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October 25, 2014
Friday, August 22, 2014

Massa, UCR join PRO in opposing debt bill

UCR party leaders yesterday announced their rejection of a new debt swap bill at a summit in Córdoba.
Legislation is still expected to pass due to the government’s majority in Congress

The legislative blocs of the Radical party (UCR) and Sergio Massa’s Renewal Front (FR) yesterday joined the PRO in rejecting the government's proposal that would allow for a voluntary change in the jurisdiction of sovereign bonds, in a move that solidifies partisan positions at a time when the government had called for “national unity.”

The announcements show how President Cristina Fernández de Kirchner’s decision to force the opposition to express its position in a vote on a matter that has gripped headlines for months has resulted in a broad rejection of the initiative to institute a new debt swap.

Broadly put, the bill removes the Bank of New York Mellon (BoNY) as the payment agent for sovereign debt payments and allows for the voluntary issuance of new bonds for the country’s restructured bondholders according to Argentine legislation.

Although the lion’s share of the opposition in the Senate and the Lower House has announced its rejection of the government’s initiative, the bill is still expected to sail through legislative hurdles on account of the ruling Victory Front (FpV) numerical majority and cohesion on the matter. The FpV’s legislative arm has come out in force in support of the presidential proposal and there are no risks of any party disunity, as has been the case throughout the government’s handling of the matter.

As an example of that, Cabinet Chief Jorge Capitanich took aim at Mauricio Macri’s position against the bill, saying that the Buenos Aires City mayor “sides more frequently with the vultures and with Griesa than with a sovereign Argentine position.” PRO officials shot back, accusing the government of paying its Paris Club and Repsol creditors more than they should, effectively using public funds.

Consolidating positions

The UCR and its Broad Front-UNEN allies in the Senate — which constitute the largest opposition bloc — yesterday rejected the “homeland or vultures” dichotomy and confirmed that they will not be lending their support to the measure. As the largest member of the UNEN coalition, the UCR’s stance is a key deciding factor at a time when the coalition has been under strain over sustained rumblings about a possible future electoral alliance with Macri’s centre-right PRO party.

UNEN lawmaker and economist Martín Lousteau said during a UCR and UNEN summit in Córdoba that “we must seriously analyze the consequences that the change of jurisdiction will have because it doesn’t resolve any problems, on the contrary, it worsens them.

“If the government has another view, we need them to explain what the advantages are because today I don’t see them,” Lousteau added.

The meeting in Córdoba helped to solidify the party’s position on a delicate issue that took the political world by surprise when it was announced on Tuesday night by the president.

“It’s an unnecessary law. It brings with it more uncertainty, contributing to worsen the already bad economic situation that the government has provoked,” said UCR Chairman and senator Ernesto Sanz.

“We have alternatives, it’s up to the government to accept dialogue” said Julio Cobos, a UCR lawmaker.

Earlier in the day Sergio Massa’s Renewal Front called the move “wrong and dangerous,” announcing that FR lawmakers in the Lower House would be not be voting for the bill. He urged the FpV and the other opposition parties to find “an alternative” to a problem “that has a solution.” He did not specify what that solution would be and FR lawmakers Darío Giustozzi, Mario das Neves and Graciela Camaño have been given the responsibility to build a consensus with the other parties.

However, Camaño yesterday directed criticism against the PRO, saying that it was “too soon to be declaring Argentina in contempt of court, it has to be thought about a bit more.”

Macri was the first major politician to express his party’s outright rejection of the change of payment agent and applicable jurisdiction, announcing his stance before many senators had had a chance to formally review the details of the bill.

Internal dissent

The complexity and importance of the holdout saga led to some cracks within the opposition’s position.

The UCR stance on the matter did not appear to be wholly uniform with Senator Eugenio “Nito” Artaza (Corrientes) telling Radio del Plata “the national interest could be affected whether we vote for this law or not,” and that “Argentina is paying the bondholders and the international banks, the effort is being made.”

The government has predicated its position on the matter on the grounds that it is willing and able to pay bondholders who accept fair and equitable terms. Artaza also said that he would follow his bloc’s position.

Furthermore, left-wing elements of the UNEN coalition such as Humberto Tumini’s Libres del Sur have already expressed their position in favour of the transfer of jurisdiction to Buenos Aires, and firebrand senator Fernando “Pino” Solanas (Proyecto Sur) has yet to make his position known. He has historically rejected any debt repayments without a previous audit of the country’s debt. His most recent sparring partner and UNEN colleague, Elisa Carrió (Civic Coalition), yesterday announced that she would be abstaining or voting against should the matter be tied.

Nevertheless, Senator Rubén Giustiniani of the Socialist Party told the Herald that “we will not be supporting the bill, we have always been critical of the way that the government has handled the debt. In any case, a new law is not necessary to make this change. What would have been better in the past would have been a bicameral committee to assess the handling of the debt, but that has never been established.”

That should not be interpreted as support for Griesa, Giustiniani emphasized. “We think that Griesa’s ruling is impossible to comply with, but nonetheless we won’t be voting in favour.”

Herald staff with DyN, Télam

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