For that, Argentina will not capitulate to speculators’ actions either on the legal or the political front.

Ambito Financiero

“One can expect anything from the vulture funds”

Friday, July 20, 2012

By Ignacio Ros

Interview with Jorge Argüello, Argentine ambassador to the U.S.

«One can expect anything» from the hedge funds, warned Argentina’s ambassador to the United States, Jorge Argüello. There are complaints filed before Judge Thomas Griesa in New York against the government for US$3.5 billion around unpaid debt. However, Arguello said that “around 90% of all the cases with final decisions against Argentina in U.S. courts belong to vulture funds, domiciled in tax havens.” “Only approximately US$300 million belong to U.S. citizens,” he said. In an interview with Ambito Financiero, the official referred to the government’s legal strategy, the suspension of tariff preferences from the United States for the country and opened the possibility that American oil companies are coming to the country to participate in YPF projects.

Reporter: What are the next steps in the government’s legal strategy with the hedge funds?

J.A.: Argentina restructured 92% of its debt in default, but is still being harassed by the vulture funds, who refused to enter the swaps offered by Argentine in 2005 and 2010, and that are trying to get profits from one of the many holes in the international financial system and the lack of an internationally-accepted instrument for resolving sovereign debt. Faced with the lawsuits from a few bondholders, Argentina is cooperating judicially, but argues its position in terms of fairness and non-discrimination, supported in international law. The actions of the vulture funds would be roundly frustrated if there existed an internationally accepted legal mechanism to resolve sovereign debt that would obligate these minority speculators to accept restructuring agreements in countries in turmoil. It’s such that after the 2001 crisis in Argentina many countries have opted to include clauses in their debt bonds on class actions and jurisdictions. For that, Argentina will not capitulate to speculators’ actions either on the legal or the political front.

P.: It has always been speculated that some vulture funds were financing politicians and lobbyists. Do they have access to important congressmen?

J.A.: It’s a priority task to counter the political actions of the vulture funds, in particular in the Congress of the United States. They tried to disseminate and make known our country’s position and the true intentions of the vulture funds. Recently, we published and distributed a book about “Myths and realities” of the 2001 default, to which was added a bi-weekly publication (Argentine Embassy Newsletter) that is distributed to the 535 members of Congress and the top authorities of the administration of President Obama. We’ve gotten praise about the usefulness of the information sent out to all the political circles of the country and that has generated special interest from the chairpersons of the more important committees in both the Senate and the House of Representatives, which has generated specific meetings about the true situation of the debt and other issues of interest.

P.: In June, the U.S. Supreme Court blocked the possibility to attach reserves as the hedge funds tries. What would be the next move?

J.A.: You can expect anything, especially now, as the effects of the actions we’ve employed have already been felt and they are seeing all the while more that they are further from the possibility of satisfying their interest. They will continue trying to undermine Argentina’s image, since they believe that is how they improve their chances to succeed.

P.: Robert Shapiro, of American Task Force Argentina, said that the country “took four years to emit a restructuring offer, and when it finally came in 2005, half of the foreign investors rejected it”...

J.A.: In September 2003, the Argentine government initiated the process of restructuring. Even with the complexity and magnitude of the debt, which consisted of 152 different bonds emitted under seven different currencies under different jurisdictions, the 2005 swap achieved 76.15% acceptance. Argentina has always maintained a position in accord with the principal of fairness and non-discrimination, conforming with international law.

P.: You said there still is not a good response in the United States around reversing the trade deficit with that country. Does the suspension of tariff preferences complicate the equation?

J.A.: We are working together with the interested sectors and the competent agencies of the United States to overcome trade barriers that impede us from exporting beef and fresh lemons to the U.S. market. We are optimistic around getting positive results in the coming months. The suspension of the GSP has not had a negative impact, as, for example, in 2001 only 10% of bilateral trade was covered by that system, with an amount of US$477 million. More still, the tariff benefit was only US$18 million. However, the deficit in the bilateral trade balance presents a negative trend for our country, which we plan to reverse by increasing bilateral trade even more, but in an equitable fashion.

P.: Is some kind of alliance with American oil companies being studied to exploit any specific deposits with YPF?

J.A.: Argentina possesses valuable energy resources, with great potential, in particular in the area of non-conventional resources. Naturally, for its exploitation technology and capital are required. For that, we’re open and ready to consider investments from any origin, including U.S. investments, as well as strategic associations for their exploitation.