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Guzmán, Cristina and Massa in a time trial negotiation to avoid default

2020-05-22T03:02:23.848Z


The finance minister wrote this Thursday night the resolution that will extend the negotiations with Wall Street for the debt. Who props it up.


05/21/2020 - 23:46

  • Clarín.com
  • Opinion

Strong verbal crossings. Secret emissaries. Conclaves at dawn and reproaches among officials. It was all part of the secret time trial negotiation for Argentina to avoid going into default.

Martín Guzmán wrote the resolution last night that will extend the negotiation with the “wolves” of Wall Street. He will send it to the United States SEC today: a new 10-day period opens. But a legal contraption - a future "amendment" - would extend it until June 13.

The minister's resolution is a shortcut : Argentina did not qualify to activate the “stand still” clause. The clause –which Ecuador used– would avoid the bad drink of going into default this Friday. The Casa Rosada this Friday does not pay and will make a technical default. But the agreement with the creditors will allow you to put a balm on the default and sweeten the consequences. For this, Wall Street lowered its claims and Argentina improved its payment formula.

Now, the bondholders claim to collect 52% of the value of the debt. Argentina stretched up to 45%. The differences persist: this is a whopping $ 5 billion.

Guzmán insists that he has limitations to agree and tries to stay true to his theories and dogmas that he acquired in the cloisters of Columbia. For that, he uses an ultra-orthodox argument: that he cannot give in any more, due to the technical limitations imposed by the IMF.

He refers to the report on "debt sustainability" produced by fourth-level officials in Washington. Sounds like an excuse. That "paper" was made by IMF bureaucrats Julia Kozak and Luis Cubeddu. It was never binding, but Guzmán hides behind his recommendations to remain adamant.

His conclusions - which never had the endorsement of the IMF board - are in line with the theses, beliefs and speech that the minister used and - until now - did not work in the negotiation with Wall Street.

An internal memo from the economic team explains the current situation as follows: “There is still a way to go. Still missing for an agreement. " That "paper" confirms the rumor that existed on Thursday night in Manhattan: that despite political directives, Guzmán will not change his belligerent attitude.

Kristalina Georgieva is comfortable with the ambiguous IMF speech. She insists with a story in favor of Argentina, but does not adopt any concrete measure that benefits Argentina. Now she does not clarify what is the real scope of this IMF technical "paper".

They say creditors are demanding a cash payment to close the deal . The order would be $ 3 billion. It would be three annual installments of 1,000 million. There were polls from the Casa Rosada at the IMF and the responses were only evasive. Clarín was able to confirm that the Fund will not give any aid and that there is also no promoted mediation by the United States Treasury.

It happens after a strong debate at the highest level of government. Political officials do not want Guzmán's dogmas to interfere in a solution.

The dollar's escape and fear of eventual hyperinflation worried on the Front of All. Both financial phenomena are pure dynamite against the economy : the quarantine brake put intensive activity on therapy. A secret report circulating in the Cabinet Headquarters says it: this year the economy would have a 10% drop in GDP.

In this framework, a default would be fatal: it would compromise governance. For this reason, the President gave the order to Guzmán: "We have to close an agreement."

Cristina Kirchner resorted to a secret mission by Miguel Galuccio. The former YPF holder negotiated with Larry Fink, the Blackrock holder, and spoke to Hans Hume, of Greylock and chairman of a creditors' committee.

Sergio Massa polled his usual contacts on Wall Street and sent an identical message from the President: Argentina does not want a default.

The banker Jorge Brito - at the request of the Casa Rosada - sought consensus with David Martínez, the head of the Fintech Fund.

The change in strategy happened after the setback on May 8. That day, most of the external creditors rejected Guzmán's initial strategy: he only had a total adherence of 17.28%. It was a failure.

In the Quinta de Olivos there were reproaches because the Palacio de Hacienda always had an excessively optimistic vision. Many officials also billed the minister for the time he wasted: the payment proposal was ready in April, four long months after the government took office.

The internal debate caused confusion among the bondholders. The "wolves" of Wall Street took advantage and launched an offensive against Guzmán himself.

Unfounded versions of the minister's continuity circulated over the weekend and it all ended with a strong ratification by the President. The Manhattan offensive began because they saw the minister complicated. The funds do not have a good dialogue with Guzmán and intended to displace him and seek another interlocutor with Argentina . Alberto stopped everyone in his tracks: "The only interlocutor with the creditors is and will be Martín," he reiterated.

The President has a weakness for the minister and ponders his technical qualities. He even thought about giving him more power over the rest of the ministers of the economic area.

Thus, the President spoke to the troops themselves: one question is internal reproaches, and another is functional to the "wolves" of Manhattan.

Also, the economic team was caught in informal conversations with Massa and Maximo Kirchner. Massa told them: "You do experiments, but we are the ones who stand up."

It was within this framework that the vice president asked the former YPF president for secret management. Despite her account against the IMF and the bondholders, Cristina always had as a priority to pay - and often succulently - the creditors. Galuccio had - at least - two talks with the owner of the powerful Blackrock.

In the first, he conveyed to Fink Argentina's desire to pay and strengthened Guzmán's negotiating position : he asked that Gerardo Rodríguez - a Blackrock executive - stop bombing him. In the second, the proposal that Blackrock demands was discussed. Fink agreed to moderate his claims. It was achieved by lowering the "exit rate" to 10%.

At the Casa Rosada they admit that the vice president is the one who encourages criticism of Horacio Rodríguez Larreta. In truth, "pure Albertism" believes that behind the attack on the Buenos Aires chief there is another objective: to mark the field and complicate the President.

Cristina -and Mauricio Macri- agree again: both are worried because Alberto and Larreta reached strong levels of popular acceptance . The offensive of the tough sectors of the Kirchner against businessmen would seek a similar objective: to complicate the search for anti-crack support for the President.

Máximo Kirchner first started with the tax on the wealthy. Initial doubts triggered the outflow of dollar deposits . Now the harassment of big business continues with the project of exchanging state aid for shares. Thus, the “hardliners” of the Front of All are similar to the orchestra of the Titanic: they are still in love with their romantic and archaic stories while the economy - and also the workers - are sinking in the sea of ​​recession.

Source: clarin

All news articles on 2020-05-22

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