The 30th anniversary of the Falklands War – and the bellicose rhetoric (and videos) currently emerging from Buenos Aires — has once more shone a spotlight on the UK’s relationship with Argentina. Were it not for the Falklands, it’s unlikely that Argentina would occupy much discussion in this country. The truth, for those of us who have followed the country’s recent history, is that Argentina, most notably under the current Government, is truly remarkable. But for all the wrong reasons.
In Britain, of course, our chief concern is the ongoing nationalist rhetoric that President Cristina Kirchner is whipping up around the sovereignty of the Falkland Islands. But if you were Spanish, your chief concern would be that Kirchner has just filed a Bill to nationalise part of a major Spanish energy company, YPF/Repsol, which would mean losses of billions of Euros for Spanish investors. Months of government intimidation has already lost the company several operating licences in Argentina, and significantly depressed its share price. If you were Italian or American, however, your chief concern would be that Argentina is refusing to pay debts following her default in 2001. This amounts to billions of dollars owed to financial institutions, pension funds, and 200,000 individual pensioners in Italy, whose savings have been eradicated by Kirchner’s refusal to honour the contracts. Countless other creditors from countries around the world are also owed money. Argentina meanwhile has amassed over £30 billion in foreign currency reserves — enough to pay her debts to both private bondholders and Governments, and still have plenty of change.
President Kirchner’s intransigence does not stop there. Argentina was in non-compliance with 47 of 49 of the international recommendations on anti-terrorist financing and anti-money laundering, as measured by the Financial Action Task Force (FATF) in 2010; she has ignored 116 court judgments on debt repayment in New York alone; and is the subject of 80 per cent of cases against G20 countries in ICSID, the World Bank’s tribunal body. Kirchner even refuses to abide by her IMF Article IV obligations (allowing oversight of a country’s finances), which every other country in the IMF allows as a matter of course. It is due to this defiant behaviour Argentina displays at every turn that many are now calling for the country to be expelled from the G20.
Argentina has a Government with a staggering disregard for the rules that everyone else abides by. Yet she continues to benefit from billions of pounds of loans from the same international institutions, such as the World Bank, that she treats with such disrespect.
But this is changing. The United States is leading efforts to hit the Kirchner Government where it hurts – in the wallet. Since September 2011, the U.S. Government has voted against loans from international lending institutions to Argentina, a hugely important step towards protecting the integrity of the international lending system. Now, according to reports, Spain plans to join the U.S. in opposing multi-lateral development loans to Argentina.
British taxpayers have supported the World Bank and other multilateral lending institutions to the tune of £4.6 billion since 1999 — perhaps it’s time we too stood up against this abuse of the system we support so generously?
If Argentina refuses to abide by the rulings of the World Bank, why should they be able to be allowed to benefit from that institution? The principle outlined by the US is one that we, as significant players in international aid, should wholeheartedly support, yet since September 2011 the UK representatives have continued to nod through these loans to Argentina. The time has come for a rethink — we should stand alongside the US by denying loans to Argentina until she agrees to live up to her obligations. The Government has made a start — with the recent announcement that Argentina should pay back £45 million in pre-1982 loans that were used for military expenditure — but the wider issue still demands attention.
The current Argentinian Government is a danger to its own people (capital flight amounted to over £15 billion in 2011), to the safety and prosperity of the Falkland Islands, and to the international economy. We should not allow Cristina Kirchner’s sabre-rattling over the Falklands to distract us from acting against this irresponsible behaviour. By voting against these loans, we can get better value for our taxpayer money, we can protect the international lending system, and we can send a message that a G20 country with no respect for domestic or international laws cannot be tolerated. The next time a loan is proposed at the Inter-American Development Bank or World Bank, we have a choice: to nod through further funds for the outlaws in Buenos Aires, or to stand alongside the U.S. in principled opposition. I sincerely hope the Government chooses the latter.