Want to help reduce global deficits? Make Argentina pay!
The global net loss from Argentina's shirking of responsibility is over $157bn
Far from a diatribe on the Falklands or on the despotic character of President Cristina Fernandez de Kirchner, we think it’s high time the international community took greater note of Argentina’s nefarious fiscal behaviour and highlight how it owes the world over $157bn.
That’s a lot of money, when you think about it. If you break it down, the $157bn that Argentina has accrued in costs to the rest of the international community makes the £10bn that George Osborne shelled out to the IMF last week, and was rightly derided for, look paltry. Here's a few things you can buy today for just $1bn, let alone 157 of them. That’s why we’re asking you, our readers, to become a part of the ‘Campaign to Make Argentina Pay’.
If you’re unfamiliar with the history, here it is for you in short.
In 2001, Argentina presided over the largest structural default in terms of loan agreements with the international community and private creditors ever. That’s ever. You hear a lot from the media when governments waste a couple of million here and there, or a new tax is set to raise £200m from pensioners or pasties – but for whatever reason the scandalous behaviour by Argentina in fleecing the international community has somewhat passed under the radar. Let’s make it stop here.
As a recipient of international loans, and especially as an economy that finds itself in the good company of the G20, Argentina has certain obligations. Honouring its debts is one of the foremost of those. Another is to provide investors and the international finance community with accurate figures pertaining to its economic status. Argentina has failed at both these hurdles.
Yesterday, the conservative think-tank the Bow Group outlined why following the nationalisation (read: seizure) of the Spanish oil firm Repsol YPF, Argentina should be suspended from the G20 group of leading economies. Key factors include their persistent, belligerent refusal to negotiate with foreign lenders over debts it effectively shirked in 2005, continued misdirection over inflation figures and defiance of World Bank judgments made against it.
It’s worth noting that even The Economist, who have a history of tolerance (more than we’d have) when it comes to dealing with rogue states and their economies, has now refused to cite official Argentinian economic indicators because their reliability is so poor. That really says it all.
But for law-abiding nations like Poland, Spain and even Chile, the issue bites even harder. It can be argued that their economies far better deserve a place within the G20 group of nations, as Poland’s reliable statistics place her in good stead, Spain has attended as an observer for many years already and Chile is a South American economy with a far better record of transparency where investors are much more keen to take a stake.
Suspending Argentina from the G20 club would send a strong message and provoke President Kirchner into finally assembling around the negotiating table with those to whom she is in debt.
For these reasons we’re asking you to join up to our ‘Make Argentina Pay’ campaign and ensure that a precedent is not set for international powerhouses (supposedly, anyway) to abdicate their responsibilities to the international community and indeed to Argentinians. Delaying the discussion over these payments will simply offset debt to the next generation – a debt that given the hostility between the disputing sides, is certain not to be forgiven.
We are wholly dependent on the kindness of our readers for our continued work. We thank you in advance for any support you can offer.