December 13, 2017


Monday, July 28, 2014

Are politicians up to handling the fight?

A sign that reads ‘Together we will fight against the loan-shark vultures’ is posted on a wall at the Economy Ministry.
By Andrés Federman
For The Herald

Argentina’s current confrontation against the holdouts/vultures in New York has a number of implications which differ greatly from the kind of foreign policy, or even foreign economic policy, issues that a nation-state has to deal with normally. Perhaps because of this, Argentina’s politicians might have failed to make their mark.

First and foremost, this is not a social, political, ideological or religious issue. Consequently there is (fortunately) no room for great controversies dividing society. This is about cash. So the Argentine government that is handling the problem has (or should have) simple objectives in mind: to pay as little as possible while — at the same time — minimizing any ulterior damages. And such an objective is (or should be) surely shared by all citizens, regardless of their support of or opposition to the government. The existence of hidden partisan or sectarian agendas would be the only exception. But whoever espouses them cannot go public without attracting widespread criticisms.

Secondly, the main adversary, although particularly unfriendly, is not another nation state or organization of nation sates. A totally different situation from the recent negotiations with the Paris Club or even with the case of Repsol, which had the full backing of the Spanish government. By contrast, the holdout/vulture funds, can — at most —use the law of their home country as a lever (enter Judge Griesa), but this adversary has no public support backing it. Moreover, its line and style of business attracts quite significant criticisms. Even outside Argentina.

By the same token, the holdouts/vultures are answerable only to themselves. Moreover, as they are — in a way — outside the mainstream financial system, there are not liable for too many explanations to be provided to their regulatory authorities. And this is — precisely — their main strength. Their negotiating stance and decisions — as well as the profits or losses emerging from them — are independent from outside scrutiny.

By contrast, the Argentine government seems to be placed in a more difficult negotiating position. The issue has become highly politicized in Argentina. Part of the blame falls on the government itself which turned the confrontation with small private group (true, protected, by the legal processes of its home country) into a national crusade with strong political and ideological overtones, perhaps on account of what many describe as — or wish to be — the end of an era. The opposition followed suit, with some honourable exceptions. But there was no shortage of criticisms to a — supposedly — lack of professionalism or effectiveness of the government negotiators. Both sides showed a significant lack of judgment. It is not the done thing to accuse the opposition of lack of commitment to the fatherland. And it is equally wrong to undermine the authority of the negotiators appointed by one’s government of the day. Even if we expect to defeat said government in next years’ elections.

The same can be said about the description of the consequences. In an effort to rally national support (which was surely there in any case) the government said that the country’s Crown Jewel (the Vaca Muerta shale field) is at risk. Then, quite contradictorily, other government officials went public stating that life would continue as usual even if the conflict is not sorted out by Wednesday’s due date.

The press, politicians and even business sectors from the opposition did not much better. Strong pressure to reach an agreement (any kind of agreement?) attracted many headlines and extensive TV commentary, accompanied by lurid descriptions of what could happen if such agreements were not reached. Definitely, not the best way to underpin a strong negotiating position for the national government.

Now, let us face it. It may well be that the government’s negotiators are not up to the job. And even that the consequences of failing to reach an agreement are really disastrous. There are places to — discreetly, very discreetly — discuss this. They are Congress, the Pink House or even the home of an influential lawmaker over dinner. Moreover, if the government wants to — as it should — discuss such important issues with key political opponents, the latter can be officially sworn to secrecy on account of national security, and in order to avoid leaks. It is done all over the seriously democratic world on a regular basis. And after more than three decades of democratic governments, Argentina should also be able to do it. In the particular case of the holdout/vultures, some silence from Argentina would have strengthened the country’s hand.

One last comment: perhaps these discreet dialogues have been taking place the whole time and the firebrand prose was aimed at tricking “the other side.” If that is the case, then the author is happy as usual to help the national effort.


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