Gesamtzahl der Seitenaufrufe

Mittwoch, 5. März 2014

Additional English Clip: Moody’s: “Impact of Court Ruling on Argentina’s Debt on Future Sovereign Debt Restructurings is Likely Limited” (Duggar, Attached) Lead Articles: El Cronista: “What Cristina doesn’t talk about, and isn’t in the mood to announce” La Nacion: “After the Repsol agreement, YPF goes out to seek investors” La Nacion: “Provinces turn to the U.S. to fight against drug trafficking”

Lead Articles:
El Cronista: “What Cristina doesn’t talk about, and isn’t in the mood to announce”
La Nacion: “After the Repsol agreement, YPF goes out to seek investors”
La Nacion: “Provinces turn to the U.S. to fight against drug trafficking”
·         Argentine stocks were hammered along with other emerging countries in trading over the crisis in Ukraine.  El Cronista reports that Foreign Minister Hector Timerman, in Geneva for a conference on the death penalty, met with Russian Foreign Minister Sergei Lavrov, telling his Russian counterpart he is willing to offer “peaceful alternatives” to solve the crisis, “which respect human rights and the United Nations Charter,” but didn’t take any further position. 
·         The government has not yet taken any public position on the Ukraine crisis, nor has any FpV figure come out with a trial balloon position.  The pro-K Pagina/12 has an article which relativizes the conflict to show a bumbling, incompetent European Union, a hypocritical United States and a “neoliberal” Russia causing a dangerous global crisis.
·         Opposition blocks in Congress are demanding a special session on March 19 to debate the revoking of the Iran MOU on the AMIA bombing, and definitively overturning the agreement.
·         La Nacion reports that the U.S. State Department’s annual report on global drug trafficking indicates that cocaine production in Argentina is small, but a growing problem. (  Page 95, “Country Report: Argentina)
·         “Ucrania” (Ukraine), “Rusia” (Russia) are trending in the top ten this morning.

El Cronista
What Cristina doesn’t talk about, and isn’t in the mood to announce
Tuesday, March 4, 2014
By Maximiliano Montenegro, Journalist and Economist
It was the last speech before Congress with a horizon in front, 20 months, enough for announcing transcendent decisions and to trust that they will be carried out.  The next, in March 2015, eight months from the election of her successor, will be almost a testimonial, a review of the inventory for the future resident of the Casa Rosada.  
However, Cristina said nothing.
She said nothing about inflation, which has devoured the bases of the economic model.  The main reason for the flight of capital (“I am the grandmother of the runs on the peso,” she admitted), the exchange rate delay, the clamp and the final round of the devaluation.
Equal to the last six years, she didn’t even say the word.  Despite the fact that inflation is no longer 25%, as she indignantly denied in the recorded conference at Harvard.  That the trade unions are resisting any salary increases below 30% is the best proof that the floor is even higher now.
The well-worn denunciation of businessmen and speculators that are “plundering wallets” because “there is no justification for price increases” is valid as a political marketing strategy.  The same from the request to Congress for “instruments that defend consumers against abuse from concentrated sectors.”  But that is irrelevant in fighting inflation.  A “distraction,” in the words of Mario Blejer, an economist with the ear of Daniel Scioli.  Why didn’t they move ahead sooner with these laws to end with the “abusive” increases?  Why didn’t the innumerable “cared-for prices” agreements of Moreno have an effect?  How did we get here?  
If there were a plan, it was the best moment to announce it.  Chart a course, set milestones and create expectations of a way out from this present dark gray area.
Perhaps the main difficulty that Cristina has in explaining the plan is that she is doing what she said she’d never do: devaluation, interest rate hikes, cooling the economy, salary ceilings and pension payments below inflation.  Classic orthodox recipe.
The Economy Ministry’s goal is to reach July or August, when the soy dollars end, with contained inflation, even at the cost of a greater recession and the fall in salary purchasing power.  They acknowledge in the government that if they fail in the game and inflation in these coming 5-6 months surpasses 20%, then in July or August the dollar at 8 pesos will be unsustainable and the reserves will go back to falling and pressures will rise for greater devaluation, like at the end of last year.  With the added problem of the economy being much colder and the political margin will be smaller, because in the second half of this year, the 2015 race will begin.
Cristina also said nothing about the plan to aspire to be Bolivia.  Minister Axel Kicillof promised her that with the Repsol agreement, the new INDEC price index demanded by the IMF, and the negotiation with the IMF and the Paris Club, he’d be able to smooth out the adjustment if he could manage to unblock dollar financing for Argentina.  
While it is not so appealing as comparing oneself to Australia and Canada, in this aspect, Bolivia is the model.  It issued debt last year at a rate of 4.5%, when Argentina would have paid 12% or 13%.  To compensate for this “Argentine risk”, the financing of the payment of US$5 billion to Repsol over the expropriation of YPF costs 8.75% plus a guarantee of US$1 billion in extra bonds that will have to be issued if the oil company sells the bonds at the current price of similar paper.  If Argentina were Bolivia, that purchase –in installments – would come out far cheaper.  Evo Morales’ credit card offers better discounts than Cristina’s today.
The problem of moving forward with this program without announcing it is that it will not end up recovering a very precious asset in the economy which the government lacks right now: credibility. Jorge Capitanich is the most skeptical of all: he often cites the case of Roberto Lavagna in April 2002, when he became Duhalde’s minister, and rather than announce a plan that no one would believe in, he dedicated himself to rebuilding trust with ad hoc measures, and disarm the run on the currency. But at that time there had already been a monumental adjustment with a 250% spike in the dollar, frozen wages and the collapse of consumption and employment. The economy is not traveling this wild path, nor is the government so weak.
Even so, Cristina refuses to unfurl the roadmap and sit down with union chiefs, business owners and even leaders of the opposition at a table to coordinate expectations around three key challenges in the short term. First, close on collective bargaining with a credible promise of slowing inflation. Second, cut subsidies and unfreeze rates for public services to narrow the fiscal deficit and reduce the printing of pesos. And finally, a reversal in the K-narrative, a return to the credit market in dollars, after an agreement with the Paris Club for the refinancing of close to US$ 10 billion in debt that the next administration must face.
These are all sensitive objectives in policy, and with an uncertain outcome. For example, the Abeceb consultancy estimates that cutting electrical subsidies would have a bi-monthly cost in the metropolitan area on average of 66 to 550 pesos; something unworkable to implement from one day to the next,  and which will require administrative expertise. Meanwhile, on Friday, during a seminar with economists from investment banks in New York, there was discussion over whether Argentina would access cheap credit this year or next: some said yes, because the market could, by anticipating political change, finance the transition; but others thought that the government would eventually liquidate its reserves.
The risk of addressing that agenda against the clock without revealing a plan is that, once the rain shower of soy dollars ends along with its soothing effect, the lack of credibility in the official policy will rise again. In that case, the cost will be high: more recession or more inflation with a run to the dollar. Options that no one would want to face.
La Nacion
After the Repsol agreement, YPF goes out to seek investors
It will organize a trip for more than 30 American businessmen
Tuesday, March 4, 2014
by Pablo Fernández Blanco  | LA NACION
Susan Segal is an old, well-known figure among Argentine business leaders.  She has led the Americas Society and the Council of the Americas since 2003, which are the entities that every year hold a big meeting at the Hotel Alvear –occasionally repeated in New York – which topline political leaders attend, as well as almost all the important business figures of the local market.
This ex-banker, who cultivated a close relationship with President Cristina Kirchner, is one of the first cogs in the wheel that the YPF leadership will deploy, under the guidance of Miguel Galuccio, to publicize among international investors the ease of becoming a partner in the state-run oil company after the agreement reached by the government with YPF to settle the expropriation of 51% of Repsol’s stake for US$5 billion.  
Although confirmations are still lacking, YPF wants the President and CEO of the Council, as it is nicknamed among companies, to organize the first investor trip for the company in years. The idea is that this month a group of 30 investors, among them bankers, pension fund and investment fund administrators, will depart together from Houston to Ezeiza, passing by the YPF Tower in Puerto Madero and arriving in Neuquén to observe the work of YPF in the formation of non-conventional fuels in Vaca Muerta, one of the assets of the company that oil investors are closely following.
It will be the first strong move to "sell" the company after the agreement with Repsol. It is, however, a move that Galuccio started deploying yesterday in Houston. The YPF President traveled to the oil city to participate in CERA Week, a global gathering that brings together the popes of the industry. Yesterday evening, he dined with some of his peers. In the meeting, organized by John Watson, the CEO of Chevron (who is a YPF partner in Vaca Muerta), there were Chris Finlayson (BG), Andrew Mackenzie (BHP Billiton), Steve Riney (BP), Olivier de Langavant (Total) and Martin Bachmann (Wintershall), all of them heads of their companies.
According to executives who attended the meeting, Galuccio put forth an argument: he recounted the good results in production and the strength of YPF's non-conventional reserves. He recalled that while Vaca Muerta is the most hyped of all, the company has an extensive portion of the so-called D-129, which runs underneath Chubut and Santa Cruz. It is still unexplored, and according to his judgment, it has great potential.
Last night, Galuccio participated in another dinner at which the main speaker was Emilio Lozoya, CEO of Pemex, the state oil company of Mexico. Lozoya has a personal relationship with the Argentine. And he was one of those who pushed Repsol and its President, Antonio Brufau, to continue the negotiation that led to the end of the conflict with the Spanish company.
Since he landed at YPF, in May 2012, Galuccio has insisted that the future of YPF depended on ending the dispute with Repsol peacefully. He took charge of the uncertainties until last week, but he recovered some oxygen after the announcement of the agreement. "Now, YPF will go out to the world", said an executive who works with him daily.
Production increased in January
YPF oil production recorded a sharp rise in January, according to the company. According to data from the Energy Ministry, in the first month of the year oil extraction by the company grew 9.8%, while gas climbed another 9.2%, compared with the same month of the previous year.
"YPF’s monthly oil production has been growing continuously from April 2013, while gas has grown from May of the same year, due to the strong level of investment that the company maintained over the past year, yp to six billion dollars,” said the company in a statement.
The data does not include the production by holdings acquired by Petrobras and Apache.
La Nacion
Provinces turn to the U.S. to fight against drug trafficking
Tuesday, March 4, 2014
by Martín Dinatale | LA NACION
Three years after Foreign Minister Héctor Timerman seized an American plane at Ezeiza which had arrived to train federal police in the fight against drugs, Argentina has resumed strategic collaboration contacts with the United States.  But it is doing so in an indirect manner: now it’s the governors – some with the permission of the Casa Rosada – who are signing agreements with Washington to deal with drug trafficking, a growing menace in their districts.   
The image of Timerman opening, pliers in hand, “sensitive material” from the C-17 Globemaster III, in February 2011, has been forgotten, and the anti-drug offices of the United States have resumed their collaboration with the country on training courses, exchange of secret information and mobilization tasks  in the hotter drug trafficking areas.
In recent months, at least five governors have signed collaboration agreement with offices such as the DEA, FBI, and other units of the Department of State.
Diplomatic sources and provincial officials said that, so far, Buenos Aires, Chubut, Salta, Mendoza and Santa Fe have made a rapprochement with Washington. Security Secretary Sergio Berni has also had well-oiled contacts with United States on the issue.
Kevin Sullivan, Chargé d'affaires of the Embassy of United States in Buenos Aires, confirmed the participation of his country in advisory tasks to LA NACION. "For us, it is important to continue to work with the national government and the provincial authorities, to see which strategies can be applied to deal with drug trafficking."
At the same time, the current top official at the American Embassy, since Washington has not sent its new ambassador, added: "We are maintaining open communication with both the national government and the provincial authorities".
Sullivan emphasized also that the United States "is willing to expand these channels of cooperation [in the fight against drug trafficking] if the Argentine representatives requested it.”
This means that Washington will agree to lengthen the list of governors that request collaboration and help from the United States to combat drug trafficking.
Despite Timerman, the Casa Rosada confirmed the growing level of cooperation that exists with the United States in combatting drug trafficking in Argentina.
"The episode of the American military aircraft and Timerman was now subscribed to the foreign minister himself.  From here forward, we will modify this line,” a prominent Minister who handles issues related to the fight against drugs said, honestly, to LA NACION.
This can be seen in different ways: the exchange of sensitive information, the support and training of security forces in the United States and in some cases the donation of equipment needed to confront drug trafficking gangs.
Law 26.052 allows provinces to be granted greater power in the fight against drug trafficking. So far, eight provinces have used this rule for different reasons. Most of the districts that were able to expand the powers of action for their courts and police in the fight against drug trafficking have asked for help from the United States.
For example, the Governor of Mendoza, Francisco Pérez, established an agreement so that four officials from the Directorate of Drug Crimes that he created will receive courses of instruction in Washington for the fight against drugs. "Governor Pérez is concerned about this scourge and is determined to move forward with all the cooperation that is necessary," a close associate of the Mendoza leader told LA NACION.
Elsewhere, the Governor of Santa Fe, Antonio Bonfatti, and his Security minister, Raúl Lambert, met last month in Washington with representatives from the State Department, who provided them a hard diagnosis of the growth of violence and drugs not only in Santa Fe, but also in Cordoba and Entre Rios.
This diagnosis is part of the annual report on the advance of drug trafficking in the world that the United States government released yesterday. According to qualified Washington sources, a harsher diagnosis in the Argentine chapter was expected, if compared with the last year's report.
Bonfatti not only took a pessimistic diagnosis home from Washington, but also carried the commitment of help from experts in the fight against drug trafficking. In fact, a group of Santa Fe experts in criminal investigations against drug trafficking attended FBI courses. But Santa Fe not only got the collaboration of the United States in this matter. It also received help from Israel, Colombia and Brazil.
On his recent trip to New York, Daniel Scioli also strengthened his ties with the United States administration to receive cooperation and exchange of information on drug trafficking. Thus, Buenos Aires, which has more than 60 specialized prosecutors and 100 judges to combat illicit drug trafficking, will get receve direct support from U.S. anti-drug offices.
The Governor of Chubut, Martín Buzzi, has just made arrangements with Washington to set up a series of cooperation agreements with special forces in the fight against drug trafficking and its province police would be trained in the field.
In Salta, cooperation with the DEA is quite advanced and Governor Juan Manuel Urtubey is convinced that without the help of its experts it would be impossible to combat drug trafficking. From January up to now, there were more than 60 arrests for drug trafficking in Salta, and this, Urtubey’s aides say, was due largely to foreign aid from the United States.
In the case of the Security Ministry, the situation has changed substantially in relation to the link with the United States. Minister Arturo Puricelli, and Berni, are convinced that collaboration with the United States is "necessary and key" to combat drug trafficking in the region. It is not an ideological analysis of the problem, but a factual one.
So, this sector of the Casa Rosada has left behind its period of “isolation” from Washington, which former Security Minister Nilda Garre faced at the time. It would seem that Timerman and his pliers in hand has also been left in the past, at least in the view of several governors and Kirchnerist officials.  

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