December 12, 2017


Monday, September 1, 2014

Good and Bad news

By Andrés Federman
For The Herald

Friday’s announcement that the G77 plus China are endorsing a debate on sovereign debt restructuring was good news for the government. As a matter of fact, Cristina and her team are more than entitled to take credit for a good international lobbying job. To make the news even sweeter, the International Capital Markets Association (ICMA) also issued a statement pointing out that there is a vacuum in the provisions for sovereign debt restructuring which — currently — place too much power in the hands of a minority of creditors.

Equally positive is the fact that, in the midst of their enthusiasm, when communicating the news, Kiciloff and Timerman included sobering remarks about the (sad) fact that whatever progress is made on this matter, namely an international convention setting the rules for debt restructuring, would not be applicable to Argentina’s current conflict with Judge Griesa and the holdouts/vultures.

The ministers managed to avoid the (very human) temptation to celebrate a success that is still in the making. And this qualifier applies to the possible future convention as well as to the case of Argentina’s own battle.

There are several reasons to moderate the optimism. First there is the UN. Although it represents the highest possible stage of civilization and relations between states, it is not the most efficient tool around. True it has a good list of successes in terms of international conventions. They range from UNCLOS (United Nations Convention on Law of the Sea) to ICCPED (International Convention for the Protection of All Persons from Enforced Disappearance). But — out of necessity — the negotiation processes are long and protracted. And, on occasions, the price of finally obtaining an agreement is to resign on matters that are important. In addition, there is the issue of getting the final result signed and ratified by each individual country. And the most powerful ones (that make the convention worthwhile) might tend to drag their feet. On this point, and at the risk of an unfair pre-judgment, there is the question about what the US position will be.

Side by side with some very worthy democratic values, there is a strong conservative core in the US political system. Witness Obama’s problems with issues like public health. And — closer to home — Judge Griesa might seem eccentric but — ideologically — he is by no means a “rara avis.”

There are countless examples of issues on which the American democracy has values which differ from those of, say, the Western European political systems. The existence of the death penalty or the political clout of the National Rifle Association are just two examples of this.

In fact, the US political context should also be taken into account when examining the Argentine case. The media is full of reports abut the close ties of the holdouts/vultures with the Republican Party. But the problem is not only conservatism. For better or worse, Judge Griesa’s rulings have been upheld all the way up to the Supreme Court. And however critical US politicians or commentators might be about the ruling, this is what counts the most. Not that they care for the plight of countries like Argentina less, but that they value their institutions more.

In addition, Argentina’s bilateral relationship with the US is not at its best. The president and some of her ministers have been openly critical of Obama’s government, not to mention his predecessors. This makes a good section of the Argentine electorate happy. And makes another significant section of the voters equally unhappy.

These conflicting visions are perhaps one of the best examples of the deep divide in Argentina’s political system. So — at the time of seeking support for the current confrontation with Griesa & Co — the government would be best advised to seek elsewhere. To make matters more complicated, the recent rapprochement with Russia and China, does not help. It might be the best option for Argentina’s national interest. But it does not earn brownie points in the US. The same can be said about Venezuela.

Government supporters get quite angry when the opposition claims that Argentina is “isolated from the world.” In fact some ministers’ narrative is focused on proving such assertion false. Perhaps things would be clearer if both government and opposition explain what they define as “world.” When government supporters refer to UNASUR, China or Russia they are absolutely right. But when the opposition refers to the US and a number of European countries, they also seem to have a point. The recent remarks from the German Finance Minister Wolfang Schäuble that Argentina has been — and continues to be — “an example of instability” underpin the views on Argentina’s isolation voiced by the opposition.

Unfortunately, the battle with the holdouts/vultures takes place in the US and — eventually — in Western Europe. A part of the world where G77 plus China do not cut much ice. So optimism about any future United Nations global regulations should be balanced by the less rosy prospects for the Argentine case in the near future


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