December 11, 2013
The kindness of strangers
The World Bank’s agreement to unblock some three billion dollars of credits after reported Argentine concessions to respect CIADI international arbitration jurisprudence for the first time in ages (five years ago Argentina already had 27 unresolved cases with the Swiss-based arbitration tribunal) might be baby steps in terms of the Cristina Fernández de Kirchner administration’s return to international capital markets but nevertheless suggests the first friendly move in that direction in the last four years — perhaps the most significant since CFK’s unfulfilled pledge to pay off the Paris Club just before the collapse of Lehman Brothers in September, 2008. The CFK administration would thus seem to be having second thoughts about meeting its borrowing requirements via Central Bank reserves whose steady depletion the currency curbs have so signally failed to arrest — if for some weeks Economy Minister Hernán Lorenzino (a protégé of Acting President Amado Boudou) had been named as one of the first in line for a post-electoral Cabinet shuffle, his more open attitude to the outside world appears vindicated now.
While the World Bank, CIADI and the Paris Club have all been important fronts in Argentina’s tensions with international finance, the International Monetary Fund (IMF) has always been presented as the mother of battles and this continues to be the case. CFK might dub her administration a “serial payer” (the far left would agree) and might be at pains to present any proposals to replace New York jurisdiction with Argentine as having no other purpose than to continue payments to creditors heeding previous bond swaps but the IMF seems to place Kirchnerite debt payment strategies as virtually on a par with Adolfo Rodríguez Saá’s outright default in late 2001 — especially the implausibly low inflation figures as from early 2007 (two years after Néstor Kirchner used almost 10 billion dollars of reserves to pay off all debt to the IMF and break free from its monitoring) which trimmed billions of dollars off index-linked bonds over the years. Perhaps the crunch test for the nascent Kirchnerite approach will be to see if they are in earnest about the new and serious nationwide price index.
If the reported respect for CIADI rulings against Argentina is a nod to the international financial world in general, it is a wink to the United States in particular which had always placed the scorned CIADI rulings favouring its companies at the forefront of grievances — if the year 2013 began with an agreement with Iran’s previous extremist government, perhaps it will end with fresh overtures to Washington.