G.BREUER
DESDE 1869
G. BREUER's Newsletter
December 2006
Dear Clients & Friends,
We are sending to you the last 2006 edition of our Newsletter, where you will find an update on:
Please do not hesitate to contact Jorge Otamendi (joo@gbreuer.com.ar) and Alberto Navarro (anavarro@gbreuer.com.ar) for any specific question you may have after reading it or for any other issue you may need advise on.
Hoping that you find this edition interesting, we take this opportunity to wish you a Merry Christmas and all the best for 2007, and also invite you to see our Christmas card.
Best regards,
G. BREUER
25 de Mayo 460
Buenos Aires - Argentina
Tel: +54 114313 8100
Fax: +54-11-4313-8180
This month, there have been several events with impact on the political field. First, the strike that paralyzed the commercialization of Argentine beef and grains for nine days. Second, the relocation of Spanish ENCE’s pulp mill on the River Plate estuary.
With regard to what was called the “farming strike”, it is worth mentioning that such measure acquired a very important economic dimension. Farmers were supported by the three biggest Argentine farm organizations (i.e. the Argentine Agrarian Confederation, the Argentine Rural Confederation and the Argentine Rural Society). It is the first time in 140 years that the Argentine Rural Society adhered to a strike.
Farmers claimed the government because its intervention in the beef and grain markets prevents any kind of predictability as to the profits of the sector. This government intervention consists on restrictions to wheat and corn exports and on controls in the domestic supply of certain products and of rising prices.
Kirchner’s administration criticized the strike arguing that the reasons for the strike were the willingness to increase profitability without any regard to Argentine consumers. This kind of message is in line with the policies of the government not only to reduce inflation, but also –and most importantly- that this Administration plans to show as achievements in the next Presidential election to be held in October 2007.
On another front, we mention that one of the two paper pulp mills –Spanish ENCE- that caused tension with Uruguay decided to move 200 hundred kilometers south from its original location. The plant is going to be built in Punta Pereyra, on the River Plate estuary. Although this is good news for the Argentine President, his Uruguayan counterpart did not confirm that ENCE was authorized to build the plant there. Between lines, Uruguayan authorities are saying that the location of ENCE’s plant is not something to be decided in and by Buenos Aires.
In the meantime, Botnia continues building its plant, and residents of Gualeguaychú continue blocking two of the three crossings to Uruguay. For this reason, Uruguay filed a claim before the World Court to clear the blockades and stated that if Argentina refuses to clear the demonstrators it may resort to the United Nations Security Council.
President of Uruguay, Mr. Tabaré Vazquez, ordered Uruguay’s army to mobilize to Botnia’s plant and to the crossing that separates Argentina’s town Gualeguaychú from Uruguay. This is a very clear message to Argentina that Uruguay will continue backing the construction of Botnia’s paper pulp mill despite any blocking or mobilizations caused by environmentalists. This action was not welcomed by President Néstor Kirchner, who, without ordering the clear of the crossings to Uruguay, intends to settle differences with neighboring country Uruguay. At Botnia’s request, Uruguay cleared troops.
Apparently and as seen, there can be no good news in this matter. Probably because the entire issue is a collection of misunderstandings and mistakes by both sides.
Two other issues –which are not political in nature- may be of political importance this month.
First the raising concern of lack of security, particularly in the Province of Buenos Aires. This month the kidnapping of a young man in a populated district of the Greater Buenos Aires area –José C. Paz-, showed that the political handling of security issues and of the Buenos Aires Province Police may be a big issue in the forthcoming elections in said Province. In this case, the kidnapping was –allegedly- perpetrated by a group of several members of the Police of political groups linked to the local major, all close allies of President Kirchner. The matter of security will have to be addressed seriously.
Finally, another issue to be borne in mind is that the energy crisis made its appearance in the past weeks with several power cuts in the city of Buenos Aires, and as a result several agreements are being studied by the current administration with Energy and Gas producers. According to unofficial versions currently known, utility-price increases will be allowed only after January 2008. This ratifies that politics has strong influence in the current Argentine energy supply levels.
With the latest reports from the Labor Ministry, its was announced that formal private employment in Argentina grew 0.7% in October as compared to the previous month of this year, and 6.4% as compared to the same month in 2005. With these results, currently unemployment stands at 11%.
November 2006 registered an increase of 0.7% inflation rate due to the growth of goods (0.9%) and services (0.5%). 53% of the goods evaluated within the 0.9% and 47% of the services evaluated within the 0.5% are part of what is called the “basic food basket”, consisting of those items consumed by low- and middle-class families. These figures show that, so far, inflation accumulated in the first 11 months of the year is 8.8%. The government expects to end the year with less than 10% inflation as forecasted when starting the controversial measures of price control.
It is worth mentioning that in 2005 the people more affected by the growing prices were those of less resources (1.5% more than people with better salaries), while in 2006 figures showed that said tendency was reverted since this year prices were the highest for high-class population (2.6% more than for mid-class and low-class population).
It is worth mentioning that inflation rate is said to be several points above the official estimation provided by the current administration.
You may read the December edition of our Boletín Informativo, G. BREUER’s monthly publication focused on general legal information sent to our Argentine Clients & Friends.
- You can access the Argentina chapter of “The International Comparative Legal Guide to Merger Control 2007”, published by Global Legal Counsel, written by Jorge Otamendi and Juan Yofre, partner and associate at G. BREUER, respectively, by clicking here.
For further information, please contact Jorge Otamendi (joo@gbreuer.com.ar) or Juan Yofre (jyofrejyofre@gbreuer.com.ar).
- For information on local legislation, you may see the December edition of our Boletín Informativo sent to our Argentine Clients & Friends.
G. BREUER
25 de Mayo 460
Buenos Aires - Argentina
Tel: +54 11 4313-8100
Fax: +54 11 4313-8180
Please note that the information given in this bulletin is for general purposes only and does not aim to provide comprehensive legal advice on any issue.
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© G. BREUER, 2006