Argentine precedent

On August 7, Argentina filed a lawsuit against the UN International Court, accusing the United States of violating its sovereignty and immunity. What is the matter?

A man sitting in a garbage container in the very center of the city is a kind of reminder of default. Buenos Aires, July 31, 2014 /Photo: Rodrigo ABD /AP

At the end of July, international rating agencies announced Argentina default for debt obligations. Everyone immediately remembered the Argentine default of 2001. But the situation is now different.

In 2005, Buenos Aires agreed to restructure his debt with 93 % of creditors, but the owners of the remaining 7 % of debt obligations, including large American hedge funds, refused to agree.

In June 2014, Argentina transferred $ 590 million to the American branches of her banks for payments for debt obligations, but they were blocked by the American court: he decided that at the beginning of Buenos Aires should pay $ 1.5 billion, 7 % of those who had not agreed to restructure to creditors, and agree with the rest of the payments. Meanwhile, in the case of Argentina, the so -called amendment on collective decision -making was not applied. According to the amendment, if most borrowers (usually 70 %) agree to a certain debt restructuring, the rest are required to play according to the same rules.

Of course, it would be a mistake to look at the problems of Argentina as a local default of a distant country. In fact, this is another precedent that reminds us: the whole world faces the problem of restructuring the public debt, which, according to various estimates, reached $ 54 trillion in 2014. This debt is growing every minute, because states are able to take loans, but no one knows how to give them away.

For many decades, the United States has been saying that loans need to be limited, but their external debt continues to grow. The EU is trying to introduce non -working mechanisms of loan repayment: even if you forget about insignificant, from an economic point of view, countries like Greece or Portugal and look at Italy, the third eurozone economy, it will become obvious that the country is in stagnation, and its debt is growing!

The problem is that today's capitalist model has exhausted itself, the world will sooner or later encounter the need to restructure world financial obligations. There are two questions in front of us: what to do with the inherited trillion debts that we inherited and how to do not build up even more? There are no answers to any question.

Back in 2003, the American economist Ann Osborne Krueger, at that time the First Deputy Director of the Directorate of the IMF, prepared proposals for the mechanisms of restructuring world debt. But in the States, they did not want to hear about it then - they put the document in a long box. And today we see how the Manhattan judge determines the future not only of Argentina, but the whole planet: after all, if the funds who attack Argentina win, this will become a precedent for such stories in the future. And instead of reforming the world financial system, intractable creditors will bring one country after another to default.