The government capitulates on foreign debt

Clarin

The government capitulates on foreign debt

 

Thursday, November 15, 2012

 

By Jorge Altamira

 

Argentina has been harmed by two unsustainable judicial decisions.  The first, which captured the Frigate Libertad, violated the immunity of a war ship.  In the second, a New York appeals court orders a “double path”: the creditors that rejected the 2005 swap have the right to collect the new debt with haircuts, without prejudice on continuing to litigate for the whole amount.

 

A generalized application of this interpretive abuse could but an end to debt restructurings in Europe.

 

The ruling has another incongruence, because the “vulture funds” couldn’t collect on the GDP coupons, which were delivered, as a “reward”, to those that did enter the swap.  The equal treatment clause establishes that obligations cannot be emitted with different privileges of payment, in case of default; in no way equal rights for those who fell outside a swap accepted by 95% of the creditors.  The ruling from New York makes impossible the continuity of foreign debt payment from Argentina, under the terms they have been making them. 

 

These facts reveal the political fiction of UNASUR, that have been olympically ignored.  Why?  Bolivia, an eminence in the Bolivarian camp, just subscribed to international debt at the hands of JP Morgan, and on the other hand encouraged the construction of a refinery with Repsol, no less.  The Sao Paulo stock market, for its part, would repudiate a lack of acknowledgment of foreign jurisdiction in matters of foreign debt.  Hugo Chavez, lastly, never has had a confrontation with Venezuela’s creditors: the rescheduling of his debt with foreign banks provides financing for PDVSA and the currency exchange market in Caracas.

 

Nor does Cristina Kirchner want to confront them: the foreign debt of Argentina’s private sector has had a big spike in 2012, just like provincial debts that adjust to the value of the dollar.  The effective unity of Latin America only could be assured by governments of workers.

 

The other aspect is that the “debt reduction” has emptied out Argentina’s finances.

 

It has confiscated funds from ANSeS and devalued the patrimony of the Central Bank.  The national bourgeoisie demands that the government get out of the quagmire through paying a bail bond to Ghana and the acceptance of the New York ruling.

 

It’s a colonial position.  The serial payment of usurious debt, at the cost of retirees and an indomitable inflation, has accentuated the financial vulnerability of the country (the currency clamp).

 

It would have been cheaper and more effective to repudiate the usurious debt contracted by the military government and refinanced repeatedly by the democratic ones, as was reiterated by the Left Front in the last electoral campaign