Ambito Financiero
August 30, 2012

By Carlos Burgueno

A credit for an insignificant amount from the Inter-American Development Bank (IADB) put the government on notice yesterday about what it will have to face in international credit organizations. Yesterday, the board of that entity, led by Luis Alberto Moreno, approved a disbursement of US$60 million to San Juan for starting small and medium sized businesses. The United States, Spain and Germany, each with its own arguments, voted against the credit. The support of the rest of the Latin American countries, who have a majority in the IADB board, moved it forward. However, the yellow light went off over what could happen at the World Bank, which also must approve various lines of credit this year. According to the Economy Ministry, now is the time to start the diplomatic efforts to avoid loans of almost US$1 billion getting blocked, which are in process for the country until December.

Yesterday's vote took place in the IADB's headquarters in Washington. The province that is governed by Jos Luis Gioja must put in US$20 million to complete the US$80 million needed for the plan. The project states that its goal is "to contribute to the rise in productivity of SMEs through: the increase in access to medium and long-term credit by companies; the improvement of administrative capacity and the articulation of the beneficiary companies to develop and finalize their investment plans."

At the time to vote, Spain (which has a less than 2% share in the IADB) went against it, honoring the promise made in March of this year at the IMF summit in Washington, when Spanish Minister Miguel de Guindos announced that Argentina would always get a negative vote when cast. This is the position of the government of Mariano Rajoy after the nationalization of YPF.

The United States also voted against it, returning to a position the government of Barack Obama has kept to since all of last year and is repeating for the first time in 2012. The interpretation of the ministry led by Hernan Lorenzino is that again, and before the approaching presidential elections, it has ended up being under the negative influence of the vulture funds and American companies that have won or have pending judgments before the ICSID.

In April, when Cristina de Kirchner and Obama met at the Summit of the Americas in Cartagena de Indias, the Argentine government was convinced that the U.S.'s negative votes against Argentina were under control. However, the actions by the lobbyists for the vulture funds and the companies with lawsuits against Argentina at the ICSID accelerated in the American Congress, for its representatives to vote against credits requested at the IADB and the World Bank. The surprise for the Argentine delegation led by Gabriela Costa is that Germany also voted against it, a country with which until yesterday they had maintained good relations with on the boards of the international organizations. According to official interpretations, there was pressure on the government of Angela Merkel for Argentina to speed up its negotiations to pay off the debt with the Paris Club for some US$9 billion (including interest), something that is already back off of the Casa Rosada's agenda.

Faced with this situation, Argentina will begin to speed up its contacts in Washington (where both organizations are based) to hold onto the positive votes of other countries. In the case of the IADB, the situation is looser for the country. The United States has a preponderant position (30% of the votes) but with the support of the Latin American countries there is no chance a credit can be held up. Only with the positive vote of Brazil, Mexico, Venezuela, Chile, Colombia, Peru, Uruguay and the Central American states, the credits are guaranteed.

The situation at the World Bank is more complicated. There, the United States holds 15.5%, Germany 4.58%, and Spain 1.77%. Together, they are more than 20%, and eventually could get the support of Japan (9.17%) and the United Kingdom (4.1%). Argentina will now have to speed up financial diplomacy with China, France, Italy, Russia, India and the rest of the developing countries that, while holding percentages of the vote that are less than 4%, together make up more than the 51% necessary for a loan to not be held up. According to the local view, keeping good relations with Russia, India and China, and making sure these allies stay firm, approval will be guaranteed. Latin American support is without problems, making up 5% of the total, beginning with Brazil, with 1.87% of the votes.

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