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Vulture Funds: Judge Griesa Rejects Stay, Orders ‘Continuous’ Dialogue

The lawyers representing Argentina arrive at the court of Judge Griesa for a hearing (photo: AFP/Don Emmert/Télam/dsl)

The lawyers representing Argentina arrive at the court of Judge Griesa for a hearing (photo: AFP/Don Emmert/Télam/dsl)

Judge Thomas Griesa today rejected another appeal for a stay by Argentina as the country seeks to avoid falling into default in the ongoing dispute over debt payments to holdouts, led by vulture funds.

At a hearing with banks and lawyers in New York, Griesa ordered both sides engage to “work “continuously” to reach a settlement before 30th July, the deadline to pay holders of restructured bonds.

The judge determined that a stay, which would allow Argentina to meet its obligations to those bondholders while continuing to negotiate with the holdouts, was not necessary for an agreement to be reached before the end of the month. Last month Griesa blocked the US$539mn payment in question after Argentina deposited the funds in the Bank of New York Mellon.

Daniel Pollack, the special master appointed by Griesa to mediate the dialogue, called another meeting for tomorrow morning to try and break the deadlock. At today’s hearing, however, Argentine lawyers said that this would be “impossible” without the stay.

Rejecting this argument, Griesa again adopted a tough tone with the Argentine representatives, criticising what he called the government’s “incendiary” rhetoric. In recent days and weeks, both side have been engaged in a public relations battle over the case, including several full-page ads in major newspapers.

Yesterday, the government issued a another statement supporting its application for a stay, which is based on concerns that paying the US$1.5bn to the vulture funds – as ordered by Griesa in November 2012 – would trigger a landslide of other claims that could amount to between US$120bn and US$500bn, far beyond the country’s payment capacity.

This is based on the Right Upon Future Offers (RUFO) clause that was included in the debt restructurings of 2005 and 2010, to which over 92% of bondholders subscribed.

The RUFO clause, which expires at the end of this year, prevents the government from voluntarily making a better offer to that concluded in the restructuring. However, the holdouts, led by vulture fund NMP Capital, say this is not an issue because the US court ruling, which was upheld several times in appeals courts, means the payment is not voluntary.

Judge Griesa called for “sensible steps” to reach a settlement and avoid an Argentine default, which he said would be “most unfortunate.”

Posted in News From Argentina, Round Ups Argentina2 Comments

Government Regulates State Production of Medicines

Assorted pills (photo via Wikipedia)

Assorted pills (photo via Wikipedia)

A presidential decree issued in the Official Gazette yesterday laid out the specific regulations for the state production of medicines. The move will bring into effect a law sanctioned by Congress in 2011.

According to law 26.688 on public health, the investigation and production of medicines, medical equipment and vaccines is an issue of national interest. The bill was designed to make medicines more accessible to the public, as well as encourage scientific development in state-owned laboratories.

Yesterday’s decree determined that the state would prioritise the production of “essential medicines”, as defined by the World Health Organisation (WHO). It also stipulated the the Federal Health Board (Cofesa) and Health Ministry would collaborate to determine the needs of the population and thus control production.

“The regulation considers medicines as a social good and strengthens the country’s healthcare sovereignty,” Claudio Capuano, coordinator of the free public health and human rights course at the University of Buenos Aires told Clarín newspaper. “Improved access [to medicine] guarantees the right to healthcare.

The decree was published just weeks after the government forced pharmaceutical companies to return prices to their 7th May levels and freeze them for 60 days (until 24th August) amid concerns over the rising costs of medicinal drugs. The resolution also demanded that the companies guarantee the continued supply of medicines

Posted in News From Argentina, Round Ups Argentina0 Comments

The BRICS Bank and China’s Increasing Clout in Latin America

The BRICS Bank and China’s Increasing Clout in Latin America

Last week, Brazil, Russia, India, China, and South Africa (the ‘BRICS’) approved the creation of a new development bank during a two-day summit in Fortaleza.

BRICS leaders in Fortaleza (Photo courtesy of MRE Brasil)

BRICS leaders in Fortaleza (Photo courtesy of MRE Brasil)

The BRICS Bank will fund infrastructure projects in developing countries; the goal is to lend money at lower rates and with fewer preconditions than the International Monetary Fund (IMF).

The five nations also agreed on the creation of a Contingent Reserve Arrangement with US$100bn initially. China will contribute the most with US$41bn. Brazil, Russia and India will put up US$18bn each, while South Africa will give US$5bn.

A New International Financial System

The creation of the BRICS Development Bank is a concrete step towards a new international financial system, in which emerging markets clamour for a bigger say.

It could even be hailed as the birth of a structure comparable to what was created at Bretton Woods in 1944, when the framework to establish the IMF and IBRD – today part of the World Bank group – was agreed upon.

The BRICS gather 43% of the world population and 21% of the planet’s gross domestic product. They have combined foreign reserves of about US$4.4 trillion. The total trade within the bloc stands at US$6.14 trillion—nearly 17% of the world’s total.

By creating an alternative to existing institutions, the BRICS will offer a counterweight to the United States’ tightly-held grip of the global financial system.

Each BRICS member was compelled, at some point, to make budget cuts so as to meet the strict conditions to qualify for IMF loans. China’s president Xi Jinping thus contended that, with the new bank, the BRICS are improving global economic governance and promoting the democratisation of international relations.

“We need to adjust our economic structure, achieve development of better quality, build closer economic partnership, boost the building of an open world economy and establish a global development partnership,” Xi said during the summit.

The BRICS account for over 40% of the world's population and 20% of global GDP.

The BRICS account for over 40% of the world’s population and 20% of global GDP.

Under China’s helm?

Aside from challenging the existing economic setup, the new bank also offers China an opportunity to extend its own global influence.

Despite Brazilian president Dilma Rousseff’s assertion last week that: “I don’t believe the format of the new BRICS bank will promote a new hegemony,” the Development Bank is emblematic of Beijing’s increasing clout in the world — and especially in Latin America.

The Fortaleza Declaration set out that Shanghai will be the headquarters of the new bank. This move is expected to bolster the city’s bid to become an international financial center by 2020.

Notwithstanding that China’s economy has slowed in recent years, it remains the world’s second economy and the main engine of growth. In fact, China’s economy is larger than that of all the other BRICS combined.

The timing of the BRICS summit is significant too. Xi has embarked on a Latin American tour until 23rd July to consolidate China’s relations with key allies like Venezuela, Cuba, and Argentina – all have shunned Western international financial organisations.

On Friday, Xi and Argentina’s president Cristina Fernández de Kirchner inked 19 agreements related to infrastructure, agriculture, finance trade and cooperation, while the Chinese leader is now in Venezuela.

The United Nations’ Economic Commission for Latin America and the Caribbean expects China to become the region’s second largest trade partner by 2015. The report also forecasts that China will buy more than 19% of the region’s total exports in 2020, up from about 8% in 2009.

China interests include securing diversified sources of commodity imports in order to feed 1.3 billion mouths and soothe its massive demand for growth. In this regard, Latin America represents a key supplier of natural resources – soybeans from Argentina, energy from Venezuela for instance – for the world’s second-largest economy.

Bonding with “Pariah” States

Chinese banks already offer an interesting alternative to Latin American states deemed pariahs by international financial organisms because they refuse to bow to creditors. The establishment of the BRICS Development Bank could further strengthen China’s role as a strategic source of financing for less creditworthy nations in the region.

For instance, since the last decade, Argentina has shifted its foreign policy from dependence to the United States to a progressive rapprochement with China and Russia.

Since 2001, international financial markets have shunned Buenos Aires for defaulting on about $100bn of debt. This left the South American country starved of foreign capital from developed nations, allowing China to step in.

“South America, in general, and Argentina in particular, are examples – with the developed world affected by the worst crisis of capitalism – of how it is possible, with policies opposite to those of the neo-liberal block, to advance development processes with economic growth and social inclusion,” explains Fernanda Vallejos, adviser to Argentina’s Ministry of Economy and Finance.

“The BRICS Development Bank will allow the financing of major infrastructure projects that will consolidate the development processes underway, detached from the functioning of traditional organisms,” she says.

Presidents Cristina Fernández de Kirchner and Xi Jinping signs a series of agreements in Buenos Aires (Photo: Maximiliano Luna/Télam/)

Presidents Cristina Fernández de Kirchner and Xi Jinping signs a series of agreements in Buenos Aires (Photo: Maximiliano Luna/Télam/)

China has also contributed to diversifying Venezuela’s international economic relations. Whilst the United States has considered Venezuela a significant challenge to its interests in the Americas, Beijing has become Caracas’ second commercial partner. In March 2014, China agreed to lend Venezuela US$5bn, the third tranche of the China-Venezuela Fund.

Figures from the 2013 China-Latin America Finance Database set out that China lent almost US$100 billion to Latin America between 2005 and 2013. More than half of it was directed to Venezuela.

Similarly, the United States remains deeply distrustful of Cuba since Fidel Castro marched victoriously into Havana in 1959. The island has been absent from leading international financial institutions, like the IMF and the World Bank, regarded as agents of “capitalist imperialism”.

Yet, China agreed in 2004 to give Cuba US$400 million in long-term loans. And since the 1990s, China has invested US$1.3 billion in the island.

A Matter of Time

If China is seeking to expand its influence in Latin America and revive national economies through the BRICS bank, it will have to be patient. The project is currently pending legislative approval in each member country, and this process could take several years.

“The influence of the BRICs will be long term, not short term,” says David Thomas, a BRIC expert based in Australia.

“It will take five years before we will see meaningful outcomes, but in the longer term we will see enormous shifts in capital flows, economic influence and power, and the emergence of the four BRIC countries (and Africa) as the new geo-political leaders,” he explains.

Posted in Analysis, Current Affairs, News From Latin America, TOP STORY1 Comment

Renewed Demands for Justice on 20th Anniversary of AMIA Bombing

The aftermath of the AMIA bombing in 1994 (Photo courtesy of Wikipedia).

The aftermath of the AMIA bombing in 1994 (Photo courtesy of Wikipedia).

There were renewed calls for justice at a commemorative act held this morning to mark the 20th anniversary of the Argentina Israelite Mutual Association (AMIA) bombing, which killed 85 people and injured hundreds more.

Speakers at the event also criticised the Memorandum of Understanding (MoU) signed last year by the government with Iran, where several of the suspected perpetrators come from. The MoU was designed to move the case forward with a bilateral investigation, a move heavily criticised by both AMIA and Delegation of Israelite Associations (DAIA).

“AMIA has said the agreement with Iran is unconstitutional,” said AMIA vice president, Ralph Thomas Saieg. “We had to go to the courts because Congress ignored our pleas and approved the treaty as a law in an express session.”

In May, a federal judge upheld the claim that the agreement was unconstitutional, though the government has since appealed against this ruling. “We want Congress to repeal the agreement,” added Saieg today.

Luis Czyzewski, whose daughter Paola was killed in the explosion, also spoke today on behalf the victims’ relatives. “Our dead demand justice, not agreements,” he said.

At present, nobody has been detained in the investigation into the terrorist act. A secondary investigation into an alleged cover up following the bombing, in which ex president Carlos Menem is implicated, is still held up with appeals and is expected to reach trial in 2015 at the earliest.

On 18th July 1994, a van packed with 275kg of explosives blew up about five metres in front of the AMIA centre on Pasteur 633, causing the building to collapse. The blast killed 85 people and injured some 300 others.

Posted in News From Argentina, Round Ups Argentina0 Comments

Brazil: BRICS Leaders Sign Accord to Create Development Bank

BRICS leaders in Fortaleza (Photo courtesy of MRE Brasil)

BRICS leaders in Fortaleza (Photo courtesy of MRE Brasil)

The leaders of Brazil, Russia, India, China and South Africa – countries that make up the BRICS group – today signed an accord to create a new development bank and reserve fund at the annual summit in Fortaleza, Brazil.

According to the declaration issued by the leaders, the new development bank will be aimed at “mobilising resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies.”

The bank will have an initial authorised capital of US$100bn, with the first US$50bn of this to be fronted equally by the founding states. It will be headquartered in Shanghai, with the key posts to be held by nationals of each of the five countries.

The new institution will offer a financing alternative to US-based institutions such as the IMF and World Bank. The Fortaleza declaration also noted the group’s “disappointment and serious concerns” with the non-implementation of 2010 reforms at the IMF, saying it harmed the fund’s “legitimacy, credibility and effectiveness.”

“The BRICS Bank will be one of the major multilateral development finance institutions in this world,” said Russian President Vladimir Putin, according to Russia Today. “We want the global system to be more fair and equitative,” added Brazilian president Dilma Rousseff.

The leaders also signed a treaty to establish a US$100bn Contingent Reserve Arrangement (CAR) to “help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net, and complement existing international arrangements.”

The BRICS countries represent a quarter of the world’s territory and 46% of its population. Trade between the five countries represented 16% of the global total in 2011, double that of a decade earlier.

As part of this year’s summit, the BRICS leaders will also hold a joint session with heads of South American states in Brasilia tomorrow. Today’s joint declarations highlighted the aim for closer ties with the region, and noted the importance of the Union of South American Nations (UNASUR) in promoting peace, integration, and development.

However, before the summit BRICS leaders poured cold water on rumours that Argentina would be invited to join the group, saying further expansion is not on the agenda for now.

The next BRICS summit will take place in July 2015 in Russia.

Posted in News From Latin America, Round Ups Latin America1 Comment

Union Confirms ‘Indefinite’ Strike of Long-Distance Buses

Buses at the Retiro terminal (photo: Beatrice Murch)

Buses at the Retiro terminal (photo: Beatrice Murch)

Transport union UTA today confirmed that a nationwide strike of long-distance bus drivers will begin at midnight after negotiations failed to resolve an ongoing salary dispute.

The strike will continue for an “undetermined” length of time, according to UTA press secretary Mario Calegari.

Calegari says bus companies were showing no flexibility over wage negotiations, in which UTA is demanding a basic increase of 30% plus travel expenses for approximately 23,000 long-distance bus drivers in Argentina.

“We’ve been in discussions over wages since January, but nothing has changed,” said Calegari on local radio earlier today. “We still don’t have a solution and the bus companies refuse to make an offer.”

Unlike the previous UTA strike in May, the measure will only affect long-distance bus services – including inter-city and international – as salary hikes for local and urban bus drivers have now been agreed.

This morning, Cabinet Chief Jorge Capitanich, who is mediating salary negotiations said the dialogue “remains open, and is now in the hands of the bus companies.”

Posted in News From Argentina, Round Ups Argentina0 Comments

Districts in BA Province Sign Up for Municipal Police Forces

The Buenos Aires police force (Photo: Daniel Muñoz/Télam)

The Buenos Aires police force (Photo: Daniel Muñoz/Télam)

The district of Avellaneda, immediately south of Buenos Aires, will be the first to create a new municipal police under the terms of a decree issued by provincial governor Daniel Scioli earlier in July.

Local mayor Jorge Ferraresi signed a resolution with provincial security minister Alejandro Granados yesterday, saying he hoped the new police unit would be in operation by February next year. The mayors of Lanús and provincial capital La Plata followed with similar agreements today.

Scioli signed the decree to create the “Police Units for Local Crime Prevention” on 3rd July after a police reform bill was held up by opposition in the provincial legislature. Granados justified the decision saying: “We hoped to create [the local police] with a new law and not a decree, but the people living in the province cannot wait another day for this.”

The new units will operate as a division of the Buenos Aires provincial police force, with the chief appointed by the security ministry in agreement with local mayors. According to the decree, the units will “strengthen crime prevention at the municipal level and extend the decentralisation of police operations”.

The main function of the new police units will be available for towns with a population of more the 70,000, and will focus on the prevention of local crime and improving the institution’s relationship with the community. They will also have a duty to combat domestic violence, with special patrol cars and female officers deployed for this objective.

Among the more controversial elements of the new unit is the ruling allowing the local police to carry their standard issue weapon 24 hours a day, even when not on duty.

Posted in News From Argentina, Round Ups Argentina0 Comments

Several Injured in Clashes Over Panamericana Highway Protest

Gendarmerie forces face off with protesters on the Panamericana highway (Photo: Daniel Dabove/Télam)

Gendarmerie forces face off with protesters on the Panamericana highway (Photo: Daniel Dabove/Télam)

Ten people were reportedly injured this morning after national gendarmerie forces used rubber bullets, tear gas, and water cannons to disperse a protest on the Panamericana Highway.

The road block was set up around 30km north west of Buenos Aires by labour unions, social groups, and political activists to demand the reincorporation of 100 workers dismissed and 200 suspended by autoparts manufacturer Lear in May.

The protest began at around 5.30am, and was violently cleared by the gendarmerie three hours later.

“It was a disproportionate operation [by the gendarmerie],” said Jorge Medina, union representative at another company who had joined the protest. “They used water cannons and fired rubber bullets. We’ve got several colleagues injured – at least ten, for sure.”

The incidents marked the second day of violent clashes as security forces cleared protesters from major roads. Yesterday morning, the federal police also used water cannons and rubber bullets to remove workers from transport companies Emfer and Tatsa that had blocked General Paz in protest at alleged unpaid salaries.

After yesterday’s clashes, Security Secretary Sergio Berni said: “You can’t protest on a Monday at 7am in the main access road into Buenos Aires. The peaceful clearing of protests doesn’t exist – unfortunately it has to be done using the minimal force necessary.”

Posted in News From Argentina, Round Ups Argentina0 Comments

Nicaragua: Route for Interoceanic Canal Confirmed

The chosen Nicaragua canal route (photo: laprensa.com.ni)

The chosen Nicaragua canal route (photo: laprensa.com.ni)

Nicaragua has approved the route for a canal linking the Pacific and Atlantic Oceans, a century after the Panama Canal first dissected Central America.

The 278km canal, more than three time the length of the Panama canal, will run across southern Nicaragua connecting Punta Gorda in the east to the mouth of the Brito river on the country’s Pacific coastline.

The route passes through the Gran Lago de Nicaragua (or Cocibolca), Central America’s largest freshwater lake, drawing criticism from environmental groups that say the huge project will threaten the lake’s ecosystem.

“The excavation of hundreds of kilometres from coast to coast, traversing Lake Nicaragua, the largest drinking-water reservoir in the region, will destroy around 400,000 hectares of rainforests and wetlands,” concluded the president of the Nicaraguan Science Academy, Jorge Pérez-Huete, and fellow scientist Axel Meyer in an article published in Nature magazine in February. The article also raised concerns over the impact of dredging and pollution in Lake Nicaragua, as well as the possible introduction of non-native marine species.

Those involved in the project have played down environmental concerns, adding that while the route has been approved, it must still be assessed for potential environmental damage and the social impact on indigenous territories that lie on or near the canal route.

“The specific route is yet to be defined,” said Telémaco Talavera, president of the National Comittee of Uniersities and member of the Great Canal commission. “The route covers an area that will be subject to an environmental and social impact study… this will determine the precise route.”

The canal, being developed by Hong-Kong based HK Nicaragua Canal Development Investment Co Ltd (HKND Group), will cost an estimated US$40bn and is expected to be completed by the end of the decade. When operational, an estimated 5,100 of the world’s largest cargo ships will be able to pass through the canal each year, representing approximate 5% of global cargo transport. Complementary projects will include a new international airport, a free trade zone, and new tourist complexes.

Posted in News From Latin America, Round Ups Latin America0 Comments

Brazil: Campaigning for October General Election Gets Underway

Brazilian President, Dilma Rousseff (Photo: wikimedia commons)

Brazilian President, Dilma Rousseff (Photo: wikimedia commons)

Campaigning officially began yesterday for the general election due on 5th October, with incumbent president Dilma Rousseff favourite to win re-election.

Rousseff, representing the Partido dos Trabalhadores (PT), will be running against main rivals Aécio Neves of the Partido da Social Democracia Brasileira (PSDB) and Eduardo Campos, of the Partido Socialista Brasileiro (PSB).

The most recent opinion poll conducted by Datafolha and published last week showed Rousseff holds a commanding lead, with 38% support, though this would not be enough to win outright in the first round. Neves, meanwhile, trailed with 20%, while Campos received 9%.

Choosing to launch her re-election bid via a new website yesterday, Rousseff said in a online video message that these elections would be one of the “most politicised in our history.”

“The most important thing is to turn this campaign into a great debate in support of Brazil. For me, this campaign must be one that recognises the value of politics, which is so important yet so discredited.”

Neves, actual senator and former governor of Minas Gerais, began his campaign in Sao Paulo with indirect criticism of the Rousseff administration for using the World Cup for political gain. “Some think they can confuse the World Cup with the elections. But no, Brazilians are smart and aware enough to see they are completely different things.” Neves added that the campaing would provide “an opportunity to debate proposals.”

Campos meanwhile launched his campaign in a favela (slum) on the outskirts of the capital Brasilia. “It cannot be that 35km from the Palacio de Planalto (government house) , you can find yourself in a neighbourhood where rubbish is not even cleared from the streets,” said Campos. “[The administration] should not even be running for re-election. It should be humble enough to admit its failure.”

On 5th October, more than 141m eligible voters will choose the president, 27 state governors, and legislators at both a federal and state level. If needed, a second-round run off to elect the president will be held on 26th October.

While candidates can now campaign on the streets, in newspapers, and online, the use of TV and radio for campaign messages is prohibited until 19th August.

Posted in News From Latin America, Round Ups Latin America2 Comments

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