Saturday, September 12, 2015

Gov’t to take debt principles to Congress

Foreign Minister Héctor Timerman speaks at a G77 group meeting at the UN on Wednesday.

Says the document approved by the General Assembly should become national law

The basic principles for sovereign debt restructuring approved by the United Nations General Assembly on Thursday will be sent to Congress in order to turn them into a law, federal government officials said yesterday, sparking a debate over the effects of the UN resolution on the country’s legal case against the “vulture” funds in New York.

“We want to turn the principles into a law and we will send them to Congress, where they will be approved. They put a limit on the actions of the ‘vulture’ funds,” Foreign Minister Héctor Timerman said yesterday. “I wonder what the opposition will say about the UN decision. I guess they can’t say there was fraud, right?”

A total of 135 countries voted in favour, six voted against and 42 abstained from the vote on the UN resolution, which says countries should have the freedom to decide their own economic policies, that sovereign immunity should protect their assets abroad and, crucially, that debt restructuring approved by a majority of bondholders should apply to all of them.

“The 193 member countries attended the General Assembly. We were able to convince many of them that were reluctant. Some are even going through similar situation as ours,” Timerman said. “We carried out nine principles and rejecting them is like rejecting the commandments. The slave owner never wants slavery to end.”

Meanwhile, Victory Front (FpV) presidential hopeful Daniel Scioli said he hoped opposition leaders “acknowledge the courage and tenacity” of President Cristina Fernández de Kirchner when negotiating with the “vulture” funds and highlighted the principles voted at the United Nations.

“It’s not magic, it’s thanks to important decisions taken by the president. The principles weren’t created just to benefit Argentines but also to provide a service to the world so no one has to deal again with the actions of the ‘vulture’ funds,” Scioli said at a rally in Morón. “The principles mean saying no to the ‘vultures’ and yes to keep on growing and moving forward.”

Following the same train of thought, Buenos Aires province Economy Minister Silvina Batakis said the resolution is “a gesture of solidarity by Argentina with the rest of the countries that could face” debt litigation in the future, while highlighting the work of CFK and Economy Minister Axel Kicillof.

A sovereign state “has the right to design its macroeconomic policy, including restructuring its sovereign debt, which should not be frustrated or impeded by any abusive measures” according to the resolution, which calls on debtors and creditors “to act in good faith and with a cooperative spirit to reach a consensual rearrangement” of sovereign debt.

Effects debate

Even among government officials, debate grew yesterday over whether the UN resolution would have any real effect on the legal case between Argentina and the holdouts. Timerman, said it “won’t help to work on what happened in the past,” a contention that international relations experts also agreed with. Cabinet Chief Aníbal Fernández, however, disagreed.

“It’s not true it doesn’t have any immediate effects. The principles lead to concrete effects,” Fernández said. “The resolution is highly positive.”

Meanwhile, former Foreign minister Dante Caputo highlighted the “political importance” of the vote but said UN resolutions don’t “force states” to act.

“The only binding resolutions are the ones voted by the UN Security Council. If those aren’t obeyed, countries can be sanctioned,” Caputo said. “As the principles aren’t binding, retroactivity doesn’t apply in this case.”

The UN’s independent expert on the effects of foreign debt and human rights, Juan Pablo Bohoslavsky, agreed with the contention.

“This GA resolution is not creating new rights or obligations, it simply identifies, in a clear and systematic manner, the existing and well-rooted-principles which apply to the field of sovereign debt,” the human rights expert said.

Former Argentine ambassador at the UN Emilio Cárdenas agreed with Caputo and said “none of the General Assembly resolutions are binding for countries,” except the ones agreed to by the Security Council.

“Nevertheless, it has an ideological impact, especially by having China’s support,” Cárdenas said. “If the resolution would be applicable, creditor countries could choose not to give more loans or to use much higher interest rates so as to avoid the risks of a default.”

At the same time, Former Argentine ambassador in China César Mayoral said the resolution “isn’t binding” but highlighted its importance.

“It’s a step forward, especially when thinking in the long-term. Countries that have debt and default will be able to solve the situation with the agreement of the majority,” Mayoral said. “It’s not valid for the current case of Argentina and the holdouts.”

Herald with Télam, DyN