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British row has possible link to debt swap
Buenos Aires Herald
February 22, 2010

By Guillermo H skel, Herald staff

While a dispute between Argentina and Britain over the sovereignty of the British- controlled Malvinas Islands was reignited after an oil rig has been sent to the archipelago, a leading anti-corruption champion is urging courts to investigate the government on charges that the British Barclay's Bank that it hired as a global coordinator of a debt swap is a shareholder in the company that runs the rig.

British Prime Minister Gordon Brown on Friday said that there were already contacts between the two nations that in 1982 went to war over the islands that the British call "Falklands."

"The diplomacy between us and Argentina is one that I think will be successful," Brown said, adding that that Britain was acting within international law. "I think the work that's being done will avoid any tension." Brown insisted that the islanders have the right to develop a legitimate business such as an oil industry.

Argentine Foreign Minister Jorge Taiana said that Brown's remarks were "positive" but that "so far, there has been no dialogue or contact at all, and that is an indicator in itself.

"Argentina will hold a peaceful dialogue and Britain must seat to discuss sovereignty to overcome this anachronic colonial situation," he added in Canc n, Mexico, during preparatory sessions of the Grupo R o of 33 nations due to start tomorrow.

The Argentine Foreign Ministry issued a communiqu saying: "Argentina insists that a member of the Security Council such as Britain must abide by UN resolutions in force on Malvinas, which reaffirm the existence of a sovereignty dispute between the two countries and every year urges the two governments to discuss sovereignty over the Malvinas islands and their surrounding area." It added: "There is also still in force a UN resolution that urges both parties not to aggravate the controversy, a request that once again Britain fails to abide by through of the increasing illegitimate authorization for private projects of hydrocarbon exploration in the area."

The British embassy in Buenos Aires said in a statement that "We have no doubt about our sovereignty over the Falklands islands and the surrounding maritime area."

President Cristina Kirchner, facing a deep economic and political crisis at home and with her popularity at the lowest levels since she came to office in 2007, is scheduled to attend the Canc n gathering. Taiana, meanwhile, plans to travel to New York on Wednesday to urge UN Secretary General Ban Ki-moon that a UN resolution that urges Britain to negotiate with Argentina be enforced.

Taiana has started talks with other Latin American leaders in the hope top get their support amid the dispute with Britain. Venezuelan President Hugo Ch vez said: "Give Malvinas back to the Argentine people. Away with empires!"

Argentina claims sovereignty on the islands that the British occupied in 1833. In 1982, the military dictatorship then ruling Argentina sent in troops to the islands but a British task-force recovered control after a 64-day war in which nearly 1,000 servicemen died, 649 of them Argentines. After the war the two countries reestablished diplomatic links.

Argentina contends that the British decision to explore hydrocarbons in the sea surrounding the islands is "a unilateral act of aggression."

The Ocean Guardian rig run by the Desire Petroleum company arrived in the site on Friday and is due to start tests this week.

Relations between the two nations were worsened last week after Mrs. Kirchner decided that ships sailing through Argentina's territorial waters must ask for an Argentine permit.
Brown on Thursday said that the islands were "well protected" rejecting demands from the islanders that security in the area be strengthened.

Argentine Deputy Foreign Minister Victorio Taccetti said: "The war option has been ruled out and they (the islanders) must not worry about that possibility."

The British move was decried by the Argentine opposition.

Radical deputy Ricardo Alfons n expressed his "most energetic rejection of a unilateral move that contradicts the dialogue that must prevail in the resolution of international conflicts, as well as in the wording and spirit of the UN resolutions."

Federico Pinedo, a deputy from the centre-right PRO party urged the Argentine government "not to over-react to seek domestic political benefit" and warned that the exploration of natural resources should be done on a bilateral basis.

Former deputy Foreign Minister Andr s Cisneros questioned the Argentine government's decision to unilaterally break an accord signed in 1995 on the possible exploitation of
hydrocarbon and fishing resources.

"In 2007 Argentina unilaterally terminated that accord out of an alleged patriotic decision. It didn't even renegotiate it. Now we don't have any accord and they will have no obstacle to exploit oil because there is no tool so that they, at least, share it. When the foreign policy of any country is subordinated to domestic interests, that policy disappears."

Ricardo Monner Sans, an anti-corruption champion, said that the Argentine government is facilitating the British control over Malvinas and other South Atlantic archipelagos, by having appointed Barclay's Bank global coordinator of the debt swap. He added that Barclay's has a stake in Desire Petroleum.

He also demanded that Economy Minister Amado Boudou be investigated.

"On October 16, 2009 remarkably little after having acquired a stake in Desire Petroleum, Barclay's Capital Inc, together with its affiliate companies, presented the National (Argentine) State a proposal and financial terms and conditions for the reopening of a debt swap," Monner Sans said in his court presentation, obtained by the Herald. "In only six days, by means of Resolution 267/2009, economy Minister Amado Boudou approved an accord whereby he appointed Barclay's as global coordinator in the debt restructuring process, with the cooperation of Citibank and Deutsche Bank."

He added: "The so-called debt restructuring last January involved a series of shocking institutional occurrences that led to the sacking of Central Bank governor (Mart n Redrado), in the face of the demands from these banks that reserves be used as a warranty of the payment of the debt.

"We are facing a connection between the public debt swap and oil exploitation around Malvinas with the two-pronged intervention of Barclay's Bank," Monner Sans aid.

"Furthermore, Barclay's, as 'a non operating' investor in Desire Petroleum, failed to report this condition to the Productive Oil Companies Registry that reports to the Energy Secretariat, precisely with the aim to prevent the activity of companies, partners, or shareholders in oil drilling on our continental platform without the necessary Argentine authorization.

Early this month Mrs. Kirchner fired Redrado on charges that he refused to tap reserves to pay debts. The administration of her predecessor, her own husband N stor Kirchner, forced creditors to swallow a huge haircut after in 2001 Argentina declared the largest-ever sovereign debt default in world history. However, holders on some 20 billion dollars rejected that swap and are demanding that US courts freeze Argentine reserves in US bank accounts, something that a US judge has done temporarily. Possible freeze of more than three billion dollars is looming.

Monner Sans also urged courts to probe an alleged participation of companies of the Argentine Techint group in the reported transport in a British ship of oil seamless pipes to Malvinas. Techint last week said that that reported shipment was "absolutely false."

Former planning secretary Jorge Castro told the Herald that oil, which was quoted at 15 dollars per barrel in the 1990s, is expected to fetch 100 dollars by the year end and that the conflict about oil exploration in Malvinas is expected to escalate.

Exploration in 1994/96 ended in failure but the British conducted new studies that although have not found proven reserves, suggest a high probability of oil and gas reserves mostly in the area 160 kilometres to the northwest of Malvinas.

Castro added that coupled with the near exhaustion of the North Sea oilfields, an additional incentive for exploration has been "the discovery in the Brazilian platform, which has the same structure as that of the South Atlantic, of oilfields comparable to those of Saudi Arabia."

Former Argentine ambassador to Paris Carlos P rez Llana told the Herald that there may be several reasons behind the British oil exploration drive. He said that as of late 2009 the Lisbon Treaty included Malvinas as "European territory", that oil prices are currently at 80 dollars per barrel and continue to grow, that North Sea oilfields are nearing exhaustion "and nobody wants to rely on uncertain energy resources. In general, Europe faces gas difficulties due to Russia's strange actions and London prefers not to depend on Islamic barrels." Also, he said, there will be elections in Britain in the next few months and the case could be interesting for the Labour Party.

He also said that, meanwhile, the Argentine government did little or nothing when the Lisbon Treaty was under discussion. "It is very hard to do something when there is no foreign policy," he said, adding that Argentina lacks ambassadors in countries such as Britain, Belgium, Denmark, Italy, Poland and Bulgaria.

After coming to know what the Lisbon Treaty said, Argentina presented a written complaint.

P rez Llana added that although Argentina in 2004 created ENARSA, an energy company "of friends of power" should have called tenders and lure capitals and companies to explore in Argentina's platform so they would think it twice before going to smaller areas such as Malvinas. "But ENARSA just imported Bolivarian (Venezuelan) fuel oil, participated in tenders in Bolivia that will never succeed and has won other tenders from which it later withdrew."

Argentina needs to seek partners, for instance, Brazilian, Chilean, Chinese and European companies to explore our platform, P rez LLana said, adding that expecting something from the Venezuelan company turned out to be a sleeping drug. "We need to participate in the hypothetical benefits, beyond demanding sovereignty.

"How is it possible that the debt coordinator chosen by Minister Boudou to negotiate with the holdouts is the Barclay's Bank that will earn hundreds of millions and is a partner in the company that hired the British oil rig? There is no intelligence service. They only focus on internal 'files' to spy and extort enemies and noy very trustworthy friends," the former ambassador said. "As a conclusion, after the nap, the nightmare came."

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