Wednesday, August 27, 2014

Kicillof urges Congress not to become 'judge Griesa’s clerk office'

Economy Minister Axel Kicillof shows up in Congress to address senators on Argentina''s new debt swap bill.

Economy Minister Axel Kicillof spoke before the Budget and Foreign Affairs Committees of the Senate as a new round of talks began today over a government-sponsored bill that if approved would allow for the voluntary payment of the country’s creditors in Buenos Aires.

In the beginning of his address, minister Kicillof described what he called the process of “over- indebtedness” that started with the 1976-1983 military dictatorship, ending with an external debt Argentina was "never" going to be able to serve.

“An unpayable debt,” Kicillof said adding that international credit organisms such as the International Monetary Fund (IMF) forged a mechanism of “refinancing,” “interests” and “covered capitalization” that ended only with growing liabilities “without the entrance of genuine resources into de South American country.”

“Every each of such refinancing (processes) were a show of humilliation for Argentina because the impossibility to pay forced (Argentina) to incurred in new debts (accepting) to have its economic policy conditioned (with) adjustment plans,” Axel Kicillof said arguing Argentina only got to serve its debt with its very own strategic resources – the recently expropriated YPF energy company and the country’s Aerolíneas Argentinas flag carrier – during the 90’s neoliberal decade of "privatizations."

Affirming “over indebtedness” turned also into an “instrument of control” over Argentina’s domestic policies with governments here “copying” the mandates of international credit organisms - both the de facto 1976-1983 junta and the democratic government that came after it -, Kicillof defended this year's agreement with the Paris Club group of creditors, negotiations that were conducted and ended for the first time in the group’s history “without the intervention of the IMF.”

Such process of indebtness, Kicillof added, resulted in the 2001-2002 crisis and historic default. “One of the most perverse instruments in terms of conditioning, sovereignty seizure, the definitive un-industrialization of the country,” he insisted. “That package proved to be unsustainable with huge rates of umemployment; it had unemployment as a requirement.”

The scandal

“Argentina did not need money for a bridge (…) but to serve its debt and it had to do it desperately,” the economy minister continued saying “no one got surprised” when Argentina defaulted on its sovereign debt more than a decade ago.

“They were lending an insolvent. No one was surprised. Many benefited by lending to Argentina in the worst conditions (…) with 15 percent of interest rates. Those who lent (money) knew Argentina could not pay, that is why the mega-swap had so many adhesion, because it was managed wisely; creditors came already having filled their pockets with interests,” Kicillof stressed now questioning both US District Court Judge Thomas Griesa and so called “vulture funds” that rejected the country’s 2005 and 2010 debt swaps.

“In private law, having 66 percent of creditors accepting the swap, the rest must compulsively accept. We got 93 percent,” the minister pointed out alluding to the 92.4 percent of bondholders that did accept the restructuring.

Vulture funds, Kicillof continued, that make a “business” of “extorting” countries while New York Judge Griesa makes the thumbs-up sign to hedge funds, paving the way for them to collect a 1.5 billion dollar sentence for bonds “they paid 48 million dollars” for.

“It is a scandal if Argentina pays,” Kicillof warned accusing opposition figures standing by Griesa’s ruling of either “ignorant” or seeking for a return to Argentina’s “over-idebtness” decades.

The five plagues

“The money was deposited and Argentina's obligation was to deposit the money. Once deposited the money is of bondholders’. Griesa, bondholders, the BoNY acknowledged it, that that money was no longer ours,” the minister stated accusing the US magistrate of an “illogical sentence” because a ruling can never go against a third party’s interests that is not involved in the dispute (meaning the 92.4 percent of creditors that did accept the 2005 and 2010 swaps), adding it is the Bank of New York Mellon that has now to transfer Argentina’s payment to creditors.

“They said vultures’ five plagues were coming: the devaluation of the peso currency, that they would attack the Government, that they would not allow us to pay somewhere else, that we would not access the international financial system and that another government would happily come and pay,” Kicillof said aiming at opposition leaders and private-sector consultants that have been long resisting the Kirchnerite strategy to face hedge funds.

In that sense, Kicillof assured that the Cristina Fernández de Kirchner administration is instead seeking to settle the debt dispute with vulture funds and avoid passing the conflict to future governments with the “Sovereign Payment” bill.

"Passing problems to future governments is to sign anything to Singer, NML Capital and Griesa."

“If Congress does not do anything, what it is actually doing is ratifying judge Griesa’s ruling. This is a story of loan sharks against sovereign countries. Are we going to ratify what Griesa ruled? Is the Argentine Congress going to be Griesa’s clerk office?”.

The ruling Victory Front (Fpv) is expected to expedite the bill through the Budget and Foreign Affairs Committees, ending debate tomorrow and taking the measure for a vote on the Senate floor by September 3.