24 de septiembre de 2014 / 16:24 / en 3 años

Argentina says Germany "hostile" toward its debt revamp efforts

BUENOS AIRES, Sept 24 (Reuters) - Germany has a “hostile attitude” toward Argentina’s debt restructuring effort, cabinet chief Jorge Capitanich said on Wednesday after local newspapers ran an advertisement quoting a German official criticizing Argentine policymaking.

The advertisement, posted by a U.S. lobbying group on behalf of hedge funds suing Argentina for full repayment on defaulted bonds, quotes German Finance Minister Wolfgang Schauble calling Argentine policymaking “an example of lack of strength.”

Capitanich shot back that ”Germany has always had a hostile attitude toward Argentina, from an economic and financial point of view.

The ad marked the latest spat generated by Argentina’s July default, which sealed the South American country’s exclusion from the international capital markets at a time of recession, sinking central bank reserves and soaring inflation.

Last week the government expressed “deep indignation” after a U.S. diplomat referred to the country as being in default.

Argentina says it is not in default because it made every effort to make its July coupon payment on restructured bonds. The government deposited the $539 million with an intermediary bank but payout was blocked by a U.S. federal court.

The case has become a rallying cry for President Cristina Fernandez, who characterizes the funds as “vultures” out to wreck Argentina’s finances in their pursuit of astronomical profits.

Her tough position is popular on the streets of Buenos Aires but has exasperated the U.S. judge who is hearing the case and has ordered Argentina to settle with the funds.

Capitanich noted that Germany was among 11 countries that on Sept. 9 voted against Argentina’s proposal at the United Nations to adopt a multilateral legal framework for sovereign restructurings.

The resolution easily passed but the United States joined Germany in voting no, arguing that market-based mechanisms are the best way of curing defaults.

Wednesday’s full-page advertisement, published in dailies La Nacion and Clarin, was paid for by the Virginia-based American Task Force Argentina. “Don’t let them fool you about Argentina’s default,” the advertisement says.

The Task Force lobbies for funds in the case led by Elliott Management’s NML Capital Ltd and Aurelius Capital Management.

“You have to wonder why the big powers of the world do not have a firm attitude toward these miniscule groups that pulverize any possibility of allowing the international financial system to function properly,” Capitanich said.

“It looks like these governments have been co-opted by the vultures.”

Millions of middle class Argentines fell into poverty when the government defaulted on about $100 billion in bonds in 2002. Most of that debt was later restructured in deals offering less than 30 cents on the dollar.

Elliott and Aurelius scoffed at those terms and sued for 100 cents on the dollar, having paid only a fraction of that for bonds that were already in default when they bought them.

The July coupon payment was blocked by U.S. District Judge Thomas Griesa, who said Argentina must pay the funds $1.3 billion before any more payments can be made on Argentina’s restructured debt.

A spokesperson at the German embassy in Buenos Aires was not immediately available for comment. (Additional reporting by Walter Bianchi and Alejandro Lifschitz; editing by Andrew Hay)

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