MercoPress. South Atlantic News Agency

Message of support from US to Argentina's latest international financial decisions

Kevin Sullivan, who is in charge of the US embassy in Buenos Aires on an interim basis, met with cabinet chief Capitanich

United States praised Argentina for its latest commitment to the payment of a debt worth more than 600 million dollars to five companies in exchange for the ending of legal action. The message was transmitted by the US most senior representative in Argentina Kevin Sullivan, in a brief encounter with cabinet chief Jorge Capitanich, according to reports in Ambito Financiero.

 “The brief and informal meeting left a convincing message, 'a big step', which removes the greatest impediment to relations between the two countries”, reported the Buenos Aires financial daily which apparently consulted sources from both governments.

During the dialogue Sullivan, who is in charge of the embassy on an interim basis, described Argentina's latest accords in the International Centre for Settlements of Investment Disputes, in which the nation committed to the payment of a debt worth more than 600 million dollars to five companies in exchange for the ending of legal action, as “a big step”.

Those lawsuits were the largest impediment to relations between the two countries. The agreement covers four companies that acted legally against the nation in the World Bank-affiliated court (Azurix, CMS Gas, Continental Casualty and Vivendi) and a fifth (National Grid) that filed their complaint through the courts of the United Nations Commission on International Trade Law (UNCITRAL).

Up until a little under two months ago, Argentina had demanded that those enterprises, notwithstanding rulings in their favor from the ICSID, act through the local justice system, which had sent relations through the floor.

The declarations are the first made from a US civil servant to an Argentine since that decision, and seem to have thawed relations. In fact, in the last few days it has been speculated in Washington that the agreement could remove several trade barriers. The first would see the country included once more in the General Preference System, with favorable tariffs for some Argentine exporters. Argentina lost that benefit at the start of 2012.

One of Capitanich's obsessions is to help exports grow and open new markets in order to improve the balance of trade.

It could also facilitate certain credit lines, although in this area there is another influencing factor: the lack of agreement on the debt with the Paris Club. For some time the US and other European countries have been voting against the granting of new credit (to finance public works and exports) to Argentina, until a new round of discussions dealing with a debt that is worth around 9bn dollars is opened.

Sullivan also highlighted the pre-agreement with Spanish petroleum giant Repsol over the payment of compensation for the expropriation of 51% of YPF shares, for around 5bn dollars. He also asserted “there is a mark of trust with Argentina”, adding that he would fight to “continue working very closely for the benefit of both countries.”

Sullivan has been in charge of the embassy in Buenos Aires since Ambassador Vilma Socorro Martínez left her post, and will remain until Noah Namet, who has been proposed for the position by the government of Barack Obama, takes over.

The declaration serve to reduce tensions after Capitanich came out to criticize an article published by a Buenos Aires daily, in which it was affirmed that Washington was “worried” about the level of currency reserves in Argentina. “I am worried about the level of debt in the US, who has tripled their monetary base,” the Cabinet Chief had fired on Monday.

In related news the president of Repsol referred to the recently sealed deal between Argentina and the Spanish company to settle a compensation agreement over the expropriation of YPF last year. “The more the better,” he said.

“What we collect must be a real number and that justifies us dropping legal disputes,” Antonio Brufau told reporters when he was asked to comment on the accord that was approved last week by Repsol’s board and that would involve 5 billion dollars in compensation. In return, the Spanish firm would drop its complaint to the World Bank.

Argentina seized Repsol majority stake in YPF in April 2012, arguing the Spanish company had not invested enough.