Argentina
Basic Political Developments
· US Secretary of State Condoleezza Rice, on a tour of Latin America, is not making a stop in Argentina, indicating the tension between the Washington and Buenos Aires as the South American country has continued to strengthen ties with Venezuelan President Hugo Chavez.
National Economic Trends
· Argentina will sell $4 billion worth of pesos in currency markets this year and buy U.S. dollars in a bid to prevent an appreciation of the country's currency, Economy Minister Martin Lousteau said March 13.
· Unemployment in Argentina is declining at two different rates. While formal sector unemployment has fallen to about 7.5 percent by the end of 2007, informal unemployment remains about 15 percent.
· Argentina’s economy grew 8.7 percent in 2007, according to Indec.
Business, Energy or Environmental regulations or discussions
· Argentina's four leading farm groups launched a two-day farm strike March 13 to protest a new export tax scheme that sharply raised the duty on soybeans leaving the country.
· Soltera Mining Corp. announced March 13 that it has acquired the underlying option agreement on the Eureka Property, a copper-gold prospect located in the Jujuy province of Argentina.
Activity in the Oil and Gas sector (including regulatory)
· Argentina began imposing fines against oil companies March 12 due to fuel shortages at some service stations. The fines come amidst rumors of fuel hoarding in anticipation of a difficult winter season. An Argentine official said that five service stations operated by Brazilian oil giant Petrobras have been fined; the amount of the fine was not specified. Other companies are also being investigated for shortages. Large multinational oil firms operating in Argentina include Spain’s Repsol, US firm ExxonMobil’s subsidiary Esso, and Royal Dutch Shell.
· Methanex Corporation issued a statement March 12 indicating its disapproval of the Argentine government’s tax hike on natural gas exports. An official noted that the firm is “disappointed in the way the export duties were implemented as we believe it did not take into consideration the impact on the economy of southern Chile. We have been operating our plants at only 30% capacity since June 2007 as a result of the curtailments of natural gas exports from Argentina. In addition, there is no excess pipeline capacity available to transport the gas from southern Argentina to the most populated regions of that country. Given the announcement of increased duties, we do not expect to change the operating rate of our plants."
· According to March 12 report citing an Argentine official, the state oil firms of Chile and Argentina are set to begin a joint exploration of new oil fields in Argentina. Chile’s ENAP will work with Argentina’s Enarsa to evaluate the area. Both Chile and Argentina are facing difficult winters, complicated by historical and widespread shortages of energy sources. The countries are seeking to reduce their dependency on Bolivian natural gas, as Bolivia has indicated that it will be unable to meet its contractual obligations for the commodity in 2008.
· The Argentine government's Energy Secretariat authorized March 13 higher prices for gas obtained through new or untapped, hard-to-reach gas reserves, although the measure leaves the door open for continued government intervention in the price.
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Basic Political Developments
http://www.iht.com/articles/2008/03/12/africa/rice.php
Condoleezza Rice to avoid Argentina during South American trip
Wednesday, March 12, 2008
RIO DE JANEIRO: Secretary of State Condoleezza Rice is scheduled to arrive in Brazil on Thursday for a two-day visit to South America just days after Colombia's assassination of a top rebel leader enraged Ecuador's president and drew threats of military action by President Hugo Chávez of Venezuela.
Notably absent from Rice's previously scheduled visit to Brazil and Chile, however, will be Argentina, where the first elected female president in the country's history, Cristina Fernández de Kirchner, was inaugurated in December. The omission underscores Washington's angst with the new Kirchner government, which has continued to strengthen ties with Chávez while accusing the United States of political motives in an investigation into an alleged $800,000 secret campaign contribution from Venezuela to Kirchner.
"The United States is clearly snubbing Argentina," said Peter Hakim, president of the Inter-American Dialogue in Washington. "They are unhappy with Argentina in ways that continue with this new president."
Relations with Brazil, which President George W. Bush visited last year, remain warm. The agenda for Rice's visit on Thursday includes meetings in Brasília with President Luiz Inácio Lula da Silva and Celso Amorim, Brazil's foreign minister. She and Da Silva are expected to discuss progress on an initiative announced with Bush last year to develop their ethanol industries.
Later Thursday, Rice is scheduled to fly to Salvador de Bahia for a cultural event tied to that city's designation as the center of Afro-Brazilian culture, American diplomats said. Then on Friday she flies to Santiago to meet with President Michelle Bachelet of Chile and Foreign Minister Alejandro Foxley.
Rice is likely to address the flare-up last week over the decision by President Álvaro Uribe of Colombia to send Colombian forces into Ecuadorean territory to kill Raúl Reyes, a senior commander of the Revolutionary Armed Forces of Colombia, or FARC. The crisis finally ended on Friday when Chávez, Uribe and Rafael Correa, Ecuador's president, shook hands at a summit meeting in the Dominican Republic.
Last March, Bush also avoided Argentina, visiting Brazil and Uruguay, which he hailed as strong partners in the region. Argentine supporters of Chávez, meanwhile, staged an anti-Bush rally in a Buenos Aires soccer stadium.
Relations between the United States and Argentina have been strained throughout Bush's seven years in office. Argentina still blames the American-controlled International Monetary Fund for its financial collapse in late 2001. Argentina was forced to default on billions of dollars in debt to the IMF and the Paris Club, which is composed of European lenders.
Anti-American sentiment became a way for Néstor Kirchner, who took over as president in 2003, to play to leftist constituencies while turning around a country where more than half its people had slipped over the poverty line, said Daniel Kerner, an analyst at the Eurasia Group in New York.
Anti-Bush sentiment flared up in November 2005 at a meeting of Latin American leaders that Bush attended in Mar del Plata, Argentina. In front of Bush, Kirchner criticized the neo-liberal policies of the 1990s that the United States sponsored and did little to stop anti-American protests. The American president left insulted.
American officials were looking for change when Cristina Fernández de Kirchner, the former president's wife, was elected last October. But just days after Kirchner was inaugurated in December, diplomatic tensions flared up when American prosecutors in Miami named four Venezuelans and one Uruguayan in connection with a plot to cover up that $800,000 found in a suitcase at a Buenos Aires airport was meant as a secret campaign contribution from Venezuela's government to Kirchner.
Kirchner angrily lashed out at the United States, calling the investigation "garbage operations" and asserting that it was designed to drive a wedge between the growing friendship between Argentina and Venezuela. State Department officials deny there was any political motivation.
In retaliation, Kirchner restricted the diplomatic access of the American ambassador, Anthony Wayne, in Argentina. In an interview, Thomas Shannon, assistant secretary for Western hemisphere affairs, called Argentina's reaction "regrettable and not positive."
While Argentine investigators have sought to question the man who was nabbed with the suitcase, Guido Antonini Wilson, American prosecutors are working with him as a cooperating witness. So far, two of the four men formally charged in the case - both Venezuelan citizens - have pleaded guilty to charges of conspiring to act as agents of a foreign country without notifying the attorney general of the United States.
The case has pushed Argentina and Venezuela even closer together, to the dismay of American officials. While Venezuela has continued to buy more Argentine consumer products, it has also bought some $4 billion in Argentine bonds to help Argentina refinance its debt. During a visit by Kirchner to Caracas last week, Chávez pledged to supply energy-strapped Argentina with more than 10 million barrels a year of fuel oil and diesel.
National Economic Trends
http://www.bloomberg.com/apps/news?pid=20601086&sid=aKkOI04_C30Y&refer=latin_america
Argentina to Sell Pesos to Keep Currency From Gaining (Update2)
March 13 (Bloomberg) -- Argentina will sell $4 billion worth of pesos in currency markets this year and buy U.S. dollars in a bid to prevent an appreciation of the country's currency, Economy Minister Martin Lousteau said today.
The government has sold pesos in currency markets since 2002, when the one-to-one peg with the U.S. dollar was dropped. Since then, Argentina's international reserves have surged to $50 billion from as little as $8.2 billion in January 2003.
President Cristina Fernandez de Kirchner's administration will seek to prevent the peso from strengthening, Lousteau said. He said the taxes, in part, allow the government to maintain a competitive exchange rate.
``The government will use part of its fiscal surplus, which is fueled by export taxes, to buy dollars from the markets to keep the peso stable,'' Lousteau said in a Radio Diez interview.
Economists including Javier Gonzalez Fraga, a former central bank president, and Alfredo Coutino, at Moody's Economy.com applauded the decision to use savings to make the currency purchases rather than issuing pesos, a measure that would fuel inflation.
``If the government is capable of having internal savings, then it's in a good position to buy currency in the market and keep the peso at a competitive exchange rate,'' said Coutino in a telephone interview from West Chester, Pennsylvania.
Shift
Fraga said that while most of the country's dollar purchases last year were made by issuing pesos, Lousteau this year will use 1 percentage point of the 4 percent fiscal surplus to keep the peso at a competitive rate.
Lousteau also criticized a two-day strike called by Argentina's four biggest farm associations to protest an increase in export taxes for some agriculture shipments, calling the stoppage an ``exaggeration.''
The government this week announced a 7-to-9 percentage point increase of soybean and sunflower export taxes to promote increased output of other farm products and to restrain domestic food-price inflation.
The increase will add $2.5 billion per year to the government's tax coffers, according to Alfredo Rodes, a director of the Argentine Confederation of Rural Associations of Buenos Aires and La Pampa.
Stakes
The government gains more revenue from soybeans than any other commodity.
Only the U.S. and Brazil export more of the crop than Argentina, which earned 5.74 billion pesos ($1.82 billion) in total export duties in January and February, of which grains and other foodstuffs accounted for about 60 percent.
Argentina's exports rose 67 percent in January from a year earlier, and sales of food commodities accounted for more than half of that.
``The measures are just a fiscal tool disguised as good will,'' said Rodes in a telephone interview. ``They don't help to stop rising prices in the domestic market because most soybeans, sunflowers and their by-products are exported.''
Lousteau defended the import tax increase, saying that the net prices for producers will remain at the ``record high'' seen at the end of 2007.
Argentina's peso strengthened 0.1 percent to 3.1485 per dollar at 1:23 p.m. New York time. The peso has weakened 1.5 percent in the past 12 months.
http://ipsnews.net/news.asp?idnews=41574
Unemployment Declining at Two Different Speeds
BUENOS AIRES, Mar 12 (IPS) - Argentine companies are competing for professionals and technically skilled employees, and are even hiring students who have not yet graduated, as demand for qualified workers exceeds supply. But the reverse is true among less-skilled workers.
Six years after the unemployment rate soared to over 20 percent in the wake of the worst economic crash in Argentine history, unemployment fell to 7.5 percent by late 2007, and the rate is expected to continue to drop this year, according to the National Institute of Statistics and Censuses.
The downward trend suggests that the country is coming close to achieving full employment, which experts say would be reflected by a structural unemployment rate (due to mismatch of location or skills of workers and jobs available) of between three and six percent. However, they warn that the average index hides problems that would invalidate such a conclusion.
"In the formal economy, full employment has already been reached," sociologist Ernesto Kritz of SEL Consultores, a labour consultancy, told IPS. "The problem is with people working in the informal economy, where unemployment currently stands at around 15 percent."
Carlos Fontana is 54 years old and has not worked in the last five years. He had a small service business which he was forced to close down, and since then he has been looking for paid work, without success. "The problem is my age," he told IPS. But Fontana also lacks a high school diploma and has next to no computer skills.
Kritz said that even among people who are better positioned in terms of labour skills, those whose last employment was in the informal economy -- that is, not registered for tax purposes nor for making social security contributions -- are having a much harder time finding a job.
The experts who spoke to IPS agreed that unemployment has fallen significantly in the last few years. In the first quarter of 2003, the unemployment rate was 20.4 percent if people on unemployment subsidies were counted as employed. But if these people were excluded from the employment statistics, the unemployment rate stood at 26.6 percent.
Far fewer people are now receiving unemployment subsidies, and those who do receive them have been transferred to programmes that require the beneficiary to carry out some work in exchange.
And if those enrolled in such programmes are counted as unemployed, the current unemployment rate rises from 7.5 percent to just 8.1 percent.
"We estimate that by the end of 2008, the open unemployment rate will be 6.2 percent, close to the figure indicating full employment," Marina Dal Poggetto, an economist at Estudio Bein, told IPS. That figure is very close to the average unemployment rate during the 1970s, when full employment was in fact reached.
However, she acknowledged that unemployment is falling at two clearly distinct speeds, because of the new demands of the labour market and the disparities in the labour supply. While some workers are highly qualified, others have low skills and qualifications.
"In some industrial sectors labour supply cannot meet demand, and companies are headhunting workers from each other, but apart from this, there is a pool of poorly qualified workers who have great difficulty finding jobs," she said.
This is what Claudio Flores, head of the human resources firm Agein, sees every day. Companies come to his office looking for employees after searching fruitlessly in other firms, and they often leave without finding what they need.
"There is unmet demand that has remained constant for nearly two years, and is even increasing in some sectors. But I don’t think that one can say, because of this, that there is full employment, because we also see many people coming in over and over again, who are not finding jobs," he remarked.
"When we advertise vacancies, we get far fewer applications than we did during the years of economic crisis, but they are from people who don’t have the right qualifications. These people are going around in circles. They lack educational qualifications, experience, or do not fit the profile of the candidates being sought," he said.
Two years ago, the greatest demand was for workers to participate in the recovery of local industries. Technicians, heads of industrial plants, and professionals in the chemical, mechanical engineering, metallurgical, automotive, paper, textile, rubber, plastic or leather industries were sought after in great numbers. Companies were even offering jobs to students in the final years of their studies in technical schools.
Now the most sought-after workers are people who work with systems (systems analysts and developers, computer engineers, software programmers), marketing (business administrators, sales personnel, accountants), industrial and electromechanical engineering, and human resources specialists.
Some of the available applicants have professional qualifications, but need to upgrade their skills in order to become competent users of new technology. Others have been out of the labour market for too long, lack the right qualifications, have an employment record of moving frequently from job to job, or demand such high salaries that they exclude themselves from consideration, Flores said.
Dal Poggetto and Flores were both in agreement that with improved training and a better targeted job search, many unemployed people could gradually enter the labour market. However, that is not what is happening today.
"At the moment, we find 80 percent of the employees that companies have requested in other firms," so that they are switching between similar jobs, said Flores, who added that "a much lower percentage of unemployed people are managing to get back into the labour market."
Meanwhile, Argentine President Cristina Fernández reaffirmed her government’s economic model and stated its goals of cutting unemployment to five percent by 2010, and the poverty level to less than 10 percent.
"For the first time in 100 years, we have had five uninterrupted years of economic growth at rates of over four or five percent. If we grow again this year, we will have achieved the longest period of growth in our country’s history," the president said at the Mar. 1 inauguration of the 2008 session of congress. (END/2008)