November 27, 2014
Senate tackles immunity for C. Bank funds
Barring any last-minute surprises, today’s special session in the Senate will give the green light to a bill laying out the groundwork to provide legal immunity for assets held by foreign central banks in Argentina.
The bill, sent by the Executive in late June, has been expedited through the Senate on the grounds that it provides a framework for reciprocal immunities between the Central Bank of Argentina and other monetary authorities around the world and comes amid the ongoing legal dispute with bold holdouts and the upcoming payments to the Paris Club creditors following the agreement signed at the end of May.
According to the terms of the bill, the immunity by Argentine courts would be extended to foreign central banks on the grounds that “protection is based on the convenience of preserving its monetary and foreign exchange policy.”
Fábrega to the Senate
To push support for the bill, Central Bank Governor Juan Carlos Fábrega will give testimony to a Senate Economy Committee meeting to be held immediately before the special session in the Senate chamber, which would then pass the measure.
Talking to the Herald yesterday, Economy Committee president Senator Laura Montero (UCR-Mendoza), said that her bloc views “the bill as rather innocuous, we don’t see any problems with it,” while at the same time noting that “we simply want to give it the corresponding legislative review” after an initial move by government allies to vote on the bill without any committee review.
The bill sent to Congress by the Executive branch included the signature of Industry Minister Débora Giorgi, who was interim Economy Minster while Axel Kicillof was out of the country, signalling how important it was for the bill to receive legislative approval prior to the winter recess.
Asked why the bill had received such urgent treatment, she said: “I ask myself that as well and it’s one of the things that we will seek to clear up with Fábrega.”
Montero also went as far as saying that “the bill doesn’t have anything to do with the holdouts as it is already too late for that.”
Nonetheless, the bill is expected to sail through today’s Economy Committee meeting.
The bill received widespread approval from the Senate Foreign Relations Committee last week, during which Senator Ruperto Godoy (FpV-San Juan) spoke of the need to “fill a legal vacuum in our legislation ... in Argentina the assets of the Central Bank cannot be embargoed, but that doesn’t apply to the assets of foreign central banks.”
Reciprocity as key
It is precisely this reciprocal nature of the bill that is seen as having the most strategic value. Should the bill also receive approval in the Lower House, the Argentine Central Bank would be given the authority to establish bilateral reciprocal immunity with other monetary authorities.
Immunity for the Central Bank from foreign courts could prove a useful strategic asset while negotiations continue with holdouts by way of Judge Thomas Griesa’s court.
Although the bill does not state it outright, it notes that the Central Bank’s experience “in the last few years as it faced legal challenges from various jurisdictions.” At the time there is no apparent threat to the Argentine Central Bank’s assets abroad, but the bilateral agreements would add a further layer of legal protection.
Central banks hold a portion of their assets in other central banks, and when Argentina cancelled its debts with the International Monetary Fund (IMF) it did so by way of payments through the Central Bank to other central banks.
Today’s session has been overshadowed by speculation over whether or not Vice-President Amado Boudou will chair it as Senate president.
Boudou was travelling back to Argentina during the first Senate session following his indictment, during which most of the opposition senators either called for Boudou to take a leave of absence or resign following his indictment on corruption charges.
Boudou has yet to answer publicly to the indictment nor has he addressed the senator’s requests but he did receive backing from FpV senators Miguel Pichetto (Río Negro) and Rodolfo Urtubey (Salta).
Montero told the Herald that as part of the UCR bloc she would be accompanying the requests against Boudou, noting that the vice-president’s role as “a tie-breaker in the Senate is too important to be in the hands” of someone who has been indicted.
“Constitutionally speaking, the role is meant to be one of equilibrium and national unity,” she added. Montero is a close political ally of former vice-president Julio Cobos, whose tie-breaking vote against the government in 2008 over a hotly debated export duty regime for agricultural won him universal reproach from the FpV for not supporting the government’s law.
Pushed on the subject, Montero rejected the interpretation, saying “Cobos was part of a alliance that was supposed to be plural and in that way representative, and not exclusively the vision of the FpV.”
Whether the vice-president attends today’s session or not, an otherwise straightforward debate on the Central Bank bill will most likely include another heated war of words over his political future.@tbrockenshire