EspañolThe climbing unofficial exchange rate for the US dollar in Argentina — popularly known as “blue dollar” — has been keeping the Cristina Kirchner administration on edge. From August 29 to September 29, the blue dollar has seen an increase of 10.92 percent. On Monday, the informal rate was AR$15.75 per US dollar, while the official official exchange rate held steady at AR$8.43 per US dollar.
The Kirchner administration is trying to put an end to the illegal sale of currency, and is working on a bill that would reform current criminal law regarding currency exchange.
Faced with a widening gap between the official and unregulated rates, the bill seeks to change the nature of the offense and allow security forces to conduct raids on black-market exchange “caves,” without a request from the Argentinean Central Bank (BCRA).
Carlos Gonella, chief deputy attorney general for Economic Crime and Money Laundering (Procelac), said the decision to strengthen controls and ease search requirements stems from the discovery of phone records indicating calls placed within the BCRA to illegal businesses, presumably warning them of possible inspections in advance.
Putting an End to “Warning Calls”
Gonellla has described current law governing the black-market exchange “obsolete,” since it gives the BCRA discretion on when and where to conduct raids. He says the law enacted in 1971 is now anachronistic because “it does not cover the blue or parallel dollar.” He also criticized the media for “normalizing the blue dollar.”
I have seen armed public officers of various security services providing [private] security for the caves,” Gonella told Radio América. Prosecutors have also told La Nación that during raids police officers often find their colleagues guarding these locations.
— LA NACION (@LANACION) September 29, 2014
The administration’s belief that there exists a connection between BCRA officials, federal police, and major exchange operators have led authorities to seek ways to interrupt communication and prevent “warning calls.”
One of the highest profile cases to date involves Federal Judge Norberto Oyarbide, who claims he was forced to stop a police raid on an exchange operator after receiving a call from the Legal and Technical Secretariat of the Presidency.
Despite Gonella’s statements, Cabinet Chief Jorge Capitanich dismissed the idea that the administration is working to change the law. “Given my role, [if the bill existed] I would have been aware of it, but that is not the case,” he said. Gonella, however, responded to Capitanich’s comments in an interview with Radio América, once again confirming the proposed legislation and adding that it has been in the works for “several years.”
What the Current Law States
The Criminal Regulations for Foreign Currency Transactions Law was enacted in 1971 during Argentina’s military dictatorship (1966-1973). It provides for sanctions against “any foreign exchange negotiation without the participation of an institution authorized to make such transactions.” It further stipulates that this includes “any foreign exchange transaction not made for the amount, in the currency, at the exchange rate, within the terms established, and according to the remaining provisions established in the regulations in effect.”
According to the law, Article 5 states that “the Central Bank of the Argentinean Republic will supervise and control the persons and legal entities negotiating in the exchange market and will conduct the investigations regarding violations of the law.” Paragraph E of the same article explains that it is the BCRA’s exclusive authority to request a search warrant from the courts to “be issued without delay, under the responsibility of the officials who require them.”
The legislation also states that the central bank may “seek the immediate assistance of the police in the case of constraints or resistance when conducting raids, seizures, or inspections of offices, books, papers, correspondence, or documents of the persons under investigation.”
The criminal law sets a financial penalty of up to 10 times the amount of the operation and a maximum prison sentence of eight years for repeat offenses.
Aldo Pignanelli, an economist and public accountant, served as the president of the BCRA between July and December 2002, under the interim government of Eduardo Duhalde. He explained to the PanAm Post that the gap between the blue dollar and official exchange rates stems from the macroeconomic policies of the Kirchner administration. Pignanelli believes that, even though the draft of the bill not yet available, changes to the law will not prevent this gap from widening.
“Amid a run against the peso, and the new Law of Supply, no good will come from a reform of exchange regulations. It’s not about good or bad criminal law, but about having good macroeconomic policy,” said Pignanelli.
EspañolA key education reform introduced by Chilean President Michele Bachelet is one step closer to enactment, and with it a tightening of controls over otherwise independent schools. On September 29, the Education Committee of Chile's House of Representatives approved two reforms that would curtail student selection in the private sector for elementary education. If passed by the Congress, elementary-school officials would no longer be able to dismiss students purely on academic grounds. Nor would they be able to select entrants in any way, aside from their ability to pay the fees. Ángel Soto, professor at the University of the Andes shared with the PanAm Post that the education-reform package is likely to go into law, but he says there is great discontent among citizens. That means representatives will be mindful of a political price to pay, and it is too early to predict the final results. "It is true that the education-reform package is an emblematic proposal [of Bachelet administration], but the government must be careful with the criticism on the streets. The error in the Bachelet administration has been precisely their poor understanding of what people have requested. https://twitter.com/felipekast/status/516738315253739520 Voting for education reform in the Education Committee. These proposed regulations are part of a sweeping education-reform package. Beyond restrictions on elementary-school exclusivity, the House committee has approved a ban on for-profit status in all educational organizations that receive government funding. The levers of regulation and state funding will, for example, challenge schools that participate in the prevailing voucher program. The initial campaign for broader reform focused primarily on state schools, but the bills making their way into legislation target the private sector. The Alliance for Chile, a coalition of opposition parties, has expressed intense criticism towards the modifications to the General Education Law (LGE), and they plan to appeal it on constitutional grounds. “This is the true face of the reform, where the autonomy and freedom of educational projects are severely limited,” affirms Representative Jaime Bellolio from the Popular Democratic Union (UDI). https://twitter.com/jbellolio/status/516229071261675520 The government must decide whether they want to upgrade education or control it. This reform points to the left, not forward. Representative Felipe Kast of the Evópoli Party adds that “It would be better for the New Majority, Bachelet's party, to obsess about upgrading public education than to attack private education. Months, in discussions, have passed, and not a word on [quality].” Students' Best Interests at Heart Responding to the criticism, Education Minister Nicolás Eyzaguirre has explained that the purpose of these two new reforms is the protection of students against discrimination. He believes this is a problem during the selection process in private schools. Correspondingly, the minister has denied accusations that these reforms are simply against profit in education. Eyzaguirre says the role of the government is to ensure that student rights are respected in private schools. Camila Vallejo, a representative of the Communist Party of Chile, has given her support for these reforms and added that there are more of this kind on the way. Apparently, they are under discussion in the House, but she did not specify the details. The only specific reform rejected from the Bachelet proposal came from independent Representative Gabriel Boric. It sought a mandate that all schools be coeducational. Education Reform for Equity? Hernán Herrera, president of Independent Schools of Chile (CONACEP), has spoken out in a newspaper op-ed with the headline "Maximum Segregation," published in La Tercera. His organization has united representatives of private and subsidized schools, as they express their fears that these reforms are a step on the road to destroying the nontraditional schools in Chile. Equity includes the right of every student to access the same subsidies from the state, and not to be distinguished by the school they attend. While the reigning New Majority Party has outright dismissed criticisms from the Alliance for Chile, Herrera says "Equity includes the right of every student to access the same subsidies from the state, and not to be distinguished by the school they attend." To Herrera, the proposal at hand, which would the voucher program, constitutes a strangulation of private educational institutions. New Majority representatives contend that there will be no differential financing in future, so long as students attend nonprofit schools. Herrera counters that not only is such a distinction immoral, it "might also be unconstitutional.… Resources have to be given to the students on the basis of their [economic] vulnerability, not their chosen educational institute."