The Permanent Council of the Organization of the American States (OAS) has adopted by acclamation to convene a Meeting of Consultation of Ministers of Foreign Affairs on Thursday to discuss “Sovereign Debt Restructuring: The Case of Argentina and its Systemic Consequences.”
Upon presenting the request of his country for the Meeting, the Alternate Representative of Argentina to the OAS, Minister Julio César Ayala, said “the issue that affects my country today is urgent and of common interest to all the States of the Americas.”
Minister Ayala explained that, since 2003, “Argentina has been implementing a series of measures aimed at normalizing the international financial relationships” affected by the 2001 default. That process, added Ayala, “continues to this day.”
The Argentine diplomat said that after paying off its debt to major institutions and banks, in 2005 and 2010, the South American nation reached agreements with 92.4 percent of its remaining creditors. But he explained that such was not the case with “one group, known around the world as vulture funds”.
Moreover, he said these funds, also known as hedge funds in English, bought bonds in default “for the purpose of speculating, waiting for the country to improve its economic condition to sue it and obtain a 100 percent payment of the face value of the bonds plus interest thus obtaining in the short term of 6 years, a fabulous rate of return close to 1,600 percent.”
“These bondholders obtained, nevertheless, a favorable judgment that was unsuccessfully appealed by Argentina. This judgment obliges the country to pay US$ 1.5 billion,” Ayala said, and added “to make things worse, if we pay the vulture funds, and the rest of the bondholders demand the same treatment, it would cost my country US$ 120 billion and would eradicate a decade of efforts to restructure Argentina’s external debt.”
The Secretary General of the OAS, José Miguel Insulza, expressed his solidarity with Argentina, “as I have expressed to Foreign Minister Timerman several times in recent days over the situation in which this unusual decision has put his country.”
“This is an urgent issue,” said the Secretary General, and added “therefore, it is important to make a statement on it soon.” At the end of his address, the OAS leader told the Council he would extend “a special invitation” to the International Monetary Fund, the World Bank, the Inter-American Development Bank, the Economic Commission for Latin America and the Caribbean,” and all international observer organizations of the OAS to attend the meeting on Thursday.
During the special meeting of the Council, the representatives of Argentina, Saint Kitts & Nevis, Brazil, Panama, Paraguay, Bolivia, Venezuela, Chile, Guatemala, Peru, Mexico, Ecuador, Uruguay, Dominica, Grenada, Nicaragua, Jamaica, Colombia, Guyana, United States, Saint Lucia, and Canada took the floor.
The regional meeting will take place on July 3 at the headquarters of the OAS in Washington D.C., United States.