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Lockheed Martin said to Financial Times that the US government’s spending cuts would reduce its sales for the year by $825m, as it became one of the first big military contractors to put a figure on the impact of the across-the-board reductions. READ WHOLE ARTICLE IN FT

Ranking Member Adam Smith

Of the 30 largest House recipients of defense industry campaign donations since the 1990 election cycle, only 11 are still serving in Congress, according to the analysis of magazine POLITICO and federal data compiled by the Center for Responsive Politics. It’s the same story in the Senate, where 14 of the top 30 recipients over the same time period still serve.

READ MORE HERE: http://www.politico.com/story/2013/02/defense-industry-finds-few-old-friends-on-hill-87991.html

Crime in Brazil

Recent surveys reflect public safety has not been the priority of the current Brazilian government. The surveys are talkinf about little investment public safety, high rates of crime and homicide, low percentage of homicides cleared by the justice system, increased sense of insecurity of the population, according to an article published by 180graus.com

The article says that a survey by the website Open Accounts about public spending on public safety, points out that the 3.1 billion in planned budget for public safety in 2012, only 738 million reais (23.8% of total) was used by the federal government.

According to the survey, the pending on the purchase of new vehicles, equipment and infrastructure improvements, such as prisons and police departments, although it was higher than in 2010 and 2011, is far less than that applied in 2007 (R $ 1.2 billion).

Excessive bureaucracy, the systemic failings of the various organs of government and lack of commitment results are the main factors for the low investment of resources in the area. Furthermore, by constitutional provision, the federal government maintains some distance from the public safety issue, since the control of the military and civil police is the responsibility of the states. With this, the difficulties in applying the resources demonstrate the need to review assignments of the central federal government in Brasilia, states and municipalities.

Brazil is considered the second most violent country in the world, based on figures relating to intentional lethal crimes. Annually about 50 thousand Brazilians are victims of homicides in Brazil. Of these, on average, only 8% the police get the criminals and far fewer get to be tried and convicted. The impunity rate reaches the level of 92%, according to the article.

Nevertheless, Brazil supposedly can not be regarded as a country of  impunity, because it has the third prison population in the world, second only to China and the United States, and one of the fastest growth rate of incarceration in the world. In 1995 there were 160 000 prisoners and currently are 540 000.

The Americas Security News - Spending cuts in Pentagon

The U.S. Department of Defense DoD will impose a freeze on hiring civilians, cut operating costs on military bases and take more immediate steps to reduce spending in preparation for the possibility that U.S. Congress will fail to reach a deal to avert billions of dollars in additional cuts,  DoD officials said on Friday.   If  the White House and the Congress  do not an agreement, the Pentagon would be subject to $52 billion in cuts this fiscal year — about 10 percent of its non-war-fighting budget.

If no agreement by March 1, the DoD would have seven months to erase the $52 billion from its current budget because the fiscal year ends Sept. 30.  Cuts could affect defense programs, such as ship maintenance, purchase of new weapons and the military training programs.

A memo released Thursday by the Pentagon instructs all DoD forces and agencies to curtail spending on training, travel, office expenses and conferences. It also gives officials the authority to fire temporary workers.

The hiring freeze alone could have a significant impact on the economy in the Washington DC region (including Viriginia and Maryland). The Defense Department employs about 800,000 civilians worldwide, but many are concentrated locally.

Free Trade Agreement with United States: in front of a billboard saying `Colombia is now open´ President Santos rang The Opening Bell at the New York Stock Exchange trading floor, on May 25th 2012.

On Friday, May 25, Juan Manuel Santos, President of the Republic of Colombia, visited the New York Stock Exchange (NYSE).  During his visit, the President met with NYSE Euronext executives, participated in an executive roundtable breakfast, rang the opening bell and toured the NYSE trading floor.READ MORE HERE

The Americas Post - Tempers are flaring over Argentina's recent move to nationalize YPF

Spanish oil company Repsol-YPF announced it will demand over nine billion dollars from Argentina for nationalizing 51 percent of its YPF division, a price tag that has already been rejected by authorities in Buenos Aires.

The Argentine government’s decision to take control of the company has sparked a diplomatic crisis between Argentina and Spain, while provoking a flood of international criticism against the South American country for the abrupt action.

Argentina’s President Cristina Fernandez on Monday spoke of the country’s largest oil company, which generates half of Repsol-YPF’s revenue, and sent her Congress a bill to expropriate 51 percent of its shares after months of  pressure and blame for reduced oil production in the country.

After years of spending millions on imports that undermine its trade surplus, Argentina wants to regain energy independence.  Many analysts however, doubt that nation’s ability to compensate Repsol-YPF and also find the money for the necessary investments.

“We’re going to request a total valuation of 18 billion dollars,” said Repsol chairman Antonio Brufau, in a two-hour press conference.

Repsol, which held 57.43 percent of YPF, called the decision illegal, but Argentina disputes the amount demanded by the Spanish.

“We will not pay what they say, as Mr. Brufau, 10 billion dollars,” said Deputy Economy Minister Axel Kicillof, speaking before the Senate.  “The valuation of YPF will be based on objective data rather than stock market speculation,” he said.

YPF’s market capitalization is currently about 10.4 billion dollars, but the company has lost nearly a third of its value already in 2012 due to pressure from Argentina and fears of expropriation.

Kicillof said he is reviewing “secret” information to determine the company’s market value.

“The numbers the directors or former directors were talking about in a very careless way about the value of the company will be reviewed as we learn the intricacies of secret information that the company handled,” he told senators.

An Argentine Senate committee began Tuesday to discuss the proposed expropriation, in a meeting attended by Kicilliof and the current auditor of YPF, Planning Minister Julio De Vido.  During the meeting there were harsh exchanges between legislators and officials.

Kicillof suggested that in recent years Repsol funded its international expansion by “squeezing” YPF for the dividends that the company distributed.

According to local law, Argentina should negotiate with Repsol-YPF for compensation. In case of disagreement, a court will decide based on an appraisal yet to be agreed on.

“The range of defensive measures that could be taken is broad and may include individual or class actions in the various countries involved, including  civil or commercial claims for compensation for damages, ” said Brufau.

Argentina already owes hundreds of millions of dollars outstanding in antigovernment decisions in international court.

Argentina’s decision sparked a wave of criticism in the international community, from Madrid to the EU and Mexico.  The Government of Spain confirmed that the case will be discussed on Friday in cabinet.  Speaking at an event in Mexico, Spanish Prime Minister Mariano Rajoy expressed “deep distress”.

“The company has been seized without any justification or economic reason, and they have to explain what happened”, he said.

European Commission President Jose Manuel Barroso said Tuesday he expects Argentina to respect international agreements on protection for business with Spain.

“I am seriously disappointed by the announcement yesterday. I hope that the Argentine authorities respect their international agreements and obligations, particularly those resulting from a bilateral agreement on investment protection in Spain,” said Barroso.

The Americas Post - Chevron's Brazil Corporate Affairs Director Rafael Williamson has a headache

A crusading federal prosecutor in Brazil this week opened his second 20 billion real ($10.9 billion) lawsuit against U.S. oil company Chevron and driller Transocean, doubling the charges against both companies while drawing criticism from other Brazilians.

The new lawsuit, the second filed by Eduardo Santos de Oliveira against the companies in less than five months, is related to an oil leak discovered on March 4 in Chevron’s offshore Frade field northeast of Rio de Janeiro, the Federal Public Prosecutor’s office announced. The case in federal court in Campos, north of Rio de Janeiro, would also block Chevron and Transocean from operating in Brazil, transferring Brazilian profits overseas, obtaining government-backed finance and moving equipment from the country, the statement said.

“The second leak is as serious or more serious than the first, so the damages have to be in the same category,” Santos de Oliveira said. “While they are not a simple mathematical calculation, they are not symbolic either.”

Chevron and Transocean’s activities may have damaged the Frade reservoir, making it impossible to produce from the field, denying Brazil its right to royalties on a public resource, Santos de Oliveira claimed. In November, he launched his initial 20 billion real lawsuit over an estimated 3,000-barrel spill in the Frade field. Santos de Oliveira considers the spill as one of the worst-ever ecological disasters in Brazil.

Chevron’s November spill was less than 0.1 percent of BP’s 2010 Deepwater Horizon disaster in the Gulf of Mexico. Chevron said the March leak, which led to the latest lawsuit, was about two barrels, of which less than one escaped, making it less than 0.1 percent of Chevron’s November spill. Unlike in the Gulf of Mexico, no Chevron oil came near the coast. “The filing of the second lawsuit is another in a series of outrageous actions brought by the same district attorney who previously filed both a criminal and civil case, all of which are without merit,” a Chevron statement responded. “The 20-billion-real figure in both civil lawsuits is arbitrary and has no legal and factual basis,” Chevron said.

The huge amount of the suit has caught the attention of politicians close to the government of President Dilma Rousseff. Jorge Viana, a senator from Rousseff’s Workers’ Party and one of the country’s leading environmentalists, said in March that the damages being sought are “irresponsible” and could bring about the closure of Brazil’s oil industry. The industry generates revenue worth more than 10 percent of gross domestic product in Brazil, the world’s sixth-largest economy. Chevron is the No.2 U.S. oil company by market value. Chevron now faces about $22 billion in potential legal charges from cases launched by Santos de Oliveira alone. That’s more than the $20 billion BP set aside to pay damages and for its cleanup of its far larger spill in the Gulf of Mexico.

“Look at what’s being set aside by BP in the United States and you’ll see everything you need to know about what the prosecutor is asking,” said Ildo Sauer, a professor at the University of Sao Paulo’s Electro-tenical and Energy Institute and former head of natural gas and energy at Brazil’s state-led oil company Petrobras. “I can’t figure out where he got these numbers from or how he came up with such a figure,” said Sauer, who has a Ph.D in nuclear engineering from the Massachusetts Institute of Technology. In the BP spill 11 died and about 4.9 million barrels leaked over three months. In Frade, no one was hurt and the leak was stopped in four days, according to Chevron. The amounts being asked of Chevron and Transocean don’t include unspecified damages being sought by Brazil’s largest oil workers’ union for the same spill or several hundred million dollars of fines already levied against the companies by Brazilian regulators. Santos de Oliveira has also filed criminal charges against Chevron, Transocean and 17 of their employees. The charges could carry jail terms of up to 31 years.

“Everything suggests that we are operating in an environment where there is a huge gap in our legal, institutional and technological ability to deal with and run an offshore oil industry,” Sauer said in an interview. The prosecutor’s office also said Tuesday that Santos de Oliveira plans to investigate Brazilian national oil regulator ANP and environmental protection agency Ibama over their handling of the November spill and March leak. Santos de Oliveira recently said he plans to expand his probe to investigate other oil companies in the Campos Basin, the location of the Frade field and the source of about 80 percent of Brazil’s more than 2.6 million barrels a day of oil and natural gas output.

The biggest operator in the Campos Basin is Petrobras, which operates 39 of the 47 producing fields in the region, according to Brazil’s oil regulator, the ANP. Other operators in the area include Ango-Dutch Shell, Brazil’s OGX Petroleo , Spain’s Repsol, Denmark’s Maersk Oil and the U.K’s BP. Chevron and its partners in Frade, Petrobras and Frade Japao, a Japanese group led by Inpex  and Sojitz, asked for and received permission to end operations temporarily in that field after the March leak. The field, which was producing about 80,000 barrels a day at its peak last year, was producing about 62,000 barrels a day when it was shut down.

Chevron owns 52 percent of Frade, Petrobras owns 30 percent and Frade Japao 18 percent. Petrobras former chief executive Jose Sergio Gabrielli said last year that Chevron’s partners may have to pay their share of any damages won against Chevron for actions in Frade. Chevron said on March 21 that tests showed the March leak was not from any reservoir it was producing from in the field. An ANP official told a Brazilian Senate committee earlier this month that the November spill caused no discernable environmental damage.

Both Chevron and Transocean have said they have done nothing wrong, that they are innocent of any crimes and will defend their employees against civil and criminal charges.

The Americas Post - Brazilian federal prosecutor Eduardo Santos de Oliveira has an axe to grind with Chevron

A judge in Campos, Brazil, may transfer the criminal case filed against Chevron and drill-rig operator Transocean to Rio de Janeiro, a move that would eliminate a crusading prosecutor from that case.

Eduardo Santos de Oliveira, a federal prosecutor based in Campos, in Rio de Janeiro’s interior, said on Friday that a jurisdictional review is under way that could postpone criminal indictment of both firms and their personnel for weeks.

Oliveira filed criminal charges against Chevron, Transocean and 17 of their staff in Brazil this week for alleged crimes leading to a November offshore oil spill in Brazil’s Frade field, operated by Chevron.  He called for maximum prison sentences of 31 years against the firms’ executives.

Federal judge Claudio Girão Barreto will now decide whether the companies must post bonds in Campos or whether the case should be moved to Rio de Janeiro. Such judicial review typically takes about two weeks.

The review does not change the severity of the charges, but could remove the case from Oliveira’s jurisdiction and result in a different team of prosecutors.

The jurisdiction question is complicated by location of the alleged crimes in a deep-sea oil field beyond Brazil’s territorial waters but within its 200-nautical-mile “exclusive economic zone.”

Oliveira said the judge asked him to appear in court Monday with more details about the case.

“I think moving the case to Rio de Janeiro would be a mistake,” said Oliveira. “Chevron and Transocean want you to believe this happened on some foreign ship or platform in international waters. But the crime happened under the seabed, in physical Brazilian territory.”

Some Brazilian officials, such as Senator Jorge Viana of the government’s ruling party, have called Oliveira’s charges overly-aggressive. Viana warned this week that the case could damage Brazil’s oil industry.

A 20 billion reais ($11 billion) civil suit launched previously by Oliveira in Campos against Chevron and Transocean, its drilling contractor at Frade, has already been transferred to Rio de Janeiro’s capital. A judge determined in January that Campos was not the correct jurisdiction for the civil case, Brazil’s largest environmental lawsuit in history.

Chevron’s spill of 2,400 to 3,000 barrels of oil at the Frade field in November was caused by a pressure surge during drilling. Oliveira has accused Chevron’s operation of being reckless and unsafe. The companies deny the charges.

The Americas Post - There's a lot of oil off Brazil, but some of it is in the water again. Image: sojitz.com

The Brazilian navy has detected a thin oil slick, stretching for about a mile, in the same offshore field where U.S. oil company Chevron had a minor spill in November.

Navy officials reported the spot on Friday after a surveillance flight off the Atlantic coast of Brazil, according to a statement issued late on Friday.

The Navy, oil industry regulator ANP and environmental protection agency IBAMA, will supervise and coordinate actions with Chevron to control the spill, the statement said.

On Thursday Chevron moved to temporarily stop production operations in Brazil after it detected a “small new leak” of oil in the Frade field.

The company said it adopted the measure as a precaution to study its “reservoir management plans”, where they have spent over two billion dollars to develop that nation’s largest oil field controlled by foreigners.

If approved by Brazilian regulators, the suspension will close an oil field with capacity to pump 80,000 barrels per day, more than 3 percent of oil production in Brazil.

Chevron’s public relations firm in Rio de Janeiro said the company would issue no immediate comment on the statement of the Navy.  The previous Chevron spill in November leaked about 3,000 barrels from cracks in the seafloor.  That resulted in a civil lawsuit for 11 billion dollars, the largest case of environmental damage in the history of Brazil, even though the total amount of oil released was less than 0.1 percent of the 2010 BP spill in the Gulf of Mexico.

Chevron said Thursday that there was no evidence yet that the two were related spills.  ANP, the Brazilian Navy and IBAMA officials will meet early next week to assess the situation, the statement said.

The Americas Post - Guess what the argument is really about? Photo Credit: Rockhopper

Britain denounced Argentina for intimidation against the people of the Falkland Islands on Friday, after Buenos Aires announced legal action against companies conducting oil exploration in the disputed South Atlantic protectorate.

Tensions between the two countries have increased approaching the thirtieth anniversary of the Argentine invasion in the Falklands, a conflict that killed 650 Argentines and 255 British soldiers.

The dispute has been revived by the discovery of oil in the islands, which analysts estimate could value 167 billion dollars.

Argentina said Thursday that it would present legal action against any company involved in oil exploration off the coast of the islands, in a bid to pressure London into discussing their claim of sovereignty.

A spokesman for Prime Minister David Cameron described Argentina’s decision as “regrettable” and the Foreign Ministry said that the Falklands had the right to develop its petroleum resources without interference.

“Argentina’s efforts to intimidate the Falklands are illegal, inappropriate and totally counterproductive,” said a ministry spokesman.  The Foreign Ministry will work with all affected companies to limit the impact of the Argentine legal measures, he added.

London has refused to discuss sovereignty of the islands unless required by its 3,000 inhabitants, who have shown no signs of wanting to do so.

The British explorer Rockhopper, who discovered the site north of Sea Lion Island in 2010, has sought a partner to invest in a project of 2,000 million dollars.  Meanwhile, Borders & Southern and Falkland Oil & Gas is preparing to drill wells south of the island this year.

An industry source in London said on Thursday that legal action against companies involved in oil exploration in the Falklands “will not impact Rockhopper operations”.

Argentina asserts that the exploration and drilling are illegal because it is a disputed area, but the government did not specify what type of legal action it had in mind.

Britain says that the recent decisions in Argentina are an attempt to impose an economic blockade on the remote archipelago. In December, South American trade bloc Mercosur agreed to block ships sailing under the flag of the islands from any of its ports, in solidarity with Argentina.

This month, Argentina said it wanted to renegotiate a 1999 agreement with Britain that allows weekly flights by Chilean airline Lan to the islands and suggested that the state Aerolineas Argentinas fly into the territory.

In February, Argentina filed a complaint at the United Nations for what it considers the “militarization” of the South Atlantic by Britain, after London announced plans to send a destroyer to the area.

Buenos Aires also criticized the mission of Prince William, second in line of succession to the throne, to the islands in his capacity as a search and rescue military pilot.