Posted on 20-1-2002
Argentinia's
Problem With Banks
A press conference organized by the New Economics Foundation
at Southwark
Cathedral in London today (14th January, 2002), was addressed
by Ann
Pettifor, Director of the Jubilee Debt Programme at the New
Economics
Foundation and Mario Cafiero, Congressman of the Argentine Parliament,
and
a member of the ARI (Argentina Por Una Republica de Iguales
- Party for a
Republic of Equals in Argentina, Argentina's only opposition
party - led by
Elisa Carrio).
Ms Pettifor said: "The crisis in Argentina would have been less
lethal if a
framework of justice had been in place to enable the insolvent
Argentine
government to declare a standstill on its debt payments. Instead
Argentina
is being crucified on the cross of globalisation - and millions
of ordinary
Argentines are being denied their human rights. "Today we launch
the
"Jubilee Framework" a proposal for an international bankruptcy
process,
which would allow Argentina's crisis to be resolved in an orderly,
just and
democratic way. We demonstrate that such an ad-hoc framework
of arbitration
could be put in place tomorrow - and reject the arguments of
Ms Kreuger at
the IMF, that such an international insolvency framework would
take more
than two years to establish."
Mr. Cafiero said: "I am in London today, to back the Jubilee
Framework for
international insolvency, because I believe that only under
such a
framework, can there be a solution to Argentina's crisis; and
only under
such a framework of international justice, can those who are
guilty for
this crisis, be brought to justice and be disciplined. "The
crisis in
Argentina is not only a lesson for the political class of Argentina,
it is
also a lesson for those who supported and colluded with the
political class
of Argentina. These include the very richest people of our own
citizens;
but also the IMF, the British, Spanish German banks and multinationals
companies, who benefited from Mr. Cavallo's policies.
"The winners of the Cavallo model of economics were: the British,
Spanish,
American and German banks who profited from the usurious interest
rates.
Winners also included the Spanish companies like Telefonica
and Repsol (60%
of their revenues come from Argentina) who benefited excessively
from the
privatization of Argentina's assets. But the wealthy individual
Argentines,
helped by foreign banks like HSBC and Lloyed, have been able
over ten
years, to export $130bn of wealth through the capital flight
mechanisms
that both foreign and local banks provided. "The losers were
the ordinary
people of Argentina, the new poor. Each day, before the crisis
broke, 1000
people were being pushed below the poverty line. 30% of the
population now
live in poverty and the 45% in the informal sector who are now
unemployed.
"The IMF has co-responsibility for these massive transfers of
wealth, both
within and outside Argentina. The IMF shares responsibility
for economic
policies that have driven Argentina over the cliffs of recession
and into
effective bankruptcy. The IMF therefore is in no position to
distance
itself from this crisis - and it certainly cannot play an disinterested
role in resolving Argentina's crisis.
"We need an independent ad-hoc panel to investigate the relationship
between Argentina's massive debt, capital flight and fiscal
fraud. That is
why we need an international insolvency process like the "Jubilee
Framework" for the independent resolution of this crisis. "British
banks,
like HSBC and Lloyds Bank have to honour their debts to the
people of
Argentina, who entrusted them with $6bn of their savings and
hard-earned
money. I call on the British banks, today, to reassure Argentinians,
by
publicly declaring their commitment to return these savings
to the ordinary
people of Argentina.
"I am sure that if foreign banks were to withhold $6bn of the
savings of
British people, there would be uproar in this country. "Sadly,
50% of the
savings of ordinary Argentines are today in foreign banks, thanks
to the
advice of the IMF, which encouraged the liberalization and takeover
of the
Argentine financial sector. "HSBC, together with Credit Suisse,
J. P.
Morgan and other banks, colluded with Mr. Cavallo in the ruinous
debt swap
deal, negotiated last June (2001) and known as the Mega Swap.
Under this
deal, Argentina's debt was re-structured, and as a result rose
by $55bn.
"The repayment of this debt every year, for the next 22 years,
represents
as much as Argentina will hope to earn from her export of cereals
- in
other words, $2.5bn a year.
"If the judicial system functioned properly in Argentina, then
Mr. Cavallo
would be in prison today for this deal - and so would some of
the
Presidents and managers of European and American banks. "We
are sure that
an important part of the capital flight from Argentina is made
up of those
who have savings abroad, and have used these savings as collaterel
for
loans from Argentine banks. Now they are expecting to be subsidized
for the
devaluation of the Peso.
"I am calling on Mr. Eddie George, Governor of the Bank of England
to
collaborate in the investigation of Argentine 'back-to-back"
loans, to
discover if those who have loans in the Argentine banking system,
also have
savings abroad. (Thanks to the information available within
the Argentine
financial system, we know who the borrowers are. However, we
do not know if
they have savings abroad, which guarantee their borrowing. The
return of
these savings or 'capital flight' - could of its own help resolve
the
Argentine financial and banking crisis".
|