Monday, March 7, 2016

Holdouts bill exposes divide in Victory Front

Senator Juan Manuel Abal Medina (Left) and Héctor Recalde, Victory Front caucus head in the Lower House of Congress.

Senator Abal Medina calls on Lower House bloc head to help Macri reach quorum

The much-anticipated debate over the government-backed proposal to reach a deal with holdout creditors is leading to a growing divide among Kirchnerite leaders in Congress.

Senator Juan Manuel Abal Medina yesterday called on his colleague, the president of the Victory Front (FpV) bloc in the Lower House Héctor Recalde, to provide quorum so they can discuss the agreement, promising that pro-Kirchnerite senators would would definitely participate in the debate.

“I think we need to vote on it no matter what. To not vote or not give quorum is very childish behaviour from my point of view,” Abal Medina told Radio Mitre.

On Friday, Recalde announced that they wouldn’t give quorum to prevent a debate over the Let’s Change (Cambiemos) administration bill to repeal the Sovereign Payment and Padlock laws. Both these laws prevent Argentina from paying the holdouts more than the 75-percent haircut previously offered to creditors in the debt swaps of 2005 and 2010.

The Macri administration has until April 14 to repeal both laws and provide funds for the holdouts.

“We need to take a look at the project, analyze it, gather experts and make the best decision we can for Argentina,” said Abal Medina, a former Cabinet chief for president Cristina Fernández de Kirchner, stressing that even if the FpV bloc in the Lower House ultimately doesn’t give quorum, there is still a possibility it can still be obtained. This is because only 81 seats of the total 257 seats in the Lower House are controlled by the FpV, and only 129 lawmakers are needed to ensure quorum.

The Senate Peronist-FpV bloc, meanwhile, offers a completely different picture: of the 72 senators that are in the chamber, 40 belong to the Peronist (PJ) party, giving them the power to block a session.

One of the main causes behind the divide between the FpV senate and Lower House bloc representatives is that senators are historically more dependant on their provincial governors’ whims than lawmakers. Several Peronist provincial leaders want to develop a friendly relationship with the Macri administration, since the president holds the purse strings to provincial funds via its control of the federal-provincial revenue-sharing scheme.

The president has recently announced he would return the 15-percent deduction in funds destined for the provinces — that has been withheld by the ANSeS social security agency — in five years’ time.

“If the government called a meeting to negotiate the return of funds that have been held by the national government, it is on the right path,” Chubut Governor Mario Das Neves told Radio 10 yesterday.

Hawks and doves

Meanwhile, Salta Governor Juan Manuel Urtubey — a former Kirchnerite ally and pro-dialogue Peronist — yesterday praised the return to financial markets as “part of his convictions” saying it will be good for the country.

In an interview with the El Tribuno daily yesterday, Urtubey said the move was vital to finalize the agreements, but failed to mention what other Peronists believe may be the possible implications of giving the holdouts a better deal than the creditors that agreed to previous debt swaps.

“What most worries me about repealing the Padlock and Sovereign Payment laws is the possibility of lawsuits submitted by creditors that accepted debt swaps in 2005 and 2010,” Abal Medina said. This was the same reason used by Recalde on why he was against giving the Lower House quorum to discuss the repeals.

But, in an attempt to portray himself as on the middle ground, Abal Medina still criticized the Lower House bloc leaders of having a very extreme and confrontational position.

“We need to collaborate with the country, while being part of the opposition. This is why we are trying to construct a majority in the senate with (Río Negro Senator and FpV Senate caucus president) Miguel Pichetto and other leaders,” he concluded.

US$15 billion at stake

The Let’s Change caucus in the Lower House is hoping to pass the so-called “normalization of public debt” bill this week, by repealing the Padlock and Sovereign Payment laws and getting approval for the authorization for the issue of US$15 billion in debt.

According to Finance Minister Alfonso Prat-Gay, US$11.68 million will be allocated to pay the holdout funds, while the rest will be used to pay other debt payments and finance the fiscal deficit. Three bonds with maturities of 5, 10 and 30 years will be issued in mid-April, at a 7.5-percent rate of interest.

Pro-government representatives are trying to get approval from the Finance and Budget Committees of the Lower House by tomorrow, so that the bill can reach the floor this Thursday.

If this occurs, their goal is for the bill to receive preliminary approval by April 1, which would give the Senate two weeks to discuss the move.

Macri’s PRO party is relying on the multi-caucus support of Renewal Front leader Sergio Massa and former Córdoba governor José Manuel De la Sota’s supporters, as well as a third group that recently broke away from the FpV known as the Justicialist Bloc.

The FpV and some left-wing parties have announced that they wouldn’t help the government reach a quorum and that, in any case, they planned to vote against the law.

Herald staff with DyN, Télam