The Hill: Reactions to the death of Fidel Castro Ruz have highlighted some of the differences in the way the Cuban revolutionary and long-time head of state is perceived throughout the world.
Mark WeisbrotThe Nation, September 23, 2016
The New York Times reported last week that Argentina’s former President Cristina Fernández de Kirchner was indicted “on charges of manipulating the nation’s Central Bank during the final months of her administration.” Reading the article, however, as well
The Nation: Hardly. Despite recent setbacks, it has led the region’s “second independence,” benefiting hundreds of millions.
TIME magazine has sunk to new lows, soliciting a billionaire Republican donor, Paul Singer, to write its blurb for recently elected Argentine president Mauricio Macri’s entry in the 2016 edition of “100 Leaders.” It’s not ridiculous because he’s either a billionaire or a Republican though, it’s that for the better part of the last decade the man has funded a multi-million dollar campaign against the previous Argentine government. Oh, and he stands to make a pretty penny from the decisions of the new president too.
First, the backstory. In 2001, Argentina had the largest ever sovereign debt default in history, some $100 billion that the country, in the midst of a disastrous recession, simply could not continue to service. Over the following years, Argentina negotiated and reached a settlement with 93 percent of its bondholders. They agreed to take a significant haircut on their holdings and were given new bonds that were linked to the country’s economic growth. Since Argentina did quite well after its default (more on that here), the bondholders recouped their investment and a tidy profit as well.
But that wasn’t enough for everyone. A group of vulture funds, many of whom bought the distressed debt on the secondary market for cents on the dollar, took Argentina to court in New York demanding full repayment. The previous Argentine government refused to comply with court orders demanding billions be paid to these vulture funds, including Singer’s. The Argentine legislature also passed laws preventing the government from dealing with the vultures.
The Hill: After 15 years of court battles, injunctions, smear campaigns, lobbying and other interventions, the vulture funds have finally won a tentative agreement with the new Argentine government.
Rumor has it that Senator Marco Rubio’s presidential campaign is set to name hedge fund manager Paul Singer as its national finance chairman. The potential move may represent a belated attempt by the Republican establishment to rally behind Rubio in order to derail Donald Trump’s presidential bid, as Politico’s Mike Allen has suggested. It also draws the Florida senator ever closer to his second largest financial backer – who has incidentally just emerged victorious from a decade-long campaign to extract an exorbitant return from Argentina after its financial crisis of 2001.
Almost three years after Argentina defied a New York court ruling that would have forced the country to choose between default and certain bankruptcy, Argentine President Mauricio Macri reached a settlement on Monday with a small group of holdout creditors led by Singer’s Elliott Management. The deal still needs to be approved by the Argentine National Congress, which is set to vote on repealing two laws that currently prevent the country from paying these vulture funds.
The election of the conservative candidate to the presidency in Argentina has been cause for celebration in mainstream Washington, as typified by this Washington Post editorial. I won’t claim to know which candidate offered the better path for the country going forward, but we should not let the Washington Post types rewrite the past.
The governments led by the Kirchners have much to show for their twelve years in power. Nestor Kirchner took power in May of 2003, just as Argentina was beginning its recovery from its dramatic default and devaluation at the end of 2001. The I.M.F. was insisting that Argentina return to the austerity path that had led to a horrible recession in the years from 1998 to 2001. Its per capita income had already declined by more than 15 percent at the point of the default making the downturn more than four times as severe as the 2007–2009 recession in the United States. Kirchner said no deal.
Instead he pursued policies to promote growth and employment, with an emphasis on helping those at the bottom end of the income distribution. To the great consternation of the folks at the I.M.F. (where Argentina became known as the “A-word”), his policies largely succeeded. While the I.M.F. kept predicting economic collapse, Argentina’s economy grew rapidly. By the middle of 2003 it had already made up all the ground lost following the default and by the end of 2004 its per capita income was above the pre-recession level. And, it was much more evenly distributed.
Fortune: The election of right-wing candidate Mauricio Macri as Argentina’s president on Sunday, which just a few months ago was unexpected, is a setback for Argentina and for the region.
