Argentina offers tax amnesty for undeclared cash

BUENOS AIRES, Argentina (AP) — Argentina's government announced new measures on Tuesday intended to suck up undeclared dollars in response to growing pressure to abruptly devalue the nation's currency.

Economy Minister Hernan Lorenzino said the new tax-free bonds and certificates of deposit will pull into the banking system the foreign currencies that Argentines have hidden under mattresses and spirited out to illegal tax havens.

Both measures are being sent to congress for approval, presumably because enabling people to declare cash without paying criminal penalties requires the force of law.

Argentines will need to deposit these undeclared dollars at the Central Bank, which will issue CDs for the entire amounts, Central Bank President Mercedes Marco del Pont said. The bonds will pay 4 percent interest through 2017, Lorenzino said.

The money will be used to finance energy and home construction projects, generating jobs and stimulating the economy.

Both sectors have stalled, in part because speculation about future inflation and a possible devaluation has made long-term investments in Argentina too risky.

Tax chief Ricardo Echegaray said that once approved, the amnesty will last for three months, and that any person or corporation can benefit. But he also said elected officials and anyone facing money laundering probes cannot participate.

"We have a long list of people facing charges who are not eligible," Echegaray said, and named some names beginning with Lazaro Baez, a businessman close to President Cristina Fernandez and her late husband Nestor Kirchner who is the focus of a federal money laundering investigation.

Hours earlier, Fernandez ruled out any currency devaluation while she's president, and dismissed the brewing Baez scandal as election-year politics.

But many Argentines have lost faith in the peso and in her leadership as inflation soars, Central Bank reserves drop and the economy slows, hamstrung by currency controls that make doing legal business more difficult.

A closely watched sign of the country's economic future is the illegal currency market, where Argentines are increasingly desperate to ditch their pesos as inflation climbs above 25 percent a year. Amid fears of a potential currency shock, they're now trading nearly 10 pesos for each dollar — close to half the official value of 5.2.

This "blue dollar" trading remains marginal compared to the overall economy, but it's a free market, stubbornly beyond the government's control, and as such, it's increasingly being looked at by Argentines trying to protect their pocketbooks. The central bank periodically releases dollars to rein it in, but that's risky as well, now that Argentina's reserves have dropped by more than 20 percent, to $39.75 billion.

New polls suggest Fernandez has lost more than half the support she had when re-elected in October 2011, including a 10-point ratings drop in the days since a scandal broke on April 14 over allegations that Baez spirited millions in cash out of Argentina in private planes.

A survey by the Management & Fit agency said only 29 percent approval of Fernandez's leadership, down from 64 percent when she was re-elected. That poll of 2,000 Argentines, taken just after the scandal broke, had an error margin of about two percentage points.

A separate survey about her personal image said 48 percent viewed it as positive after the scandal broke, down from 57 percent before. A total of 1,000 Argentines responded to that survey by the Ipsos-Mora firm, which had an error margin of three percentage points.

Fernandez waved away the trouble in a speech at the Casa Rosada government house Monday night.

"Those who want to make money at the cost of a devaluation that the people will have to pay for will have to wait for another government," she declared. History shows that devaluations have only hurt ordinary Argentines, while enabling the financial sector to make huge gains "off the hunger, misery and de-industrialization of the country," she warned.

"They're raising this idea again because an election period is approaching," she added. "Every time there's an election, on side there's the economy and on the other, the scandals. It's typical of every election."

That brief reference to scandals was her first comment yet about allegations that Baez had used his access to the presidential couple to make huge profits that he laundered by having aides fly the cash out of the country in mysterious trips on private planes.

The allegations, made by former Baez associates in televised interviews with investigative journalist Jorge Lanata, have made for sensational television in Argentina, and a judge agreed to open a formal investigation of Baez and his associates.

Lanata struck closer still to the president on Sunday night, interviewing Kirchner's former secretary, Miriam Quiroga, who described bags full of cash in the Casa Rosada. She said they were delivered to the southern province of Santa Cruz, where Baez based his business empire and the Kirchners have several homes. Quiroga also alleged that the Kirchners had vaults built to hold the cash.

Judge Julian Ercolini subpoenaed Quiroga to testify in the widening criminal investigation by prosecutor Guillermo Marijuan, and Attorney General Alejandra Gils Carbo ordered additional police protection for the prosecutor, who reported receiving at least two threats that his young daughters will be killed if he doesn't drop the probe.

Meanwhile, Fernandez faced a new challenge on her left flank: the launching Tuesday of a new political party by her former ally, union boss Hugo Moyano, who has become one of her toughest critics. Moyano plans to run lists of candidates under his "Culture, Education and Jobs" banner in October's midterm elections.

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Associated Press writer Almudena Calatrava contributed to this report.

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C. African Republic rebels reject president offers

BANGUI, Central African Republic (AP) — Rebels in Central African Republic are vowing to take up arms again despite recent concessions made by the country's president in a bid to stay in power.

The rebels had set a Wednesday deadline for President Francois Bozize's government to address their grievances.

An alliance of rebel groups signed a peace agreement with the government in January after threatening to march on the capital of Bangui.

In a presidential decree read late Wednesday, Bozize agreed to lift a curfew and release political prisoners.

But rebel spokesman Col. Sylvain Oumar Bordas says the president's actions are too little too late. Bordas says the rebel leaders are now discussing their next steps.

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Venezuela book fair offers more Chavez than books

CARACAS, Venezuela (AP) — Near the entrance to Venezuela's national book fair, an image of the late Hugo Chavez holding a can of paint in one hand and a brush in the other greets visitors. Beside him reads a bright-red message that has also been scrawled on walls all over the country: "I will be present in the struggle."

Judging by the posters, comics and stacks of books featuring Chavez at the book fair, the larger-than-life leader is living up to those words two weeks after his death from cancer.

An April 14 vote to replace Chavez approaches, and the government is pushing the candidacy of Nicolas Maduro, his hand-picked successor, by inserting the late president into every corner of daily life. That includes the country's cultural life, and the annual book fair has become the latest example of the government strategy.

"If we are all Chavez, we must be readers and promote that intimate affection that Chavez had for reading," Maduro said while inaugurating the fair on the patios outside the Teresa Carreno theater.

Conspicuously absent at the book fair on a recent afternoon were tomes written by the likes of conservative Peruvian author Mario Vargas Llosa or columnist Andres Oppenheimer. Instead, public employees handed out booklets of Chavez's last televised speech and posters dramatizing his healthier days, with the leader wearing a dark suit and the red, yellow and blue presidential sash.

Opposition politician Julio Castellanos slammed the government for using state institutions and cultural events such as the fair to promote the ruling party's political agenda. Parties backing opposition candidate Henrique Capriles, he said, have brought their complaints to the National Elections Council, which is charged with ensuring fair elections. Yet that's the same commission that hosted a giant Maduro campaign rally last week.

"Our complaints regarding the prohibition of propaganda activities by public employees and institutions, which constitute a gross form of electoral opportunism, have fallen on deaf ears," Castellanos said.

Such legal questions felt a world away at the fair, as Chavistas snatched up the Bolivarian swag.

In the fair's state-run bookstore, cashiers handed out a comic book chronicling the weeks leading up to the 2002 coup that briefly ousted Chavez. The former paratrooper is depicted masterfully outsmarting the rebellious military leaders who led the coup and staging a triumphant return.

Radio Nacional de Venezuela, one of several state-run radio stations in the country, broadcast live from the fair. In between news updates and sounds bites of Maduro's latest speeches, pro-government musicians stopped by the station's cubicle to play tunes praising Chavez.

Luis Felipe Bellorin strummed a guitar as he sang "Caravan: A Song of Peace."

"From your hands, peace runs across Earth," Bellorin intoned.

Public employees nearby handed out leaflets that promoted Maduro's candidacy while exclaiming "Vive Chavez! He's here! He turned into millions of people and we will continue his legacy."

"This encourages people to read, and we can thank the government for that," said Eduardo Cedeno, who was holding a copy of "The Working Class and the Bolivarian Revolution" and government newspaper "El Correo del Orinoco."

The 56-year-old retiree said that while the fair was clearly directed to Chavez loyalists, "this is open to everyone."

Chavez himself was a voracious reader, often keeping several books at his side during televised speeches and sharing excerpts with his audience.

In 2009, he spurred sales of Eduardo Galeano's anti-imperialist polemic "Open Veins of Latin America: Five Centuries of the Pillage of a Continent" by presenting a copy to U.S. President Barack Obama during a regional summit meeting.

Chavez also repeatedly urged Venezuelans to read Victor Hugo's "Les Miserables" and "Don Quixote" by Miguel de Cervantes, with his government printing over a million copies of the books for free distribution.

Venezuelans, however, have shown little of that same literary bent. An information panel at the fair said the average citizen read as little as two books a year, a quarter of the U.S. average of eight books. Instead, Venezuelans are by far more eager consumers of overheated TV soap operas.

All of which raises the question: How many book fair visitors will actually dig into the discount-priced copies of "The Communist Manifesto" or "Will There Be Peace in Colombia?" a compilation of interviews with Timoleon Jimenez, the commander of Colombia's largest rebel group.

Christhian Valles, president of a state-run institution that promotes reading and helped organize the fair, said the event's mission had been accomplished, with more than 100,000 people visiting in 11 days.

"We are on the right path: the promotion of reading," she said in a statement. "And our main promoter is and always will be President Hugo Chavez."

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Christopher Toothaker on Twitter: http://twitter.com/ctoothaker

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