December 22, 2014
D-day and the opposition
If Monday’s editorial placed the onus on the government to spell out its counteraction against the negative fallout from a likely default, today’s puts the ball in the opposition’s court to explain how they would handle the deadlock better. Alternatives are not lacking — ranging from PRO centre-right City Mayor Mauricio Macri (who seems to prioritize above all else avoiding another default, even assuming risks from the catastrophic RUFO clause) to proposals of debt repudiation more drastic than Adolfo Rodríguez Saá’s 2001 “suspension.” Indeed pretty much that range exists within the leaders of Broad Front-UNEN opposition coalition alone. On the contrary Sergio Massa’s Renewal Front might look like an oasis in the desert — it not only enjoys a clear leadership (unlike UNEN) but a team of economic heavyweights with a wealth of expert opinion.
Yet how consistent an alternative do we gain from pooling their opinions? While Ricardo Delgado (unofficially chief of this kitchen cabinet) deplores default as the worst possible outcome, urging “professional negotiations” to make Argentina “credible for (Manhattan judge Thomas) Griesa,” former economy minister Roberto Lavagna comes close to welcoming default as a chance for a fresh start and takes the dangers of the RUFO “rights upon future offers” clause very seriously. Former Central Bank governor Martín Redrado is not far from Macri’s position while ex-minister Miguel Peirano shares his zeal to exhaust every mechanism for paying off the vulture funds in order to avert default but an unshakably optimistic ex-governor Aldo Pignanelli dismisses their anxieties and concessions as needless since the crisis will not come to a head. And so on — all as clear as mud.
Not enough constructive alternatives from the opposition, then, as last night definitions were expected for today’s D-day (“D” for default) in New York City. Will a proxy magically appear to open the escrow account demanded by the vulture funds as their condition for a stay without triggering the RUFO clause? Or, barring any such last-minute salvation, would a technical default save Argentina from the frying-pan of RUFO, only to enter the fire of the cross-default clause accelerating payments to the vast 93 percent majority of creditors accepting previous bond swaps? Or might a Griesa increasingly out of his depth and walking into contradictions every time he tries to enforce his ruling have the intellectual and professional honesty to restore a stay, the simplest solution? Anybody’s guess as the above questions may or may not have been answered when this editorial is read today.