La Nacion: “The IMF will not back the country against the holdouts”

Lead Articles:

 

La Nacion: “The IMF will not back the country against the holdouts”

 

Clarin: “Step backward for the IMF: it will not support Argentina in front of the vulture funds”

 

El Cronista: “The IMF will not go to the Court to support Argentina against the vulture funds”

 

Ambito Financiero: “Turn by the IMF: now it will not support the country in the vultures lawsuit”

 

Telam: “IMF will not issue the recommendation about the ‘trial of the century’ before the U.S. Supreme Court at this stage”

 

El Cronista: “Step backwards from the IMF in the vulture fight has little effect on the case but will put pressure on bonds”

              

 

La Nacion

The IMF will not back the country against the holdouts

 

Wednesday, July 24, 2013

 

By Silvia Pisani

 

WASHINGTON.- In a serious setback for the government’s expectations, the International Monetary Fund (IMF) did a 180-degree turn regarding what it had announced and finally decided to “not join” Argentina in its complaint to be herd before the U.S. Supreme Court over the conflict with the “vulture funds”.

 

The decision is the first political consequence of the measure that, in equal direction, has already been adopted by the government of Barack Obama, according to what was confirmed last night here.

 

A spokesman from the organization explained that the director general of the organization, Christine Lagarde, decided to “withdraw” her motion to back Argentina after the Obama government did the same.  

 

The source affirmed that the initial decision by Lagarde to back Argentina’s position had been adopted based on the conviction that she would count on the support of the United States “by which it would not be appropriate to go forward” now that it is evident that this support is not there.

 

For the moment, this leaves Argentina alone in its complaint to be heard before the American high court, when only 48 hours are left for the procedural deadline to file those kinds of recourses.  Experts consulted by LA NACION agreed in saying that, without the initial support of Washington – and now from the IMF – the chances that the case will reach the Court “are shrinking a lot.”

 

A rumor had said that, perhaps, the government of France would back the country.  But that has not materialized up to now and, with what happened yesterday, the chances of it happening are diminishing.

 

What the organization did maintain was the conviction that a ruling in favor of the vultures would have “consequences” in the processes of debt restructuring in general, a situation that is causing it “deep concern.”

 

The IMF made no reference in favor of Argentina.  In fact, one of the conditions for the recourse – now discarded – being approved by the board was that “it would make no mention of endorsement at all” for policies from the country on the matter.

 

A suggestive expression from the Fund is that its decision was taken at “this stage” of the process.  That would seem to leave the door open to a possible involvement in the future, above all, if its opinion is requested.

 

The abrupt turn was a bucket of cold water known only hours after which both Ambassador Cecilia Nahon and the Argentine representative before the organization, Sergio Chodos, appeared for the first time to defend the position of our country in the matter on a panel that praised the backing from the Fund.

 

Both officials tried, however, to not comment on the matter. “I prefer to wait for that approval,” said Chodos at the time of the event.  Nahon, as such, refused to answer the question of what the impact would be from the refusal of the U.S. to back the country.  “For my position, it does not correspond that I speak about that,” she said.  

 

It was the first time that both officials decided to make a public and joint defense of the country’s position on the holdouts’ claim, as the holders of debt in default who didn’t accept either of the two swaps offered by the government are known.

 

Organized in the Capitol, the appearance occurred without any of the 600 legislators that make up the body being present.  It was the first time that a reply was attempted in this way in favor of the sanctions against the country.  But it didn’t seem to come in time to avoid this from unfolding.

 

The position of the IMF didn’t leave any doubts.  “The director of the IMF has withdrawn her recommendation for the board to file an amicus curiae in the case of Argentina, following the decision by authorities from the United States to not back that filing at this stage,” said a spokesman from the entity.

 

It argued that the initial recommendation from Lagarde “counted on the premise of support from the U.S., by which it would not be appropriate to continue with the presentation without that endorsement.”  The spokesman added, however, that the organization remains “deeply concerned” by the consequences that a ruling in favor of the “vulture funds” could have “in general, for the processes of debt restructuring” from the financial system.

 

Argentina is awaiting a resolution from the court in New York, which stayed a ruling by which Judge Thomas Greisa condemned it to pay US$1.3 billion all at once to the funds NML Capital and Aurelius Management, as well as a dozen private investors.

 

The government, however, already has reserved the right to petition to be heard before the highest court, an aspiration that without Washington and the IMF’s support loses a big percentage of possibility, according to local attorneys.

 

However, there is indeed the possibility that both the Democratic government as well as the IMF could expound on their judgment “if this is requested of them” by the court.  In the Argentine government they believe this will be the case.

 

 

Clarin

Step backwards from the IMF: it will not support Argentina in front of the vulture funds

The head of the organization had anticipated its endorsement.  But it withdrew to align itself with the government of Barack Obama.  

 

Wednesday, July 24, 2013

 

In a brief statement the IMF announced last night that it will not support the request that Argentina made for the U.S. Supreme Court to take the case of the vulture funds.  The statement says that the decision is due to that at the last moment, the United States came out against it and consequently, Christine Lagarde decided not to recommend to the Board that it send a brief in favor of our country as she had announced at the G-20 summit in Moscow last weekend.  

 

The new is a big legal and political setback for the government of Cristina Kirchner.  In less than 72 hours the Casa Rosada lost the support of the two heavyweights of the international system that she so needed, first the support of the U.S. itself and yesterday from the IMF.  Despite Timerman saying it was set that they had ensured the support of the White House, Obama not only said no, but also blocked the support of the IMF.

 

“The recommendation from the director general was based on the support of the U.S., so it would not have been appropriate to send that brief without that support,” says the statement adding that the Fund continues to be concerned about the “wide systemic implications that the ruling from Judge Griesa could have on the process of debt restructuring in general if it is upheld.”

 

“There are two losers here, Argentina and the IMF itself,” said a high level source at the Fund who asked not to be identified to Clarin.  “The director general has never been seen saying that she would recommend something to the board and then say that she wouldn’t do it because the U.S. doesn’t want it.  This is a big embarrassment for Lagarde.  Once the U.S stepped back, other countries again followed in its footsteps.”

 

The source said that the speculation on the IMF board is that the U.S. turn came fundamentally from the intense lobby made by the holdouts through ATFA, American Task Force Argentina, in the Congress.

 

In fact, as Lagarde announced she would recommend the sending of the amicus curiae brief in Argentina’s favor to the board, ATFA sent out a furious statement arguing that the brief would go against the neutrality that, according to its charter, the Fund must maintain in conflicts that take place between debtors and creditors.  More still, the director of ATFA, Robert Raven (sic), said that the IMF couldn’t meddle in a U.S. domestic legal issue saying that in the NML v. Argentina case, what is in play at the New York court level and the Supreme Court level is U.S. federal law.

 

“It’s hard to imagine any other country tolerating the Fund’s interference in a dispute about the capacity of its judicial system to do its job,” he said.

 

According to what Clarin could find out, Lagarde made the decision to not recommend to the Fund an involvement before the Supreme Court in favor of Argentina during an informal meeting of the board that took place yesterday which was attended by the director of the IMF’s Department of Legal Affairs, Sean Hagan.

 

Hagan and his team were charged with drafting the brief that Lagarde wanted to present to the board today.  In the brief, Hagan was very careful not to endorse the economic policies of Cristina Kirchner.  But in line with a study distributed more than a month ago about debt restructurings, the brief accented the impact that a ruling in favor of the vulture funds could have on future debt restructurings.  “if you could read the brief you wouldn’t see even a single line in support of Argentina’s policies,” said the source consulted by Clarin.  

 

“Nor does it set a position about legal aspects of the case.  It only speaks of the effect on the policy of restructurings.  It’s the Fund’s expertise,” the source said.

 

 

 

El Cronista

The IMF will not go to the Court to support Argentina against the vulture funds

The multilateral credit organization doesn’t plan to ask the U.S. Supreme Court to review the Argentine case over the debt that is still in default  

 

Wednesday, July 24, 2013

 

EL CRONISTA Buenos Aires

 

The International Monetary Fund (IMF) decided not to ask the U.S. Supreme Court to review the case of Argentina in its legal battle with creditors that didn’t agree to restructure their debt, due to the lack of support from the U.S. government, a spokesman from the organization said yesterday.

 

The director of the Fund, Christine Lagarde, had revealed last week that she would advise the IMF to file an “amicus curiae” before the Supreme Court to support the case.  The deadline expires this Friday, but then at an informal meeting of its board held yesterday, the conclusion was reached that such a step didn’t have sufficient consensus.

 

“The director general of the IMF has withdrawn her recommendation that the IMF Executive Board send an amicus curiae in the case of Argentina, following the decision by U.S. authorities to not support the filing at this stage,” said a brief statement released last night.  

 

“The Fund remains deeply concerned about the wide systemic implications that the decision of a lower court could have for debt restructuring processes in general,” added the multilateral organization.

 

The government of the United States, in documents previously filed in lower courts, had agreed with that opinion.

 

Lagarde had planned, equal to what was learned on Monday from France, to file a “friend” of the court document so that the court would review the ruling of Judge Thomas Griesa in favor of the vulture funds, that had partial support from the Court of Appeals.  The deadline for making such a filing before the Supreme Court is Friday, July 26, by which from yesterday there were two business days left for those interested to be able to send an “amicus” to the high court.  As a counterparty, the vulture funds NML, Aurelius and Olifane (sic), will have until August 26 to file their response to the Argentine request, according to a Supreme Court order last Friday.

 

As such, in Washington, the Argentine government is still feeding the debate around the global impact of the ruling against the country, and the threat that the vulture funds represent for debt restructurings.  The ruling from Judge Thomas Griesa determined that Argentina must pay 100% of the debt in default to the vulture funds, some US$1.3 billion, updated from the real date of payment and at the cost of the creditors.

 

The French government, however, could intercede in the legal battle that Argentina is waging against the vulture funds for the bonds in default.  In fact, it will support the country in its request before the U.S. Supreme Court, according to what came out yesterday.

 

 

Ambito Financiero

Turn by the IMF: now it will not support the country in the vulture lawsuit

 

Wednesday, July 24, 2013

 

The No. 1 at the IMF, Christine Lagarde, yesterday decided not to recommend to the board that it endorse the country before the American judiciary and against the vulture funds.  It is not too relevant since, definitively, the ruling is decided by other factors.  What is indeed relevant is the fact that the IMF followed the posture of the U.S., which has been voting against Argentina in organizations.

 

 

Telam

The IMF will not issue the recommendation on the ‘trial of the century’ before the U.S. Supreme Court at this stage

The director general of the IMF, Christine Lagarde, decided not to issue recommendation to the Executive Board to file its position before the federal judiciary regarding the litigation of Argentina with the vulture funds “at this stage”, called the trial of the century  

 

Wednesday, July 24, 2013

 

IMF general director Christine Lagarde decided today (yesterday) not to issue a recommendation to the Board to file its position before the Supreme Court on Argentina’s litigation with the vulture funds “at this stage”, while maintaining its “deep concern” over the implications that the case could have at the global level.  

 

The IMF issued an opinion that, while maintaining the position that the ruling from Judge Thomas Griesa on bonds in default will have serious consequences for the countries that restructure debt, decided not to file the “amicus” in this judicial instance where the case finds itself, contrary to what had been reported on Saturday.

 

The justification of the change of opinion was because the United States changed the support it had initially argued on this initiative from Lagarde.

 

"The director general of the IMF (Christine Lagarde) has withdrawn her recommendation that the Board of the IMF send an amicus curiae in the case of Argentina, following the decision of the authorities of the United States to not support the filing at this stage,” announced the spokesman of the multilateral organization through a statement.

 

This afternoon an informal meeting of the board was held which took up the issue of the possibility of raising a recommendation from the Fund before the Supreme Court that it review the sentence in question, due to the impact at the international level that the outcome of the so-called “trial of the century” could have.

 

However, with the change in the IMF’s initiative, the official from the organization warned that “the Fund remains deeply concerned about the wide systemic consequences that the sentence of the lower court could have on the process of debt restructuring in general.”

 

It was what Lagarde publicly made clear before the G-20 in Moscow last weekend that the case could have “negative implications” for the international system, and that is captured in the public documents that the IMF put out in May, and were voted on favorably by the board of that institution.

 

However, the Fund insisted that the “recommendation of the director general is based on the support of the United States, making it not appropriate for the IMF to file this brief without that support,” the spokesman admitted.

 

In the discussion that took place today – which was held in Christine Lagarde’s meeting room and not in the usual board room – the opinion also came out that “the directors showed that the IMF must maintain the principle of neutrality with countries and not come out in favor or against them, despite that in this case a ruling against Argentina has systemic consequences,” sources very close to the deliberations told Telam.

 

Lagarde called a "restricted informal session" today, in which the directors from countries and the departments of the Western Hemisphere, Capital Markets and Policies, together with the IMF’s legal counsel, Sean Hagan, also a specialist in the issue of the vulture funds, participated.

 

It’s Hagan who is defending the position of the negative implications for the IMF and for the international financial system, if the application of a ruling like Judge Thomas Griesa’s comes to prevail.   

 

"While there was an unprecedented discussion in the IMF today, due to the implications of the case, it has never happened before that the IMF would file in a judicial case in a country,” they explained.

 

As such, legal sources from the case pointed out to Telam that - beyond this decision from the IMF – “the discussions will continue, and it doesn’t rule out that from here to Friday “the deadline for filing “friend” briefs supporting the country’s petition) support comes from bondholders and other governments.”

 

In fact, there were countries that began to more openly come out in favor of Argentina, like France, which informed the parties in the case that it will file support for the country in the battle against the vulture funds, according to what the same sources confirmed.

 

France, like other countries from the European Union, understand that an adverse ruling for Argentina could harm future disbursements from the IMF, which will have to be required for successful debt restructurings, due to the fiscal seriousness that countries find themselves in, who have difficulty recovering sustainable growth.

 

The United States, which already backed Argentina’s position in the lower court, before Griesa, and in the appeals court, before the Court of Appeals, indicated that it will not raise its position on its own, according to what a spokesman from the Justice Department, while the door was left open for this scenario to change if the Supreme Court makes the request.

 

In fact, the position of the United States is also public and negative toward the vulture funds, by the impact that it could have at the systemic level, and in the United States’ international relations, according to what they indicated at the time.

 

 

El Cronista

Step backwards by the IMF in the vulture fight means little in the case but will put pressure on bonds

A negative reaction is expected after the cost of insurance against default has fallen 30% in the last month.  But experts insist that, without the U.S.’s support, the IMF’s move would have helped little before the Supreme Court

 

Wednesday, July 24, 2013

 

MARÍA ELENA CANDIA Buenos Aires

 

Christine Lagarde repented.  The director general of the International Monetary Fund (IMF) finally decided not to issue a recommendation to the Executive Board to present its position before the federal judiciary regarding Argentina’s litigation with the vulture funds.  Thus, the organization folded to the Obama administration and the amicus brief that was publicly promised will never arrive.  Overall, for legal experts, without the support of the United States, the IMF’s gesture would have done very little to help Argentina before the Supreme Court.  But this will not stave off, of course, the price of insurance against default reflecting this turn in the case today, above all after a month of going down by 30% with the perception of an improved set of chances for the country to be heard by the highest court.

 

“It is fundamental to count on the filing of the U.S. government.  When it is done, the chances that the Supreme Court takes the case in review go up from 3% - when it doesn’t file – to 50%,” explained Eugenio Bruno, partner at the Garrido Firm, for whom if the United States accompanied the country in the last few years, the most logical step would have been to do so at the highest level also.  “I don’t understand why it changed its position, from the legal point of view there is no explanation,” Bruno added.  It was that attitude precisely that motivated the IMF to step back.

 

In tune with this, for Richard Samp of the Washington Legal Foundation, the support of the Obama administration is essential for the Supreme Court to act in the country’s favor.  “The litigants that want to convince the court to listen to the cases seek prominent groups to file amicus briefs.  While the strategy works sometimes, the only friend of the court that can make the court take note of this case is the American government.  If it does not file, the other amici will have limited value,” Samp said.

 

While the Department of Justice confirmed last week that the Obama administration will not file “uninvited” the Supreme Court could ask for its opinion later on.  But this possibility will not be known until eight weeks pass from August 26, the date set by the high court for the holdouts to answer the appeals petition from Argentina.

 

According to Antonia Stolper, partner and leader for Latin America at the firm of Shearman & Sterling, headquartered in New York, the support of the IMF would only have marginally increased the chance that the Supreme Court would ask the opinion of the Solicitor General – the attorney that represents the American government before the court – and while this would enter with a favorable opinion, it is difficult for the country to get the appeal.

 

Marcelo Etchebarne, partner from the firm Cabanellas, Etchebarne, Kelly & Dell’Oro Maini, agreed: “I don’t believe that (the help of the IMF and France) is relevant in the lawsuit.  It is relevant to relations between the IMF, France and Argentina.  The amici from third parties have power only in their legal arguments.  Some months ago, in the case of British Gas vs. Argentine Republic, the court asked for the opinion of the Solicitor General, who argued for Argentina with good arguments, but the court ruled against it.”   For Etchebarne, the chances that the high court would take the appeal are lo