U.S. Congress Makes Federal Case Over Argentina’s Refusal to Negotiate With Creditors

U.S. Congress Makes Federal Case Over Argentina’s Refusal to Negotiate With Creditors

Post date : 12.16.2014 8:43 am

You might have missed this, but late last week, the U.S. Congress approved language (see House Report 113-499) requiring the U.S. Departments of State and Treasury to report back to Congress early in the new year about the “steps that Argentina is taking to normalize relations with its creditors.”

Report language addressing Argentina’s refusal to negotiate with U.S. creditors had previously passed a House Committee this summer and is put into effect by the omnibus appropriations bill that just passed both Houses of Congress. Here is what it says:

Debt repayment. The Committee is concerned about the continued dispute between Argentina and its creditors and notes that the Secretary of State, in a hearing before the Subcommittee, said that he has urged Argentina to repay its debts to the United States Government and to engage with creditors, public and private. The Committee directs the Secretary of State and the Secretary of the Treasury to submit a report to the Committees on Appropriations, not later than 45 days after enactment of this Act, on steps the Government of Argentina is taking to normalize relations with its creditors.

According to the report’s directive, both the Secretary of State and the Secretary of the Treasury must report back to Congress within 45 days on “steps that Argentina is taking to normalize relations with its creditors.”

This isn’t the first time U.S. officials have taken a position on Argentina’s refusal to negotiate. As the report states, Secretary of State Kerry has called upon Argentina to engage with creditors, public and private. This summer, Senator Menendez called out Argentina for its behavior, stating that there was no reason for a G-20 member to fail to meet its obligations.

For years, Argentina’s creditors have asked the country’s leaders to sit down and negotiate a final resolution to Argentina’s outstanding debts. Creditors have made it clear that they can be flexible on negotiating terms, including incorporating elements of past Argentine negotiations with the Paris Club and Repsol into a final bondholder resolution. However, Argentina’s officials have refused to engage in even basic dialogue with its creditors. By refusing to negotiate, Argentina’s leaders, specifically its Economy Minister Axel Kicillof, have created a disastrous economic situation for Argentina’s citizens, and have isolated the country from financial markets.

This latest action by the U.S. Congress is a constructive step aimed at promoting a settlement between the two parties. Argentina’s creditors are waiting to negotiate. Will Argentina join them?