ATFA: Argentina Continues to Defy Paris Club's Rules and Requirements

-- Capitulating to Argentina's Demands Would Damage The Integrity and Effectiveness of the Paris Club

 

WASHINGTON, May 28, 2014 /PRNewswire/ -- American Task Force Argentina Co-chair and former Undersecretary of Commerce for Economic Affairs Robert J. Shapiro expressed his concerns today about Argentina's refusal to accept and abide by Paris Club guidelines for sovereign debtors, as preparations proceed for tomorrow's meeting in Paris of the Club and Argentina. Shapiro also urges Argentina to discontinue its decade long repudiation of privately held defaulted bonds and to finally sit down with bondholders and negotiate a resolution.

Argentina's embattled Economy Minister Axel Kicilloff is expected to snub the Paris Club leadership by refusing to accept and respect a mandated IMF review of the country's economy, among other requirements.  For more than a decade, Argentina has refused to deal with the IMF or acknowledge its supervision, as it has refused to repay more than $10 billion in loans from Paris Club nations.  At stake, now as then, are the principles, authority and effectiveness of the Paris Club and the IMF.  If Argentina were to succeed in persuading the Club to waive its requirement for IMF evaluation, future debtors inevitably will adopt similar tactics.

Dr. Shapiro noted:

The Paris Club's legitimacy and authority lie in its integrity and credibility, which will be at serious risk if it entertains the self-serving proposals by the current Argentine government.  According Argentina a special right to evade the Club's long-standing requirements in this case could also suggest that the Club approves of a nation that has not only lied consistently about its economic statistics, but also continues to flouts international norms and rules, embraces protectionist trade policies, and jails and fines individuals and organizations that dissent from their government.

Over nearly a half-century, the Paris Club has dealt with more than $470 billion in debts between countries, negotiating hundreds of agreements with some 90 countries. It has done so by consistently following its principles and requiring that all debtors respect the Club's established procedures.  

Moreover, the Paris Club should not entertain proposals from Argentina while the Republic persists refusing to negotiate or even meet with private creditors.  Thousands of small bondholders in Europe have been snubbed by Argentina in its repudiation of debts owed to private individuals. 

The governments of Nestor Kirchner and Cristina Fernandez de Kirchner have publicly blamed the IMF for Argentina's 2000-2001 economic crisis, when the IMF lent Argentina billions but then refused to lend billions more unless the government undertook basic economic reforms. 

Since 2006, Argentina has refused to allow the IMF to conduct its annual Article IV Consultations required of every member nation in the IMF.  The Argentine government has also fired and replaced independent statisticians at the government's statistical bureau, the INDEC, with political appointees, and fined economists who published data conflicting with INDEC's cooked figures.  In so doing, Argentina became the first country to be censured by the IMF for manipulating economic data and issuing false reports.

Argentina also has refused to negotiate with private creditors who hold court judgments, or to even meet with these creditors.  It's abuse of U.S. courts and of the rule of law has become ever more appalling – Argentina's lawyer recently told a U.S. court of appeals judge that it would "not voluntarily obey" her order.   

The American Task Force Argentina (ATFA) is an alliance of organizations united for a just and fair reconciliation of the Argentine government's 2001 debt default and subsequent restructuring. Our members work with lawmakers, the media, and other interested parties to encourage the United States government to vigorously pursue a negotiated settlement with the Argentine government in the interests of American stakeholders.