The announcement last week by President Cristina Fernández de Kirchner’s government that Argentina intends to repay nearly $9 billion in official sovereign debt—a higher figure than it had said previously that it owed—to other member nations in the Paris Club could be seen as a step forward.
But apparently it was not enough evidence of progress to convince the Obama Administration that Argentina is sincere about living up to its obligations as a member of the G-20. Kirchner was reportedly miffed when President Obama announced during his State of the Union speech that his upcoming visit to Latin America would not include a stop in Argentina.
Perhaps the Kirchner government should reflect a bit more on the signals its policies are sending to the rest of the world. Although her government has recently discussed a deal with official Paris Club creditors, Argentina still has $16 billion in arrears to numerous private creditors in the U.S. and Europe. And it’s important to note that the U.S. government’s stake in the Paris Club negotiation is a mere fraction—$360 million—of the proposed $9 billion settlement. Argentina owes most of that money to other foreign governments.
The U.S. should urge Argentina to repay all of its outstanding debts to foreign lenders if Argentina is to re-enter international credit markets. Otherwise, any blessing by the Obama Administration of the proposed Paris Club negotiation could be seen as the U.S. favoring repayment to foreign governments over U.S. taxpayers and creditors.
Other recent actions by Argentina—such as strengthening its ties to Iran, Palestine, and Venezuela, as well as a reported failure to fight hard enough against money laundering—call into question the decisions of the Kirchner government.
A future visit to Latin America by a U.S. President that includes an arrival ceremony for Air Force One in Buenos Aires will be more likely when Argentina reverses course and begins to act more like a serious country in the global community.