The OAS Permanent Council, responding to an Argentine request, agreed to convene a Meeting of Consultation of Ministers of Foreign Affairs on Thursday, July 3 the headquarters of the OAS in Washington DC to discuss “Sovereign Debt Restructuring: The Case of Argentina and its Systemic Consequences.”
“The issue that affects my country today is urgent and of common interest to all the States of the Americas” said Minister Julio Cesar Ayala who 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.”
Ayala said that after paying off its debt to major institutions and banks, in 2005 and 2010, Argentina reached agreements with 92.4% of its remaining creditors. But he explained that such was not the case with “one group, known around the world as vulture funds,” and added that 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% 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%.”
“These bondholders obtained, nevertheless, a favorable judgment that was unsuccessfully appealed by Argentina. This judgment obliges the country to pay 1.5 billion dollars,” 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 120 billion dollars and would eradicate a decade of efforts to restructure Argentina’s external debt.”
OAS Secretary General 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.”
He added “this is an urgent issue,” and “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.