Monday, November 2, 2015

Let’s Change: stand on ‘vultures’ isn’t soft

Let’s Change’s economist Alfonso Prat-Gay says punitive should not be accepted.

Economic advisers insist a Macri administration would seek concessions from holdouts

The strategy being pursued by the Let’s Change coalition to negotiate with the so-called “vulture funds” is not a soft one, the coalition’s chief economic spokesman Alfonso Prat-Gay said yesterday.

Prat-Gay sought to downplay the idea that a government led by presidential candidate Mauricio Macri would simply roll over and give in to all the demands by New York District Judge Thomas Griesa in order to bring the long legal fight with holdout creditors to an end.

“Before entering a negotiation, we’re going to start the wheels of production, foment the sectors that generate foreign currency like agriculture and regional economies, and only then, with those dollars, after those initial steps, we will sit to discuss what to do in the New York courts,” Prat-Gay said in an interview with Radio Ciudad.

Prat-Gay is seen as Macri’s top economic adviser along with Rogelio Frigerio.

His comments come after Victory Front (FpV) presidential candidate Daniel Scioli accused Macri’s PRO party of planning to accept all the conditions that the holdout creditors put on the table.

Macri had said in 2014, after Argentina lost the appeal against Griesa’s ruling, that “we now have to sit down in Griesa’s tribunal and do what he asks. We have to go there and pay.”

Prat-Gay, however, insists that regardless of the outcome, there are aspects to Judge Griesa’s ruling that can be questioned in a negotiation.

Punitive interests

“We will sit down for negotiations in New York but there are some aspects of Griesa’s ruling that we want to discuss. Argentina has to pay what it owes but Griesa’s ruling completely overshoots, as it includes punitive interests that don’t respond to any criteria of justice,” he said.

The tough-negotiation approach is similar to what one of Scioli’s top economic advisers, Miguel Bein, has put forw ard, saying in May that “negotiating the basis of punitive interests is an important possibility that we must explore.”

That stance would still mean the country would end up paying more to the “holdouts” that challenged Argentina in court than it did to those who accepted the debt restructurings of 2005 and 2010. But it would also seek to end up at a smaller figure than what the “vultures” are requesting.

Prat-Gay criticized the government’s past approach to the issue, saying no real negotiation was attempted.

“The Argentine government never tried to challenge those punitive interests because it preferred to go for the ‘motherland or vultures’ approach,” suggesting that the toughest stance was in the end counterproductive.

He also said that it was now Scioli who was in the weakest position to negotiate with the “vultures,” arguing that his economic programme forced him to make a quicker deal with those suing Argentina.

In his view, “as Scioli won’t change anything, he will not have the dollars he needs, so his only choice will be to embrace the vulture funds, which is not what we are proposing.”

Scioli’s team has said they will get dollars by lowering export duties to grain producers, but that they will avoid a strong devaluation because it would hit workers’ pockets.

Both Prat-Gay and Banco Ciudad’s president Frigerio emphasized the restrictions on the dollar trade as Argentina’s main problem, saying that ending them was needed to “eliminate poverty and hunger” in Argentina but, when pressed on the short-term consequences of lifting those restrictions, they denied that this would imply a devaluation or create more inflation.

Other issues

Frigerio also criticized the government’s subsidy programmes, saying they were “regressive” as “poor people get nothing from them while the rich do, and that must change. We have an enormous fiscal deficit and we can’t afford the luxury of subsidizing the rich.”

He also denied recent rumours, echoed by Scioli himself, about Let’s Change’s alleged plans to extend the retirement age by five years.

As for public companies, Frigerio argued that PRO’s administration in Buenos Aires City proved it did not favour privatization even if it opposed nationalizations initially, arguing that the federal government handled them poorly.

“Nothing was privatized in the City. The national government made a dreadful nationalization of half of (energy company) YPF’s shares. It cost us US$5 billion. The Spanish celebrated with champagne. The same happened with Aerolíneas Argentinas and the pension funds. We can’t go back in time,” he said.

Herald staff with DyN, online media