April 22, 2015
Today, Argentine President Cristina Fernández de Kirchner will kick off her state visit to Russia with a meeting of members of the Russian and Argentine business communities in Moscow. Fernández de Kirchner and Russian President Vladimir Putin are scheduled to meet on Thursday to review and follow up on a series of trade, energy and military deals that were signed in July 2014, when Putin visited Argentina.
Fernández de Kirchner landed in Russia on Tuesday. Members of her delegation include Foreign Minister Héctor Timerman, Legal and Technical Secretary Carlos Zannini, Defense Minister Agustín Ross, and other government officials. The president recently tweeted, “We are meeting with CEOs of Russian companies that want to invest in our country.”
Indeed, Argentina's National Commission for Atomic Energy (Comisión Nacional De Energía Atómica) signed a memorandum of understanding (MOU) with Rusatom on the sidelines of the Argentine-Russian business meeting headed by Fernández de Kirchner today. The MOU states that Rusatom’s subsidiary, TVEL, a nuclear fuel manufacturer, will supply nuclear fuel to scientific and power-generating reactors in Argentina.
Monday Memo: Colombia Peace Talks — Mercosur and Pacific Alliance — Uruguay Elections — Walmart in Panama — Goldcorp in Argentina
November 24, 2014
This week's likely top stories: Colombia to resume peace talks with FARC once hostages are released; Mercosur and Pacific Alliance convene to discuss regional cooperation; Uruguayans return to polls on Sunday to elect president; Panama courts Walmart for its regional distribution center; Goldcorp to inaugurate Cerro Negro mine in Argentina.
Hostages Released and Peace Talks to be Resumed: Peace talks between the Colombian government and the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia- FARC) will resume after the two parties reached an agreement to free hostages kidnapped by the FARC over a week ago. The FARC will release a total of five hostages, including General Ruben Dario Alzate Mora, the highest-ranking military captive ever taken by the FARC. The Colombian delegation will return to Havana and resume peace talks as soon as the captives are liberated and the humanitarian operations by the Red Cross to return the captives home are underway. Colombian President Juan Manuel Santos ordered the suspension of the peace talks on November 17, just after the kidnappings took place.
MERCOSUR and Pacific Alliance Meet in Santiago: Chilean President Michelle Bachelet inaugurated a meeting today in Santiago between Latin America’s prominent regional integration blocs, the Alianza del Pacífico (Pacific Alliance)—comprising Chile, Mexico, Colombia, and Peru—and the Mercado Común del Sur (Southern Common Market—Mercosur)—which represents Brazil, Argentina, Uruguay, Paraguay, and Venezuela. The meeting, a follow up to Chilean Foreign Relations Minister Heraldo Muñoz’s proposal last February to design a formal trade alliance between the entities, brings together representatives from both sides, including trade officials, academics, union members, and business leaders, in order to dialogue about opportunities for cooperation on climate change, infrastructural development, public health, tourism, and the export of manufactured goods. In her opening statement, Bachelet said, “We are hoping that this historic meeting sets us on our first steps down the shared path of developing our Latin America and each one of our countries.”
Uruguayans Vote for President on Sunday: Uruguayan voters will return to the polls this Sunday, November 30, to elect the country’s next president in a runoff vote. Former president and Frente Amplio (Broad Front—FA) candidate Tabaré Vázquez is almost assured a victory after a November 12 Cifra poll showed that 52 percent of eligible voters plan to elect Vázquez, compared with the 35 percent of voters who plan to vote for challenger Luis Lacalle Pou of the Partido Nacional (National Party—PN). Other polls have made similar predictions, and Lacalle Pou recently said that he fully expects to be defeated by Vázquez in the second round. Vázquez just missed an outright victory after he won 47.8 percent of votes during Uruguay’s first round election on October 26, falling short of the 50 percent plus one required to avoid a runoff. Vázquez served as Uruguay’s president from 2005 to 2010.
Panama Courts Walmart to Host Distribution Center: Panamanian business leaders have asked U.S. multinational Walmart to build a Latin American distribution center in Panama’s free trade zone, the Zona Libre de Colón (ZLC). ZLC Manager Surse Pierpoint said that Panamanian President Juan Carlos Varela has sent a letter to Walmart executives asking them to consider the proposal, which Pierpoint said will “elevate the status and image of the ZLC” and attract additional companies to Panama. Pierpoint and other business leaders, including the head of the Consejo Empresarial Logístico (Business Logistics Council) and the Cámara Marítima (Maritime Chamber) are seeking a meeting with Walmart executives, expected to take place in December or January, to pitch the proposal.
Goldcorp to Open New Mines in Argentina: Today, the Argentinian Secretary of Mining, Jorge Mayoral, announced in a memo following an on-site meeting with Goldcorp’s Vice President and COO of Central and South America, Eduardo Villacorta, that the company’s Cerro Negro mine will be inaugurated in February 2015. In 2010, Canadian gold giant Goldcorp acquired the Cerro Negro mine, located in the Santa Cruz province of Argentina, and invested $1.67 million in its reconstruction. Cerro Negro is expected to forge between 130,000 and 180,000 ounces of gold before the end of 2014, and once fully operational, the mine will maintain a production capacity of 4,000 tons per day of concerted gold and silver throughout its 23 year lifespan. Cerro Negro marks the Vancouver-based miner’s second Argentinian venture, after its 37.5 percent share of the Alumbrera copper mine in Catamarca.
September 19, 2014
As the shale gas revolution sweeps across Latin America, many governments are beginning to see the industry—and the significant influx of foreign investment—as a quick stimulus to their sluggish economies. Argentina is no exception—with an estimated 16.2 billion barrels of shale oil and 308 trillion cubic feet (TCF) of shale gas in the Vaca Muerta shale formation, the government aims to capitalize on their newfound resource wealth.
Although foreign investment may help Argentina’s fiscal woes in the short term, it is by no means a panacea for the country’s economic problems, and could in fact encourage poor financial practices.
Efforts by the Fernández de Kirchner administration to attract foreign investment have begun to bear fruit, with various international oil companies and investment firms increasing their stake in Vaca Muerta projects. Argentina’s national oil company, Yacimientos Petrolíferos Fiscales (Treasury Petroleum Fields—YPF), has also made a series of joint ventures with oil companies that will provide the state-owned energy company with much-needed cash and technical expertise to develop unconventional energy projects.
In addition to an infusion of financial capital, both YPF and international oil companies have been lobbying the Argentine government to create a more favorable legal framework for investors interested in shale oil and natural gas projects. The administration has undertaken efforts to rewrite the 1967 hydrocarbons law, which would simplify taxes, royalties, and licenses and effectively reaffirm Buenos Aires’ control over natural resources. Such a law would be a direct rebuke of the 1994 constitutional amendment that recognized subsoil hydrocarbon resources as property of the provinces where they are located.
August 19, 2014
Three members of Pope Francis’ family were killed on a provincial road between Rosario and Cordoba in Argentina this morning. Emanuel Bergoglio, the pontiff’s nephew, remains in the hospital in critical condition after surviving the traffic collision that claimed the lives of his wife and two small children.
The family was traveling to Buenos Aires when they were struck by a truck. Pope Francis just finished a five-day tour of South Korea where he appealed for unification of the Korean peninsula and humanitarian assistance for the economically beleaguered North Korea. The pope, who joked about his own mortality and tenure as the leader of the Catholic Church on Monday, was ”deeply pained” by the news of the crash and asked that believers join him in prayer when informed of the deaths, said Vatican spokesman Reverend Federico Lomabrdi.
Argentina registered 12.6 traffic deaths per 100,000 people in 2010, putting it slightly behind the Chile and United States in traffic safety.
August 11, 2014
El “default” de Argentina tiene tantas lecturas como tenedores de bonos argentinos hay en EEUU. La apreciación sobre si el país está o no en cesación de pagos ha extendido el debate económico al campo político, en donde el concepto “soberanía” se ha agitado de manera preponderante por el gobierno de Cristina Fernández de Kirchner.
Para las calificadoras de riesgo Standard & Poor’s, Fitch y Moody’s, Argentina entró en un default selectivo el 31 de julio tras no cumplir el pago a los llamados “fondos buitres,”ordenado por un fallo del juez norteamericano Thomas Griesa. Sin embargo, para la Comisión Económica para América Latina y el Caribe (CEPAL), el país todavía se encuentra en un litigio inédito en la Corte Suprema de EEUU, y la Asociación Internacional de Derivados y Swaps (ISDA) revertió su apreciación inicial de default para decir que no hubo moratoria en el pago de la deuda–al fin y al cabo, el dinero del 93% de los bonistas está en las cuentas del Bank of New York Mellon.
June 17, 2014
In a victory for the New York-based hedge fund, Elliot Management Corp., the U.S. Supreme Court decided against hearing an appeal from Argentina on Monday, meaning that the South American nation will have to meet its debt obligations on defaulted notes from 2001 in full, despite having restructured its debt.
The Argentine government has until June 30 to reach a settlement before the payment is due to all creditors who refused to accept the country’s debt restructuring, including Elliot Management Corp., at a cost of $15 billion. The high court’s decision not to hear the case is the culmination of a series of restructurings and settlements that took place after Argentina defaulted on $81 billion of liabilities in 2001.
Argentina has 25 days to request a rehearing from the Supreme Court, an outcome that experts deem unlikely. As the Argentine stock market plummeted, President Cristina Fernández de Kirchner addressed the nation Monday evening stating that the country would only make payments to holders of restructured debt, defying a lower U.S. court’s ruling.
June 6, 2014
Yesterday, Federal judge Ariel Lijo changed Argentine Vice President Amado Boudou’s court date from July 15 to June 9. Boudou will face charges of corruption, illegal negotiations as a public employee, and illegal profiteering related to his purchase of the Ciccone Calcográfica printing company with a partner in 2010. Boudou allegedly planned to use the company to print bank notes and official documentation. Given that he was economic minister at the time, the acquisition would have been illegal according to Argentine law.
The vice president maintains his innocence and has challenged the judge to have a televised trial. On Wednesday his defense team requested that the summons be annulled, claiming that the allegations were based on “false affirmations, lacking legal, factual and evidential substance.”
Once seen as a possible successor to President Cristina Fernández de Kirchner, Boudou met yesterday with the president, who after months of maintaining her distance, has expressed her support for the defendant and ordered him to accept the summons.
He has since cancelled a trip planned for next week to attend the Architecture Biennial in Venice, Italy. In a strange coincidence, the mayor of Venice, Giorgio Orsoni, was arrested yesterday along with 34 others on charges of bribery and corruption.
April 25, 2014
The lower house of Argentina’s congress agreed to pay Spanish oil company Repsol $5 billion in bonds in compensation for its expropriation of the company’s 51 percent share of Argentine oil company Yacimientos Petrolíferos Fiscales (Treasury Petroleum Fields—YPF). After YPF was nationalized in 2012, Repsol’s share in the company was seized and reduced to 12 percent without any compensation. The settlement had been pending since the company’s expropriation.
The settlement with Repsol is essential in order to attract long-term investors to Argentina’s Vaca Muerta shale deposit in the Patagonia region, potentially one of the world’s largest deposits of natural gas. Since Repsol’s expropriation, YPF has had difficulty attracting partners to the project, which would be a crucial boost to Argentina’s struggling economy, currently dependent on fuel imports.
The settlement is less than Repsol’s original demand of $10.5 billion. The dollar bond payment—which had been previously approved by the senate—will mature between 2017 and 2033, and guarantees a minimum market value of $4.67 billion. If the market value of the bonds does not amount to the minimum, the Argentine government must pay an additional $1 billion in bonds.
April 21, 2014
This week’s likely top stories: María Mercedes Maldonado becomes Bogotá’s new mayor; the U.S. Supreme Court hears arguments in the Republic of Argentina v. NML Capital case; the deadline passes to regulate illegal mining in Peru; rallies in Venezuela turn violent; Gabriel García Márquez’ memorial service is held in Mexico City.
Santos Names Interim Mayor for Bogotá: Colombian President Juan Manuel Santos named María Mercedes Maldonado the interim mayor of Bogotá on Monday, weeks after former Mayor Gustavo Petro was officially removed from his post in March. Petro’s removal by Inspector General Alejandro Ordóñez—on the grounds that Petro had mismanaged an overhaul of the city’s garbage collection system—was accompanied by a wave of protests and lawsuits, but the decision was ultimately approved by Santos. Maldonado, a lawyer and professor who has worked in both the public and private sector, was secretary of planning for six months in Petro’s administration.
Argentine Debt Case Reaches U.S. Supreme Court: The U.S. Supreme Court will hear oral arguments Monday in Republic of Argentina v. NML Capital, the case that pits the Argentine government against U.S.-based holdout creditor NML Capital, which is attempting to enforce a $1.4 billion judgment against Argentina. To collect the judgment, NML must be able to enforce subpoenas against Bank of America Corp. and Banco de la Nación Argentina to access Argentina’s non-U.S. assets. NML Capital won the right to subpoena the banks in an August 2012 decision by the 2nd U.S. Circuit Court, but the U.S. government has sided with Argentina in arguing that the ruling violates the Foreign Sovereign Immunities Act by forcing a sovereign national to reveal assets held outside the U.S.
Deadline Passes for Illegal Gold Miners in Peru: Saturday marked the deadline for illegal gold miners in Peru to legalize their status as part of a government effort to eradicate illegal mining in the country. Currently, some 40,000 illegal gold miners are active in the southeastern part of the country, where they have clashed with police and blocked highways to protest government efforts to crack down on their livelihood. Illegally mined gold accounts for some 20 percent of Peru’s gold exports and the trade has serious environmental, social and economic consequences, but miners say that the government has offered few alternatives to the lucrative trade, and that the actual process of registering with the government through the national tax agency was overly burdensome.
Violence Continues in Venezuela: A rally on Easter Sunday in Caracas took a violent turn as protesters against the government of President Nicolás Maduro clashed with security forces. Troops used tear gas and water cannons against demonstrators, who burned effigies of Maduro in the street and set up barricades in the district of Chacao, which they defended with homemade bombs. Supporters of the government also protested and burned effigies of opposition leader Henrique Capriles. Maduro completes his first year as Venezuela’s president this week, while more than 40 people have died in protests that began on February 12.
Memorial Service for García Márquez: Colombian President Juan Manuel Santos and Mexican President Enrique Peña Nieto will attend a public memorial service on Monday for the Nobel Prize-winning Colombian literary icon Gabriel García Márquez, who died of a lung infection last Thursday at the age of 87. The service will be held in Mexico City, where the author spent his final days, though his final resting place is not yet known. García Márquez spent much of his adult life in Mexico. The Colombian government declared three days of national mourning for the author, who won the Nobel Prize for literature in 1982.
April 11, 2014
Parts of Argentina were paralyzed on Thursday after the country's biggest unions shut down transportation and blocked entrances to Buenos Aires. The unions are staging a 24-hour strike to protest rising inflation and cuts to government subsidies, and are currently negotiating wage increases. Industrial unions—including metal and oil workers allied with President Cristina Fernández de Kirchner—did not participate in the strike.
Hugo Moyano, leader of the Confederación General del Trabajo de la República Argentina (General Confederation of Labor of Argentina—CGT) led the 24-hour strike, which included bringing transportation to a near stop in the capital city, and shutting down many businesses and public schools.
This is the second strike Moyano has organized against President Kirchner since she disregarded his union's demands for higher salaries and better representation in 2011. The first strike Moyano staged against President Kirchner took place in November 2012 and called for tax cuts and pay increases.
After years of spending on social programs and subsidies, Kirchner's government is facing high inflation, forcing the administration to devalue the Argentine peso and reduce subsidies for gas and water by 20 percent. In February, economists estimated that Argentina's inflation rate had risen to 34.9 percent from the same period last year. According to a March 29-April 3 Management & Fit survey, President Kirchner's approval rating fell to 25.9 percent in April of this year.