Launch of report on Argentina and International Insolvency

The Jubilee Debt Programme at New Economics Foundation launches a new report on Argentina and international insolvency: “Chapter 9/11? Resolving International Debt Crises – the Jubilee Framework for international insolvency”.

A press conference organized by the New Economics Foundation at Southwark Cathedral in London today, was addressed by Ann Pettifor, Director of the Jubilee Debt Programme at the New Economics Foundation and Mario Cafiero, Congressman of the Argentine Parliament, and a member of the ARI (Argentina Por Una Republica de Iguales – Party for a Republic of Equals in Argentina, Argentina’s only opposition party – led by Elisa Carrio).

Ms Pettifor said: “The crisis in Argentina would have been less lethal if a framework of justice had been in place to enable the insolvent Argentine government to declare a standstill on its debt payments. Instead Argentina is being crucified on the cross of globalisation – and millions of ordinary Argentines are being denied their human rights.

“Today we launch the “Jubilee Framework” a proposal for an international bankruptcy process, which would allow Argentina’s crisis to be resolved in an orderly, just and democratic way. We demonstrate that such an ad-hoc framework of arbitration could be put in place tomorrow – and reject the arguments of Ms Kreuger at the IMF, that such an international insolvency framework would take more than two years to establish.”

Mr. Cafiero said:

“I am in London today, to back the Jubilee Framework for international insolvency, because I believe that only under such a framework, can there be a solution to Argentina’s crisis; and only under such a framework of international justice, can those who are guilty for this crisis, be brought to justice and be disciplined.

“The crisis in Argentina is not only a lesson for the political class of Argentina, it is also a lesson for those who supported and colluded with the political class of Argentina. These include the very richest people of our own citizens; but also the IMF, the British, Spanish German banks and multinationals companies, who benefited from Mr. Cavallo’s policies

“The winners of the Cavallo model of economics were: the British, Spanish, American and German banks who profited from the usurious interest rates. Winners also included the Spanish companies like Telefonica and Repsol (60% of their revenues come from Argentina) who benefited excessively from the privatization of Argentina’s assets. But the wealthy individual Argentines, helped by foreign banks like HSBC and Lloyed, have been able over ten years, to export $130bn of wealth through the capital flight mechanisms that both foreign and local banks provided

“The losers were the ordinary people of Argentina, the new poor. Each day, before the crisis broke, 1000 people were being pushed below the poverty line. 30% of the population now live in poverty and the 45% in the informal sector who are now unemployed.

“The IMF has co-responsibility for these massive transfers of wealth, both within and outside Argentina. The IMF shares responsibility for economic policies that have driven Argentina over the cliffs of recession and into effective bankruptcy. The IMF therefore is in no position to distance itself from this crisis – and it certainly cannot play an disinterested role in resolving Argentina’s crisis.

“We need an independent ad-hoc panel to investigate the relationship between Argentina’s massive debt, capital flight and fiscal fraud. That is why we need an international insolvency process like the “Jubilee Framework” for the independent resolution of this crisis.

“British banks, like HSBC and Lloyds Bank have to honour their debts to the people of Argentina, who entrusted them with $6bn of their savings and hard-earned money. I call on the British banks, today, to reassure Argentinians, by publicly declaring their commitment to return these savings to the ordinary people of Argentina.

“I am sure that if foreign banks were to withhold $6bn of the savings of British people, there would be uproar in this country.

“Sadly, 50% of the savings of ordinary Argentines are today in foreign banks, thanks to the advice of the IMF, which encouraged the liberalization and takeover of the Argentine financial sector.

“HSBC, together with Credit Suisse, J. P. Morgan and other banks, colluded with Mr. Cavallo in the ruinous debt swap deal, negotiated last June (2001) and known as the Mega Swap. Under this deal, Argentina’s debt was re-structured, and as a result rose by $55bn. “The repayment of this debt every year, for the next 22 years, represents as much as Argentina will hope to earn from her export of cereals – in other words, $2.5bn a year.

“If the judicial system functioned properly in Argentina, then Mr. Cavallo would be in prison today for this deal – and so would some of the Presidents and managers of European and American banks.”

“We are sure that an important part of the capital flight from Argentina is made up of those who have savings abroad, and have used these savings as collaterel for loans from Argentine banks. Now they are expecting to be subsidized for the devaluation of the Peso.

“I am calling on Mr. Eddie George, Governor of the Bank of England to collaborate in the investigation of Argentine ‘back-to-back” loans, to discover if those who have loans in the Argentine banking system, also have savings abroad. (Thanks to the information available within the Argentine financial system, we know who the borrowers are. However, we do not know if they have savings abroad, which guarantee their borrowing. The return of these savings or ‘capital flight’ – could of its own help resolve the Argentine financial and banking crisis”).

Jubilee Plus Press Release, January 14, 2002

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