Argentina: The Bogus Default
Marina
Menéndez Quintero
• marina@juventudrebelde.cu
July 31, 2014 21:13:57 CDT
A CubaNews translation. Edited by Walter Lippmann.
It seemed like everything had already been invented in terms of attacks on the most vulnerable. I am not talking about armed interventions, their most brutal expression. Nor of covert political interference, or the impositions arising from the dependence generated by poverty ... I do not even mean the very novel “soft coups” as they have been calling the allegedly "constitutional" removals through which “legal” scams have overthrown presidents whose fair election in the polls seemed assurance of the much cherished bourgeois democracy in fashion today.
What we are witnessing now is a new form of extortion with remnants, of course, from the recent past. And for that very reason it has to be overcome. The technical default, partial or selective, as they euphemistically labeled the unjust default imposed on Argentina, after the ruling of a U.S. court, goes beyond the financial area and is, whether we like it or not, a political crossroads.
To comprehend the issue, it is imperative to understand the injustice of the ruling by New York Judge Thomas Griesa. It prevents the stay requested by Argentina from paying the creditors who participated in the renegotiation of its debt while the dilemma of the 'vulture' funds (well-named after the dark bird of prey) remains unsolved. Hence emerges the unprecedented and scandalous situation of a default that in no way is due to the financial insolvency of Buenos Aires, but to the magistrate's decision which freezes and blocks the possibility that Argentina will pay. $539 million deposited by Argentina in U.S. banks destined to pay creditors who, between 2005 and 2010, agreed to renegotiate the debt are in limbo: those bondholders are not allowed to collect and the sovereign owners of the money cannot get their money back. Another $600 million were paid to the Paris Club.
The measure vainly sought to pressure the government of Cristina Fernandez de Kirchner. This Thursday, only a few hours before the deadline given for the "negotiation" of the vulture funds, Argentine Economy Minister, Axel Kicillof stood his ground and confirmed that his country would not agree to a deal that would hurt its citizens because it was not fair, equitable nor sustainable.
What the vulture funds intend, is the immediate payment in full of the 1,330 billion dollars which are now the equivalent of the debt bought by just seven percent of the creditors who did not agree to renegotiate. This is the amount reached through speculation in the bonds they acquired at devaluated prices equivalent to about 20 cents for every dollar. Well, as you know, vultures eat carrion.
Argentina, therefore, is fighting, not only to prevent becoming indebted again, but also to assert its sovereignty. Accepting the claim of the scavengers means an unfair and bleeding expenditure and would automatically enforce the RUFO clause adopted by the nation for debt exchanges. This clause sets equal payment for all creditors. Or should the country ignore its own laws?
But there are more reasons to think that Griesa´s decision is a move engineered to give checkmate and behead the king. Otherwise, the proposals presented by Kicillof would not have been rejected. He sought to reach a plausible agreement by negotiating similar terms with the remaining creditors. This would have meant profits of up to 300 percent for the owners of vulture funds.
Other comments related to the events are even more disturbing, such as the reflections published in the British newspaper The Guardian by analyst Mark Weisbrot. He suggests asking, among other questions, why, if even the IMF at the beginning was against the claim of the holders of vulture funds, then this institution has not acted to prevent the thievery. Or why the Supreme Court of the United States has not intervened.
Weisbrot´s speculations are not surprising or baseless. He pursues a clue --as when finding the murderer in an Agatha Christie´s novel-- following the thread to the group known as the American Task Force for Argentina, led by former officials of the Clinton administration, revealing that they spent last year over a million dollars in this case.
He says there are also “the usual suspects in Congress” mostly neo-conservatives, and the “Florida delegation”: individuals with allies within the U.S. executive branch looking to punish a "leftist" government. He believes they would have also forced the administration to change its mind. At first this, putting the financial markets over the political gain, had decided to mediate with the Court of New York against Griesa’s ruling.
What are we talking about then? Obviously, Argentina is facing what seems like an arm-twisting by the most recalcitrant and rightist groups in power. These resist the new Latin America, and tomorrow might try to twist the arm of any other neighbor in the continent. That is... if the region lets them, which, at this point, is difficult to expect. Argentina is now at the forefront of the resistance.
Argentina: el falso default
Marina
Menéndez Quintero
•
marina@juventudrebelde.cu
31 de Julio del 2014 21:13:57 CDT