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American Task Force Argentina Launches to Seek Re-Opening of Argentina's 2005 Debt Restructuring
Press Release
October 31, 2006
Coalition Will Work to Encourage U.S. Government Engagement, Promote Discipline in International Lending Markets
Washington, DC - Today, the American Task Force Argentina (ATFA) was launched to convince the government of Argentina to reopen negotiations with American creditors holding defaulted Argentine bonds and encourage the Bush Administration to reexamine of Argentina's 2005 debt restructuring as a policy agenda item in bilateral discussions.
ATFA, through a variety of events and research initiatives, will work to encourage the United States government to take action on behalf of American taxpayers, businesses and bondholders. The ATFA also launched a website at www.atfa.org to serve as a clearinghouse for news and information related to Argentina's restructuring and ATFA's efforts.
While the governments of Japan, Germany, Spain and Italy have engaged
the government of Argentina on behalf of creditors and citizens in their nations, the United States has yet to do so. ATFA is concerned by the U.S. Government's filing of amicus briefs urging courts to adopt interpretations of the FSIA that protect foreign sovereign assets and undermine the efforts of Americans to regain their investments. The U.S. has also put pressure on creditors to accept provisions in their bonds, so-called collective action clauses, making it easier for sovereigns to restructure debt. The United States government can and should follow the lead of other governments by reversing course and acting on behalf of its citizens.
Made up of major creditor groups, the ATFA is co-chaired 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.
Last week, the ATFA released a scholarly paper by Dr. Robert Shapiro and economist Nam D. Pham on the effects of Argentina's restructuring titled, "Discredited The Impact of Argentina's Sovereign Debt Default and Debt Restructuring on U.S. Taxpayers and Investors." Together, they found that the default and restructuring cost Argentina's worldwide lenders some $74 billion, including net costs of $7.9 billion for U.S. lenders and $11.6 to $12.1 billion for Italian lenders, while the default and subsequent restructuring also cost U.S. taxpayers some $2.6 billion and U.S. shareholders of companies with direct investments in Argentina some $7.8 billion.
The ATFA will highlight the hazards and uncertainty generated by the Argentine debt default and its indefensible restructuring offer while supporting Dr. Shapiro's U.S. policy recommendations including:
- Consider terminating Argentina's participation in the "General System of Preferences" (GSP) to persuade or require Argentina to respect the established, international norms of developing-nation finance.
- Urge the IMF and World Bank to make future loans to Argentina contingent on its providing satisfactory terms to lenders holding its defaulted debt.
- Make emergency IMF loans to governments in default to help them stabilize their foreign exchange position available initially for the purpose only of repaying its creditors -- which would restore its access to capital markets.
- Permit American bondholders to attach Argentine government assets in the United States. These reforms should include changes in the Foreign Sovereign Immunities Act and international agreements to preserve immunity for central bank assets held at the Bank of International Settlements for any government in default only to the extent they are required for the conduct of the country's foreign exchange and monetary policy activities.
- Allow bond holders to attach the U.S. assets of enterprises owned by a government in default and any commercial payments or goods flows in the United States that involve a government in default.
"The ATFA is proposing serious remedies; justified because the stakes are not only tens of billions of dollars for American lenders, taxpayers and shareholders, but also the integrity of future international lending and investment for all developing countries," said Robert Shapiro. "If left unchallenged, the apparent success of Argentina's harsh, take-it-or-leave-it approach to its lenders may change the terms of international lending and ultimately reduce financial and technology transfers to developing nations," Shapiro continued.
Dr. Shapiro shared the findings of the ATFA report at two recent conferences hosted by Latin Finance Magazine in Washington, D.C. and New York and plans to participate in a similar event in Rome on November the 8th.
Argentina needs to reaffirm its commitment to international financial norms and the laws that govern financial contracts in order to restore confidence. The ATFA will work to ensure that Argentina's restructuring is not viewed as the new international norm for sovereign defaults or restructurings.
The American Task Force Argentina will continue with its ultimate aim to bolster the stability of global credit markets; work toward a suitable outcome for remaining creditors; ensure the integrity of U.S. law; and strengthen crucial bilateral relations between the United States and Argentina.
For additional information, please visit our new website at www.atfa.org, or contact info@atfa.org, or +1-888-662-2382.
U.S. Government
Takes Action
The Debt and Europe
ATFA Member Spotlight
Resolution on Argentina's Generalized System of Preferences Status (GSP)
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