ARGENTINA’s foreign minister Hector Timerman recently declared that the Falklands Islands would be Argentinian “within 20 years”. A referendum, held today, is asking the Islanders to choose between that vision, and their current status. It looks unlikely that the Falklands will side with Timerman.
But there is more than belligerent nationalism to the statements coming from Buenos Aires. The government of President Cristina Fernandez de Kirchner is using the Falklands as a smokescreen to deflect attention away from more fundamental problems – destruction caused by reckless economic mismanagement, and the worsening isolation of the country from the international community.
Only a decade ago, Argentina was invited into the elite G20 club. Today, the country is fast becoming the world’s worst financial and legal outlaw. Last month, the International Monetary Fund (IMF) took the significant step of censuring Argentina for its publication of misleading government statistics. This is first time in the Fund’s history that a country has been censured – a damning indictment of Argentina’s departure from accepted standards.
Its government, while condemning the IMF, said it would withdraw from the World Bank’s investment dispute tribunal, the ICSID. Argentina has over £40bn of cases filed against it due to a record of property expropriation, a refusal to honour contracts, and an unwillingness to respect court judgements. The latest claim hails from Repsol, the Spanish energy company nationalised by Kirchner last year. If Argentina leaves ICSID, the next Repsol will not benefit from such protection. Worryingly, Britain remains the sixth-largest investor in Argentina, and could be left exposed.
These problems all stem from Argentina’s ongoing refusal to repay its debt obligations. Since its default in 2001, it has ignored more than 100 court decisions to make good on its debt, despite having the ability to pay. Recently, an exasperated US judge said that Argentina must abide by contractual commitments and pay its creditors. Argentina’s rejection has caused concern for the precedent it may set for future sovereign defaults.
This concern has led to the US, Germany, France and Spain voting against loans to Argentina from international lending bodies. If Kirchner will not abide by the rules of the community, she scarcely deserves to profit from its generosity. The UK has now joined those countries by declaring it will also vote against loans to Argentina. This is a welcome shift from its previous stance of abstention.
But the Argentine government has sent a clear message that it does not care for the view of the international community. The IMF has now sent a message, through its censure, and the Falkland Islanders will send their own. The US and the UK, are doing their part by voting against any new loans to Argentina. But I sincerely hope the UK will go further and work with the US government to convince other countries to act. Kirchner needs to know that her government’s reckless and irresponsible behaviour will not go unpunished.
James K. Glassman is a former US under-secretary of state for public diplomacy and public affairs.