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Paris Club: mistreatment that was not responded to
Clarin
August 20, 2010

By Marcelo Bonelli

The members of the Paris Club gave at least discourteous treatment to Argentina and contempt to officials at the Economy Ministry over their lack of professionalism in holding multilateral negotiations.

This was set off during the plenary meeting in Paris, in which high officials also participated from the Monetary Fund, the World Bank and leaders from the financial system from the Institute of International Finance. Also, as special guests, there were delegates from Brazil, South Korea and Poland. At the meeting, they dealt with the emission of debt from Ukraine and Kazakhstan, but in an unusual mistreatment they likened the Argentine situation to the evolution of very primitive economies in Africa.

Thus they placed Argentina on equal footing with the Congo, Central African Republic, Ivory Coast and the Republic of Seychelles.

The attitude was linked to informal issues, but specified in the meeting about the way that Amado Boudou handled negotiations with the Paris Club and before the IMF.

In particular, bankers and international officials objected to not keeping promises that the minister made to the international business community. Boudou, just after taking office, had promised to resolve the problem of the holdouts. But he also gave his word and didn't keep it that he would normalize the INDEC, make a payment proposal to the Paris Club which he never put together and that he would negotiate with the Fund, which he never started.

The unusual mistreatment made towards Argentina was reflected in the official statement from the Paris Club. In its brief text it pointed out who participated, the issues dealt with and only in the end mentioned Argentina in a malicious way. It said: "The creditors also discussed the recent restructuring of the Paris Club, with emphasis on the comparative results seen with the Ivory Coast, the Republic of the Congo, the Democratic Central African Republic and the Seychelles." And then added right after: "Lastly, the creditors reflected on the latest news related to the situation of Argentina's debt." The meeting was held on June 16th, but the Economy Ministry kept it hidden for its adverse results not to be known. Boudou preferred to hide the objections for them to not affect his image and to avoid an impact on the close of the swap on foreign debt.

The Paris Club's contemptuous attitude deserved a strong response from the Palacio de Hacienda. But it avoided it, as did the Foreign Ministry.

Pandora's box opened up in recent weeks, and then the presidential couple charged financier Alfredo Mac Laughlin with the task of seeking an accord with the Paris Club.

On the trading bourse they argue that the designation of the banker has to do with the stumbles and objections that the Boudou team got in the Paris Club meeting, in the Paris summer.

Now, the head of the Paris Club, Ahora, Ram n Fern ndez, sent a message to Buenos Aires: that the creditor nations are ready to negotiate an end to the default once Argentina makes a formal and serious proposal. Fernandez also showed his pleasure at the designation of Mac Laughlin, because he has a direct line to Nestor Kirchner.

People abroad are tired of Boudou's false promises (like other ministers before him) and prefer to speak in a realistic way with Kirchner's direct interlocutors.

Among the businessmen it a change in the Foreign Ministry also was welcomed: the designation of Ambassador Luis Maria Kreckler in the strategic secretariat of International Economic Relations. Kreckler is a professional of prestige and a career diplomat, who also has the virtue of having a direct line to the Casa Rosada. His ascension was directly decided on by the President, who promised him strong autonomy to follow Afredo Chiaradia's tasks. The now-ambassador to the U.S. has an excellent relationship with Mac Laughlin. That will be important to avoid the short-circuits that were generated in Washington by the leadership of Hector Timerman.

Mac Laughlin will travel in the coming days to the U.S. with a special title: director for the IMF, but coordinator in chief of all financial representation at the World Bank and IADB. Before he will attend the desgination of the new delegate of the IMF in Buenos Aires: Mar a Angeles Gonz lez Miranda. The moves have to do with signals that came out of the US Treasury and the IMF Vice President.

John Lipsky communicated the desire that Argentina normalize its relations with the Fund. For that, Lipsky has only one condition: that Argentina make its statistics credible.

The IMF bureaucracy doesn't believe in the economic data that the Palacio de Hacienda puts out and just sent a recrimination to Boudou, requesting elemental information about growth and monetary data from the BCRA.

The staff is threatening to apply sanctions on Argentina if it doesn't comply with those elemental norms, obligatory for any member of the Fund. The bureaucrats proposed to the IMF leadership to reduce the number of members and, in the cutback, the Argentine desk is in second place among an undesirable ranking of non-complying nations. The issue creates loud political noise, which required a move by the U.S. Treasury. Meg Lundsager, Barack Obama's delegate to the IMF, had to redact a document clarifying one issue: that the proposal to eliminate positions on the board not be directed at emerging countries like Argentina, but at the European Community.

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