Friday, November 23, 2012
By Martín Kanenguiser
The co-chairman of the American Task Force Argentina (ATFA), Robert Shapiro, warned that Argentina could fall into crisis in the short term if it doesn’t comply with the ruling that orders it to pay the bondholders in default in December. In an interview with LA NACION from Washington, Shapiro said that the “vulture funds” bought their bonds between the default in 2001 and believes that the threat to the world is not from these groups, but the idea that “a country can repudiate debt of those who are not willing to accept unacceptable terms.”
-What is your opinion about the Argentine situation 11 years after the crisis of 2001-2002?
-The situation in Argentina is bad for everyone. There is growing concern that the country could find itself in another crisis. President Cristina Kirchner’s economic policies have damaged rather than improved the country’s standing in the international community. Your access to capital markets remains blocked, and the government’s policies have harmed the ability of the country’s provinces, corporations and banks to access capital as well. The Argentine people are suffering, as they expressed in the recent large-scale protests.
-Have the New York courts been very tough on the country?
-They are upholding the stability of American law, which in turn supports the stability and growth of the United States in global markets. By signing the bond contracts and respecting New York law, Argentina promised to abide by the terms of the operation.
-Don’t you think that the attachment of the Fragata Libertad in Ghana is unfair, in particular when judge Griesa denied attachments of military assets of Argentina in the past?
-The measure is consistent with British and Ghanaian law. It came after a decade of the Argentine government’s defiance of over 100 court judgments. It is also certainly unfair that the Argentine government sacrificed the well-being of 300 crew members rather than posting the requested bond that was requested to win the immediate release of the ship.
-What will happen if Argentina doesn’t obey the rulings like the one issued in New York?
-It leaves Argentina with three options: settle with the bond holders; refuse to pay all of them on equal terms and precipitate another default, or appeal to the U.S. Supreme Court. I hope that Argentina chooses to pay, so it will not suffer economic decline.
-The bondholders that accepted the swaps of 2005 and 2010 believe that it’s unfair if the holdouts receive 100% of what they claim.
-We call on Argentina to agree to negotiate in good faith with the creditors who have not been paid. What the government decides to do with a different constituency of former creditors is up the government and those creditors.
-But the Argentine government says that the “vulture funds” bought their bonds at a very low value and now they are claiming 100%. Isn’t it an unfair complaint?
-The government has offered a series of arguments regarding their reasons for not paying what courts around the world insist that they pay. I understand the holdouts had purchased bonds before the default. The question, however, avoids the fact that the government has failed to make good on its promises.
-In the Amicus Curiae presented at the Court, the US government warned that Argentina could fall in another economic crisis if it loses these cases...
-Argentina may well find itself in worse economic shape very quickly if it does not address these obligations. It is becoming more and more isolated. And average people in Argentina feel the effects everyday of these bad policies.
-Don’t you think that, as the U.S. and Argentine governments have said, if a small minority of people win this case of pari passu, it would be a disaster for other restructurings?
-The Court of Appeals ruling is a direct application of a specific contract involving Argentina. Argentina's behavior not to paying any bondholder that won a lawsuit against the country would be an exceptional case and the court has treated it as such. And the majority of bond covenants today are written to include collective actions clauses, for which the pari passu argument would not apply.
-What solution would be reasonable if the country doesn’t have the resources to pay the US$11.056 billion that remains in default?
-Argentina is Latin America’s third largest economy with $46 billion in reserves. It is self-evident that Argentina can meet these obligations. But one also can consider the high price that the country is paying on its debt for not assuming the need for a negotiation. The only way to lower that cost is to open discussions and negotiate with its creditors.
-ATFA was denounced by The Wall Street Journal for fooling some of its members, like rural leader Larry Matlack, into pressuring Argentina with greater force.
-The majority of our members participate in our activities; apparently, one of our members wasn’t aware they had joined ATFA several years ago. It was an anomaly, but we spoke with the organization and corrected it.
-How do you respond to the accusation from Ambassador Jorge Argüello that ATFA is dangerous for defending the “vulture funds”?
-The international threat comes from the precedents that the Kirchner regime tried to establish, by saying that a country can repudiate debt from those that didn’t want to accept unacceptable terms.