Buenos Aires Government invited bondholders to see poverty with their own eyes, but they refused even to consider the proposal.
Argentine negotiations to reach an agreement with foreign creditors on its defaulted debt looks deadlocked even when they have not officially started. The South American country offered to pay 25 cents on each one of the $99 billion dollar owed to them –as much as it can pay under nation's current conditions-, but bondholders –most of them ambitious financial funds- say Buenos Aires is failing to abide by a pledge to negotiate in “good faith'' on rescheduling debt payments.
The Global Committee of Argentina Bondholders, representing two-thirds of the debt held by foreign creditors, met in New York yesterday for a second time, with Argentina's Economy Ministry delegate in Washington, Federico Molina, sitting in as an observer. The committee, comprised of companies such as Morgan Stanley and Bear Stearns Cos., had invited Economy Minister Roberto Lavagna, but he refused to attend. In Buenos Aires, Lavagna said to a number of local and foreign journalists -including PRAVDA.Ru- that he had “more important things to do” for country's welfare.
“Though we thank the government for sending Mr. Molina, this does not represent a good faith effort by Argentina to negotiate with a representative committee of the nation's creditors,'' the committee said in a statement.
However kindness is not a usual attribute on these greedy businessmen. Recently, the Government issued a letter of invitation to bring creditors to Argentina to see with their own eyes how deep the country fell after over 25 years of becoming indebted with foreign banks and multinational institutions at usurious rates. One of the bondholders' leaders replied to a local newspaper that such was an invitation for the Red Cross. This wealthy man could not see that by saying this, he made laugh of over 20 millions Argentineans living under poverty line.
Argentine socioeconomic indicators cannot be worse after decades of free market policies. Fifty percent of its 40 million population is unemployed or underemployed. The same figure for the people living in poverty. Twenty percent are trying to survive with less than a dollar per day. The policies that brought Argentina into this disaster were fueled and encouraged by foreign institutions as the International Monetary Fund, the World Bank and others. At the same time, private banks played the stock market taking advantage of the outstanding rates Argentina begun to pay late in the nineties to secure fresh money to cover its extraordinary deficit.
As late as in July 2001 –less than six months before the financial crack- banks as the Citibanks kept on binding Argentine bonds into the international financial market. Greedy investors became attracted by the juicy rates: they lost. They should blame the banks they trusted. Instead, they make laugh on poor people’s suffering.
Now, Argentina needs to move forward with debt restructuring as part of a $13.3 billion three-year aid agreement with the International Monetary Fund and regain access to international credit markets in the future, as German Finance Minister Hans Eichel said last week. The IMF will discuss the approval of new loans for the country next month. IMF officials are in Buenos Aires to review fiscal and economic targets.
Nicola Stock, co-chairman of the bondholders group, said in an e-mail that the IMF may demand Argentina initiate talks with the creditors as a precondition for the next disbursement in March. Stock is chief executive for international affairs at Banca di Roma SpA in Rome, representing Italian bondholders.
The government has offered creditors bonds worth $250 per $1,000 of face value of defaulted debt that pay interest of 1 percent to 5 percent and mature in eight to 32 years. Lavagna said in this weekend that the government is considering linking all bonds to the rate of economic growth. “We are talking about certain growth, not hypothetically”, said Lavagna before PRAVDA.Ru and other media. “That is as much as we can offer”.
Lavagna's words can be corroborated easily. Just a quick tour to northern cities of Tucuman and Tinogasta to see how children die of starvation. Or even to San Francisco Solano, just 20 kilometers from the House of Government to have the same dreadful scenario. Of course, there are wealthy people in Argentina, but they are just partners in crime.