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Argentina's creditors pressure Kirchner
Frankfurter Allgemeine
January 25, 2010

BERLIN, January 25. Argentina's foreign creditors are attempting to back President Cristina Fernandez de Kirchner into a corner. They want to prevent Argentina from continuing to be able to protect currency reserves from seizure by foreign courts. Earlier the conflict in Buenos Aires between the government and the head of the central bank had escalated. The police prevented the dismissed Central Bank Head Martin Redrado from entering the Central Bank. He had opposed the President's audacious proposal to release currency reserves in the amount of 6.6 billion dollars for the purpose of paying state debts.

Kirchner's goal is to regain access to the international bond markets. Redrado fears that if that happens foreign creditors, with the help of the courts, will seize Central Bank funds in foreign accounts. At the beginning of the century, Argentina caused one of the greatest financial losses on the international financial markets when it discontinued servicing outstanding sums of 100 billion dollars.

Robert Shapiro, who represents the interests of the "American Task Force Argentina" (Atfa), is currently traveling to the European capitals. He wants to prevent Argentina from continuing to be able to protect currency reserves at the Bank for International Payment Settlements (BIS) totaling, according to his information, 40 billion dollars from seizure by foreign courts. "This is an abuse of the international organization. It is within the power of Germany, America, Italy and France to change this," he emphasized. He argues that, if the government in Buenos Aires is able, with the help of the BIS, to protect itself from lawful seizures, then tomorrow an African dictator will be able to bring to safety there funds arising from the illegal exploitation of his country. This must be prevented, he stated. Either the BIS should require Argentina to reduce its currency reserves to an average level or it must be possible, by means of appropriate court judgments, to seize the funds that are invested there. According to Shapiro's information, Argentina has in the interim deposited 80 percent of its reserves in Basel.

Shapiro met the Chairwoman of the Bundestag [German Lower House of Parliament] Budget Committee, Petra Merkel (SPD), in Berlin. He emphasized that she was highly interested in the problem, because substantial revenues for the German treasury were involved. He stated that the discontinuation of payments cost Germany 1.5 to 2 billion dollars. As he further reported, representatives of the Federal Finance Ministry had assured him that they would discuss his concern with the Bundesbank. The shareholders of the Bank for International Payment Settlements are the central banks. "I hope that the growing pressure will bring Argentina back to the negotiating table," said Shapiro, who was Undersecretary in the Commerce Department under President Bill Clinton. "It is necessary to keep up the pressure, in order to convince Fernandez de Kirchner that she cannot stay on her course," he admonished. He still hopes to reach a fair solution for the investors that did not want to subject themselves to the Argentinean government's debt reorganization dictate. He stated that this is important for the entire international finance system, in order to avoid disincentives.

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