Brics, G20 Then Argentina

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Divide and Conquer in Latin America: Sabotaging BRICS in 'our backyard'



Juliana Barembuem
Sott.net
Mon, 15 Sep 2014 11:52 CEST




Since the beginning of the Western-engineered crisis in Ukraine, the world has been bombarded with propaganda about how Evil Russia is. Yet, despite what we're all being asked to believe, there was no "Russian invasion", MH17 was not shot down by Russia, and Ukraine has de facto split in two. While these manipulated events on Russia's borders grab the headlines, let's take a look at what is going on behind the scenes in "America's backyard", as John Kerry shamelessly described Latin America in April this year.

The century-long pretense upheld by American leaders that their country is a Republic is betrayed by Kerry's imperious language, and he obviously needs diplomacy (not to mention geography) lessons. Besides, he was clearly referring to Latin America, even though, technically, the US is also part of the "Western Hemisphere".



© fco.gov.uk
Anyway, you've also probably heard about President Putin's visit to Latin America and the BRICS's Summit in Brazil. The existential danger that BRICS presents for the Western 'elite' is obvious; the alliance between Brazil, Russia, India, China and South Africa represents a serious political and economic alternative to the current US system of global hegemony. And it's growing, with countries like Argentina, Venezuela, Iran, Mongolia, Malaysia and others interested in joining. Currently, BRICS represents almost half of the world population and close to a third of the global GDP.

This is what Vladimir Putin had to say during an interview regarding BRICS before the Summit:
The modern world is indeed multipolar, complex, and dynamic - this is objective reality. Any attempts to create a model of international relations where all decisions are made within a single 'pole' are ineffective, malfunction regularly, and are ultimately set to fail.

Those are the reasons why the interaction format proposed by Russia for such influential states such as the BRICS members has proved to be needed. Our joint efforts have contributed to enhancing predictability and sustainability in international relations.

I believe it is time to raise the BRICS' role to a new level and to make our association an unalienable part of the global management system for sustainable development.

* How can this be achieved in practice?

First, develop cooperation in the UN in every possible way, to persistently counteract individual states' attempts to impose on the international community the policy of displacing unwanted regimes and promoting unilateral solutions to crisis situations. We propose to create a mechanism of regular high-level consultations between our foreign ministries on different regional conflicts to agree, where possible, on common positions and joint efforts to ensure their political and diplomatic settlement.

We should coordinate BRICS policy more actively and counteract security threats and challenges. Among other ways, this can be achieved through the mechanism of counter-terrorism consultations. An important place on the agenda will be expanding cooperation to combat drug trafficking. We are ready to build up joint efforts to reinforce the international legal regime of drug control.

Cooperation in setting rules of responsible behaviour in the global information space is another important issue. Such rules must be based on the principles of respect for a country's sovereignty, non-interference in domestic affairs, observance of human rights and freedoms, as well as equal rights for all countries to participate in Internet management. I think our joint efforts will ensure that the BRICS countries hold a leading position in strengthening international information security.

We are going to thoroughly analyse the situation in the planet's hotspots. Those include Syria and Iraq, where the positions of extremist and terrorist groups are gaining strength. Serious attention should be given to the crisis in Ukraine and the international community's measures to stop the bloodshed in the southeast of the country.

In the economic sphere, we are going to discuss IMF reform. The BRICS countries are concerned about the unreasonable delay in holding a debate of this subject. This jeopardises all the efforts of G20 in this direction. It is the case of fulfilling the rightful demands of "new economies" to balance the IMF according to the 21st century reality.

One more important question is the increasing cases of unilateral sanctions. Recently Russia has been exposed to a sanction attack from the US and its allies. We are grateful to our BRICS partners who have criticised such practices in different forms. At the same time, substantive conclusions should be drawn from the current situation. Together we should think about a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decisions made by the US and their allies. [...]

It is in our common interest to use the complementarity of national economies to the maximum. This is a market with almost three billion consumers. The BRICS countries have unique natural resources and a substantial technological, financial and industrial potential.

Another important initiative that is underway is creating a BRICS pool of foreign currency reserves. It will become a safety net to help us form a joint response to economic challenges.

Another long-term common interest of the association's members is strengthening the rule of international law and the UN's leading role in the international system. To be honest, without Russia's and China's principled position on Syria in the Security Council the events in that country would have followed the Libyan and Iraqi scenario.
http://www.sott.net/article/285779-Divide-and-Conquer-in-Latin-America-Sabotaging-BRICS-in-our-backyard#
 
Argentina


© http://geopoliticsrst.blogspot.fr/
One of the "vultures" in question, billionaire Paul E. Singer, head of Elliott Management
The BRICS website reference to solving "short term liquidity" problems is probably a reference to the June attack on Argentina by 'vulture capitalists' (coincidentally, right before the BRICS Summit in Brazil). During the brutal US-backed dictatorships of the 70s and early 80s, and later under the 'neoliberal' regimes of Carlos Menem (and his foreign minister, Harvard-trained US puppet Domingo Cavallo) in the 90s and Kirchner in the 2000s, state assets and government bonds were sold off to 'foreign interests' for criminally low prices and Argentina was loaded up with outrageous IMF and World Bank debts, all of it in breach of the country's constitution. Argentine taxpayers now find themselves in the position of 'owning' debts that they never agreed to absorb. The Argentinian government recently attempted to pay off some of the debt by offering 30 cents on the dollar to creditors (the same price the creditors bought them for), but several 'vultures' refused to accept the price they paid for bonds and demanded 100 cents on the dollar. As an example of the extent to which Argentina is financially controlled by the US, it was a US federal judge who decreed that the 'vultures' were owed the full current value of their ill-gotten bonds.
The subject of the legal battle is the payment for the bonds that have been issued before the Argentine sovereign default in 2001. While most of the bondholders participated in two bond-swaps, basically allowing the country to restructure its debt and extend the maturity of its bonds, some bonds ended up in the hands of so-called "vulture funds". Such funds are specialized in extracting value from "troubled" bonds. While some vultures feed on the carcases of animals, the "financial vultures" try to use the courts for making issuers pay in full for the bonds acquired by the "vulture funds" at steep discounts.

[...]


Several US courts have ruled that Argentina has to repay the vulture funds around 1.33 billion dollars, before it can continue paying the bondholders who agreed to restructure the Argentine debts in the aftermath of its 2001-2002 default. President of Argentina, Cristina Fernandez de Kirchner slammed the court rulings, describing the actions of the US judiciary system as "extortion".

The deadline for paying the vulture funds is June the 30th and if the country doesn't pay up, it will lose the possibility to pay other bondholders through US banks and will face the risk of having its international assets confiscated. Moreover, Argentina risks to face a situation similar to the situation of Iran, because it will be locked out of the dollar-based financial system and will be unable to repay its creditors in dollars or seek dollar-denominated funding.​
The timing of all this seems a little too coincidental. This is a forced default and pressure is being put on Argentina to pay the 'vultures' before it has the chance to join BRICS, which would help it deal with precisely the problem of the 'vultures'. A solution to this problem is proposed here and it amounts to removing the almost unlimited power that the U.S. exerts over Argentina and so many other nations. The fact of the matter is that speculative funds and vulture capitalists would not be possible if the world's economy didn't revolve around the 'almighty' dollar. Interestingly, China has just helped Argentina in this matter by moving further away from the dollar and allowing for the use of the yuan in their international transactions. And the UN's General Assembly has just passed a resolution to create legal frame work for sovereign debt restructuring, which will change how debts are managed in the future. (Not all EU countries voted in favor, but it was passed nonetheless).
 
The CIA was heavily involved in creating and/or propping up dozens of South American dictatorships throughout the 20th century. Since then, it has pretty much ruled the region economically. It has drowned those countries in debt, taken over their lands via pathologically greedy corporations, funneling Latin American resources into private US coffers

For the ones that think the US intervention in the region was ony something of the 60s and 70s
 
Very, very slanted article. Some of it may be true, but as an example:

state assets and government bonds were sold off to 'foreign interests' for criminally low prices and Argentina was loaded up with outrageous IMF and World Bank debts, all of it in breach of the country's constitution. Argentine taxpayers now find themselves in the position of 'owning' debts that they never agreed to absorb. The Argentinian government recently attempted to pay off some of the debt by offering 30 cents on the dollar to creditors (the same price the creditors bought them for), but several 'vultures' refused to accept the price they paid for bonds and demanded 100 cents on the dollar.

So, Argentina can sell off their bonds to "foreign interests" (I think most of the bondholders were foreign, though many were Argentine - as are at least some of the holdouts) at 100% but can basically tell those foreign interests to f**k off when it comes to paying them back by offering less than 30% return. The "vultures" pay as much as 50% for the bonds, giving some people more money than Argentina was willing to give and they're evil destroyers of sovereignty.

And nowhere have I ever seen the "vultures" demanding 100% of the value of the bonds. But I have seen Cristina and other members of her administration saying they wouldn't even deign to negotiate with, much less pay anything to, the vultures.

I would actually be quite happy to see BRIC succeed in setting up an alternate banking system to the current near-monopoly US/European system. But if anyone thinks that BRIC is going to be any better than the US and Europe in terms of what they ask for loaning money to "developing countries" (and BTW - to be "developing" you have to actually have a rational and obtainable plan, and follow it, and Argentina, to me, certainly doesn't fall under this category any more than it falls under "3rd world")., they are either quite naive or just plain lacking in common sense (or both, with the possibility of missing rationality as well).

While the US and Europe may have been heavy-handed and have caused problems, I can't believe for a moment that Russia, India, China and Brasil would be any better.

But competition is good and I love the idea of having another banking system to turn to! Then again, I'm not a country asking for tons of money for social programs that are unsustainable - I'd be hoping that it would be a banking system in all its definitions - I'd be making deposits and hoping to take advantage of different investment opportunities than I easily have access to now. But certainly not bonds sold by certain countries...
 
And one other thing - any debt that came from the military dictatorship period or that was unconstitutional - I don't really think that problem should be put on people buying bonds, either. The Argentine people allowed their military to take over the country. They sure as hell would have bitched if another country came in and took out the dictators, particularly if the US had done something like that. So is it the fault of all those people who bought Argentine bonds? Should they foot the bill for Argentina's own debt?

When exactly was it that someone actually forced Argentina to borrow money? Actually forced Argentina to allow anyone to come to their country and take advantage of hospitals and schools for free? Forced the current administration to load up the government with a huge percentage of jobs, many of which are sinecures and not at all necessary?

I don't like the way the US and Europe act much of the time. But I abhor the way that Argentina blames everyone but themselves and refuses to change even so, except to become more isolationist in ways that can't possibly resolve the issue.
 
The Argentine people allowed their military to take over the country.

:eek: Lots of people went into exile, lots of people faught here, lots of people oposed but did not want to risk their lives, lots of people did not want them and thought in that moment that they were the worst government they coud have.

The general consensus was probably BEFORE they took power, people thought that dictatorship would be like the ones before, the so called dictablandas, but they were all wrong.

And of course they multipilied for at least six the debt and furthermore, thay nacionalized the debts argentines companies took in dollars. Who, in the middle of politicized societies as they were in the 70s, would alowed that?
 
Matias, it's a responsibility of the people what government they end up with. It's unavoidable. The choice to not risk their lives and let the military take over is understandable, but it is a choice. Other people did not have a choice on whether Argentina let its military run things, like the people who bought bonds that were offered by the Argentine government, military, neo-liberal or peronist/kirchnerist.

The question I posed was not meant to slight the Argentine people for allowing military dictators to take over the country and borrow money in their name. It is about responsibility and cleaning up the mess afterwards. Who is more responsible to take a hit on that - the people of Argentina or the people who bought the bonds in good faith - most of which were bonds sold to pay off the older debt as I understand it (correct me if I'm wrong) so to the new bond holders it was new debt.

Even if it wasn't new debt to the bondholders and one could say it was the bond holders' fault for getting involved with a dictatorship - they should have known better, that one day the "legitimate" rulers of Argentina would return (Peronistic Democracy anyone? Who the hell knew who would be ruling Argentina as the bonds came due?) and would have to be reckoned with, that all that debt the military racked up was really illegitimate the moment it was sold, well, I don't think that argument holds either.

Argentina (and many people, around the world it seems) would rather allow dictators to control a country than to go in and make a change. And yet people have sympathy for the people of the country, people still do business with the governments of those countries. Are Argentinos saying that any debt incurred by dictators is simply not valid debt? And how do you determine exactly at what point a government is considered a dictatorship? Who decides that? The people that loan the money? An international court? Do all sovereign loans maybe have to get approved by an international court or any bonds to pay of the debt are invalid?

So I go back to - how are the people who bought those bonds more responsible for that debt than the Argentine people themselves, whether it was debt incurred by the military government of Argentina of by the "neo-liberal" governments or even by Cristina herself? How can anyone really say that it was invalid debt and the pension funds and other investments around the world that bought into that should rightfully carry that debt?

I accept that whatever the bondholders thought at the moment they bought the bonds, that they were indeed risking their capital. That's obvious. There could be a variety of reasons the country doesn't end up paying, OK fair enough.

But I don't feel just saying that the debt is illegitimate, makes it a legitimate declaration. It doesn't play into any mitigating factors, in my opinion, as to whether or not Argentina was justified in defaulting on the payment, the default being declared by the law in the jurisdiction where the contract for the bonds was written. The latter has much more legitimacy than the prior. Again, in my opinion due to the reasons stated.
 
I was watching a YouTube video today on Redacted about Putin, China and BRICS and heard them report that "If they can solidify another hegemonic currency, Argentina says "we're in." This was the first I've heard about it and my mouth dropped. I was stunned to find this thread from 2014. I learned about BRICS for the first time today.

The BRICS grouping of countries, Brazil, Russia, India, China and South Africa are creating a single payment system, BRICS Pay, as part of the drive to establish a common system for retail payments and transactions between the member countries.
 
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