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U.S.: bondholders seek punishment for Argentina
Ambito Financiero
May 21, 2009

Washington U.S. Members of Congress yesterday introduced a bill to impose punishments on countries of medium and high income which, like Argentina, refuse to honor their commitments with creditors from that country. Democratic Congressman Eric Massa of the State of New York, which was raised in Argentina, as his father was a naval attach of the United States in Buenos Aires, today led the charge. He had the support of other Democrats like Paul Tonko, Robert Wexler, Timothy Bishop, Carolyn Maloney, Dan Maffei and Mike McMahon.

The "Judgment Evading Foreign States Accountability Act" seeks to exclude from the U.S. capital markets any nation that doesn't comply with its obligations above US$100 million over more than two years. In the case of countries that are in default for more than three years on their commitments, the restriction to U.s. markets would even be extended to the businesses of the debtor nations. Also, it would demand that the government of Barack Obama not grant aid to "defaulting" countries, and that Treasury Secretary Timothy Geithner publish annual reports about those countries and analyze the impact of their prolonged default upon the U.S. economy.

"U.S. taxpayers are continuing to wait to have the money they lent to Argentina in good faith paid back. At the same time, Argentina has earned the reputation of being a defaulter because its government doesn't comply with judicial decisions. This legislation could clear the way for a just resolution for both countries," said Robert Raben, executive director of American Task Force Argentina (ATFA), an organization that repudiates the default and the subsequent restructuring of Argentine sovereign debt. "President Cristina de Kirchner said many times that she's ready to negotiate with the bondholders, but we haven't seen a single action on it," Raben added, who was an assistant attorney general in the Justice Department of the United States.

ATFA believes that the debt in default to U.S. citizens, which comes to US$3.5 billion, could be paid "easily" with the international reserves of the BCRA. "If Argentina refuses to settle its pending debts it could be setting a precedent in the region. A few months ago Ecuado defaulted on more than US$3.8 billion in obligations to foreign investors, citing Argentina as a model," the organization said in a statement. For that he praised the bill introduced in Congress, which "stimulates responsible loans, respects the rule of law and improves international responsibility."

Robert Shapiro, ex-undersecretary of Commerce for economic affairs in the Clinton Administration, and Nancy Soderberg (sic), ambassador to the U.S. mission to the United Nations from 1997 to 2001 are the co-presidents of the association. ATFA was launched in November 2006 in response to the concerns with Argentina's handling of the default on its sovereign debt in 2001.

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