Fact Check: Argentina

958 days, 18 hours, 30 minutes ago


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Is This the Rhetoric of a Man Who Wants to Negotiate?

Economy Minister Axel Kicillof recently posted a letter to the Financial Times responding to an op-ed published there by one of Argentina’s creditors. Right off the bat, Kicillof calls the creditor’s firm a “vulture fund” and accuses it of trying to “clean its reputation” by daring to mention that it is only one bondholder out of thousands that are still waiting for the right to negotiate a fair resolution with Argentina.

Kicillof would certainly like to pretend that these small bondholders do not exist. But as the Wall Street Journal recently pointed out, they most certainly do. The stories of individual Argentines who lost their life savings when Argentina first defaulted and then refused to negotiate a fair settlement are real and they are heartbreaking. One might say it is Kicillof who is trying to clean Argentina’s reputation by pretending it did not break its promises to its own citizens.

Kicillof follows this accusation with a real howler:

“Mr. Newman is trying to portray Argentina as a country that does not negotiate. This is completely false. After lengthy negotiations, Argentina offered two debt exchanges in 2005 and 2010, which were voluntarily accepted by 92.4% of the country’s bondholders.”

This claim pits Kicillof against everyone else who observed the way Argentina’s exchanges played out in reality.

– Of Argentina’s exchange offers, the IMF noted, “no constructive dialogue was observed and the authorities presented a non-negotiated offer.”

– The London Club, an informal group of private creditors similar in function to the Paris Club, has stated in the context of other sovereign debt restructurings that it would not want a “non negotiated process and a unilateral offer as the one launched by Argentina.”

– Moody’s has observed, “the case of Argentina was and remains unique in its unilateral and coercive approach to the debt restructuring.”

Argentina only achieved a 92% acceptance rate after more than a decade of attrition and threats that bondholders would get nothing if they declined the unilateral exchanges. According to the Moody’s study linked above, the average sovereign debt exchange involving good-faith negotiations is completed in a matter of months.

Back to Kicillof: After railing against Argentina’s creditors and trying to rewrite the history Argentina’s bond exchange, Kicillof proclaims that Argentina’s “willingness to move forward in a dialogue” is evidenced by his meeting with Special Master Daniel Pollack on Monday afternoon.

But as we noted yesterday, Kicillof’s own account of that meeting indicates that it was not a dialogue, but a one-sided harangue that culminated with yet another request for an open-ended, unconditional stay of the district court’s ruling.

Kicillof acknowledges as much in his latest screed (“Argentina requested that Judge Griesa restore the stay”), then complains that, because “the vulture funds opposed” Argentina’s unconditional stay request, that this proves “they do not want to negotiate.”

In fact, in the very op-ed to which Kicillof is responding, the author writes, “Our firm could be persuaded to give Argentina more time if its government took concrete and serious steps towards meeting its legal obligations.”

But Argentina hasn’t taken those steps. Instead, it has taken steps in the opposite direction – threatening to evade the court’s ruling, attempting to make payments on its exchange bonds in violation of the court’s ruling, and issuing “warning[s] to the United States” in full-page newspaper ads and angry speeches.

The balance of Kicillof’s “response” to the op-ed is filled with more insults and accusations. He accuses Argentina’s creditors – whose rights have now been vindicated by the U.S. Supreme Court – of “extortion,” then falls back on the same over-the-top rhetoric about the district court’s ruling that the Second Circuit Court of Appeals branded “hyperbolic.”

His rant culminates with the declaration that “The vulture funds do not negotiate: that’s why they are the vultures.” But the facts remain: Argentina’s creditors have offered to meet Argentina anytime, anywhere for a negotiation. Argentina has not once taken them up on that offer.

This all raises the question: Is this really the rhetoric of a man who wants to negotiate? Clearly, Kicillof prefers rants, screeds and one-sided harangues to the give and take of a real negotiation. That is a big reason that Argentina appears to be laying the groundwork for a default.

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