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Argentina’s government last week told leading supermarkets and electronics retailers to stop advertising in the country’s biggest newspapers. You can read all about it in my article for The Wall Street Journal here.
Axel Kicillof, Argentina’s deputy economy minister, is said to wield considerable sway over President Cristina Kirchner, influencing her thoughts on everything from gasoline prices to trade and housing policy.
But the 41-year-old Keynesian economist is deeply unpopular in Argentina’s oil industry, which he oversees.
Kicillof requires oil and gas companies to submit excruciatingly detailed Microsoft Excel spreadsheets divulging information about sales, costs, investment plans and pricing strategies. Oil executives refer to him privately as “Excel” instead of Axel.
Given the industry assumption that he’s a Marxist – something his colleagues deny – executives also mock his initials and call him as “AK47″ – “because this kid is a lethal weapon; he destroys everything that gets near him,” says one executive. (more…)
President Kirchner said Monday she will send a bill to Congress to nationalize the oil and gas company, YPF. Kirchner blames the company for falling oil and gas output, as well as the government’s growing need to import expensive fuel.
But it’s unclear how nationalizing the company will solve Argentina’s energy problems. Critics say the government itself is responsible for declining production. They cite unpredictable government policies and price caps, among other things, for the problems.
Raising production will require billions of dollars of investment in exploration and extraction. Where will that money come from now that the government will own the company?
Kirchner didn’t say.
Meanwhile, YPF’s parent company, Spain’s Repsol YPF, said it will fight the government’s decision, ensuring a lengthy and messy legal, political and economic battle over how the government will compensate Repsol for expropriating its top asset.
Within hours of the announcement, government officials were already in YPF’s building, located in Puerto Madero, taking over management of the company.
My colleagues and I wrote about the issue here for The Wall Street Journal.
More and more Argentines are traveling to the U.S.
Demand for U.S. tourist visas has soared by around 50% over the past year, according to the embassy.
“Last year the U.S. received more than 500,000 visitors from Argentina,” the embassy said.
Visa demand is so high that the Buenos Aires embassy now ranks among the top 10 worldwide in terms of tourist visa applications.
On average, the embassy handles more than 1,300 visa application a day. To meet the increased demand, the embassy has opened a new processing center and hired additional personnel.
About a year ago it took approximately four months to get a visa interview. Now “the visa interview can be be obtained in less than a week,” the embassy said in a statement.
To pay for the additional personnel and run the processing center, the embassy said it is raising the B1/B2 tourist visa application fee to US $160 from $140.
“The new amount faithfully reflects the costs our embassy needs to recover under US law through the visa application fee,” the embassy said.
The embassy didn’t say why visa demand is rising, but tourism sector officials say rising purchasing power is one factor making it easier for Argentines to travel. Another is the fact that Argentines can now pay for plane tickets in quotas spread out over months or years.
One interesting trend is the “viaje de quince” — more and more teenage girls are flying with their friends and families to the U.S. to celebrate their 15th birthday.
As you may know, Argentina bans iPhone imports because Apple won’t produce them in the country. I wrote about this for The Wall Street Journal here.
But as I’ve noted before, the import ban hasn’t stopped some of Argentina’s top officials from using the world’s most popular smartphone themselves. For previous evidence of that click here.
In today’s post you can see that even Argentina’s vice president, Amado Boudou, uses an iPhone. As you can see from the screen grab above, Boudou, a big Apple fan, used an iPhoto to post to Twitter. Ironically, the above Tweets are about imports. In one, he criticizes people for complaining about a “lack” of goods, saying that people who do this have political motives.
Says Boudou: “Argentina is open to the world but let’s not destroy the local industry” with imports.
HT to Facebook user Javier Mondini for catching this. You can follow Boudou on Twitter here.
Many of you know that Argentina has banned the iPhone.
The government hasn’t prohibited its use but instead has blocked imports of the world’ most popular smartphone.
I wrote an article for The Wall Street Journal about the issue. You can read it here.
Sean Penn, the actor and newly-named Ambassador at Large for Haiti, came to Argentina as part of a broader trip to make sure people and governments in the region continue to help the disaster-stricken Caribbean nation.
Penn met with President Cristina Kirchner on Monday.
I met Penn and his J/P Haitian Relief Organization president Benjamin Krause at a dinner Monday night. Fernando Sulicin, producer extraordinaire and a mutual friend, Penn, Krause and others are doing absolutely amazing work in Haiti. They are literally making the world a better place day by day. These people are doing the kind of thing that most of us only think about.
Vice President Amado Boudou appears to be a big Apple fan.
In this photo you can see him meeting with Economy Minister Hernan Lorenzino.
But if you’re an Apple geek what you’ll notice about the picture is that Boudou’s desk is full of Apple products. He’s got 1) a big iMac 2) a wireless Apple keyboard 3) a wireless Apple touch mouse and 4) and iPhone 4 or 4S (bottom of the photo, implying it may belong to Lorenzino).
Boudou is also using a LaCie portable hard drive, which is made specifically for Apple computers.
These products are expensive and can be hard to find in Argentina. Indeed, the government banned iPhone imports a long time ago, forcing Argentines to get them from MercadoLibre or somewhere else.
The import restrictions have also made it hard for local Apple resellers to honor the company’s international AppleCare warranty. Dealers here can’t import the parts needed to fix Apple products. This has been very frustrating for some Apple owners, including many readers of this blog.
Subway ticket prices more than doubled today to 2.50 pesos (58 US cents) from 1.10 previously.
The increase comes just days after the federal government turned over management of the subway system to the City of Buenos Aires.
The day-to-day administration of the subway is carried out by Metrovias, a private sector company which has had a concession to run the subway since 1994.
Prices had been frozen for years while the cost of just about everything else in Argentina has soared amid rampant inflation that economists say surpasses 20% annually.
The federal government had kept prices artificially low by dolling out millions of dollars in subsidies every year. But now that the subway is in the city’s hands, the federal government will stop paying for those subsidies entirely in 2013.
This year the federal government and the city will split the cost of paying for the subsidies, which total about $167 million annually.
The subway carries around 300 million passengers every year, according to Metrovias. That’s double what it carried when the company started its concession.
Metrovias has some 3,000 employees, unionized workers whose demands for higher salaries and better working conditions will undoubtedly put political pressure on the city government in the years ahead.
My colleagues, Matt Moffett, Ken Parks and I did a feature for the Wall Street Journal on the topic and the broader issues of utility rates and subsidies, which you can read here.
Still, Argentina’s biggest oil and gas company, YPF, has found a massive amount of oil in the province of Neuquen.
YPF on Monday confirmed the existence of almost 1 billion barrels worth of oil equivalent in the province. That’s not enough to turn Argentina into Saudi Arabia or even Montana and North Dakota, which have become the new stars in the world’s race to produce more oil.
Saudi Arabia reportedly has hundreds of billions of barrels in oil reserves.
But if the discovery is proven, it is enough to roughly double Argentina’s oil reserves and potentially help turn around the country’s position as an increasingly voracious energy importer.
Argentina’s oil reserves have fallen by about 16% over the past decade amid rising demand and relatively scarce investment in exploration and production, according to the Argentine Energy Institute.
YPF’s discovery, which I wrote about here, could soon help change that trend. Moreover, YPF said it has also outlined another area in Neuqen, where even more oil might be found.
The find comes amid a global boom in unconventional oil and gas exploration and production.
In the U.S., the boom has radically transformed the country’s energy outlook, taking what many said was a doomed domestic industry and possibly putting the U.S. on path to becoming energy indepdendent.
Argentina is ranked third behind China and the U.S. in its potential to produce unconventional gas – gas that’s extracted from incredibly old shale formations – according to a report from the U.S. Energy Information Administration.