August 23, 2014
PRO, Massa’s party back gov’t case against ‘vulture’ funds
The federal government received a gesture of support yesterday in its long legal battle against holdout hedge funds, as a group of opposition legislators agreed to travel to Washington, DC on Sunday along with several pro-government legislators, only days before the United States Supreme Court is expected to decide whether to hear Argentina’s appeal on June 12.
The trip will be led by Lower House Speaker Julián Domínguez, and will include pro-government legislators Gerardo Zamora, Roberto Feletti, Miguel Pichetto, Ruben Uñac, Juliana Di Tullio, Guillermo Carmona and Omar Perotti. The opposition will be represented by Darío Giustozzi of the Renewal Front and PRO lawmaker Federico Sturzenegger.
Claudio Lozano of Unidad Popular was also invited, but opted not to go due to disagreement with the government’s stance on the case against the hedge funds that have refused to accept the country’s debt restructurings following the 2001 default.
At press time, meetings were under way to try to include legislators from the Broad Front-UNEN bloc into the trip, with the eyes set particularly on Martín Lousteau, legislative sources told the Herald.
“We have been invited, but we decided not to participate because we don’t share the government’s stance over the debt. We ... question the (validity of the) debt swaps in 2005 and 2010,” Lozano said. “The trial in the United States was the opportunity to gain back autonomy and audit the debt.”
News of the mission came only a day after the Broad Front-UNEN sent a letter to the United States Embassy in Buenos Aires to express its support for the federal government in the case, and also to ask that the US Supreme Court take the case.
More than 100 British Members of Parliament also signed a resolution of support for Argentina this week in a document drafted by the Jubilee Debt Campaign, a long-standing critic of vulture funds.
“It’s a measure that could have a strong impact. It was necessary to show all the opposition parties united and supporting the federal government’s stance on the case,” Federico Sturzenegger, a PRO lawmaker, told the Herald. “If the Supreme Court asks the US government for its opinion, something we expect will happen, this visit will give the government’s stance more strength.”
The agenda, which the Foreign Ministry was polishing up at press time, will include meetings on Monday, Tuesday and Wednesday with officials from multilateral organizations, such as the IMF and Inter-American Development Bank. The group is also likely to meet US lawamkers at the Capitol as well as government officials at the State Department and the US Treasury. The lawmakers will also be meeting with Argentina’s lawyers at the firm Cleary, Gottlieb, Steen and Hamilton could was also in the works.
Congressional sources told the Herald that the trip was arranged following a meeting between Julián Domínguez and US Department of Energy Deputy Secretary Daniel Poneman, who visited Argentina last month. Poneman suggested reportedly suggested that Domínguez organize a trip alongside members of the opposition to present a unified stance to the US officials.
“The objective is to give a signal of support to the federal government by establishing deeper diplomatic contact with the United States,” sources told the Herald. “The Radical Party (UCR) tried to prevent the trip, but they couldn’t do it.”
Other experts on US politics questioned that version of events, saying it is practically unheard of for members of the Executive to wade so deeply into trying to pressure the outcome of a judicial matter.
IMF expresses concern
The International Monetary Fund (IMF) also joined the last-minute fray of issuing opinions ahead of the landmark decision next week, expressing “concern” yesterday over the outcome of Argentina’s vulture funds case at the US Supreme Court, as it will likely decide on June 12 whether or not to hear Argentina’s appeal against rulings that order the country to pay holdout bondholders in full.
“The Fund is deeply concerned about the wide and systemic implications the Court’s decision might have, in general, for the debt restructuring processes,” IMF’s spokesman Gerry Rice told Ambito.com.
This is not the first time the IMF weighs in on the hedge fund case. The agency has said in various statements that the result of the case would have major implications on future sovereign debt restructuring processes. The IMF was even rumoured to have contemplated submitting an amicus curiae, or friend-of-the-court brief, to support the government, something that finally did not happen.
But the government’s position has benefited from amici curiae from the United States, France, Mexico, as well as from local and international agencies and brokerages. The US government said in its presentation that it has a “substantial interest in the correct interpretation and application” of the Sovereign Immunity Law and in how foreign governments are treated in US courts.
Argentina has refused to pay the holdout bondholders, who President Cristina Fernández de Kirchner calls “vulture funds,” arguing that full repayment would undermine payments to the remaining 92 percent of restructured bondholders. Its continued refusal to pay up could result in US courts blocking overseas payments to bondholders who participated in the restructurings, which could technically lead to a technical default.