Thursday, 1 March 2012

Britain subsidizes Argentina. Argentina has money but it does not pay

Britain subsidizes Argentina: Wow! Extracts from an article published by the Daily Telegraph clearly illustrate how Argentina can pay its debts – and it doesn’t because it does not want to – while at the same time is getting British subsidies because after Argentina defaulted payments of its foreign debt  Argentina has no financial credibility.

“Did you know that your taxes are supporting loans going to Argentina? As President Cristina Fernandez de Kirchner continues to make waves over the sovereignty of the Falklands, the British Government continues to vote through billions of pounds in international aid to her country, primarily through the World Bank and the EU. According to a poll by ComRes, of those few British adults who are aware of such expenditure, barely 6 per cent support it.

Barack Obama’s administration certainly isn’t in favour of such action. It has started voting against loans to Argentina from international financial institutions, and is looking for allies in its tough stance. Britain should be first in line.

While I strongly support foreign assistance – and Britain’s determination to meet the UN agreement on development aid is an example to the world – such funds need to be focused on eliminating poverty and conflict, not fattening government wallets in a G20 country that refuses to meet its global obligations.

Argentina, after all, is acting with scant regard for the international community. Over the past decade it has pursued a deliberate strategy of playing games with financial markets. Its default on £51 billion of debt in 2001 turned it into a financial pariah, a status that was not enhanced by two subsequent unilateral debt restructurings. To this day, Argentina remains shut out of the world’s capital markets. To make matters worse, it also nationalised private pension funds, thereby providing itself with a captive domestic market into which it could sell its debt.

The government has since been sued by creditors around the world as they try to force Argentina to honour its obligations. In the Southern District Court of New York alone, there have been more than 170 bondholder lawsuits, resulting in more than 100 judgments. Today, Argentina still owes more than £15 billion in old debts ranging from Paris Club loans, to bondholders, and to foreign investors holding arbitral awards from the International Centre for the Settlement of Investment Disputes (ICSID). In each case, Argentina has refused to play by the rules. It has demanded a Paris Club restructuring without the mandatory IMF monitoring, it has ignored New York court judgments, and it has insisted, in blatant disregard of its treaty obligations under ICSID, that arbitral awards be brought to Argentina for “approval” by its own courts.”
President Cristina Fernandez, like her illustrious colleague General Leopoldo Fortunato Galtieri did in 1982, is trying to make the world forget that her country does not pay its debts, in spite of having the money reserves to do so. How does she do it? By re-igniting an old conflict that, by the way, Argentina lost in the most infamous way in 1982 when Argentina launched an illegal invasion using conscripts as cannon fodder.  There you are. So, did you want to know why they are talking about it again?  I gave you the answer. Another brilliant example of the most depraved hypocrisy.

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