Britain under fire for demanding Argentina pay back junta’s debts
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Deputy business editor
Friday 30 May 2014
The British Government was last night accused of unfairly forcing the Argentine people to repay the British taxpayer tens of millions of dollars of debt, run up by the military junta that ruled the country in the 1970s.
The loans, which debt forgiveness campaigners said were made for the Argentinian generals to fund the purchase of military equipment later used to invade the Falkland Islands, had been rolled up into a package of nearly $10bn (£6bn) of debt to Western countries dating back from the country’s default in 2001.
The Western governments involved, known as the Paris Club, have been negotiating with the Argentinian government of President Cristina Kirchner to repay them.
Yesterday, they struck a deal with Argentina to repay it in full over five years. The first payment of $1.15bn is due by next May.
Private lenders to Argentina accepted a lower repayment of just 33 cents for every dollar they were owed in 2005. However, so-called vulture funds, who bought Argentinian debt at a massive discount following the default, are now pushing for the country to repay them in full.
Britain’s portion of the loans was said by debt relief campaigners – citing the department of UK export finance – to be $119m, of which $45m is said to have gone towards military equipment including naval destroyers, helicopters and missiles used in the Falklands War.
The Jubilee Debt Campaign’s policy officer, Tim Jones, said: “It is unfair for the Paris Club countries to be demanding huge amounts more from Argentina than received by private lenders. Countries such as Japan, Germany and the UK lent money to previous Argentine governments recklessly. There is no reason why they should be paid in full.”
In return for agreeing the repayment, Argentina’s financial relations with the rest of the world will be placed on a more normal footing, with access from Paris Club governments to credit insurance, loan guarantees and financing that have been blocked pending the deal.
The agreement follows a recent offer of $5bn in government bonds to the Spanish oil company Repsol as compensation for the government’s seizure of a controlling stake in its Argentinian subsidiary two years ago.
It remains to be seen if Ms Kirchner’s efforts will be enough to stem her country’s crippling foreign currency shortages. She has already devalued the Argentine peso and limited imports in an attempt to retain enough dollars to stabilise the currency.
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