an accord go much further than the funds themselves - it would help the country attract badly needed foreign direct investment. "Argentina got $1.8 billion in FDI last year," Bernal said. "Let's be honest. That's less than 1% of the Argentine economy and it compares with $10-to-$11 billion on average during the 1980s."
Bernal says Argentina is "not generating the incentives to get back to the amount of FDI it needs to recover its productive capacity." He highlighted the energy sector, where executives are talking about a looming supply crunch.
As urgent as an IMF deal is, though, Kirchner might be disinclined to go soft with it for another reason: he has a big stake in congressional elections scheduled for October, including in the candidacy of his wife, Cristina Kirchner.
Giving into IMF demands won't be politically popular, so Bernal expects that the final letter of intent for a new accord won't be signed until "the day after the elections." And even then, he said, with the IMF so "sick and tired" of Argentina, even in the "best-case scenario" - one in which Argentina agrees to all the outstanding tax and utility reforms, as well as a holdout creditor plan - the Fund "would only agree to roll over 70%" of its outstanding dues.

-By Michael Casey, Dow Jones Newswires; michael.j.casey@dowjones.com; 54-11-4313 1918

URL for this article:http://online.wsj.com/article/0,,BT_CO_20050411_006285,00.html

Argentina va a construir cinco corbetas por US $120 millones (Defense News)

2005-04-12T07:32:00.000-04:00

Argentina Readies Patrol Ship Program

By CHRISTOPHER P. CAVAS, BUENOS AIRES

Argentina is set to put out bids April 20 for a new program to build up to five multimission corvettes to patrol its offshore waters.
The program — dubbed PAM, for Patrullero de Alta Mar, or High Sea Patrol Craft — has been funded at $120 million, said Capt. Gustavo Tufiño, director of projects for the Argentine Navy.
Tufiño called the project “the biggest in the past 25 years” for the often cash-strapped service.

Argentine Defense Minister Jose Pampuro named the project second on his list of defense priorities for 2005, behind a large-scale program to develop an air-traffic control system for the country.
Argentina now lacks such a system, but development likely will take some time, and a contract is not expected to be awarded this year, said government officials and outside observers.
Argentina is seeking bids by international shipbuilders to construct all the PAMs at its naval shipyard at Rio Santiago. Plans are for the first ship to begin construction in late 2006, with follow-on ships starting every 10 months thereafter.
Among the shipbuilders from whom Argentina hopes to receive bids are Germany’s Blohm + Voss, builders of the country’s four MEKO 360 frigates, and Spain’s IZAR.
The PAM ships are intended to carry out fisheries patrol, maritime interception, search and rescue, pollution control and oceanography missions, said Tufiño.
The Navy has drawn up plans for interchangeable, modular mission containers to carry out those missions. Additionally, one module is to contain a mini hospital, another to assist in submarine rescue and recovery.
The price of about $24 million for each ship does not include the mission modules or armament, said Capt. Carlos Paz, head of the Navy’s strategic policy department.
Details for the ships include:
• Displacement of about 1,800 tons.
• Length of 80 meters.
• Beam 13 meters.
• 4,700 miles endurance.
• Maximum speed of 20 knots, with a cruise speed of 12 knots.
• A single gun of around 30mm.
• A flight deck, but no hangar.

Propulsion is to be diesel-electric, with an electric-only drive capable of 8 knots. In a unique arrangement, the electric motors are to function as generators above 8 knots.
The PAMs are to be crewed by 42 sailors, with provisions for four or five women in the crew, Tufiño said. Berthing also will be provided for a 12-man maritime interception operations detachment.
The project is the result of discussions last year between Argentina, Brazil, Chile, Peru, Uruguay and Colombia, Paz said. Although Chile already has gone ahead with its own naval program, Paz indicated the other countries eventually could take part in the PAM project.
“Each country is at a different stage,” Paz said April 5. •

E-mail: ccavas@defensenews.com.

Argentina pago US $200 millones en publicidad para el canje

2005-04-12T07:28:00.000-04:00

The government of Argentina has paid six international and local banks $200 million in fees for advising on February's debt exchange that ended the country's three-year default.

The three international banks are Merrill Lynch, UBS and Barclays while the local banks are Banco Galicia, state-owned Banco Nación and BBVA Francés. The government declared victory in the restructuring as 76% of its bondholders, representing some $62 billion in claims, accepted the government's offer to pay back only 25% of the debt's face value.

Fonte: Latin Finance

El Plan para Consumo de Gas (Bloomberg)

2005-04-12T07:19:00.000-04:00

Argentina to Penalize Consumers That Boost Gas Usage (Update1)

April 11 (Bloomberg) -- Argentina will implement for a second year in a row a plan that penalizes people who increase gas usage in a bid to prevent energy shortages during the South American winter season.

Under the billing system, the price of gas will increase for users who exceed the average consumption they had during the winter months of 2003 while it will fall for users that reduce consumption, according to the government's official gazette. The program will run from April 15 until September 30.

``Last year's experience was very good,'' the government said. ``We saved gas which was redirected to industrial uses.''

Argentina is seeking to avoid energy shortages that arose last year as gas producers, having been prohibited by the government from raising prices since 2002, curbed investment in exploration. President Nestor Kirchner last year cut gas shipments to Chile and Uruguay, reduced the supply to 35 of Argentina's biggest companies and started importing gas from Bolivia.

Gas producers such as Repsol YPF and Total SA said the government-imposed freeze on prices made production unprofitable and deterred them from investing to expand output. The government froze utility prices to prevent inflation from surging after it devalued the peso in January 2002.

Los piqueteros y Kirchner (The Washington Post)

2005-04-11T13:36:00.000-04:00

In Buenos Aires, A Friend in Need Critics Question Protest Organizer's Support of Argentine Leader's Agenda

By Monte ReelWashington Post Foreign ServiceMonday, April 11, 2005; Page A13

BUENOS AIRES -- When Luis D'Elia is asked to describe his relationship with Argentina's President Nestor Kirchner, he nods his head wearily and purses his lips, like a man tired of explaining the same thing every day.
"He's an ally and a loyal friend," said D'Elia, the leader of a group of thousands of demonstrators that almost always supports Kirchner's political agenda. "But I don't take direct orders from the government."

Kirchner consistently backs up D'Elia on this point -- but many here refuse to believe them. Instead, they see D'Elia as the president's point man, someone Kirchner sends to the streets when he needs to rally public support for a pet cause. The local newspapers label D'Elia an "official piquetero" -- a protester with the government's stamp of approval.

Whatever their relationship, the president and the protester have been sharing headlines in recent weeks. Responding to price increases, Kirchner last month called for a national boycott of the Royal Dutch/Shell group. D'Elia's band of protesters -- called the Land and Housing Federation -- responded with what skeptics considered suspicious alacrity.
Soon after Kirchner finished his televised speech condemning Shell, protesters aligned with D'Elia were encamped at more than 30 gas stations. Some press reports said that picketers were seen at Shell stations minutes before Kirchner went public with his boycott request.

The Buenos Aires media -- particularly the daily newspaper La Nacion -- highlighted the D'Elia-Kirchner connection. The newspaper reported that D'Elia was one of several protest leaders whom the government met with regularly to arrange demonstrations. Kirchner responded angrily, accusing the media of calling all pro-government demonstrators "shock troops" and all anti-government protests "great popular demonstrations."
"The government does not manipulate demonstrations in favor or against" anything, Kirchner told reporters.
The piquetero movement in Argentina began in the 1990s, when the country's unemployment rate climbed after widespread privatization of state-owned businesses. Many who became regular demonstrators were former union workers, able to organize themselves into social movements quickly. The piqueteros' presence remained strong during Argentina's financial collapse of 2001-2002 and now is regularly evident in the crowded streets of the capital.

D'Elia's federation was one of the groups of mostly unemployed former union members that formed in the 1990s, and he estimated it now has about 125,000 supporters. It has evolved into something similar to a political party, fielding candidates in local elections who consistently oppose institutions such as the International Monetary Fund and adopt a populist stance against foreign economic interference.
D'Elia, 48, said that although he usually agrees with Kirchner's policies, he sometimes finds himself at odds with his government. He said he did not like it when Economy Minister Roberto Lavagna suggested that populist demonstrations such as the anti-Shell protests might hurt Argentina more than help it by sending negative signals to foreign investors.

According to both Kirchner and D'Elia, the protests against Shell arose less from government coercion than from genuine grass-roots concern. Since the protests, there have been regular anti-inflation demonstrations, despite government statements that the expected inflation rate of 8.5 percent is not cause for alarm.
"When an economy is growing at 9 percent a year for two years, you're bound to have some inflation," said Alan Ciblis, an Argentine economist in Buenos Aires with the Washington-based Center for Economic Policy and Research. "But the problem is that in Argentina, many people still remember hyperinflation" from the late 1980s. "So when prices get a little higher, people notice."

Last week, Sandra De La Canal was one of about 5,000 people who marched through the streets of Buenos Aires to draw attention to rising prices. D'Elia and other "official piqueteros" had nothing to do with it, she said. Unlike D'Elia's group, the march organizers said, they were firmly opposed to Kirchner and his policies. Even though the government this month reached agreements with producers of some key food items to keep prices under control, they said the government should do more.
"We can't afford to live if prices keep increasing," said De La Canal, who lives about an hour outside Buenos Aires. "Since the beginning of January, the price of meat per kilogram has doubled."
D'Elia said he was organizing another protest for next month against utility companies that he had heard were planning to raise rates substantially. It will be the second protest he has organized this year, he said.
And why hasn't he or his federation organized more? "In the last 20 months," he explained, "we have dedicated ourselves to accompanying President Kirchner."

© 2005 The Washington Post Company

Empresas Alemanas habrian usado la Argentina para lavar dinero durante 1950-1955 (The Scotsman)

2005-04-10T10:49:00.000-04:00

Perón link to safe haven for Nazi profits

LARRY ROHTER IN BUENOS AIRES

THAT scores of fugitive Nazis found their way to Argentina after the Second World War, aided and abetted by General Juan D Perón, is no secret. But it has also emerged that his government offered a haven for the profits of German companies that had been part of the Nazi war machine, and whose assets the victorious Allies would otherwise have seized.
I
In The German Connection: The Laundering of Nazi Money in Argentina, Gaby Weber, a German journalist, argues that the Perón dictatorship sponsored an operation to move illicitly obtained wealth to Argentina, then back to Germany. For nearly a decade, her book asserts, German-made cars, trucks, buses and even the machinery for entire factories flowed into Argentina - paid for with dollars that were then used to help finance the "German economic miracle".

To the chagrin of Argentines who still revere him and his wife, Evita, the evidence Weber indicates that Perón and a few favourites around him also took a cut.
The book focuses largely on Mercedes-Benz, the automobile, bus and truck manufacturer that has since become a unit of Daimler-Chrysler. But others claimed by Weber to have been beneficiaries of the plan include German makers of electrical and railway equipment and other capital goods, as well as producers of things as varied as tractors and television sets.
"It is impossible to calculate the exact amount of money laundered in Argentina between 1950 and 1955," Weber said. "But it probably corresponds to well over a billion dollars."

According to Argentine documents seized after the overthrow of Perón, about half of one large shipment of Mercedes cars to Argentina went directly to the president’s office. Perón appears to have kept four cars himself, but sent the others to judges and prosecutors, politicians, journalists and others whose support he was seeking.
Weber has also found documentary evidence that in at least a couple of cases, entire factories were shipped to Argentina for reassembly there. "Most of the machinery came from Rotterdam, though we don’t know how it got there," Weber said. She added that most of the equipment appeared to be German, though some was probably looted from Czechoslovakia or other east European nations.

Weber also maintains that the Nazi Adolf Eichmann was hired, initially under his own name but later under an alias, at the Mercedes-Benz plant in the suburbs of Buenos Aires. Eichmann, abducted by Israel in 1960 and then tried and executed, might have functioned as a sort of paymaster," financing the movement and flight to Argentina of other fugitive Nazis.
Weber’s book, published in German and Spanish, is based in part on research in the corporate archives of Mercedes-Benz and on interviews with Argentines and Germans who took part in the scheme.

She also consulted government records of Germany, the United States and, particularly, Argentina, where she found transcripts of interrogations of participants after Perón was ousted in September 1955, and other official documents that, until now, were generally off-limits to researchers.

According to the documents Weber cites, the laundering operation involved both the consistent overcharging for goods exported from Germany to Argentina, and billing for non-existent transactions. The Argentine Central Bank also cooperated by permitting transactions to be conducted at an exchange rate unusually favourable to German companies.

A spokesman for Mercedes-Benz, Ursula Mertzig, acknowledged that Weber had been "given free entrance to our archives in Stuttgart and that we checked the names she gave us in our personnel data". But she described the book as "a very strange story" that lacked substantiation.
"She has no proof of money laundering," Mertzig said. "We could find nothing that gives nourishment to her reproach. This is her idea of what history was, but it is not supported by other historians in Germany."

The publication of Weber’s book follows the release, in Argentina, of a documentary film that caused debate on the same subject. The film, Nazi Gold in Argentina, contends that Swiss banks, the Roman Catholic Church and Argentinean politicians conspired to loot hundreds of millions of dollars in cash and other valuable assets held by the Third Reich.

The film includes scenes of Nazi submarines filled with gold bars unloading their treasure on the deserted beaches of Patagonia - events that most experts dismiss as fanciful. But it also sheds light on the activities of shadowy figures such as Hermann Dörge, a German banker who worked in Argentina’s Central Bank during the 1940s and was officially declared to have committed suicide after destroying evidence of Nazi money transfers.

In his book The Real Odessa: Smuggling the Nazis to Perón’s Argentina, the Argentinean writer Uki Goni documented how Croatian fascists allied with the Nazis shipped over 500 pounds of gold bars to Argentina after the war. But he said that "regarding German or Austrian Nazi money, the trail is more diffuse".
He added that he found it "fishy" that many Argentine Central Bank records from then and the postwar period were either incomplete or said to be destroyed.

MORE GERMANS REGRET LOSING WAR

ONE in seven Germans regrets that their nation lost the Second World War, according to a new poll. Sixty years after the end of the conflict, new figures show that a significant minority of Germans think it is a bad thing that the Nazi tyranny was defeated in 1945.

The figures surprised experts on the nation’s affairs, and have sparked new soul-searching on how the EU’s biggest nation can cope with the legacy of its own traumatic history.

The poll was published in the leading German weekly news magazine Stern last week as part of its coverage of the 60th anniversary of the end of the Second World War.
It showed that while two-thirds of Germans believed it was a good thing that their country, and the Nazi regime, was defeated by the Allies, 13% still regretted that they had lost. Another 12% said losing the war was partly bad and partly positive, and another 9% didn’t know. In addition, it showed that East Germans were more likely to be ambivalent about the defeat of the Nazis, with 14% saying that it was bad that they had lost the war and another 16% saying it was partly negative and partly good.

This article: http://news.scotsman.com/international.cfm?id=378492005

Banco de Desarrollo Interamericano: intereses altos en USA pueden herir la recuperacion en Latinoamerica (The Wall Street Journal)

2005-04-10T10:34:00.000-04:00

IDB: High US Interest Rates May Hurt Latin America Recovery

DOW JONES NEWSWIRESApril 9, 2005 8:30 p.m.

WASHINGTON -- Rising interest rates in the U.S. could hurt the economic recovery in Latin American countries that have high debt burdens, the Inter-American Development Bank said in its 2004 annual report.
The report, released Sunday during the bank's board of governors meeting in Okinawa, Japan, discusses the economic recovery that began last year in Latin American and the Caribbean. Overall, the economy grew 5.5% in 2004, although most analysts expect that rate to slow a bit this year. The growth rate in Argentina, Brazil, Ecuador, Uruguay and Venezuela was the best in 10 years, the bank said.
"It is not clear how long Latin America's current vigorous recovery will last," the report said.
The bank said it was concerned about rising interest rates in the U.S. and a possible economic slowdown in China, noting that both countries have helped fuel Latin America's growth.
Although recent interest rate increases from the Federal Reserve so far haven't materially affected each country's debt margins, the report said strong effects are predicted going forward. The Fed has raised rates seven times since June 2004, nearly tripling the key federal funds rate. That rate, now 2.75%, is expected to climb to about 4% by the end of the year.
"With public debt levels in many countries at 50% of gross domestic product or more, the anticipated interest rate increases in the U.S. could require very sharp fiscal adjustments that would derail the recovery process. For that reason, the adverse effects could be very substantial," the report said.
The report said bank lending to the region totaled $6 billion last year compared with $6.8 billion in 2003. About $1.6 billion in loans were targeted for poverty reduction programs and projects last year.

-By Jennifer Corbett Dooren, Dow Jones Newswires; 202-862-9294; jennifer.corbett@dowjones.com.

URL for this article:http://online.wsj.com/article/0,,BT_CO_20050409_000859,00.html

En la pelea de las primeras damas, la economia es la que pierde (The Wall Street Journal)

2005-04-10T10:31:00.000-04:00

In Argentina First Ladies' Battle, Economy Is The Loser

By MICHAEL CASEYApril 8, 2005 4:25 p.m. Of DOW JONES NEWSWIRES

BUENOS AIRES -- A newspaper cartoon of Argentine First Lady Cristina Kirchner and her predecessor Hilda Duhalde dueling with rolling pins Friday may have offended feminist sensibilities, but it neatly captured a rivalry now at the center of Argentine politics.
The two women, both formidable political forces in their own right, are poised to go head-to-head in a Senate race later this year that could define the future of Argentina's most lasting institution, the Peronist Party. It stems from a bold bid by President Nestor Kirchner and his allies to challenge the dominance of his predecessor, Eduardo Duhalde, who used his Buenos Aires province political machine to get Kirchner elected two years ago while retaining significant influence over the nation's affairs.
I
t won't be the first time Duhalde has engaged in an internal Peronist power struggle with a sitting president. And if the last one is anything to go by - Duhalde's 1999 fight with then president Carlos Menem, which began as a four-year recession was just getting started - the economy could be the biggest loser.
The presence of Congressional elections in October was always going to be a distraction for President Nestor Kirchner, who this week said he wants them to be a "plebiscite" on his performance. During the May 2003 presidential campaign, Kirchner never got to have a mandate-setting second-round vote because his opponent, Menem, was persuaded by appallingly low poll numbers to withdraw early. It clearly still bothers Kirchner that the best he can claim in official voter support is the second-placed 22% share of the popular vote that he got in that year's first round election.

But this hunger for legitimacy has reached new heights in the Kirchners' decision to put the First Lady on the ticket for Buenos Aires province. It promises to turn the elections into an all-encompassing affair, both for the media - which will feast on a "batalla de las damas" - and for the president. It seems bound to become a far bigger priority for him than, say, devising an aggressive macroeconomic policy for tackling a mounting inflation threat.
With consumer prices now running at 9.1% year-on-year, economists say tougher fiscal and monetary restraint are now needed.

But Fernando Losada, an economist with ABN-Amro in New York, says such growth-killing moves can't happen between now and the October elections. He says Kirchner will instead fall back on microeconomic tactics such as fixing wage-price accords with business and labor and threatening sanctions against price-hikers. These will have little medium- or long-term value, Losada says, ensuring that "inflation is not going to go down very significantly" before October.
Thankfully for the government, its record fiscal surplus gives it maneuvering room. For once, too, says pollster and political analyst Manuel Mora y Araujo, there are political gains to be had from fighting inflation. Given the public concern over the rising cost of living and Argentina's especially bad history with runaway prices, fighting inflation "can also win votes," he says.

However, on another key pending issue, the negotiation of an accord with the International Monetary Fund, no such alignment with voters' interests exists. There is little immediate political gain to be had from agreeing to tough IMF demands such as renegotiating higher rates with utility companies or reforming the tax system. Yet the consequences of failing to reach an agreement with the international lender could be significant.

"Everybody counts the beans and says we should have an agreement (with the Fund) between June or September ... because otherwise the government won't be able to fund itself for the year," says Federico Thomsen, a Buenos Aires-based economic consultant. "Yet it's not easy to see how in this election environment such an agreement can be reached."
Thomsen worries that the convergence of political and economic pressures could again drive the government to threaten to default on its outstanding dues to the IMF, a move that would surely draw the ire of the international community.

And because the main political opponents for Kirchner allies in the congressional campaign will be Duhalde people rather than, say, members of conservative opposition leader Ricardo Lopez-Murphy's Recrear party, the pressure to reject IMF demands would arguably be stronger. Duhalde is recognized as a populist and his own government was marked by an especially acrimonious relationship with the Fund.
Asked to respond to the government's announcement earlier this week that Cristina Kirchner would be a candidate for the Senate in Buenos Aires province - easily Argentina's most important politically, with 38% of the country's population - Duhalde said in a radio interview Thursday that he had "the sensation there is going to be more than one candidate" from the Peronist Party. That means two "lists" - or blocks of allied candidates seeking election to the full set of open congressional positions - with the second list, pundits surmise, headed by Duhalde's wife, Hilda.
Hilda Duhalde, also known as Chiche, looms large in Buenos Aires provincial politics. Her leadership of provincial welfare programs - a role she adopted when her husband was governor, cultivating an image as a modern day Eva Peron - turned them into a crucial vehicle for developing patronage for the Duhalde political machine.
Her prospective opponent, Cristina Kirchner, already occupies a Senate seat from the Kirchners' home province of Santa Cruz and is known to exert profound influence on her husband's political thinking and policy making.
Thomsen, the economic consultant, believes the threat of a one-on-one clash between this pair is perhaps more a sign of posturing than anything else and says the public statements more likely form part of a negotiating strategy over the makeup of a unified Peronist list. "This a chess game, not a wrestling match," he says.
What the internal Peronist dispute does mean, Thomsen says, is that the biggest political distraction for President Kirchner may come before the October elections, because the Party will need to resolve its list by August. His Peronist Party has emerged in recent years as the only viable political force in the country - so the real battle for power lies in intra-party not inter-party politics.
"Basically, the Peronists are working on the very reasonable assumption that that they are going to do well" in the congressional elections, says Thomsen. "It is just a matter of climbing onto that list, because it is a winning list. So, the struggle is now."
-
By Michael Casey, Dow Jones Newswires; michael.j.casey@dowjones; 54-11-4313 1918

Corrected April 8, 2005 17:03 ET (21:03 GMT)

BUENOS AIRES (Dow Jones)--A newspaper cartoon of Argentine First Lady Cristina Kirchner and her predecessor Hilda Duhalde dueling with rolling pins Friday may have offended feminist sensibilities, but it neatly captured a rivalry now at the center of Argentine politics.
(In an item published at about 2125 GMT, the first name of Argentina's First Lady, Cristina Kirchner, was misspelled.)

URL for this article:http://online.wsj.com/article/0,,BT_CO_20050408_005605,00.html

Bush preocupado por un Tsunami izquierdista en Latinoamerica (Science Daily)

2005-04-08T11:20:00.000-04:00

En un articulo publicado el 7 de Abril por Science Daily, de acuerdo a una fuente anonima el presidente Bush dijo lo siguiente durante reunion con sus asesores a mediados de Marzo:

-- Mr. Bush was "adamant and animated" about the rising threat of a Latin left tsunami, evident just this week in Argentina's renewed growlings over the disputed Falkland-Malvinas islands. He reportedly used expletives in referring to Mexico City Mayor Andres Manuel Lopez Obrador, and said there may be an emerging second war-on-terror front in the person of Venezuelan President Hugo Chavez.

Bush said Chavez is "stirring it up" in Colombia and throughout the region. Both Venezuela and Argentina are said to be funding far-left political parties and paramilitary groups in Nicaragua and Colombia. They are also reportedly increasing trade and economic aid to assist Cuban dictator Fidel Castro in his role as a kind of a Club Med hotelier for the region's terrorists and revolutionists. A former NSC staffer tells me the White House suspects Castro may be planning to do more than that.

Mr. Bush reportedly made no comment regarding Argentina's coup d'ebtat, but it's notable that the approximately $80 billion taking is on a scale with a year of war effort in Iraq, or even with the (economic) damage done by 9/11 terrorists. A senior Treasury Department official said that in recent weeks, the president has been "on the bit" regarding Argentina's behavior. Treasury, this official said, cannot figure out what to do after a year of acquiescing in Argentina's program.

El articulo original se puede leer aqui.

USA puede aprender de problemas con la soja en Argentina (Agriculture Online)

2005-04-08T11:14:00.000-04:00

What US farmers can learn from rust bouts in Argentina, Uruguay

By Gil Gullickson
Successful Farming Crops Technology Editor

4/08/2005, 9:09 AM CDT

Asian rust's foray into the major soybean growing regions of Argentina and Uruguay this year might be a harbinger of things to come for US farmers this summer.
Laura Karlen of Ag Advisory, an Algona, Iowa, crop consulting firm, returned in early April after visiting Argentina and Uruguay. "They were going through many of the same things (before their growing season) that we're going through now," she says.
As in the US, Asian rust had been detected in a handful of spots in both of the countries before planting. Asian rust then moved in during the growing season and blanketed Uruguay and central Argentina, where much of that nation's soybean production occurs. Excellent preparation by farmers, agronomists, plant pathologists and others has helped them weather Asian rust.
"When it started popping up, they were so well prepared that they caught it early on and treated it," says Karlen.
Farmers in Uruguay incorporated Asian rust monitoring into an already rigorous soybean scouting program that existed for other pests. In Argentina, a rapid detection system was established where farmers send leaf samples in plastic bags also containing water to diagnostic labs. The moisture aids detection by speeding proliferation of rust in infected leaves.
"It's important to keep in mind we can't use them as an exact model for what may happen here," says Karlen. "They have a different climate and wind patterns. But we can definitely learn from them."
The growing climate of these countries more closely resembles the US than does the steamy tropical environment of Brazil. "It's more like Arkansas and Missouri, where frost occurs in the winter," says Karlen.
Similarities also include spore arrival via wind. Last fall, hurricanes blew Asian rust spores northward into the US. It was the opposite situation in Argentina and Uruguay, where northern winds blew spores from the Asian rust hotbed of Brazil.
Once Asian rust was initially detected in Uruguay and central Argentina, it quickly surfaced all over. Soybeans double-cropped after wheat in Uruguay were the most prone to infection, as they were in the R4 (full pod) and R5 (beginning seed) stages. These fields were more likely to be infected and treated than early-planted soybeans that were further along in the R6 (full seed) stage.
For the most part, farmers are successfully battling Asian rust with a strategy of scouting and spraying with fungicides immediately after leaf pustules surface in a field, says Karlen.
In both nations, farmers treat infected fields with curative fungicides or a mixture of curative and preventive fungicides. These mixtures include fungicides from both the triazole and strobilurin families, which also are approved for use in the US.
"They seem to be the popular trend in Brazil, and that's following through in Argentina and Uruguay," says Michael McNeill, Ag Advisory president.
Few market surprises
Grain market watchers have closely watched developments in South America like these. In February, concern over deceased South American soybean yields helped rally the market. It's possible rust rallies may predominate.
However, one factor that may reduce market surprises is the educational effort that's been done among US farmers in recent months.
"Everyone knows about rust," says Ron Mortensen, president of Advantage Ag Strategies, Fort Dodge, Iowa. "It is not a surprise."
Rallies also will hinge on if and how quickly Asian rust moves northward and how farmers respond.
"It depends on how everyone responds when we're in the trenches," adds Mortensen. "Two years ago, Asian rust would have been a big surprise and caused a big panic. That probably isn't the case now."
Learn more about soybean rust
StopSoybeanRust.com is a Web site with news, information andresources about Asian soybean rust, created by the Greenbook, Dealer & Applicator magazine and Successful Farming magazine. It is sponsored by Bayer CropScience US. Cooperating partners include the United Soybean Board and the Crop Advisor Institute.
• Visit StopSoybeanRust.com

Scotiabank demanda a La Argentina (The Wall Street Journal)

2005-04-07T12:14:00.000-04:00

Scotiabank Files Claim Against The Government Of The Republic Of Argentina

DOW JONES NEWSWIRESApril 7, 2005 12:01 p.m.

TORONTO -- Bank of Nova Scotia (BNS) is seeking more than $600 million from the government of Argentina under a treaty intended to protect the interests of investors of one country doing business in the other.

In a news release, the Canadian chartered bank claims that "expropriatory and discriminatory actions" taken by the Argentine authorities caused the total loss of its investment in its subsidiary Scotiabank Quilmes, whose licence was revoked in August 2002.
The bank said it's seeking damages as compensation for the loss of its investment, the cost to it of winding-up Scotiabank Quilmes, and harm to its reputation.
A Notice of Arbitration was filed Thursday after the Argentine government failed to respond to three written requests from Bank of Nova Scotia during the past 18 months to negotiate an amicable settlement, it said.

The bank said it's now referring the dispute to arbitration under the terms of the Promotion and Protection of Investments Treaty signed by the Republic of Argentina and Canada in 1991. The arbitration panel will comprise one nominee from the bank, one from the government of Argentina, and a third person agreed to by both sides, the bank noted.
Bank of Nova Scotia said that, although full details of the claim aren't a matter of public record, it alleges that the Argentine actions violated the treaty protection against expropriation of investments without compensation and the protection against discriminatory treatment.
A Bank of Nova Scotia spokesman said the Canadian bank is one of about 30 companies that have filed similar claims against the government of Argentina. It's the only Canadian company that has filed a claim.

Company Web Site: http://www.scotiabank.com
-Wendy Tsau, Dow Jones Newswires; 416-306-2100

URL for this article:http://online.wsj.com/article/0,,BT_CO_20050407_005755,00.html

La inflacion es el desafio clave para la Argentina (The Wall Street Journal)

2005-04-07T12:09:00.000-04:00

Argentina Inflation Emerges As Key Economic Challenge

By MICHAEL CASEYApril 6, 2005 4:00 p.m. Of DOW JONES NEWSWIRES

BUENOS AIRES -- There was once a time in Argentina - in 1989, for example, a year in which the annual inflation rate came in just shy of 5000% - when a mere 1.5% monthly increase in the consumer price index would have been celebrated.
But now, in an era in which stable prices are the norm and investors are accustomed to ignoring the CPI, news of a March price spike of this magnitude is triggering some alarm bells.

The country won accolades for avoiding what some had feared would be a return to hyperinflation following the 70% devaluation of the peso in January 2002. Inflation inevitably reached 42% that year but there was no follow-on price spiral and the rate dropped to a mere 3.7% in 2003 and was contained at a benign 6.1% in 2004.
Could the latest figures, released Tuesday by INDEC, the national statistics agency, signal the return of Argentina's old demons? The consensus among economists seems to be that while the government has room to keep them under control, inflationary risks have risen quite dramatically.
"This a statistic that is, frankly, worrying," said Esteban Fernandez Medrano, economist at consultancy Macrovision, after the national statistics agency, INDEC, released the latest data Tuesday.

The headline number came in well above the consensus estimate of 0.9% and marked the third-straight month of gains in excess of 1% for the index. It left accumulated inflation at 4% for the first three months of the year and the Central Bank's full-year target ceiling of 8% already looking virtually unattainable.

More worrying were the underlying numbers. Food and beverage prices rose 2.7% in the month, marking the strongest March gain since the current data series began in 1992 if the post-devaluation inflation surge in early 2002 is excluded. And the gain in education prices - though clearly influenced by seasonal back-to-school effects - was, at 6%, the highest monthly gain since 1992.

Medrano says this underlying information dispels the notion - promoted by Economy Ministry officials - that the current price trend is a transitory phenomenon, the product of one-off adjustments in "relative prices" delayed since the devaluation. Such adjustments, exemplified by the recent dismantling of a three-year freeze in utility rates, are expected to feed through to prices in some sectors of the economy. But, as Medrano says, "if ever there was a sector that's not affected by relative price adjustments it's food and beverages."

That didn't stop the Ministry's undersecretary of economic programming, Sebastian Katz, from confidently declaring late Tuesday that "this inflationary process is transitory and seasonal."
Katz said the effect of price-containing accords struck last month with beef and dairy producers should kick in in April and that if supermarket chains don't comply with a separate set of agreements, "the government could take additional measures."
Given its political significance, it's not surprising the government has so far focused on the food and beverage sector. The sector's 31% weighting in the CPI is the highest and it forms the basis of the basket of goods that the government uses to determine the poverty line.
President Nestor Kirchner has had some modest success in reducing poverty from an astronomically high rate during the recent financial crisis - from a 2003 record high of 54%, the percentage of Argentine households living below the poverty line is now down at 44.3%. A sharp increase in the basket of goods will push the threshold line higher and could result in a reversal in poverty trends.

The accords signed last month could stem price pressures for now but economists warn that Kirchner's ability to keep broad-based inflation in check over the medium- to longer-term will depend on his and the central bank's willingness to undertake more contractionary policy measures.
"The government toward the end of last year adopted a very expansionist monetary and fiscal policy and that fueled demand pressures," said Fernando Losada, economist at ABN-Amro in New York. "The question is whether the government is going to do an about-face and implement tight monetary and fiscal policy," Losada said. "My sense is that what they are going to do between now and the (Congressional) elections (in October) is implement a more conservative policy mix but I would be surprised if it is a sharp change."
Indeed, economists say the real challenge will lie in undoing some of the "Merry Christmas" measures of last December - tax holidays and public employee bonus payments put in place to stimulate year-end spending. For its part, the central bank has shown some capacity to reverse course, putting an end to its dollar-buying spree of last year, one that pumped excess pesos into the financial system and kept the local currency at what many believe is an artificially low exchange rate.

Losada said the central bank might now go a bit further, nudging up its short-term money market rates, for example, while the government will likely show some restraint in terms of public employee salaries.
But he argued that a fear of going into elections with a slowing economy would preclude a more aggressive use of "orthodox" measures. Instead, he said, Kirchner is likely to pursue the same microeconomic strategy, seeking deals for wage and price restraint such as those targeted at food vendors, a tactic that will be aided by his Peronist Party's deep traditional ties to centralized labor and industry organizations.

Argentine history suggests these sorts of deals will ultimately prove mostly ineffectual - it's one reason why Losada believes "inflation is not going to go down very significantly" before the elections. After that, he says, a more comprehensive fiscal and monetary attack is likely, with the possible consequence of a sharp slowdown in the hitherto strong Argentine economy. That unwelcome result will be more likely if it is accompanied by slower global growth and a resulting decline in Argentine exports.

Thankfully for the government, it has an ace up its sleeve that few of its predecessors have ever had as inflation emerges. Its unprecedented fiscal surplus, worth close to 5% of gross domestic product last year, has lowered the risk that the central bank will be pressured into "monetizing the deficit," a strategy that is almost always inflationary. The challenge now, economists say, is to keep that strong fiscal performance in place at a time when it will be harder to do so, as traditional sources of revenue, such as export taxes, are expected to wane.
-By Michael Casey, Dow Jones Newswires; michael.j.casey@dowjones; 54-11-4313 1918

URL for this article:http://online.wsj.com/article/0,,BT_CO_20050406_006859,00.html
Copyright 2005 Dow Jones & Company, Inc. All Rights Reserved

El canje todavia esta trabado (Financial Times)

2005-04-07T12:03:00.000-04:00

Argentine debt deal struck by late glitch
By Adam Thomson in Buenos Aires
>Published: April 7 2005 03:00 Last updated: April 7 2005 03:00>>

Enrique Iglesias, head of the Inter-American Development Bank, yesterday expressed "regret" over last-minute litigation that has delayed the completion of Argentina's record $100bn sovereign-debt restructuring.
Speaking in Japan before the IDB's annual meeting, Mr Iglesias told Reuters: "I hope it [the case] will be settled as soon as possible and the judiciary will understand that it is good for everybody to close the negotiations."

The unmistakable show of support from one of the multilateral organisations comes as Argentina this month postponed issuing about $35bn in new bonds and $690m in interest payments following legal snags in the US.
The new securities were supposed to be handed over last Friday to hundreds of thousands of international creditors who in February accepted Argentina's restructuring offer. Investors holding more than 76 per cent of the old bonds participated in the exchange, and they now want to receive the new securities.

But Argentina's lawyers argued that an attempt late last month by NML Capital and EM Ltd, two hedge funds, to seize or "attach" $7bn of the country's defaulted bonds prevented them from completing the exchange. They said attaching the bonds "would undermine the Republic's debt restructuring".

Thomas Griesa, a New York judge, last week reversed his initial decision to freeze the bonds, concluding, among other things, that they could not be attached because they still belonged to private bondholders.
But he also gave NML Capital and EM Ltd the right to contest his decision in a court of appeal.

This week the appeals court is understood to have turned down a request by Argentina to speed up the process. As a result, a hearing is not expected before the last week of April.
Argentine authorities are cautiously optimistic that the appeals court will uphold Judge Griesa's decision. However, they are concerned the last-minute hitch could provide ammunition for those who remain unsatisfied with the restructuring and demand a solution for the 24 per cent of creditors who rejected the offer.

This week, Rodrigo Rato, head of the International Monetary Fund, told the Financial Times that dealing with the so-called "hold out" creditors would be part of the discussion but not necessarily a prerequisite for agreeing a new programme.
Argentine officials privately complain that the recent litigation has increased pressure, including from some within the International Monetary Fund, to reopen the swap as a strategy for dealing with the hold-outs.

Articulo original

China estudia comprar harina de soja de India (India Economic Times)

2005-04-07T11:57:00.000-04:00

The Economic Times Online
China looks at India for soyameal

RATNA GANGULI[ WEDNESDAY, APRIL 06, 2005 10:45:36 PM]

China which mainly imports soyameal from the US and South America is looking towards India to meet its contingent requirements. Responding to a sudden surge in the demand for the animal feed from its poultry industry, China recently imported some 24,000 tonnes of soyameal from India. Though such buying by China pales into insignificance when compared to other south-east Asian countries’ import of the commodity from India, it encourages Indian soyameal exporters to look at the possibilities of further increasing the export to China through negotiations between respective industry associations. For the last few years, China has been importing around two million tonnes of soyameal each year on an average. A significant part of which goes to feed its poultry industry. The import is being mainly made from the US, Brazil and Argentina. But with soyabean crushing in those countries coming to a slow in February-March, it has turned to India to meet the contingent need of its poultry industry and lifted 24,000 tonnes of soyameal from India in March. Backed by soyabean output of 66 lakh tonnes in the ’04-05 crop year (October-September), India is poised to export about 20 lakh tonnes of soyameal in the year. Of this, it has already exported about 13 lakh tonnes, about 80% of which went to some south-east Asian countries including South Korea, Indonesia and Malaysia.
Seeing India’s capability to export 20 lakh tonnes of soyameal in a normal year, China is gradually becoming interested to source soyameal from India. “But its interest in this regard can be sustained only if India proves itself to be a steady supplier of the commodity. Until then, China will be interested to buy it from India to meet its contingent need. For this, as it prefers to lift the commodity from India in small lots, it will go in for transporting the same in containers,” industry sources said. Even within the limited scope, India could increase its soyameal exports to China and other south-Asian countries as well provided exporters could arrange for containers in a short time. Indian exporters could have committed more exports to China in March. But they dared not facing problems in procuring cargo containers at short notice, they added. India stands a better chance in countries where buyers seek smaller cargoes, of around 20,000 to 25,000 tonnes, to fill immediate needs. Sailing times from India to south-east Asia are much shorter than for shipments from the US.
©Bennett, Coleman and Co., Ltd. All rights reserved.

El precio mundial del crudo sigue subiendo y podria llegar a $US 105 el barril (Bloomberg)

2005-03-31T10:45:00.000-05:00

En USA los fuertes aumentos en los precios de gasolina se deben a dos factores: la capacidad de refinamiento ha llegado a un maximo, y el precio mundial del crudo sigue subiendo. Un analisis de Goldman-Sachs prevee que el precio del barril de crudo podria llegar a $US105. Lea el despacho original aqui.

Es de notar que los dos factores que causan el aumento de precios en USA tambien existen en Argentina.

Repsol tiene acuerdo estratégico con Venezuela

2005-03-30T14:44:00.000-05:00

En un research paper publicado por la compañia Ibersecurities, Repsol recibió una calificación de "buy" dado que entró en un acuerdo estratégico con Venezuela por varios años, lo cual le permitirá aumentar sus reservas y disminuir su dependencia de la Argentina. Lea un anuncio aquí.