Daily Archives: April 22, 2012

Leftist economist masterminds Argentina’s YPF grab

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By Hilary Burke and Magdalena Morales
BUENOS AIRES 
Fri Apr 20, 2012 12:42pm EDT

(Reuters) – Government economist Axel Kicillof stormed the world stage this week when Argentina moved to nationalize energy company YPF, defending the plan he helped devise in a fiery speech worthy of Venezuelan President Hugo Chavez.

Charismatic and polarizing, the 40-year-old Kicillof lambasted “free-market fundamentalists” as he defended the push to seize control of YPF from Spain’s Repsol.

Just four months after taking the deputy economy minister post, Kicillof has penetrated the small circle of trusted advisers to President Cristina Fernandez, who singles him out for praise in her speeches.

Sporting sideburns and an open collar, Kicillof told Congress that only “morons” would think the state was stupid enough to play by Repsol’s rules and make an offer to buy 100 percent of its shares. He blasted economic theories that “justify the looting of our resources and our companies.”

People who know Kicillof say they are not surprised to see him become the public face of a move that has prompted howls of protest from abroad. They say he has always been brilliant, hard-working and even messianic.

One classmate remembered a high school camping trip where Kicillof and a group of friends played at him being God, surrounded by his chanting followers.

“It was child’s play, but it’s striking that Axel was God,” she said, speaking on condition of anonymity.

Kicillof, who declined to be interviewed for this story, spent most of his career in academia, giving classes and writing about the theories of economists such as John Maynard Keynes and Karl Marx.

His first foray into business administration came in 2009, when he took a key position at flagship carrier Aerolineas Argentinas, which the government had expropriated from Spanish travel group Marsans.

Last year, he rose to prominence when Fernandez’s administration fought to appoint him as state representative on the board of directors at steelmaker Siderar, despite company resistance.

With that, local media at odds with the government crowned him the new radical boogeyman.

As a college student, Kicillof co-founded TNT, a group that used irony and humor to tackle corruption and raise standards inside state-run Buenos Aires University’s economics department.

Later, during the 1999 presidential election, he helped organize a protest against Argentina’s obligatory vote because he said the field of candidates was too narrow.

“He’s a brilliant guy. He’s one of the most intelligent people I know, very honest and with strong ideals,” said Leo Piccioli, general manager of Staples Argentina and a fellow member of TNT in the 1990s.

SALVATION

Despite his youthful appearance, Kicillof is an old-school ideologue who shuns the tenets of 21st Century globalism and believes Argentina must find its own way to economic development and industrial prominence.

In his Tuesday speech, he mocked the concept of the “rule of law,” saying this was designed to protect big business. He also compared the Spanish operators of YPF and Aerolineas Argentinas, who received no compensation after the airline was expropriated.

“Spanish officials decide what is done at YPF … in the same way that (Marsans) was bent on lobotomizing Aerolineas Argentinas,” Kicillof said. “This is a transnational group that doesn’t think about the Argentine worker.”

Kicillof helped put together a strategic plan for Aerolineas, which critics say has failed because the company keeps losing money. Others say it is impossible to evaluate his administration of the airline’s finances when so much tax revenue has been used to revamp the company.

Admirers call him captivating while critics see him as inflexible and verbose. His influence is growing where it counts — with the president.

At both Siderar and YPF, Kicillof urged company officials to make fewer dividend payments abroad and invest more locally. Fernandez ended up enshrining that view in government policy.

“He was the main architect of this concept,” said a personal acquaintance who met Kicillof in the last few years. “He is absolutely convinced that (his vision) will be Argentina’s salvation and not its death knell.”

Some people view Kicillof as a threat to the country’s future, saying he will scare off private investors. Emerging markets analyst Walter Molano at U.S.-based BCP Securities called Kicillof “a flaming red Marxist” on Thursday.

One old friend said his lack of political experience, and his impulsive, irreverent style, could eventually cause a rift with the president and end with him being scapegoated.

But that view might underestimate the loyalty shown by Fernandez to another controversial government figure, price and import czar Guillermo Moreno, famed for his vulgar talk and his fanatical work ethic.

Like Moreno, Kicillof isn’t seen giving an inch.

“He is intelligent,” his old schoolmate said. “But he won’t listen to other opinions or other points of view. He won’t learn from past mistakes.”

(Writing by Hilary Burke; Editing by Helen Popper and David Gregorio)

The tab for U.N.’s Rio summit: Trillions per year in taxes, transfers and price hikes

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By George Russell
Published April 20, 2012
FoxNews.com

The upcoming United Nations environmental conference on sustainable development will consider  a breathtaking array of carbon taxes, transfers of trillions of dollars from wealthy countries to poor ones, and new spending programs to guarantee that populations around the world are protected from the effects of the very programs the world organization wants to implement, according to stunning U.N. documents examined  by Fox News.

The main goal of the much-touted, Rio + 20 United Nations Conference on Sustainable Development, scheduled to be held in Brazil from June 20-23, and which Obama Administration officials have supported,  is to make dramatic and enormously expensive changes  in the way that the world does nearly everything—or, as one of the documents puts it, “a fundamental shift in the way we think and act.”

Among the proposals on how the “challenges can and must be addressed,” according to U.N. Secretary General Ban Ki-moon:

–More than $2.1 trillion a year in wealth transfers from rich countries to poorer ones, in the name of fostering “green infrastructure, ”  “climate adaptation” and other “green economy” measures.

–New carbon taxes for industrialized countries that could cost about $250 billion a year, or 0.6 percent of Gross Domestic Product, by 2020. Other environmental taxes are mentioned, but not specified.

–Further unspecified price hikes that extend beyond fossil fuels to anything derived from agriculture, fisheries, forestry, or other kinds of land and water use, all of which would be radically reorganized. These cost changes would “contribute to a more level playing field between established, ‘brown’ technologies and newer, greener ones.”

— Major global social spending programs, including a “social protection floor” and “social safety nets” for the world’s most vulnerable social groups  for reasons of “equity.”

–Even more social benefits for those displaced by the green economy revolution—including those put out of work in undesirable fossil fuel industries. The benefits, called “investments,”  would include “access to nutritious food, health services, education, training and retraining, and unemployment benefits.”

–A guarantee that if those sweeping benefits weren’t enough, more would be granted. As one of the U.N. documents puts it:  “Any adverse effects of changes in prices of goods and services vital to the welfare of vulnerable groups must be compensated for and new livelihood opportunities provided.”

Click here for the Executive Summary Report.

That  huge catalogue of taxes and spending is described optimistically as “targeted investments  in human and social capital on top of investments in natural capital and green physical capital,” and is accompanied by the claim that it will all, in the long run, more than pay for itself.

But the whopping green “investment” list  barely scratches the surface of the mammoth exercise in global social engineering that is envisaged in the U.N. documents, prepared by the Geneva-based United Nations Environmental Management Group (UNEMG), a consortium of 36 U.N. agencies, development banks  and environmental bureaucracies, in advance of the Rio session.

An earlier version of the report was presented  at a closed door session of the U.N.’s top bureaucrats during a Long Island retreat last October, where Rio was discussed as a “unique opportunity” to drive an expanding U.N. agenda for years ahead.

Click here for more on this story from Fox News.

Under the ungainly title of Working Towards a Balanced and Inclusive Green Economy, A United Nations System-Wide Perspective,  the  final version of the 204-page report is intended to “contribute” to preparations for the Rio + 20 summit, where one of the two themes is “the green economy in the context of sustainable development and poverty eradication. ”  (The other theme is “the institutional framework for sustainable development” –sometimes known as global environmental governance.)

But in fact, it also lays out new roles for private enterprise, national governments, and a bevy of socialist-style worker, trade and citizens’ organizations in creating a sweeping international social reorganization, all closely monitored by regulators and governments to maintain environmental “sustainability” and “human equity.”

“Transforming the global economy will require action locally (e.g., through land use planning), at the national level (e.g., through energy-use regulations) and at the international level (e.g., through technology diffusion),” the document says. It involves “profound changes in economic systems, in resource efficiency, in the composition of global demand, in production and consumption patterns and a major transformation in public policy-making.”  It will also require “a serious rethinking of lifestyles in developed countries.”

As the report puts it, even though “the bulk of green investments will come from the private sector,” the “role of the public sector… is indispensable for influencing the flow of private financing.”  It adds that the green economy model “recognizes the value of markets, but is not tied to markets as the sole or best solution to all problems.”

Among other countries, the report particularly lauds China as “a good example of combining investments and public policy incentives to encourage major advances in the development of cleaner technologies.”

Along those lines, it says, national governments need to reorganize themselves to ” collectively design fiscal and tax policies as well as policies on how to use the newly generated revenue”  from their levies. There,  “U.N. entities can help governments and others to find the most appropriate ways of phasing out harmful subsidies while combining that with the introduction of new incentive schemes to encourage positive steps forward.”

U.N. organizations can also “encourage the ratification of relevant international agreements, assist the Parties to implement and comply with related obligations…and build capacity, including that of legislators at national and sub-national levels to prepare and ensure compliance with regulations and standards.”

The report declares that “scaled-up and accelerated international cooperation” is required, with new coordination at “the international, sub-regional, and regional levels.”  Stronger regulation is needed, and “to avoid the proliferation of national regulations and standards, the use of relevant international standards is essential” — an area where the U.N. can be very helpful, the report indicates.

The U.N. is also ready to supply new kinds of statistics to bolster and measure the changes that the organization foresees—including indicators that do away with old notions of economic growth and progress and replace them with new statistics. One example: “the U.N. System of Environmental-Economic Accounting (SEEA), which will become an internationally agreed statistical framework in 2012.” 

These changes, the authors reassure readers, will  only be done in line with the “domestic development agendas” of the countries involved.

“A green economy is not a one-size-fits-all path towards sustainable development,” an executive summary of the report declares.   Instead it is a “dynamic policy toolbox” for local decision-makers, who can decide to use it optionally.

But even so, the  tools are intended for only one final aim. And they have the full endorsement  of U.N. Secretary General Ban, who declares in a forward to the document that “only such integrated approach will lay lasting foundations for peace and sustainable development,” and calls the upcoming Rio conclave a “generational opportunity” to act.

Click here for the full report.

George Russell is executive editor of Fox News and can be found on Twitter @GeorgeRussell

Click here for more stories by George Russell.

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USA: Vantage Drilling Acquires Titanium Explorer Drillship

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Vantage Drilling Company  announced Friday that the Luxembourg branch of its wholly-owned subsidiary Vantage Drilling Poland Sp. z o.o.  acquired and took delivery of the Titanium Explorer, a deepwater drillship formerly known as the Dragonquest.

The acquisition was accomplished under the previously announced Purchase Agreement (“Purchase Agreement”) with Valencia Drilling Corporation (“Valencia”), an affiliate of F3 Capital, Vantage’s largest shareholder, pursuant to which all of Valencia’s rights and obligations under the shipbuilding contract for the Titanium Explorer, together with related rig equipment, was purchased for an aggregate purchase price of $169.0 million. The purchase price under the Purchase Agreement and all remaining construction and startup costs for the Titanium Explorer in the amount of approximately $630.0 million were financed with the proceeds from the recent $775.0 million notes offering of Offshore Group Investment Limited, another wholly-owned subsidiary of Vantage. The notes were priced at 108% of par, resulting in total proceeds to the Company in excess of $820.0 million, net of offering fees and expenses.

The Titanium Explorer is a self-propelled, dynamically positioned drillship suited for drilling in remote locations because of its mobility and large load carrying capacity. It is currently equipped for drilling in water depths up to 10,000 feet, and is designed to drill in water depths up to 12,000 feet. Another Vantage subsidiary is party to an eight-year contract with Petrobras to operate the Titanium Explorer.

We are extremely pleased to announce the completion of the acquisition of the Titanium Explorer. The newest addition to our fleet represents the culmination of nearly four years of effort as we have been involved in the Titanium Explorer project since its inception. We appreciate the support of F3 Capital in concluding these efforts and look forward to a successful commencement of operations in the US Gulf of Mexico with our customer,” said Paul Bragg, Chief Executive Officer of Vantage.

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