A courtroom development in the African nation of Ghana has thrown the spotlight on the financial policies of another country half a world away: Argentina.
Readers of this space may recall that NTU (together with other participants in American Task Force Argentina) has been engaged in a fair resolution of Argentina’s debt for U.S. taxpayers for several years. In 2009, we wrote an open letter to Congress supporting legislation creating new safeguards for taxpayers against countries that fail to honor their financial obligations to creditors. We have also testified in New York State Senate on Argentina’s pattern of fiscal irresponsibility and economic mismanagement which has left U.S. taxpayers to shoulder the burden of such recklessness, and opposed further IMF and World Bank lending to Argentina, among other activities.
We therefore noted with interest earlier this week when a Ghanaian court ruled that an Argentine tall ship could be used as collateral to settle Argentina’s outstanding debt obligations. The sailing ship ARA Libertad, which arrived last Monday in Ghana’s Tema port, was restrained and has been unable to leave until Argentina posts a bond equivalent to the value of the ship with the High Court in Accra. U.S. creditors continue to seek enforcement on judgments against Argentina issued by the United States District Court of the Southern District of New York. The ship, valued at $20 million, is just a fraction of compensation sought following Argentina’s sovereign debt default in 2001.
With some $45 billion in reserves and booming soy crop exports, Argentina has the means to pay back U.S. creditors, which it is legally obliged to do. To its credit, the Obama Administration, citing Argentina’s failure to pay, has revoked Argentina’s preferential Generalized System of Preferences (GSP) status and has started to vote against multilateral development bank assistance to Argentina, except in cases of poverty assistance.
NTU is not involved in any of the jurisprudential dramas surrounding Argentina’s debts, but the study in contrasts here – one nation’s court affirming judgments of international law and another nation’s political establishment continuing to flout them – calls a attention to a bigger question. What will our policymakers do to further protect us from countries that borrow from American taxpayer-backed lending institutions and then duck financial accountability? It’s depressing enough that our own government has engaged in risky borrowing behavior; leaving us to clean up the mess from governments abroad that have acted even worse should be unthinkable.