Argentina should be suspended from the Group of 20 major economies over its blatant failure to comply with debt obligations to bond holders, including American firms that manage savings and investments for U.S. pension funds, charitable foundations, university endowments and U.S. taxpayers, said U.S. Rep. Chris Smith (NJ-04). The senior member of the House Foreign Affairs Committee announced a House resolution today that calls on the Argentine government to live up to its economic obligations.
The House resolution, H.Res. 291, is entitled, “Expressing the sense of the House of Representatives that the Republic of Argentina’s membership in the G20 should be conditioned on its adherence to international norms of economic relations and commitment to the rule of law.”
“The government of Argentina’s open scorn for international norms and its flagrant defiance of lawful U.S. court judgments are completely incompatible with membership in a cooperative body such as the G20,” said Smith, who is also a senior member of the Western Hemisphere Subcommittee. “This resolution expresses the clear sense of Congress that the U.S. government should oppose Argentina’s G20 membership until it fully resolves its outstanding debt obligations to U.S. investors.”
More than a decade after its historic default on over $81 billion in sovereign debt, Argentina’s leaders are today still trying to evade billions in debts owed to U.S. investors and taxpayers – debts that, according to U.S. courts, Argentina can and must pay.
“Argentina refuses to negotiate with U.S. creditors who have been awarded over 100 judgments by U.S. courts,” Smith said. “Furthermore, at a hearing before the 2nd Circuit Court of Appeals last February, Argentina degraded U.S. judges by comparing their courtroom to a court in Iran and vowing that it would ‘not voluntarily obey’ their lawful orders. This is not the behavior of a G20 member in good standing.”
Despite the reprehensible comparison to Iran’s notoriously medieval courts, Argentina’s government ironically reached an agreement with Iranian president Mahmoud Ahmadinejad to re-open the question of culpability for a deadly 1994 terrorist attack in Buenos Aires.
Smith, who in February 2011 met with the group targeted in the attack—the Argentine Jewish Mutual Association (Asociacion Mutual Israelita Argentina, or AMIA)—and attended an AMIA memorial service in Buenos Aires, noted the Argentine government reached out to the international rogue state even though Argentine prosecutors already found the Iranian government responsible.
The Smith resolution, co-sponsored by U.S. Rep. Ron DeSantis (FL-06), also recognizes that Argentina received an extremely rare “declaration of censure” from the International Monetary Fund for its systematic manipulation of official statistics, including a gross understatement of the country’s real inflation rate, which some independent economists estimate close to 25 percent.
The South American nation has not only refused to pay arbitral awards granted to U.S. companies by the dispute resolution officials of the World Bank, but has:
- nationalized foreign and domestic assets without compensation,
- harassed journalism outlets; and
- pushed for new laws that would allow the ruling party to pack the court system with its allies.
“The Argentine government has damaged its credit worthiness and hurt its own citizens by directly contributing to Argentina’s double-digit inflation, economic stagnation and growing isolation from the international community,” Smith said. “In Argentina, it can cost three times more to borrow than in neighboring nations with comparable economies.”
Argentina’s refusal to honor and satisfy the judgments of U.S. courts threatens the economic well-being of the United States and undermines the integrity and efficacy of its legal system. Smith’s resolution encourages a strong U.S. government response to the Argentine government’s shabby record of meeting international financial standards.