Economic Justice for Argentina

Argentine MP calls for a transparent investigation of Argentina’s debt crisis

 

At a meeting on 21^st September at the Conway Hall in London, the Argentine MP and leading anti-debt campaigner Mario Cafiero called for international support for a transparent investigation into the cause of Argentina’s external debt burden, with a view to achieving a just and sustainable solution to the country’s ongoing debt crisis.[i]

 

Mr. Cafiero explained the origin and characteristics of the debt, and went on to analyse the current unworkable restructuring arrangements for repayment. He then put forward an alternative proposal based on respect for debtor state sovereignty, human rights of debtor populations, transparency, equitable treatment of creditors and co-responsibility of participants in the creation of the debt. At the national level he demanded the creation of a national congress investigating committee in Argentina for the determination of unlawful acts and irregularities, the registration of national and foreign creditors, and a capital flight audit. At the international level he called for the establishment of a committee of parliamentarians to work out a “balanced score card” reflecting the degrees of responsibility of the various banks and institutions for the creation of the debt. Click here to read his proposal in full.

 

Argentina’s debt problem originated during the military regime of the late 1970s and early 1980s, the debt increasing eightfold from just under $6 billion in 1976 to $46 billion by the time a constitutionally elected government was re-established in 1983. Since then, not only successive Argentine governments, but the major lending banks and risk rating agencies, the IMF and other multilateral financial institutions have been major players in the creation of the country’s present enormous debt burden of almost $180 billion. These persons and organisations, said Mr. Cafiero, should carry their share of responsibility for the current crisis.

 

At present, the country’s debt position is unsustainable.  3% of GDP (or almost 22% of government revenues) is currently assigned to debt payment. This is 6.6 times more than government spending on health. However, under the latest proposals, the repayment on bonds is linked to GDP growth, and the Argentine Treasury has suggested a minimum of 6% per annum. With a debt stock equivalent of 107% of GDP this means a minimum payment of debt service of 6% of GDP, equating to 43% of revenue. In a country where almost 50% of the population are now living below the poverty line, this is clearly a wholly unrealistic sum which reduces future debt negotiations to the status of a problem without a solution.

 

It is now hoped that MPs in the UK will respond to Mr. Cafiero’s call for international cooperation by establishing a committee to examine UK involvement in the creation of Argentina’s debt crisis. This action would help to further both the demands of justice and the need for parliamentary accountability, and is especially important in view of the fact that London is so central to the global financial sector, and that UK banks have been deeply involved in the sale of Argentine bonds over the years.

 

In the meantime, the campaign group Economic Justice for Argentina[ii] is collecting signatures for a petition to the UK Chancellor Gordon Brown, who is also Chair of the International Monetary and Financial Committee of the IMF. This petition points out the need for a fair and transparent judicial process to resolve Argentina’s crisis, and calls upon the Chancellor to ensure that the country is not pressurised by the IMF to settle an unsustainable debt burden in the absence of such a process.

 

 

To view Mario Cafiero’s Powerpoint presentation click here

For a fact sheet on Argentina’s present position click here 

Or for background see

[1] “It Takes Two to Tango” at http://www.jubileeresearch.org/analysis/reports/tango_exec.htm  and 

“Chapter 9/11? Resolving International Debt  Crises – the Jubilee framework for international insolvency” at http://www.jubileeresearch.org/analysis/reports/jubilee_framework.pdf