Political Risk Latin America Blog @PolRiskLatam

Argentina: ghosts of 2001 default linger

Posted in News and Articles, Political Risk by politicalrisklatam on August 11, 2011

by Jude Webber for Financial Times – Beyond Brics, August 11th, 2011.

Argentina believes it has closed the chapter on its $100bn sovereign default in 2001 after two debt swaps, in 2005 and 2010, which have restructured more than 92 per cent of the defaulted bonds.

It says the two take-it-or-leave-it offers prove its good faith in the matter, and has vowed not to negotiate or settle with the remaining “holdouts” – especially so-called “vulture” funds which are among those to have been pursuing it through US courts.

But a new avenue of litigation has been opened with a 283-page decision last week by the World Bank’s arbitration tribunal, ICSID, which has not yet been made public, that it is competent to hear a claim for more than $1bn brought by some 60,000 jilted Italian bondholders.

At a time of financial market panic and default fears in Greece, when the fine print of bond jurisdictions is under the spotlight in case bond holders need to sue to get their money back, the ICSID decision could reverberate widely.

Represented by global law firm White & Case, the Italian bondholders say Argentina is accountable under a bilateral investment protection treaty. The World Bank’s International Centre for the Settlement of Investment Disputes ruled on August 4 that it was competent to hear the case. (continue reading… )


Argentina Update: Election Outlook

Posted in Uncategorized by politicalrisklatam on July 28, 2011

by Juan Cruz Díaz for Americas Society / Council of the Americas, July 27th, 2011.

President Cristina Fernández de Kirchner continues to dominate the political realm in terms of popularity as the presidential October 23 election approaches. After her husband, ex-President Néstor Kirchner, passed away in October of 2010, her approval ratings skyrocketed and remained at a relatively high rate. The outcomes of various regional elections earlier this year also showcased her wide-reaching influence. However, recent adverse electoral results for the ruling Frente Para la Victoria (FPV) party in the city of Buenos Aires and in the province of Santa Fe—two crucial districts—signal discontent among some sectors of the electorate.

Local Elections and Their Impact on the Presidential Race

Mayor Mauricio Macri from the Propuesta Republicana (PRO) comfortably won the July 10 first round of the local elections in the city of Buenos Aires against FPV’s Senator Daniel Filmus, and will most likely win again in the runoff elections slated for July 31. In Santa Fe, Antonio Bonfatti, protégé of the Governor and Socialist Party presidential candidate Hermes Binner, won the gubernatorial elections by a small margin. The wild card of that vote was comedian Miguel Del Sel, who ran for governor as a representative of the PRO party with the support of a large sector of dissident Peronists. Though a runner up, Del Sel’s performance was considered the surprise of the day when he pulled in 35.2 percent of the ballots. Macri, who abandoned his candidacy for this year’s presidential elections, claimed this result as a personal victory, positioning himself as a candidate for president in 2015. The FPV candidate Congressman Agustin Rossi finished in a distant third place.

Opposition leaders portrayed these results as a demonstration that the current administration is not invincible, questioning the validity of opinion polls that depict an easy reelection victory for Fernández de Kirchner (frequently referred to by her initials CFK). While it is true that both Macri and Bonfatti were the expected winners in those local elections, some observers see the results as a window of opportunity for the opposition to become serious contenders for presidency. Still, the opposition remains divided between five main candidates and none poll well enough to currently be seen as a threat to the president. CFK leads all opinion polls and, in most surveys, even tops the requisite 45 percent—or 40 percent plus 10 percent difference with the second-place candidate—needed in order to win in the first round. (continue reading… )

IMF assessing quality of Argentina’s economic data reporting

Posted in News and Articles, Political Risk by politicalrisklatam on July 15, 2011

by Merco Press News, July 14th, 2011.

IMF said on Wednesday that it is assessing the quality of Argentina’s reporting on economic data based on a report presented by the fund’s management which recently visited the country member.

“Given the obligations of all member countries to provide accurate data to the IMF, on July, 13 2011, the Executive Board met to consider a report presented by Fund management on the quality of reporting by Argentina of its official data on Consumer Price Index for Greater Buenos Aires (CPI-GBA) and Gross Domestic Product (GDP)”, said the short release from the Fund’s headquarters.

The credibility of Argentina’s data, especially inflation, has been questioned ever since former President Nestor Kirchner replaced long-serving staff at the national statistics agency Indec with political appointees in 2007. Almost overnight, official data started to diverge from private sector estimates.

The IMF executive board said it welcomed a commitment by the Argentine authorities, working with IMF staff, to improve the quality of the country’s reporting of inflation and growth data and bring them into compliance with fund rules. (continue reading… )

Argentina: beggaring our neighbours

Posted in News and Articles, Political Risk by politicalrisklatam on July 14, 2011

by Judde Webber for Financial Times – Beyond Brics, July 14th, 2011.

Argentina has run into trouble before with trade tactics that often seem like knee-jerk reactions to events rather than a coherent policies.

The result is a growing reputation for protectionism, which is earning it few friends and making many enemies.

A couple of months ago, it upset its biggest trade partner, Brazil, with restrictions on Brazilian exports to which Brasilia responded by limiting car imports from Argentina with the result that 40,000 Argentine vehicles are still blocked at customs, according to Miguel Ponce of the Argentine Chamber of Importers.

Now, the government is planning to extend to importers of almost all finished goods a 1:1 policy already in place in the car, agricultural machinery, shoe and toy sectors, whereby imports must now be matched dollar for dollar by exports.

As has become customary, Argentina has enacted the measures without committing them to paper, something Ponce says underlines their discretionary, arbitrary nature. (continue reading… )

Buenos Aires’ Mayor: Déjà vu all over again

Posted in News and Articles, Political Risk by politicalrisklatam on July 13, 2011

by The Economist – Americas View, July 12th, 2011.

On the thin roster of candidates hoping to run against Cristina Fernández de Kirchner in her bid for re-election as Argentina’s president this year, one of the most promising was Mauricio Macri. The son of a wealthy businessman and the former president of Boca Juniors, the country’s most popular football club, Mr Macri was reasonably well-known nationwide even before he was elected mayor of Buenos Aires in 2007. The city’s economy has prospered during his time in office, and he was able to establish a new municipal police force, ending the city’s dependence on federal officers. With his conservative ally, Francisco de Narváez, barred from running for president because he was born abroad to foreign parents, Mr Macri looked like the right’s best shot to take on Ms Fernández.

To the disappointment of his conservative backers, however, Mr Macri has always been politically cautious. In keeping with his family’s business tradition, he is thought to enjoy governing far more than campaigning. Moreover, PRO, the conservative alliance he co-founded in 2005, has made few inroads outside the Buenos Aires area. And Ms Fernández’s popularity has soared since Néstor Kirchner, her husband and predecessor as president, died of a heart attack last October. Rather than offering himself up as a sacrificial lamb to Ms Fernández, Mr Macri announced in May that he would run for a second term as mayor instead.

The president was in no mood to concede continued control of the capital to Mr Macri, with whom she has repeatedly sparred in office, often hindering co-operation between the federal and municipal governments. Just as in 2007, she tapped Daniel Filmus, a former education minister, to run for mayor. Mr Filmus is one of the most moderate and professionally accomplished members of Ms Fernández’s entourage, making him a good fit for the capital’s educated and cosmopolitan electorate. Mr Filmus hammered Mr Macri for abusing his power, noting that the head of the city’s new police force, Jorge Palacios, is being prosecuted for illegal phone tapping. He also criticised the mayor for failing to reduce crime and poverty, and for delays in the expansion of the city’s underground train system. (continue reading… )

Mayor Macri wins in Buenos Aires; confirms he’s the main opponent to the Kirchner plans

Posted in News and Articles, Political Risk by politicalrisklatam on July 11, 2011

by Merco Press, July 11th, 2011.

Buenos Aires City Mayor Mauricio Macri took a 20-point lead on Kirchnerite mayoral candidate Daniel Filmus on Sunday’s election but none of the candidates managed to obtain more than 50% of the votes.

Just like in 2007, both candidates will once again run against each other in a second round next July 31.

With 100% of the votes recounted, incumbent conservative Mayor Mauricio Macri reached a 47.1% of the votes, taking a 20-point lead on Daniel Filmus, (hand picked by President Cristina Fernandez de Kirchner) who obtained a 27.8% of the votes.

In the third place was Proyecto Sur’s candidate Fernando “Pino” Solanas with a 12.97% of the vote. The showings of the rest of the candidates were below 2.5% of votes cast.

The results confirm Mayor Macri remains the main threat to the Kirchner ‘dynasty’ plans in 2015 in spite of having stepped down from competing for the presidency this year, preferring to concentrate in Argentina’s capital.

Mayor Macri came on stage minutes after 10 pm and thanked the population of Buenos Aires for “trusting him once more.” He also spoke to those who didn’t vote for him and assured that “he would not let their differences come between them”. (continue reading… )

Argentina: China wants beefsteak

Posted in News and Articles, Political Risk by politicalrisklatam on July 8, 2011

by Jude Webber for Financial Times – Beyond Brics, July 7th, 2011.

China has given the green light to imports of Argentine beef – the latest in a string of Argentine agricultural products (corn, wine, biofuels and barley have also been approved) to be granted entry to giant Asian market.

As beyondbrics has reported, Argentina is looking to export both top-of-the-range beef and offal to China.

The agriculture ministry could not confirm how many exporters have been approved, but it says the minister, Julián Domínguez, will be travelling to China next month to seek new deals and to increase the number of approved exporters – which suggests it currently is not very high. Some media reports, like this one, suggest it could be 20.

No information was immediately available on the website of the General Administration of Quality, Supervision, Inspection and Quarantine of the People’s Republic of China (AQSIQ)  (continue reading… )

Argentina News Alert – New Law Promoting Public Production of Medications in Argentina

Posted in News and Articles, Political Risk by politicalrisklatam on June 30, 2011

by Cefeidas Group, June 30th, 2011.

The National Senate unanimously sanctioned a Law that allows for the public production of medications and funding to public medical research laboratories on June 29. The law had also been passed unanimously by the House back in March. The Law declares that “the public research and production of medicine, raw materials for medicine, vaccines and medical products” is of national interest and an “essential social good”. The project was first proposed in 2002 by National Representative Eduardo Macaluse (ARI).

The attempt to promote public production of medicine and medical tools is not new, as the project contains similar traits of a decree signed by late ex-President Néstor Kirchner. Also, a resolution passed in 2008 called for public production of medicine, but it was not enforced by the Ministry of Health.

The objective of the Law is to promote the accessibility to medicine, vaccinations and medical products as well as propel scientific and technical development through public laboratories and public production. The National Health Ministry is to enforce the law and ensure its application in national, provincial and municipal labs as well as those of the Armed Forces and public universities (there are 39 public labs that conduct pharmaceutical research across 13 provinces across the country).

The public production and distribution of medications is to follow two lines of development. Firstly, Plan Remediar (a program funded by the IDB by which basic medications are supplied to “Centers of Primary Care” nationwide), will base their supplies on drugs produced in public labs. Secondly, public universities will provide the forum for the research of drugs (especially new and costly) with government funding. The project states that the National Medicine, Nutrition and Technologies Administration (ANMAT), a regulating entity for all medical labs and production plants in Argentina, must also inspect and evaluate public labs to ensure good production practices.

The Law was backed by President Fernández de Kirchner and senators of the Frente Para la Victoria (FPV) Party, including Eric Calcagno, Liliana Fellner, Lucía Corpacci and Horacio Lores. Various opposition members also expressed unwavering support, such as the Socialist Rubén Giustiniani, president of the UCR bloc Gerardo Morales, and head of the Health and Sports Committee José Cano (UCR). Senator Cano stated that the project is a great impulse in optimizing human resources and lowering costs. The Health and Human Rights Department and its head Claudio Capuano of the Universidad de Buenos Aires also endorsed the Law, along with the National Network of Public Laboratories and the Group of State Policy Administration in Science and Technology.

Opposition to the new Law has kept relatively quiet and resistance from pharmaceutical firms and institutions, a low-profile (a smart move, as opposition to the issue would generate a large social backlash).

Argentina joins a few Latin American countries in making their medications production public, among them Cuba, México and Brazil. Brazil is considered the most developed model and not only produces common medications but also conducts research for the development of the treatment of HIV, Parkinsons, Crohn disease and arthritis. The Brazilian system is a combined effort by public and private labs and coordination by the government. The Law in Argentina does not address the relationship the public labs will have with private pharmaceutical firms, and it is unlikely that there be a coordinated effort between the two sectors.

For more information, please contact Cefeidas Group (info@cefeidas.com)

Download the full PDF

Argentina risk: The race begins – VIDEO

Posted in News and Articles, Political Risk by politicalrisklatam on June 29, 2011

by The Economist Intelligence Unit, June 23rd, 2011.

After months of speculation, Cristina Fernández de Kirchner, Argentina’s president, has finally confirmed that she will run for re-election on October 23rd. With her popularity at its highest level in four years, she looks in a strong position to win another term.

Fiona Mackie, Latin America analyst, talks to Coralie Zacchino about the upcoming race for the presidency.

Click here to open in new window

Approx running time: 8 mins


1/ Now that it’s official, how will Ms Fernández go about her re-election campaign?

2/ How strong is the opposition, coming into the presidential race?

3/ Ricardo Alfonsín stands out as the most credible challenger to Ms Fernández. What will he need to do to beat the incumbent?

4/ How likely is it that Ms Fernández will be re-elected, and what would this mean for Argentina?

5/ What would be the implications of a win by an opposition candidate?

China and Argentina: warming up cultural ties

Posted in News and Articles, Political Risk by politicalrisklatam on June 29, 2011

by Jude Webber for Financial Times – Beyond Brics, June 29th, 2011.0

A long-term agricultural project between China and Argentina could sow the seed of deeper cultural ties between the two key trading partners. That is the idea of a pilot language scheme being launched as a $1.5bn deal kicks off between the province of Río Negro and China’s top crop producer, Beidahuang, to irrigate unproductive valleys in the Patagonian province and produce corn, soya, wheat, fruit and other crops to be shipped back to China.

“We see a cultural exchange between Argentina and China as a way to establish the base for lasting trade,” Oscar Gómez, one of the developers of the agricultural project, told beyondbrics. “We want this to be sustainable over the long term.”

China, hungry for resources to feed its booming economy, has cranked up investment in Argentina since last year, becoming a major player in the energy sector. It already has a host of other investments, including mining, railway and cellphone production, and is widely expected to eye the banking market soon via a purchase of the local assets of South Africa’s Standard Bank. (continue reading… )