Argentina and the flight of the financial vultures

HAVANA — The story of the vulture funds that have brought Argentina to the brink of a second default in one decade should not be told as the work of a heartless speculator, an ultraconservative judge or a pusillanimous president, although Paul Singer, Thomas Griesa and Barack Obama do figure in the plot.

In the background, there is an economic and political scenario that tends to eliminate the effectiveness of national sovereignty to place the United States as the inflexible regent of a unipolar world government.

For almost seven years, after the global crisis of 2008, a downpour of speeches and pronouncements has fallen on the most conspicuous stages of central capitalism, regarding the need to reform the financial markets. But nothing has been done to increase the supervision and regulation of a chaotic, extremely entropic system that leaves ample space for moral delinquency.

One of the most aberrant and questionable elements of the current financial architecture was, is, and will be the performance of vulture funds, a topic so repulsive that it has forced the U.S. government to repeatedly join the reformist rhetoric, even though it refuses to implement any kind of regulation.

The case of Argentina loudly demonstrates how Washington endorses and fosters the flight of the financial vultures, although it is known that, on many occasions, other South American countries have been plundered by U.S. speculators who specialize in suing over collapsed sovereign debt, in all cases supported by the overwhelming economic and political power of their government.

What makes this situation different from others is Argentina’s economic, political and cultural dimension and, above all, its relevant, probably unequaled effort to restructure and liquidate its debt, with the declared purpose of earning the approval of the international markets.

To ignore such distinctions is becoming a very challenging action by the neoconservative forces in the U.S., not only toward its neighbors in Latin America and the Caribbean but also toward broad areas of European thought and convenience and toward the large sectors of U.S. neoliberals who struggle for the creation of global institutions that are capable of somehow reconciling the various and explosive interests manifest in the world system.

The international media has pointed to the great concern that exists in the International Monetary Fund and its managing director, Christine Lagarde, over the systemic danger that could be created if U.S. justice rules in favor of the vultures.

It is said that Obama’s government told the IMF that it will not appear as an “amicus curiae” before the U.S. Supreme Court to support Argentina’s position.

Consequently, after that presidential suggestion, the Supreme Court considered it unnecessary to invite the U.S. Attorney General to submit a writ, and finally decided not to hear the case. Thus, it validated the ruling of Judge Thomas Griesa, which would obligate the Argentine government to pay the debt in full, without taking into account the restructuring agreed upon after the 2001 default.

That way, the U.S. neoconservatives are rejecting one of the basic rules or standards of debt restructuring worldwide: the exchange is accepted if approved by more than 75 percent of the bondholders, a percentage much exceeded by the Argentines.

The threat of a new default has created fears and rebellion. The defenders of the current system of world power assume that a wave of proposals and initiatives might begin to reformulate the global financial architecture that today is based on a deregulative and speculative ideology.

Its opponents believe that such a development should happen, even if the vultures’ attacks against Argentina do not provoke a disaster, thanks to the firmness of Cristina Fernández’s government.

All these trends are being fueled by an avalanche of expectations surrounding the next summit of the BRICS nations (Brazil, Russia, India, China and South Africa) in the city of Fortaleza, Brazil, on July 15.

On one hand, the Chinese government maintains that there is a broad consensus in favor of the creation of the BRICS Development Bank, an institution that should be in operation very quickly.

On the other hand, the Russian government announced that Cristina Fernández had been invited to the BRICS summit.

“We invited Argentina to the BRICS meeting,” tweeted Russian Foreign Minister Sergei Lavrov, adding, without further details, that “during Vladimir Putin’s trip to Latin America there will be an opportunity to meet with Cristina Fernández and other presidents.”

The invitation to the reunion is obviously a way for BRICS to support Argentina in the decisive moments of its court case with the vulture funds.

Last May, the media reported that India wanted Argentina in the BRICS, a possibility that so far has not been ruled out by any of the member countries. Back in 2010, it was proposed by the then-chairman of the Russian Parliament.

The importance of the forthcoming BRICS meeting grows considerably in view of the juncture we have described, because moves will be made toward a new financial architecture in a group of countries that are significant worldwide because of their geographic, demographic dimensions and their enormous economic potential.

It would be good if the winds of current experience fill the sails of the Bank of the South so it may soon begin operations. May the integration of Latin America and the Caribbean clear the road toward a new regional financial architecture that steers its member countries clear of the swamp of foreign debt and frees them from living at the mercy of their creditors.