Wednesday, November 26, 2014

Vultures, Argentina, and Israel

Argentina and the "vultures" are back in the news, which makes this a good time to resurrect the post below, which was banned from Firedoglake last summer. Una versión de este artículo está disponible en español.

News of the Argentinian government's debt default is a hot media item recently but there is more to this story than meets the eye. The major actor pushing Argentina into default is a "vulture fund" manager named Paul Singer. Mother Jones last year portrayed Singer as "the GOP's Go-To Guy on Wall Street" which, while true, does not tell the whole story.

Like the New York Times, Mother Jones has covered up the Israel angle on Singer, which is an important part of his campaign against Argentina. Furthermore, in portraying him as a Republican, MJ neglects to mention Singer's strong ties to the Democratic Party.

As reported by the Inter Press Service (IPS) last year:
When Argentina defaulted on its national debt in 2001, U.S. hedge funds swooped in to buy the nation’s bonds at pennies on the dollar, confident they would eventually prevail in the U.S. legal system and force the country to pay out in full.
That battle is set to reach the Supreme Court later this year, but the country’s creditors on Wall Street – labeled 'vulture capitalists' by their critics – are also making their case in Congress and the court of public opinion, with a current media campaign aimed at painting Argentina as an increasingly rogue nation in bed with Washington's enemies.
The public relations effort, which focuses on Argentina's increasingly friendly relations with Iran ...
The vehicle for that effort is called the American Task Force Argentina (ATFA) and "the people who head up" the ATFA, "the main lobbying organization behind Singer's current campaign ... sit on the high councils of the Democratic Party and would likely be part of any Hillary Clinton administration."

The ATFA is led by three people: Robert Raben, whose legislative career began with seven years on Barney Frank's staff and who eventually served as Principal Deputy Assistant Attorney General in the Clinton Administration; Robert J. Shapiro, who is a Senior Fellow of the Progressive Policy Institute and was appointed U.S. Under Secretary of Commerce for Economic Affairs under Bill Clinton, whom he advised during his first presidential campaign; and, Nancy Soderberg who served in the Clinton White House on the National Security Council and later as an Alternate Representative to the United Nations. Soderberg also helped the "tiny team [that] nailed down [the] Jewish vote for Obama" in 2012.

As IPS puts it: "The details of Argentina's relationship with Iran – which consists mostly of agricultural exports – are not terribly important to ATFA, however." Instead, the ATFA has chosen to portray Argentinian President Cristina Kirchner as having made "a pact with the devil" in reference to a 2013 "agreement establishing a joint 'truth commission' with Tehran" whose allegedly "only purpose ... is to whitewash Iran's responsibility for the 1994 bombing of a Jewish community center in Buenos Aires ..."

Singer's targeting of Iran via the ATFA dovetails nicely with his own support of the Jewish state as Iran has long been in Zionist crosshairs. According to the IPS:
In 2007, Singer described himself as a believer in American exceptionalism, noting that he has given "millions of dollars to Republican organizations that emphasize a strong military and support Israel." Speaking to the New York Times, Singer explained that he believes the West "finds itself at an early stage of a drawn-out existential struggle with radical strains of pan-national Islamists."
But to return to the financial stakes for Argentina for a moment let's go back to the article by Conn Hallinan on truthdig:
A recent decision by federal District Judge Thomas Griesa in Manhattan may not only force Argentina to pay the vultures, it could unravel a 2006 debt deal between Buenos Aires and other creditors. Under the highly controversial principle of "pari passu" ("equal ranking among creditors"), if the vultures are compensated, so must all the other creditors, even those who settled back in 2006. That bill could reach $15 billion. Given that Argentina has only about $28 billion in foreign reserves, the tab could send Buenos Aires into a recession or force the country into bankruptcy.
The "sleight of hand" involves the fact that the countries the vultures prey on are not really in debt to creditors such as Singer and Eric Hermann of FH International Asset Management LLC. The hedge funds look for distressed countries, then buy their debt at bargain basement prices and sit on it. In the meantime, other creditors cut a deal to take a reduced payment on their bonds, which in turn helps improve the debtor's economy and allows it to emerge from default.
That's when the vultures sue, threatening to shut down outside aid programs, seize assets and freeze debtor nations out of international finance if they don't pay up. Recent examples involving Singer include the Republic of Congo being forced to pay him $90 million on a $10 million investment. Singer's investment of $48 million in Argentina's debt would net him a 1,608 percent profit if Buenos Aires pays in full. Peru was similarly plundered.
With the default announcement today Forbes was saying:
Things couldn't have come out worse. Everyone lost: Argentina defaulted on its sovereign debt for the second time in nearly 13 years, the holdout bond holders were left empty handed, and Federal Judge Thomas Griesa's strategy to force Argentine to negotiate a settlement with the so-called venture funds failed.
But, not so fast. The Jewish Business News predicted, also today: "Paul Singer Will Likely Collect Most of His $1.3 Billion Even as Argentina Defaults on Debt Payments". And that's a good thing because, according to Liel Leibovitz, writing in Tablet Magazine: "Jewish law, in its infinite wisdom" says "Sorry, Argentina, but a Debt Is a Debt" and "Pay Up, Argentina: It's the (Jewish) Law" even if the return on 'investment' is 1,608% and payment results in possibly years of hardship for millions of people. Of course, if Argentina had a sugar daddy bankrolling them as Israel does they wouldn't be in this mess now would they?

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