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Legislation Seeks to Correct Argentina's Bad Example
Press Release
October 08, 2008

Reps. Jackson-Lee and Towns Introduce Act to Hold Foreign Nations Accountable

WASHINGTON - American Task Force Argentina (ATFA) applauds U.S. Representatives Sheila Jackson-Lee (D-TX) and Ed Towns (D-NY) for their leadership in introducing the Judgment Evading Foreign States Accountability Act of 2008 (JEFSA). The legislation encourages economic accountability for nations to deal fairly with creditors.

"American creditors have no effective way to recover outstanding debt when sovereign nations default on contractual obligations to U.S. citizens or ignore court judgments," ATFA Executive Director Robert Raben said. "Representatives Jackson-Lee and Towns worked diligently to introduce legislation that promotes accountability and stops the unfair practice of burdening U.S. investors, lenders, and taxpayers with the economic intransigence of a wealthy nation like Argentina."

Argentina defaulted on $81 billion in obligations to investors in 2001 - the largest sovereign debt default in history. Four years later, the Argentine government offered American holders a settlement that was far beneath international norms for such defaults, and repudiated the debts to the half of all foreign lenders who declined the offer. U.S. courts ruled numerous times that Argentina cannot unilaterally repudiate its obligations and must pay Americans what they are owed, but Argentina refused, choosing to simply ignore those judgments. In addition, the Argentine Congress passed a law in 2005 proclaiming that they would never pay.

"Argentina set a dangerous precedent by refusing to repay foreign investors, including pension funds, individual pensioners, taxpayers, and hundreds of businesses," ATFA Executive Director Robert Raben said. "JEFSA will protect U.S. investors and taxpayers and promote respect for U.S. courts and the rule of law. The legislation joins many letters and statements from American policymakers insisting that Argentina pay its debts - for the sake of U.S. lenders and taxpayers, and for the sake of its own faltering economy. While Argentina contemplates this decision, lenders, investors, and taxpayers in the U.S. wait for their $20.3 billion."

The bill strives to discourage acts that defy courts and international norms, and encourages responsibility and accountability by:

- Denying foreign states that have been in default of $1 million in U.S. court judgments for more than six months access to our capital markets;
- Requiring the U.S. to oppose lending and grant-in-aid by international lending organizations to such states;
- Barring U.S. foreign aid to such states until they satisfy their obligations (subject to a presidential override); and
- Requiring the Secretary of the Treasury to issue annual reports naming these states and analyzing the effect of their behavior on the U.S. economy.

An alliance of organizations, ATFA is led by former Assistant United States Attorney General Robert Raben, the group's Executive Director, and by The Honorable Robert J. Shapiro, former Under Secretary of Commerce for Economic Affairs in the Clinton Administration, and Ambassador Nancy Soderberg, Ambassador at the U.S. Mission to the United Nations in New York from 1997 to 2001, who co-chair the group.

For additional information, please visit our website at www.atfa.org, or contact media@atfa.org, or +1-888-662-2382

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