Helen Popper

Behind the charm, a political pope

Helen Popper — Wed, 27 Mar 2013 10:29:02 +0000

BUENOS AIRES (Reuters) – When Jorge Bergoglio finished studying chemistry at high school his mother asked him what he would study next.

“Medicine,” replied the skinny 19-year-old, according to his younger sister, Maria Elena.

Bergoglio’s mother cleared a storage room in the family’s working-class Buenos Aires home for him to use as a study. Every day, after his morning job in a lab, he would arrive home and disappear into the room.

One morning, though, his mother got a surprise. In the room, she found not anatomy or medicine texts but books on theology and Catholicism. Perturbed at his change of course, she confronted her eldest son.

“What is this?” she asked.

Bergoglio responded calmly: “It’s medicine for the soul.”

For the man who last week took over at the head of the Catholic Church, the shift from medicine to religion was the first of many in a career that has often defied expectations. It was also an early hint at what Argentines who know Bergoglio, now 76, describe as a steely determination – prepared even to mislead his mother – that lies beneath his charming and modest exterior.

“Jorge is a political man with a keen nose for politics,” says Rafael Velasco, a Jesuit priest and former colleague who is now rector of the Catholic University of Cordoba, in central Argentina. “It’s not an act, the humility. But it’s part of his great capacity to intuitively know and read people.”

The first pope from Latin America is also the first Jesuit pope. Like priests from other orders, Jesuits take vows of poverty, chastity and obedience, as well as a fourth special vow of obedience to the pope. They also make a promise to refrain from seeking high Church offices.

But Bergoglio rose steadily through the order’s leadership posts and beyond, sometimes crossing swords with colleagues and once proving so meddlesome that a Jesuit boss dismissed him from the school where he was teaching. After being named a bishop he climbed through the Church hierarchy itself, rising to lead Argentina’s largest archdiocese and eventually being named a cardinal.

Throughout his rise, Bergoglio eschewed the trappings of the positions he attained. As Archbishop of Buenos Aires, he famously took the subway from his one-room apartment in the Argentine capital instead of accepting the grand residence at his disposal. When his name emerged as a possible successor to John Paul in 2005, Bergoglio told family, friends and Argentine media that he didn’t want to be pope. He loved Buenos Aires too much, he said. He had no desire to leave.

When the conclave named him successor to Pope Benedict earlier this month, he joked: “May God forgive you.”

In Argentina, countrymen have expressed glee that one of their own has become the first non-European pope in 13 centuries. Francis has also charmed millions with his plainspoken banter, refusal to wear ornate vestments and his insistence that he pay his hotel bill in person the morning after the conclave. Some genuinely hope he can revive a Church roiled by scandal and undermined by rival religions and secularism, which many Catholics find to be out of touch with contemporary values.

At the same time, questions remain, not least about the exact nature of Bergoglio’s role during the Argentine dictatorship’s “Dirty War” against leftists and other political opponents in the 1970s and early 1980s. Some also point to his description of gay marriage as “the work of the devil” as proof of a hard-line conservatism.

The Vatican has moved quickly to defend Francis. The attacks, said Vatican spokesman Federico Lombardi, “reveal anti-clerical, left-wing elements that are used to attack the Church.”

Interviews with nearly two dozen people including his sister, colleagues from the Jesuit order in Argentina, his archdiocese and social circle, build a picture of a devout and dedicated priest whose scholarly grasp of Church doctrine rarely hindered his down-to-earth focus on charity, compassion and social work. They also reveal a calculating leader so used to getting his way that he once summoned a courtroom to him, rather than walk a few blocks to the courthouse.

EARLY YEARS

Bergoglio, the first of five children, was born and raised in the blue-collar neighbourhood of Flores in central Buenos Aires. His father, an Italian immigrant, worked as an accountant in a hosiery factory. His mother, also of Italian descent, worked at home.

His paternal grandparents, who lived close by, taught him Italian. His grandmother, he has said, taught him to pray.

Friends and family recall the neighbourhood as a simple and friendly area where residents would sometimes set up tables in the street and share meals. Maria Elena, his only surviving sibling, recalls that their father would gather the family to pray the rosary before dinner.

Bergoglio, she said in an interview, was a studious and kind brother. “He was a great companion,” she says. “He always looked out for friends and family.”

During his first year at high school – a six-year vocational course focused heavily on chemistry – Bergoglio sought permission to ask classmates if they had taken their first communion. The school director agreed and Bergoglio tutored four classmates about the sacrament and introduced them to a local priest. A few months later, all four took communion.

“He already had that vocation,” says Alberto Omodei, one of the classmates. “He had a desire to bring people closer to God.”

Four years on, Bergoglio decided to make it his life. Walking to a spring picnic one morning, he felt the strong urge to enter a church. At a confessional, he had an intense conversation with a priest, decided to skip the picnic and vowed to enter the priesthood.

“I don’t know what happened,” he told an Argentine radio station last year. “But I knew I had to become a priest.”

When he eventually let his parents into his plan, his mother worried the life of a priest would be too lonely. His father embraced the idea.

At 21, he was set to join a seminary in Villa Devoto, another working-class area just west of Flores. But his studies were delayed by a fever that doctors feared could kill him. They removed three cysts in his right lung. According to an account in “The Jesuit,” an authorised biography by journalists Sergio Rubin and Francesca Ambrogetti published in 2010, Bergoglio was annoyed by the hopeful assurances of people who tried to cheer him. Instead, he found strength in a nun’s declaration that he was “imitating Jesus” through suffering.

“Pain is not a virtue in itself,” Bergoglio told his biographers, “but the way that one handles it can be.”

The young man recovered, entered the seminary and decided to join the Jesuits. The order at the time administered the seminary and Bergoglio found their focus on education and brotherhood appealing.

A year later, in 1960, he moved to Cordoba, Argentina’s second city, where the order trained initiates. The atmosphere, fellow initiates recall, was disciplined and formal. “Brother Bergoglio” was cheerful, but devout. He embraced the order’s curriculum with its emphasis on language, literature, and philosophy.

Occasionally, something else caught his eye. In a book of conversations with a rabbi friend, one of several Jewish leaders with whom Bergoglio has maintained a public dialogue over the years, he mentions a young woman he met while attending a wedding while at seminary.

“Her beauty and intellectual glow surprised me,” he says in the book, “On Heaven and Earth,” published in 2010. “I couldn’t pray for an entire week because whenever I tried the girl would appear in my head.”

The infatuation passed. For much of the next decade, as he worked towards ordination, he studied at Jesuit universities in Argentina and Chile, and taught at Jesuit schools. Colleagues and students remember a firm but enthusiastic teacher, able to bond with almost anyone – from young pupils and their families to Church superiors and scholars. At one point he convinced Jorge Luis Borges, one of the giants of Argentine letters, to read to his students.

A DIRTY WAR

After his ordination in 1969 and a brief assignment in Spain, Bergoglio returned to Buenos Aires to run the order’s programme for initiates. There, he quickly impressed superiors, according to fellow Jesuits from the period. In 1973, aged 36, Bergoglio was chosen as the order’s national leader, or “provincial,” a post that usually lasts six years.

He earned a reputation as someone who remembers names, home towns, acquaintances and other small details about his colleagues and Church faithful, say several Jesuit peers. He also made important contacts, most notably with Antonio Quarracino, the bishop who would precede him as archbishop and cardinal.

But Bergoglio’s tenure coincided with one of the most tumultuous periods in Argentina’s history. Like much of the rest of Latin America, the country was riven by economic crisis and growing conflict between right and left. Some members of the regional Church were beginning to flirt with Liberation Theology, a movement that sought to empower the poor. Priests at the extremes of the movement began to advocate armed struggle.

Though Bergoglio had worked for the poor, he made it clear in discussions that the order would not stray too far toward Marxism, according to several of his successors as provincial as well as other Jesuit officials.

Things got much harder when the Argentine military seized power in a coup in 1976 and cracked down on opponents in a brutal campaign of kidnappings, torture and murders that left between 10,000 and 30,000 dead or “disappeared.” Among the regime’s victims were at least 19 priests and scores more Catholic leftists.

One particular episode drew in Bergoglio. In May 1976, naval officers seized two Jesuit priests, Orlando Yorio and Francisco Jalics, because of their pastoral work in a Buenos Aires slum. The military believed the priests were helping anti-government activists.

Fellow Jesuits say Bergoglio, by that time well versed in local politics, would sometimes get tips about pending military sweeps and alert colleagues to avoid them. In the case of Yorio and Jalics, though, no hard evidence has emerged that Bergoglio knew about the abduction in advance.

But Horacio Verbitsky, an Argentine journalist who has written extensively on the period, has said Bergoglio did not do enough to warn the priests of the danger. According to Verbitsky’s book “The Silence,” Bergoglio withdrew his order’s protection of the two priests after they refused to quit visiting the slums, paving the way for their capture. He offers no proof of this.

In the authorised biography, Bergoglio said he long ignored such accusations “so as to not get caught in their game, not because I have anything to hide.”

In the book Bergoglio said he worked tirelessly to secure the men’s freedom. He said he convinced a military chaplain – no name is given in the biography – to miss a Mass so that he himself could officiate and ask the head of the governing junta to set them free.

The priests were held for five months, blindfolded and chained, before being drugged and released in a field. It’s not clear what ultimately secured their freedom.

Bergoglio and others have described his efforts to hide or help other targets flee, including one who Bergoglio said resembled him and crossed the northern border in clerical garb and carrying his identity card.

Another case that involved Bergoglio shows the delicate balance that he and many others sought between helping victims and not falling foul of the regime. In 1976 and 1977, seven members of a leftist family near Buenos Aires disappeared, including a pregnant woman who would give birth to a baby girl in captivity. Siblings who had exiled themselves in Rome, and believed their family members had been abducted by the military, appealed to the head of the Jesuits in Italy. He contacted Bergoglio, who wrote a carefully worded letter for the father of the family, Roberto Luis de la Cuadra, to give to Mario Picchi, a bishop near the family’s home.

“I bother you to introduce you to Mr Roberto Luis de la Cuadra,” Bergoglio wrote, according to a photocopy of the letter still in the family’s possession. “He will explain to you what this is about, and I will appreciate anything that you can do.”

Several months later, Picchi told de la Cuadra he had learned that the infant girl was alive, but had been handed for adoption to another, less troublesome family, according to a surviving family member, Estela de la Cuadra.

The bishop, now deceased, told de la Cuadra he had no further details about the baby. Bergoglio, in written testimony to a court looking into the case in 2011, said he received no more specifics about the case and only learned further details through the media.

Bergoglio’s allies and many historians say there was little he could do to limit such atrocities. Many of those who did speak out were killed, and Bergoglio, though the head of the Jesuits, was far less prominent than more senior clerics outside the order.

Even those who did more at the time sympathise with Bergoglio’s position. “If I hadn’t come face to face with someone who had been tortured, I wouldn’t have been able to speak out,” says Miguel Hesayne, a retired bishop who is widely regarded as one of the few senior Church officials who criticised the regime.

But others, including Estela de la Cuadra, other family members of disappeared and human rights activists, criticise him for not speaking out more at the time and for his reluctance to talk about the period later.

INTERFERENCE

Bergoglio’s tenure as provincial ended in 1979. His successor appointed him rector of the top Jesuit school in Buenos Aires, the Colegio Maximo de San Miguel, where he taught, continued his own studies and remained an influential voice.

In 1986, the next provincial sent Bergoglio to Germany to work on a doctorate. Staying near Frankfurt, he studied the work of Romano Guardini, a Catholic philosopher active in the 1930s who wrote about the moral hazards of power.

“Catholicism and confronting violence is something he too had to think about,” says Michael Sievernich, a professor of theology who met Bergoglio at the time and noted the parallels between the subject matter and the recent Argentine horror.

Bergoglio stayed just a few months, to the surprise of his fellow Jesuits, returning to Argentina with books and photocopies. The order lodged him at another Buenos Aires school, where he continued his studies, resumed teaching and wrote.

His standing in the capital remained high. But soon, several Jesuits recall, Bergoglio began voicing disapproval of the way his peers ran the school, mostly petty details about courses and administration. His interference was unwelcome. Soon the provincial at the time Victor Zorzin sent him back to Cordoba.

“He needed to go somewhere he could relax,” says Zorzin.

In Cordoba, Bergoglio’s duties would be simple: say Mass, hear confessions and continue to work on his doctorate. He complied, colleagues recall, but he also brooded.

“He was no longer as active,” says Andres Swinnen, a contemporary in the order and a successor to Bergoglio as provincial.

Bergoglio’s exile ended abruptly in 1992 when Quarracino, now a cardinal, recommended to his superiors in Rome that he be made auxiliary Bishop of Buenos Aires.

He returned to the city, but instead of moving into a house at the archdiocese, went back into a Jesuit residence. There, colleagues from that period say, he began to meddle again. Once, when a friend of the order left them a gift of pastries, Bergoglio grabbed it and carried it to the kitchen, where maids and cooks could share the goodies.

“We didn’t need a bishop to teach us how to share,” recalls one Jesuit present, who requested anonymity because he does not want to offend the pope.

After a few months, some Jesuits began to ask when Bergoglio would leave. Eventually, says a senior Jesuit at that time, the order formally asked him to move.

“PRAY FOR ME”

Bergoglio is not the first Jesuit to climb the ranks of the broader Church. While they do not seek higher office, they accept appointments as bishops, archbishops and cardinals in obedience to the pope, who decides these promotions.

In the archdiocese, Bergoglio ascended quickly. By 1997, with Quarracino ailing, Pope John Paul II designated Bergoglio his successor to lead the archdiocese. Eight months later, Quarracino died.

Church officials say Bergoglio inherited an archdiocese whose finances were in disarray. He soon proved an efficient administrator; one who would rearrange its affairs to focus more on ministry to the poor.

Among other measures, he created a new vicariate to organise the charity work and preaching that priests carry out in the many villas, or slums, that surround Buenos Aires. More than 30 priests are now permanently based in the villas – there were nine when he first took over.

“He carried the church out into the streets of Buenos Aires,” says Gabriel Marronetti, the parish priest at the church in Flores where Bergoglio felt the call to service.

His popularity grew among parishioners. Photographers captured images of Bergoglio, on his own trips into the slums, washing the feet of poor faithful as part of the ritual on Holy Thursday before Easter.

Bergoglio’s political profile also grew.

He angered President Nestor Kirchner in 2004 with a speech criticising the “exhibitionism and strident announcements” of political leaders. In a chaotic dispute with the administration of President Cristina Fernandez, Kirchner’s widow and successor, he sided with farmers and opposed her push for a gay-marriage law. He did support an alternative bill to allow civil partnerships.

With growing renown came renewed questions about his actions during the Dirty War. Lawyers looking into many of the disappearances sought to question Bergoglio, but he exercised a provision in Argentine law allowing senior church officials to decline a summons to court.

When attorneys insisted in 2010, he forced the court to come to him, prompting a group of dozens of lawyers and judicial officials to set up a tribunal inside the archdiocese. An image of the Virgin Mary hung on one wall and other priests sat nearby, protectively.

“What sort of humility is that?” asks Estela de la Cuadra, the aunt of the disappeared baby, who is still seeking answers about her missing family members. “He’ll pose for photos paying his hotel bill, but he won’t testify in court like the rest of us?”

When Benedict stepped down in February, many Church observers thought that Bergoglio’s moment had passed. He had lost out in 2005 and was now perhaps too old to contend for the papacy at a time many Catholics were calling for the rejuvenation of the Church.

His sister, Maria Elena, recalls how she and a now deceased sister, Marta, had joked with their brother when he returned from the previous conclave.

“So you got off the hook,” Marta told him.

“Yes,” Bergoglio replied. “Thank the Lord.”

This time, before he left, Bergoglio phoned Maria Elena for a quick goodbye. “Pray for me,” he told her. “I’ll see you when I get back.”

(Additional reporting by Guido Nejamkis in Buenos Aires and Edward Taylor in Frankfurt; Edited by Simon Robinson, Richard Woods and Sara Ledwith)

Special Report: Behind the charm, a political pope

Helen Popper — Wed, 27 Mar 2013 10:19:59 +0000

BUENOS AIRES (Reuters) – When Jorge Bergoglio finished studying chemistry at high school his mother asked him what he would study next.

“Medicine,” replied the skinny 19-year-old, according to his younger sister, Maria Elena.

“What is this?” she asked.

Bergoglio responded calmly: “It’s medicine for the soul.”

When the conclave named him successor to Pope Benedict earlier this month, he joked: “May God forgive you.”

The Vatican has moved quickly to defend Francis. The attacks, said Vatican spokesman Federico Lombardi, “reveal anti-clerical, left-wing elements that are used to attack the Church.”

EARLY YEARS

Bergoglio, the first of five children, was born and raised in the blue-collar neighborhood of Flores in central Buenos Aires. His father, an Italian immigrant, worked as an accountant in a hosiery factory. His mother, also of Italian descent, worked at home.

His paternal grandparents, who lived close by, taught him Italian. His grandmother, he has said, taught him to pray.

Friends and family recall the neighborhood as a simple and friendly area where residents would sometimes set up tables in the street and share meals. Maria Elena, his only surviving sibling, recalls that their father would gather the family to pray the rosary before dinner.

Bergoglio, she said in an interview, was a studious and kind brother. “He was a great companion,” she says. “He always looked out for friends and family.”

“He already had that vocation,” says Alberto Omodei, one of the classmates. “He had a desire to bring people closer to God.”

“I don’t know what happened,” he told an Argentine radio station last year. “But I knew I had to become a priest.”

When he eventually let his parents into his plan, his mother worried the life of a priest would be too lonely. His father embraced the idea.

At 21, he was set to join a seminary in Villa Devoto, another working-class area just west of Flores. But his studies were delayed by a fever that doctors feared could kill him. They removed three cysts in his right lung. According to an account in “The Jesuit,” an authorized biography by journalists Sergio Rubin and Francesca Ambrogetti published in 2010, Bergoglio was annoyed by the hopeful assurances of people who tried to cheer him. Instead, he found strength in a nun’s declaration that he was “imitating Jesus” through suffering.

“Pain is not a virtue in itself,” Bergoglio told his biographers, “but the way that one handles it can be.”

The young man recovered, entered the seminary and decided to join the Jesuits. The order at the time administered the seminary and Bergoglio found their focus on education and brotherhood appealing.

A DIRTY WAR

After his ordination in 1969 and a brief assignment in Spain, Bergoglio returned to Buenos Aires to run the order’s program for initiates. There, he quickly impressed superiors, according to fellow Jesuits from the period. In 1973, aged 36, Bergoglio was chosen as the order’s national leader, or “provincial,” a post that usually lasts six years.

In the authorized biography, Bergoglio said he long ignored such accusations “so as to not get caught in their game, not because I have anything to hide.”

The priests were held for five months, blindfolded and chained, before being drugged and released in a field. It’s not clear what ultimately secured their freedom.

Even those who did more at the time sympathize with Bergoglio’s position. “If I hadn’t come face to face with someone who had been tortured, I wouldn’t have been able to speak out,” says Miguel Hesayne, a retired bishop who is widely regarded as one of the few senior Church officials who criticized the regime.

But others, including Estela de la Cuadra, other family members of disappeared and human rights activists, criticize him for not speaking out more at the time and for his reluctance to talk about the period later.

INTERFERENCE

“He needed to go somewhere he could relax,” says Zorzin.

In Cordoba, Bergoglio’s duties would be simple: say Mass, hear confessions and continue to work on his doctorate. He complied, colleagues recall, but he also brooded.

“He was no longer as active,” says Andres Swinnen, a contemporary in the order and a successor to Bergoglio as provincial.

Bergoglio’s exile ended abruptly in 1992 when Quarracino, now a cardinal, recommended to his superiors in Rome that he be made auxiliary Bishop of Buenos Aires.

“We didn’t need a bishop to teach us how to share,” recalls one Jesuit present, who requested anonymity because he does not want to offend the pope.

After a few months, some Jesuits began to ask when Bergoglio would leave. Eventually, says a senior Jesuit at that time, the order formally asked him to move.

“PRAY FOR ME”

In the archdiocese, Bergoglio ascended quickly. By 1997, with Quarracino ailing, Pope John Paul II designated Bergoglio his successor to lead the archdiocese. Eight months later, Quarracino died.

Among other measures, he created a new vicariate to organize the charity work and preaching that priests carry out in the many villas, or slums, that surround Buenos Aires. More than 30 priests are now permanently based in the villas – there were nine when he first took over.

“He carried the church out into the streets of Buenos Aires,” says Gabriel Marronetti, the parish priest at the church in Flores where Bergoglio felt the call to service.

Bergoglio’s political profile also grew.

He angered President Nestor Kirchner in 2004 with a speech criticizing the “exhibitionism and strident announcements” of political leaders. In a chaotic dispute with the administration of President Cristina Fernandez, Kirchner’s widow and successor, he sided with farmers and opposed her push for a gay-marriage law. He did support an alternative bill to allow civil partnerships.

His sister, Maria Elena, recalls how she and a now deceased sister, Marta, had joked with their brother when he returned from the previous conclave.

“So you got off the hook,” Marta told him.

“Yes,” Bergoglio replied. “Thank the Lord.”

This time, before he left, Bergoglio phoned Maria Elena for a quick goodbye. “Pray for me,” he told her. “I’ll see you when I get back.”

(Additional reporting by Guido Nejamkis in Buenos Aires and Edward Taylor in Frankfurt; Edited by Simon Robinson, Richard Woods and Sara Ledwith)

Argentina’s dictatorship economy chief Martinez de Hoz dies

Helen Popper — Sat, 16 Mar 2013 16:29:34 +0000

BUENOS AIRES, March 16 (Reuters) – Jose Alfredo Martinez de
Hoz, economy minister during the most brutal years of
Argentina’s “dirty war” dictatorship and architect of some of
the crisis-prone nation’s most infamous economic experiments,
has died at age 87.

The former economy chief, who was under house arrest as part
of an investigation into the kidnapping of two businessmen, died
on Saturday in Buenos Aires, local newspapers reported on their
websites.

Martinez de Hoz’s name became a byword for economic
mismanagement in Argentina, but his plan to get the troubled
national economy in order was initially lauded on Wall Street.

Prominent U.S. banker David Rockefeller called his strategy
“brilliant, solid and absolutely realistic” in a 1978 interview,
describing how he promptly granted a Chase Bank loan to the
country. Further credits followed.

It was the start of a mounting foreign debt that critics say
sowed the seeds for the country’s economic meltdown more than
two decades later when a deep crisis unleashed the biggest
sovereign default in history.

Argentina’s economy was in bad shape in 1976 when the newly
installed military junta tapped Martinez de Hoz, who hailed from
a wealthy farming family and had close links to business, to
take on the job as economy minister.

His first challenge was to tackle spiraling inflation.

“I didn’t want to be minister,” he said in an interview in
2007. “(But) they threatened to put someone from the military in
the job and – to avert disaster – I felt obliged to accept.”

His so-called Tablita (little table), a scheme aimed at
letting the peso depreciate gradually and steadily against the
U.S. dollar, shaped economic policy from 1978 until its
acrimonious collapse in 1981.

‘SWEET MONEY’

The peso’s over-valuation caused a gaping balance of
payments deficit to develop by 1980, fueling capital flight,
battering local export industries and ushering in a period known
as “sweet money” (plata dulce).

Argentines flush with over-valued pesos took holidays abroad
and famously came home loaded with foreign-made goods.

But in 1981, when the collapse of industry sent the country
into a deep recession, Martinez de Hoz’s Tablita was put to rest
and a devaluation followed.

Leaving the country with a massive debt that was to plague
it for decades, it marked the end of Martinez de Hoz’s career as
economy minister.

It did not mark the end of his troubles, however.

Nicknamed Joe or Josecito, Martinez de Hoz was arrested in
2010 and held on remand at his home as part of an investigation
into allegations he was involved in the kidnapping of two
businessmen, Federico Gutheim and his son Miguel. Martinez de
Hoz denied any links to the case.

Soon after his detention, his sons Marcos and Jose Martinez
de Hoz took out a paid advertisement in leading newspaper Clarin
in which they accused President Cristina Fernandez of waging a
“persistent campaign of hate and persecution” against their
father through the courts.

Martinez de Hoz was unrepentant about his policies and
defended the brutal rule of former dictator Jorge Videla, during
which thousands of people were killed in a state crackdown on
leftist dissent.

“(Videla) had to defend society from the attacks of
terrorist groups,” he said in the same 2007 interview.

Argentina’s pope stood up to power, but has his critics

Helen Popper — Thu, 14 Mar 2013 20:40:29 +0000

BUENOS AIRES (Reuters) – Argentina’s pope, Jorge Bergoglio, is a fearless critic of the powerful and a bold advocate of the poor, but some say he let down his country by staying silent during a “dirty war” dictatorship.

Links between some high-ranking Roman Catholic clergymen and the military regime that kidnapped and killed up to 30,000 leftists between 1976 and 1983 tarnished the Church’s reputation in Argentina and the wounds have yet to heal.

Critics of Bergoglio, the Jesuit former archbishop of Buenos Aires, say he failed to protect priests who challenged the dictatorship, and that he has said too little about the complicity of the Church during military rule.

That is reason enough for some human rights activists to question the moral credentials of Pope Francis, or Francisco as he will be known in the Spanish-speaking world.

“He has never said anything about the genocidal priests … We’ve really never heard him say anything,” said Taty Almeida, one of the leaders of the Mothers of the Plaza de Mayo, who marched for years before the presidential palace to demand information on their missing children.

Bergoglio’s harshest critics go much further.

“He turned priests in during the dictatorship,” said Horacio Verbitsky, a journalist and author close to President Cristina Fernandez, with whom Bergoglio has a prickly relationship.

According to Verbitsky’s book “The Silence,” Bergoglio withdrew his order’s protection of two Jesuit priests after they refused to quit visiting the slums, paving the way for their capture.

“I used to have the same opinion of him that most people have, of a humble, intelligent man dedicated to the poor … but then I discovered everything that is contained in my books, in my research,” he added.

Verbitsky’s accusations, based on the testimony of one of the two Jesuits who were kidnapped, are controversial, however.

Bergoglio, who led the Jesuit order in Argentina at the time, gave evidence at a major human rights trial that he asked junta leaders Jorge Rafael Videla and Emilio Massera to free the two priests, who were kidnapped and held for five months. And defenders of the new pope say he helped many dissidents flee.

“What Bergoglio tried to do was help where he could,” said Adolfo Perez Esquivel, who won the Nobel Peace Prize for defending human rights during the dictatorship

“It’s true that he didn’t do what very few bishops did in terms of defending the human rights cause, but it’s not right to accuse him of being an accomplice,” Perez Esquivel told Reuters. “Bergoglio never turned anyone in, neither was he an accomplice of the dictatorship.”

STRAIGHT TALKER

In more recent years, Bergoglio’s thinly veiled criticisms of those in power have been a constant of his leadership of Argentina’s Roman Catholics and his willingness to speak out has made him some enemies.

“He’s a real straight talker. He doesn’t beat around the bush, so to speak,” said Mercedes Zamuner, an assistant at a chapel where Bergoglio used to give Mass in Buenos Aires.

“When it’s been necessary, he’s said really tough things directed at certain quarters.”

At the height of a devastating economic crisis in 2001-02 that plunged millions into poverty, Bergoglio’s criticism of those in power was blunt.

Former President Eduardo Duhalde sat stony-faced as Bergoglio delivered an unusually harsh homily in 2002 as the crisis raged outside the cathedral gates.

“Let’s not tolerate the sad spectacle of those who no longer know how to lie and contradict themselves to hold onto their privileges, their rapaciousness, and their ill-earned wealth,” Bergoglio said in the televised sermon.

The former cardinal, the first Jesuit to become pope, was born into a large middle-class Buenos Aires family, his father an Italian immigrant railway worker and his mother a housewife.

People who know him say he shares two national passions – soccer and tango – and is endowed with the common touch, though he never worked in the ramshackle slums that encircle most of Argentina’s large cities.

“Bergoglio is willing to mingle with the people; he has washed the feet of AIDS sufferers, of pregnant women … he blessed the trash collectors,” Eduardo de la Serna, an Argentine priest who works with the poor, told Pagina 12 newspaper.

In the run-of-the-mill Flores neighborhood where Bergoglio grew up, his former home has been knocked down, but he is well-known among neighbors who remember him from childhood.

“When we were 12 he wrote me a letter saying that if he didn’t marry me, he’d become a priest,” said Amalia Damonte, 76, a childhood friend and neighbor who still lives there.

At a nearby Church school where Bergoglio attended nursery and had his first communion, he played football on Sundays, a 90-year-old nun recalled.

Bergoglio’s passion for the game has continued and he is a card-carrying member of leading Buenos Aires team San Lorenzo, who are nicknamed The Saints.

“He says he lives in a permanent state of suffering for San Lorenzo,” said fellow fan Oscar Lucchini, although he added that Bergoglio did not attend games.

Known for traveling by bus and shunning the luxuries of high Church office, Bergoglio lived in a one-room apartment next to the cathedral and is said to wear worn-out shoes.

“When he arrives in Rome he takes the bus from the airport,” said Francesca Ambrogetti, who co-authored a biography of Bergoglio that was published in 2010 after carrying out a series of interviews with him over three years.

“On one occasion, a driver from the Argentine Embassy in the Vatican asked Bergoglio if he’d please let him drive him because if he didn’t he’d get told off,” she said.

“He showed us his office once. It was incredibly luxurious (but) he turned it into a store room and received people in a really simple office instead.”

ROCKY RELATIONSHIP

Bergoglio has had a rocky relationship with Argentina’s left-leaning president, Cristina Fernandez, and her late husband and predecessor Nestor Kirchner.

In the midst of a chaotic uprising by farmers in 2008, the Church infuriated Fernandez’s government with a call for “a noble gesture and constructive dialogue.”

It was not the first time Bergoglio was accused of taking sides by the Kirchners, whose idiosyncratic blend of leftist rhetoric, unorthodox economic policy and the championing of human rights has kept them in power since 2003.

Kirchner avoided Bergoglio by shunning a traditional Mass in Buenos Aires cathedral to mark an important national anniversary and has often directed harsh words toward the clergy.

“God is for everyone. But the Devil reaches everyone too – those of us who wear trousers and those of us who wear cassocks,” Kirchner said in 2006.

Bergoglio once complained that Kirchner “sees me as the head of the opposition, and I’m not a politician,” according to 2007 comments by Joaquin Pina, bishop emeritus of Puerto Iguazu in northern Argentina.

Bergoglio’s relationship with Fernandez hit a fresh low when Congress passed a law in 2010 making Argentina the first Latin American country to approve gay marriage.

Fernandez offered her congratulations to Bergoglio during a speech on Wednesday and is expected to attend his inaugural Mass next week.

The Kirchners are not the only ones to have found themselves on the wrong end of Bergoglio’s unflinching approach.

In 2011, after a long economic boom, he took aim at Buenos Aires’ city government over the persistent exploitation of illegal immigrants in clandestine sweatshops.

“This city has failed and continues to fail in freeing us of this structural slavery,” he said.

Some think Bergoglio’s bold approach will prove an asset as he takes the reins of a troubled Church shaken by scandal.

An admirer of his predecessor Pope Benedict XVI, Bergoglio must overcome crises caused by child abuse by priests and the leak of secret papal documents that uncovered corruption and rivalry inside the Church.

“You get the sense of someone who has the capacity to defend what needs to be defended with great intensity,” his biographer Ambrogetti said.

CHILD ABUSE

Bergoglio became a priest at 32, nearly a decade after losing the use of one lung due to respiratory illness and quitting his chemistry studies. Despite his late start, he was leading the local Jesuit community within four years, holding the post of provincial of the Argentine Jesuits from 1973 to 1979.

He then held several academic posts and pursued further study in Germany. He was appointed auxiliary bishop of Buenos Aires in 1992 and archbishop in 1998.

A solemn man, deeply attached to centuries-old Roman Catholic traditions, he is not expected to stray far from Church doctrine on divisive matters of sexuality, divorce and abortion, but he is seen bringing a more pastoral touch.

“He has always stayed close to priests who got married. He even told us that he had married some (former) priests,” Ambrogetti said.

Bergoglio once branded priests who refuse to baptize children born outside marriage as “hypocrites.”

Argentina has not faced as many high-profile scandals of priests sexually abusing children, meaning Bergoglio has not been forced to take a public position on the issue like his peers in other countries.

“He mentioned that in cases of pedophile priests he considers it a perversion that predates ordination and that ‘you need to be very careful when choosing candidates for the priesthood,’” Ambrogetti said.

Almeida, from the Mothers of the Plaza de Mayo, urged Bergoglio to make his position on abuse cases clear now that he is in the Vatican.

“I really hope he now has the power in his hands to clarify and investigate these things,” she said, linking the sex abuse scandals to the Church’s role in the dirty war.

In Bergoglio’s former neighborhood in Buenos Aires, his childhood friend Damonte said she shared the high hopes of millions of Latin Americans celebrating the election of the region’s first pope.

“He is a good man, the son of a working-class family,” she said, standing on her flower-filled front porch. “I hope he can achieve all the good that he holds in his heart.”

(Additional reporting by Guido Nejamkis, Alejandro Lifschitz and Jorge Otaola; Editing by Kieran Murray and Claudia Parsons)

Falkland Islands defy Argentine sovereignty push with referendum

Helen Popper — Fri, 08 Mar 2013 13:47:37 +0000

BUENOS AIRES (Reuters) – Voters in the remote British-ruled Falkland Islands hold a referendum on their future on Sunday that seeks to challenge Argentina’s increasingly vocal sovereignty claim.

Thirty-one years since Britain and Argentina went to war over the windswept archipelago in the South Atlantic, tensions between London and Buenos Aires are running high. That has unsettled some of the roughly 2,500 islanders and strengthened patriotic feeling.

Just 1,649 Falklands-born and long-term residents are registered to vote in the two-day referendum starting on Sunday in which they will be asked whether they want to remain a British overseas territory.

A near-unanimous “yes” vote is likely, prompting Argentina to dismiss the referendum as a publicity stunt. British bookmaker Ladbrokes described the result as “the biggest certainty in political betting history” and said no one had placed a bet on a “no” vote.

But high turnout is expected as islanders embrace the ballot as an opportunity to make their voices heard.

“People feel strongly about this. It’s our chance to make a unified stand on something that affects us deeply,” said Kerri Jamieson, a Falklands-born small business owner who has been selling commemorative referendum T-shirts.

So far she has sold about 50 T-shirts bearing the logo “Our Islands, Our Decision,” and the orders keep coming in.

Jamieson lives in a remote West Falkland settlement, where a mobile voting station will be flown in to allow the handful of residents to cast their ballots.

In the quiet island capital of Stanley, where most islanders live, the post office has produced a line of official stamps to mark the occasion.

“For the Argentines, it’s just an academic exercise, but for us, it affects us enormously,” Jamieson said.

PUBLIC RELATIONS

Islanders say fiery remarks by Argentine President Cristina Fernandez and her foreign minister, Hector Timerman, have fueled patriotic sentiment on the islands, which lie nearly 8,000 miles from London and just a 75-minute flight away from southern Argentina.

Tensions have risen with the discovery of commercially viable oil resources in the Falklands basin and Fernandez’s persistent demands for Britain to hold sovereignty talks over the Malvinas, as the islands are called in Spanish.

Timerman said last month the referendum had the “spirit of a public relations campaign” and government allies have questioned its legitimacy.

“It’s almost an act of self-satisfaction to ask British people if they want to be British. As far as we’re concerned, it seems completely meaningless,” said Senator Daniel Filmus, head of the Senate’s foreign policy committee.

Argentina has claimed the territory since 1833, saying it inherited it from the Spanish on independence and that Britain expelled an Argentine population from the islands.

The sovereignty claim is a constant in Argentine foreign policy, but there have been moments of detente since former dictator Leopoldo Galtieri sent troops to land in the Falklands in April 1982, drawing a swift response from former British Prime Minister Margaret Thatcher.

The 10-week war, which killed about 650 Argentine and 255 British troops and ended when Argentina surrendered, is widely remembered in Argentina as a humiliating mistake by the discredited dictatorship ruling at the time, and no one advocates military action.

“There is absolutely no chance – not today, tomorrow or ever- that Argentina will look for a solution beyond diplomacy and peace,” Filmus said.

SEPARATE IDENTITY

Still, more than three decades since the war, the islands remain a potent national symbol in the South American country.

Everything from soccer stadiums to pizza parlors are named after the Malvinas and their craggy outline is a familiar site in street graffiti and badges worn proudly by war veterans, many of whom support the government’s tough line on sovereignty.

“This colonial situation is unsustainable in the 21st century,” said Mario Volpe from the CECIM veterans center in the central city of La Plata.

Plans by London-listed firms to tap offshore oil and gas deposits near the Falklands, which could make the prosperous islands even wealthier, are branded as looting in Argentina. That has not deterred the companies and the islands are set to start producing their first oil in 2017.

While the sovereignty claim unites political rivals in Argentina, there is growing criticism of Fernandez’s approach.

“Today we’re in a worse position than ever… we’ve never been so far from (sovereignty talks),” said Andres Cisneros, who was deputy foreign minister during a relative thaw in relations with the islanders in the 1990s.

He said the referendum “will give the government further justification for deepening a policy of hostility that mainly benefits the British.”

Cisneros said the sovereignty dispute is a bilateral issue that must be resolved between London and Buenos Aires.

That argument is rejected by islanders, some of whom are the descendants of British settlers who arrived eight or nine generations ago.

“We feel that gives us some kind of separate identity,” said John Fowler, deputy editor of the islands’ weekly newspaper, the Penguin News.

“We’re no more implanted or imposed than the majority of the people of Argentina … Like them, we’re an immigrant society.”

Most islanders say they do not expect Fernandez to take heed of the referendum’s result, which is to be announced at about 2300 GMT on Monday.

Their biggest hope is to garner global support.

“This isn’t really about Argentina, this isn’t really about the United Kingdom, this is about us – the Falkland islanders, our country,” said Gavin Short, one of the Falklands assembly’s eight elected members.

“We’re the people who really matter in all this.”

(Additional reporting by Juan Bustamante in Buenos Aires and Guy Faulconbridge in London; Editing by Kieran Murray and Vicki Allen)

Argentina’s Congress approves pact with Iran to probe bombing

Helen Popper — Thu, 28 Feb 2013 09:54:35 +0000

BUENOS AIRES (Reuters) – Argentina’s Congress approved early on Thursday a agreement with Iran to investigate the 1994 bombing of a Buenos Aires Jewish community center that Argentine courts have long accused Tehran of sponsoring.

Jewish leaders say the pact to set up a “truth commission” risks undermining the ongoing judicial investigation into the attack, which killed 85 people, but President Cristina Fernandez says it could shed new light on the case after years of deadlock.

The leftist president has close ties with other Latin American leaders who are on good terms with Tehran, such as Venezuela’s Hugo Chavez, and her supporters hailed the memorandum of understanding as an historic opportunity.

“This memorandum represents a bold decision, a brave decision that opens a possible path toward the truth,” said ruling party lawmaker Mara Brawer during a heated 12-hour debate as Jewish community groups protested outside Congress.

Fernandez controls both houses of Congress, meaning final ratification of the accord was expected, but opposition lawmakers questioned the government’s motives, some saying commercial interests of oil and grain sales lay behind it.

The measure passed narrowly with 131 votes in favor and 113 against.

“This is the chronicle of a failure foretold,” said opposition lawmaker Eduardo Amadeo, an ex-ambassador to Washington, accusing the government of putting commerce before justice and criticizing Iran’s record on human rights.

“We’re going to sell out the victims for a barrel of oil.”

Others cited Iran’s growing imports of farm goods from the South American nation, one of the world’s top grains suppliers, and said they feared the commission would undermine the evidence gathered by Argentine prosecutors so far.

“They’re asking us to … create a commission that will act like an audit of the Argentine judicial system,” said Ricardo Alfonsin of the centrist Radical party.

In a sign of how close the vote was, the ruling party took the unusual step of summoning two lawmakers on leave. They had to quit local government posts to be able to attend the session.

REPUTATION

Center-left lawmaker Elisa Carrio said the deal would further damage the G20 country’s international reputation, which has been tarnished over the last year by messy legal wrangles with bondholders, trade disputes and criticism of its inflation data by the International Monetary Fund.

“Argentina is going to be much weaker in the eyes of the global community as a result of this accord,” she said.

The accord will establish a five-member commission made up of foreign legal experts and outlines plans for Argentine judicial officials to travel to Tehran to question those people for whom Interpol has issued arrest warrants.

Iran, which remains locked in a stand-off with world powers over its disputed nuclear program, denies links to the attack.

In 2007, Argentine authorities secured Interpol arrest warrants for five Iranians and a Lebanese over the attack in which an explosives-laden truck detonated outside the Argentine Israeli Mutual Association (AMIA) building.

Iranian Defense Minister Ahmad Vahidi is among the Iranian officials sought by Argentina, which is home to Latin America’s largest Jewish community.

Western and Israeli sources have voiced concerns that Argentina may have lost its interest in pursuing investigations of the 1994 attack, as well as the bombing of the Israeli Embassy in Buenos Aires that killed 29 people two years earlier.

The Islamic Jihad Organization, believed to be linked to Iran and the Lebanese militant group Hezbollah, claimed responsibility for the 1992 bombing.

Argentine, Israeli and U.S. officials have long blamed the AMIA attack on Hezbollah guerrillas backed by Iran.

(Editing by Alison Williams)

Key political risks to watch in Argentina

Helen Popper — Thu, 03 Jan 2013 10:59:59 +0000

BUENOS AIRES, Jan 3 (Reuters) – Argentine President Cristina
Fernandez is under pressure in an important election year as
sluggish economic growth and high inflation fuel labor unrest
and middle-class discontent with her combative style.

Tight finances have prompted the left-leaning president to
pursue increasingly heavy-handed policies, such as a virtual ban
on foreign currency purchases, which have hurt her approval
ratings over the last year and ruffled financial markets.

Several large anti-government protests, trade union marches
and a wave of supermarket looting late in 2012 have set the tone
for what looks like a testy run-up to October’s mid-term
legislative elections.

Investors will be closely watching the next steps in
Argentina’s efforts to fight a U.S. court ruling that could
eventually force the country to pay “holdout” creditors owning
bonds in default since 2002.

A U.S. appeals court granted Argentina a reprieve in late
November that quelled fears of an imminent default and scheduled
oral arguments in the case for Feb. 27.

That court ruling, and a separate decision ordering the
release of a naval ship seized in Ghana on behalf of holdout
creditors, were bright spots for Fernandez’s government as it
wages several noisy political battles at home.

Her efforts to force Argentina’s largest media conglomerate,
Grupo Clarin, to start selling off broadcasting
licenses to comply with a controversial anti-monopoly law have
been frustrated by the courts.

An appeals court is currently considering Clarin’s argument
that the law violates property rights enshrined in the
constitution. A ruling that is unfavorable for the government
would likely fuel tensions with the judiciary and could lead to
government-backed reforms of the courts.

Here are some of the issues investors are watching:

LEGAL BATTLE WITH HOLDOUTS

U.S. Judge Thomas Griesa ordered Argentina in November to
make provisions to fully pay so-called holdout creditors who
rejected two restructurings of defaulted bonds and continue to
seek full repayment in the courts.

It was a sharp blow to Argentina’s efforts to put the 2002
default behind it. A subsequent appeals court stay on Griesa’s
payment order brought temporary relief to financial markets and
to the government, at least until the hearing in February.

Argentina’s next payment on the exchange bonds will be $180
million due on March 31, according to court filings.

The U.S. 2nd Circuit Court of Appeals has already backed an
earlier Griesa ruling that Argentina violated the “pari passu”
bond provision requiring it treat all creditors equally when it
paid the exchange bondholders without paying the holdouts. He
said they should all be paid simultaneously.

Participants will present their arguments in written filings
in the run-up to the Feb. 27 appeals court hearing. Argentina
filed its presentation on Dec. 28, with exchange bondholders and
other interested third parties due to file by Jan. 4 and the
holdouts by Jan. 25.

In its filing, Argentina stressed the potential impact of
Griesa’s order on U.S. banks and clearing houses involved in
payments on the country’s restructured debt, as well as its
possible implications for future restructurings.

It also said it was willing to ask Congress to suspend the
so-called Lock Law and reopen the restructuring, allowing
holdouts to be paid under the same terms offered in the swaps of
2005 and 2010.

If the appeals court upholds Griesa’s payment order,
Argentina’s last remaining option would be to appeal to the U.S.
Supreme Court. An unfavorable ruling would revive default fears.

What to watch:

- Government asking Congress to amend the Lock Law to allow
the restructuring to be reopened. Argentina would only reopen
the debt swap to the holdouts if the appeals court said that
would be an acceptable payment option.

- Details of remaining filings to the appeals court.

POPULARITY AND ELECTIONS

Fernandez has not anointed a political heir and analysts say
she may want to keep speculation alive about a re-election bid
in 2015 to maintain her grip on the notoriously fractious
Peronist party and ward off “lame duck” syndrome.

Her approval ratings suggest she would be unable to secure
the two-thirds congressional majority needed to convoke an
elected constitutional assembly to reform the constitution to
run for a third consecutive term.

The outcome of legislative elections in October could prove
decisive, either allowing her to clinch the two-thirds support
or weakening the current congressional majority that has let her
pass controversial legislation with ease.

With a re-election bid looking less likely, several Peronist
party figures are being tipped by local media and analysts as
potential presidential candidates in 2015.

The most prominent is Daniel Scioli, governor of the
province of Buenos Aires. Scioli remains loyal to Fernandez
although he has admitted he would like to run for the presidency
if she did not.

Scioli has received a nod from former Fernandez ally Hugo
Moyano, who leads the anti-government faction of the CGT labor
federation that has led several large labor protests in recent
months. Fernandez blamed Moyano and other Peronist rivals for
fomenting the supermarket looting in December.

Cordoba governor Jose Manuel de la Sota, an opposition
Peronist, bills himself as a possible challenger.

Fernandez’s approval rating slipped by 1 percentage point to
30.6 percent in November from a month earlier while her
rejection rating rose 3.6 points to 62.9 percent, according to
the latest poll by the Management & Fit consultancy.

What to watch:

- Any clearer signs of government thinking on strategy for
the elections and on whether constitutional reform is still
considered an option.

- Key economic indicators showing that the slowdown may have
bottomed out, which could lift Fernandez’s popularity.

CURBS ON DOLLARS, IMPORTS

Sweeping controls on imports and foreign currency purchases
are angering some trade partners and hitting investment.

The crackdown on dollar-buying shook financial markets in
October when the central bank refused to let Chaco province buy
dollars on the foreign exchange market, so the northern province
repaid creditors about $260,000 in pesos on dollar bonds issued
under local law.

The currency controls have succeeded in keeping dollars in
the country, however. Argentina’s capital outflows came to a
halt in the third quarter from a year earlier.

Early last year, Fernandez’s government also launched a
system to pre-approve, or reject, nearly every purchase from
abroad as part of a broader crackdown on imports. The policy
aims to protect the trade surplus and local jobs.

November’s trade surplus widened by 74 percent as imports
fell 6 percent.

The government has been pushing importers to match their
purchases abroad with exports, leading to quirky deals such as
carmakers exporting rice or wine and prompting several
complaints against Argentina at the WTO by trade partners who
were also rattled by the sudden nationalization of leading
energy firm YPF this year.

Despite investor jitters over the takeover, YPF signed two
preliminary investment deals with Argentina’s Bridas and U.S.
oil major Chevron last month to develop shale resources
in Patagonia.

What to watch:

- Trade balance and any sign import controls are being eased
to boost local industry.

- The black market exchange rate as the summer
hemisphere holiday season boosts demand for dollars.

- YPF’s progress in attracting foreign capital to fund its
multibillion dollar plan to boost output by a third. Further
details of two preliminary farm-in agreements.

THE ECONOMY

The government said in its 2013 budget that the economy
should grow 3.4 percent this year and 4.4 percent in 2013. Those
levels would trigger payments on the country’s growth-linked GDP
warrants.

An improved economic outlook would be good news for the
government as it gears up for the election to renew half the
seats in the lower house and a third in the Senate.

However, most analysts expect the government to end up
reporting economic growth below the 3.26 percent warrant payment
threshold. The central bank has lowered its growth forecast for
2012 to 2.0 percent, with a rebound of 4.6 percent seen this
year.

Falling short of the payment threshold would free up some $4
billion for spending in an election year, although Economy
Minister Hernan Lorenzino has said it would only be used for
capital spending.

Despite sluggish growth and an ever-tougher business
environment, consumer confidence rose 8.7 percent in December
compared with November. But it was down 11.7 percent
year-on-year, according to the latest survey by Torcuato Di
Tella University.

Inflation, which private estimates say is running at about
25 percent per year, will come in focus again as wage
negotiations begin over the next few months.

What to watch:

- Industry and economic growth data
over the coming months for clarity on GDP-warrant payment.

- Changes to tax regime such as a raising of income tax
floor, a central demand of opposition unionists such as Moyano,
that might avert further labor protests.

- Union comments on wage demands, signs of differences
between government and allied labor groups.

(Editing by Kieran Murray and Lisa Shumaker)

Argentina’s debt holdouts say they’re savers, not vultures

Helen Popper — Thu, 29 Nov 2012 19:50:13 +0000

BUENOS AIRES (Reuters) – A decade after Argentina’s debt default turned their savings to dust, a U.S. judge has rekindled the hopes of pensioners and other small investors fighting for full repayment alongside hedge funds.

U.S. District Judge Thomas Griesa ordered Argentina last week to deposit $1.33 billion to pay a group of so-called holdout creditors who refused to accept steep losses by swapping their bonds in restructurings in 2005 and 2010.

An appeals court gave Argentina a surprise reprieve on Wednesday by allowing it more time to fight the ruling but Griesa’s payment order has stirred cautious optimism among some of the Argentine holdouts.

“It’s the first time I’ve had any real hope that Argentina will sit down to negotiate in good faith. Our only option was the U.S. justice system,” said Horacio Vazquez, a 56-year-old engineer who bought $70,000 worth of sovereign bonds in 2000 as economic storm-clouds started to gather.

Vazquez, who set up an association for Argentine bondholders affected by the 2002 default, won a payment judgment from Griesa in another case six years ago but has never received any money. He has no bonds in the current Griesa case.

Holdout creditors have won several billion dollars worth of judgments in U.S. courts but have collected almost nothing due to sovereign immunity laws. Argentina has said, however, that Griesa’s latest order may open the floodgates for more lawsuits.

“The government’s betting that we’ll die trying (but) out of principle, after litigating for 10 years, I’m not going to accept the same amount of money as an investor who entered the swaps in 2010 and 2005,” he said, drinking coffee and eating croissants in a Buenos Aires cafe.

The bondholders in the latest Griesa case are led by investment funds NML Capital Ltd and Aurelius Capital Management, who between them hold virtually all the claims.

But they also include 13 individual Argentine investors.

They are mostly pensioners, some in their 80s and 90s, and at least one of the plaintiffs has already died. They stand to receive a total of less than $1 million if Griesa’s payment order is fulfilled, a source with knowledge of the case said on condition of anonymity.

These plaintiffs say they have little or nothing in common with “vulture funds” – the term President Cristina Fernandez uses to refer to investors who refused to enter the restructurings.

The fiery, left-leaning president calls them vultures because they often buy distressed or defaulted debt and then sue in the courts to get paid in full.

But some small investors say they unknowingly bought risky Argentine bonds at a time when better-informed investors were already dumping them.

“It annoys me that they want to demonize me when I’m nothing but a very elderly pensioner who trusted in bonds issued by this country,” said one elderly woman from Buenos Aires who is among the Argentine plaintiffs.

“The vultures are the people running this country,” she said, asking not to be named.

Two other plaintiffs, sisters aged 83 and 88, are too scared to talk publicly about their ordeal, a relative said. “What upsets them is that people think they’re speculators rather than just pensioners.”

GLIMMER OF HOPE

Holdout creditors who refused to accept a “haircut” of about 70 cents on the dollar in the two debt exchanges still own roughly $11 billion in defaulted paper, according to private estimates.

That is equivalent to about a quarter of the Argentine central bank’s foreign currency reserves, which Fernandez’s government uses to service the public debt in the absence of fresh credit sources.

Partly because of the legal action by the holdouts, Argentina has yet to return to global credit markets almost 11 years since the economic meltdown of 2001/2002.

Fernandez vows not to pay the holdouts, but it is a risky approach. If Griesa’s order that Argentina pay $1.33 billion to the holdouts is eventually upheld, U.S. courts could seize routine payments to those bondholders who accepted the earlier debt exchanges, putting Argentina into a technical default.

The judge’s ruling last week was a blow to Fernandez’s strategy to try to isolate the holdouts, but it gave an unexpected glimmer of hope to bondholders like Vazquez.

“The only thing we did was to save our money in Argentina in public bonds issued by Argentina,” he said. “We’re not vultures.”

(Editing by Kieran Murray; Editing by M.D. Golan)

Argentina appeals U.S. court order to pay holdout bond investors

Helen Popper — Tue, 27 Nov 2012 08:05:33 +0000

BUENOS AIRES/NEW YORK (Reuters) – Argentina on Monday appealed a U.S. court order to pay $1.3 billion to investors who rejected two debt restructurings tied to its 2002 sovereign debt crisis, amid fears that the country faces another default.

U.S. District Judge Thomas Griesa last week ordered Argentina to deposit the money before December 15 to pay the “holdout” creditors, a move that could jeopardize payments to bondholders who participated in the 2005 and 2010 debt swaps.

Argentina’s economy ministry said late on Monday it had filed an appeal and denounced Griesa’s ruling as “an attack on sovereignty that shows ignorance of the laws passed by our Congress.”

Any change to the terms of Argentine sovereign bonds must be approved by the country’s Congress.

The ministry said that if Griesa arranged a formula offering

holdouts the same terms presented in the 2010 restructuring, Argentina’s Congress could debate it.

That proposal is unlikely to persuade the holdouts, however.

Earlier on Monday, investors holding $1 billion worth of restructured Argentine debt filed an emergency motion in a U.S. federal appeals court to fight the ruling, which they fear could prevent payment on their bonds and lead to a fresh default.

About 93 percent of bondholders agreed to swap defaulted debt from the 2002 default for new paper at a steep discount.

But holdouts, led by Elliott Management Corp’s NML Capital Ltd and Aurelius Capital Management, rejected the swaps and are fighting for full repayment in the courts.

Griesa’s order dismayed investors who took part in the two debt swaps and fear the G20 country will now enter into “technical default” on about $24 billion in restructured debt.

It was those holders who filed the motion on Monday in the U.S. 2nd Circuit Court of Appeals seeking to halt Griesa’s order.

The motion would ensure that interest payments to the bondholders continue while the appeal is decided,” said David Boies, a lawyer representing the investors. “Exchange bondholders agreed to take under 30 cents on the dollar to support Argentina’s debt restructuring.”

Argentina’s motion was filed to the same appeals court.

Aside from sparking howls from investors who participated in the debt restructurings, Griesa’s ruling was a setback for Argentina’s combative, left-leaning President Cristina Fernandez, who calls the holdout funds “vultures” and has vowed never to pay them.

Fernandez’s decision to vilify holdout creditors, who are loathed by most Argentines, makes payment a difficult prospect, and a local law prohibits offering a better deal than that given in the swaps. Doing so might expose Argentina to lawsuits from creditors who tendered their paper.

On the other hand, another default, albeit a technical default, would tarnish Fernandez’s record on managing the economy, deepen Argentina’s isolation from global financial markets and hit investment at a time of sluggish growth.

Some analysts fear the case’s implications could stretch far beyond Argentina and its creditors, hampering future debt restructurings and the operation of global payment systems.

The Argentine government is due to pay exchange bondholders at least $3.3 billion in principal and interest in December.

But if Griesa’s demand for payment of the $1.3 billion into an escrow account for holdouts is upheld by an appeals court and Argentina still refuses to pay, U.S. courts could embargo payments to the creditors who accepted the debt restructurings.

That would push Argentina into a technical default.

LONG BATTLE

NML has more outstanding court judgments against Argentina that are not included in this case but it is willing to negotiate and would still consider a combination of cash and bonds to settle the dispute, a source familiar with its position said on condition of anonymity.

As part of the long legal battle, NML won a court order in early October to seize an Argentine naval vessel during a visit to Ghana, and the ship remains stranded.

The hedge fund denies Argentine accusations that it wants to trigger a default to get a windfall on its holdings of credit default swaps, derivatives used to insure against default.

“That would take a huge position in the CDS market to achieve and I don’t think they have an interest in doing that,” the source said, adding that NML would receive about half the amount that Griesa wants paid.

Negotiations or voluntary payment by Fernandez’s government appear almost impossible. Economy Minister Hernan Lorenzino called Griesa’s ruling “a kind of judicial colonialism”.

Argentina’s appeal asks the court to reinstate a stay on payment to the holdouts and contests Griesa’s latest ruling by arguing that it puts future debt restructurings at risk and endangers global financial institutions such as clearing houses and banks acting as payment agents.

Many specialists think it unlikely that the appeals court will reinstate the stay.

Last month, the appeals court backed the ruling by Griesa that Argentina has discriminated against holdouts. Argentina has requested a new hearing before all of the court’s 13 judges.

Most analysts think the so-called en banc rehearing is also unlikely to yield a different result, though some say it might ease the impact on third-parties such as Bank of New York Mellon (BK.N: Quote, Profile, Research, Stock Buzz), which transfers funds from the Argentine government to the bondholders, and clearing system operators.

Griesa’s ruling last week means such payment intermediaries are subject to embargoes on funds destined for exchange bondholders.

“While the situation looks very difficult for Argentina and exchange bondholders right now, it remains possible that the appeals court could amend Griesa’s order with regard to the application to third-party intermediaries,” investment bank Credit Suisse said last week.

“If the appeals court were to take a more moderate stance than Griesa, it may also issue a new stay on the order.”

That would buy Argentina some breathing space and a swift rehearing is likely given the looming December 15 deadline.

Beyond the appeals court, Argentina’s last-remaining legal option in the United States would be the Supreme Court.

Some legal experts think the Supreme Court could choose to weigh in on this case because of its implications for debt restructurings at a time of global economic turbulence.

U.S. government lawyers have backed Argentina’s position on pari passu, or equal treatment for all bondholders. They said that Griesa’s orders “could enable a single creditor to thwart the implementation of an internationally supported restructuring plan.”

However, not everyone thinks the ramifications will be that wide because most bonds issued since Argentina’s default contain collective action clauses that make a restructuring deal binding on all creditors.

“The pendulum, post Argentina, has swung,” said Hans Humes, president of Greylock Capital Management. The New York-based fund shunned the first debt swap, but accepted the same terms five years later in 2010.

“We used to have a discussion about what a country is able to pay and (Argentina) broke the mold and we’ve been forced to sit down and listen to what they want to pay. So in the current case maybe its swinging back in our favor a bit,” he added.

Securing the U.S. Supreme Court’s intervention before the hefty payment on Argentina’s growth-linked warrants is due on December 15 appears a remote prospect.

An eventual default would deepen Argentina’s economic isolation. Partly because of the legal action by the holdouts, the country has yet to return to global credit markets almost 11 years since the economic meltdown of 2001/2002.

Paying all the outstanding defaulted bonds would cost up to about $11 billion, equivalent to about a quarter of the foreign currency reserves that Argentina needs to keep servicing its debts in the absence of fresh credit.

Guillermo Nielsen, a former Argentine finance secretary who helped oversee the 2005 bond swap, said the government should deposit the $1.3 billion on time and keep litigating.

“A default on the new bonds must be avoided at all costs,” he said. “The (2002) default was incredibly costly for Argentina and this situation could end up causing a new default combined with contempt of court.”

(Additional reporting by Alejandro Lifschitz, Hugh Bronstein and Guido Nejamkis in Buenos Aires; Editing by Kieran Murray and Paul Simao)

Argentina bondholders seek fresh halt on court ordered payments

Helen Popper — Tue, 27 Nov 2012 03:08:44 +0000

BUENOS AIRES/NEW YORK (Reuters) – Investors holding $1 billion worth of restructured Argentine debt filed an emergency motion in a U.S. federal appeals court on Monday to fight a ruling that they fear could prevent payment on their bonds and trigger a new default.

The move came as Argentina makes a last-ditch attempt this week to stall the U.S. court ruling that has shaken the nation’s strategy to put a 2002 debt crisis behind it and fueled fears of a fresh default.

The Argentine government plans to appeal the ruling in the days ahead, arguing that it is “unjust and illegal” and could wreck future attempts by governments around the world to restructure debt, state news agency Telam said late on Monday.

A decade since it staged the biggest sovereign default in history, Argentina faces a stark choice between depositing $1.3 billion before December 15 to pay “holdout” creditors who rejected two debt restructurings, or jeopardizing payments to its other bondholders.

About 93 percent of bondholders agreed in 2005 and 2010 to swap defaulted debt from the 2002 default for new paper at a steep discount.

But U.S. District Judge Thomas Griesa last week ordered Argentina to pay the holdouts, led by Elliott Management Corp’s NML Capital Ltd and Aurelius Capital Management, who rejected the swaps and are fighting for full repayment in the courts.

Griesa’s order dismayed investors who took part in the two debt swaps and fear the G20 country will now enter into “technical default” on about $24 billion in restructured debt.

It was those holders who late on Monday filed the motion in the U.S. 2nd Circuit Court of Appeals seeking to halt Griesa’s order.

“The motion would ensure that interest payments to the bondholders continue while the appeal is decided,” David Boies, a lawyer representing the investors who participated in the exchanges, said in a statement.

“Exchange bondholders agreed to take under 30 cents on the dollar to support Argentina’s debt restructuring,” he said.

Aside from sparking howls from investors who participated in Argentina’s debt restructurings, Griesa’s ruling was a setback for the country’s combative, left-leaning President Cristina Fernandez, who calls the holdout funds “vultures” and has vowed never to pay them.

Some analysts fear the case’s implications could stretch far beyond Argentina and its creditors, hampering future debt restructurings and the operation of global payment systems.

The Argentine government is due to pay exchange bondholders at least $3.3 billion in principal and interest in December.

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LONG BATTLE

As part of the long legal battle, NML won a court order in early October to seize an Argentine naval vessel during a visit to Ghana, and the ship remains stranded.

The hedge fund denies Argentine accusations that it wants to trigger a default to get a windfall on its holdings of credit default swaps (CDS), derivatives used to insure against default.

Negotiations or voluntary payment by Fernandez’s government appear almost impossible. Economy Minister Hernan Lorenzino called Griesa’s ruling “a kind of judicial colonialism”.

“The only thing left is for Griesa to order them to send in the (U.S. Navy’s) Fifth Fleet,” Lorenzino earlier told reporters when outlining Argentina’s plans to file an appeal against Griesa’s ruling with the 2nd Circuit Court of Appeals in New York on Monday.

A pro-government newspaper, Pagina 12, said Argentina’s lawyers – Cleary Gottlieb Steen & Hamilton – would ask the court to reinstate Griesa’s stay on payment to the holdouts and contest his latest ruling in its entirety by arguing that it put future debt restructurings at risk and endangered global financial institutions such as clearing houses and banks acting as payment agents.

Many specialists think it unlikely that the appeals court will reinstate the stay.

“It may be an issue of process, but Argentina will struggle to justify why it refuses to pay the $1.3 billion,” Eurasia Group analyst Daniel Kerner wrote last week. “Argentina has the resources to meet the payment, so in the end it will be a political decision (and) there does not seem to be any political support for paying the holdouts at all.”