RPT-UPDATE 5-Argentina's Kicillof, architect of YPF seizure, named economy minister

Mon Nov 18, 2013 9:45pm EST

By Hugh Bronstein and Jorge Otaola

BUENOS AIRES Nov 18 (Reuters) - Argentine President Cristina Fernandez burst back on the scene on Monday after a five-week absence following surgery to treat a head injury, naming as economy minister the government's point man in its 2012 seizure of the country's biggest oil company.

The promotion of leftist economist Axel Kicillof, who had been deputy economy minister, was announced by a government spokesman in a televised address minutes after Fernandez appeared on TV for the first time since early October.

Kicillof, a charismatic and polarizing figure, steered the administration's expropriation of a controlling stake in energy company YPF from its former parent company, Spain's Repsol.

The takeover enraged Argentina's trading partners from the European Union, but was welcomed by many Argentines as a defense of national strategic interests.

Known for his fiery speeches in defense of Fernandez's interventionist policies, Kicillof spent most of his career in academia, giving classes and writing about the theories of economists such as John Maynard Keynes and Karl Marx.

He replaces Hernan Lorenzino, who was named ambassador to the European Union.

Fernandez had an operation on Oct. 8 to remove blood that had pooled on the surface of her brain after she fell and bumped her head. Her absence until earlier Monday evening had left a five-week political vacuum in Latin America's No. 3 economy.

"Thank you ... to the thousands of Argentines who have been praying for me," a smiling Fernandez said in a televised address. Sitting on a sofa, she appeared healthy. On a table was a vase of red roses she said had been sent by a well-wisher.

She briefly held a small white dog she said was sent to her by one of the brothers of Hugo Chavez, the late left-wing leader of Venezuela and a political ally of Fernandez.

Her absence had been conspicuous in a country accustomed to her centralized leadership style and frequent speeches.

Her office said her agenda on Monday was confined to meetings with senior officials. She has not been cleared for air travel and is scheduled for another medical checkup on Dec. 9.

Also on Monday, Argentina designated Carlos Fabrega as the country's new central bank chief, replacing Mercedes Marcó del Pont, and Carlos Casamiquela as agriculture minister, replacing Norberto Yauhar.

Chaco provincial Governor Jorge Capitanich will replace Juan Manuel Abal Medina as Cabinet chief. The newly named officials are scheduled to be sworn in on Wednesday.

APPOINTMENT 'WON'T BE WELCOMED BY MARKETS'

As she enters the final two years of her second term, Fernandez faces possible new protests from farmers who say her policies hurt their profits. High inflation, estimated by private analysts at 25 percent, rising crime, an overvalued currency and dwindling foreign reserves are also concerns.

Fernandez's supporters suffered heavy losses in congressional elections on Oct. 27 that ended her chances of securing a change to the constitution that would have enabled her to run for a third term in 2015.

"The appointment of Kicillof is not going to be welcomed by the markets," said Ignacio Labaqui, local analyst for New York-based consultancy Medley Global Advisors.

"It confirms that government policy will not be altered by the results of the midterm election," he said. "It increases the likelihood of a dual exchange-rate scheme, which Kicillof has been advocating, and we can expect that the central bank will continue to be the main source of financing for the Treasury."

Despite his youthful appearance - local media sometimes make as much of his sideburns as of his policymaking - Kicillof is an old-school leftist who shuns the tenets of 21st century globalism and believes Argentina must find its own way to industrial prominence.