Some things just don’t make any sense. Here’s a prime example: Why is the Obama administration adding more debt onto the American taxpayer’s back in order to provide more than $9 billion a year in loans to help a foreign country, Argentina, despite that country’s continued disregard of U.S. and international law?
Think about it. The U.S. is $14 trillion in debt. That amounts to a bill of $46,000 per person in America, or more than $14,000 more than the average per capita income in Rockford, Ill., the largest city in the congressional district I represent.
As members of Congress, we are scratching, clawing and fighting to keep America’s debt under control and prevent it from destroying our economy. So it comes as a shock that the Treasury Department refuses to place any conditions on World Bank loans to Argentina even though that country refuses to repay the $7 billion it still owes to American investors, including pension and retirement funds, holding onto its sovereign debt. When Argentina defaulted in 2001, it prioritized payments to all creditors except Americans. To add insult to injury, the administration is requesting $1.47 billion in the fiscal 2012 budget to support the World Bank. There have been 100-plus rulings from American courts and international dispute-settlement panels, including the World Bank’s own International Center for Settlement of Investment Disputes (ICSID), ordering Argentina to repay the debt.
While I support the World Bank’s overall mission and commend its dedicated staff, these unrestricted loans to Argentina reward willful violation of the rule of law with money from the American taxpayer.
This undermines that organization’s credibility and sets a terrible precedent for other nations to follow. Imagine if Greece decided to follow the Argentine approach and wiped out 70 percent of its debt without any care for investors?
According to Argentina’s national statistics agency, Indec, the Argentine economy grew at 9.2 percent in 2010, and the agency has projected this year’s growth at no less than 6 percent, largely driven by rising commodity prices. Even with the improving economic situation, the government of Cristina Fernandez de Kirchner continues to plead poverty while at the same time maintaining $54 billion in reserves from which to draw.
This is nonsense.
Under U.S. law, when Argentina defaulted on its debt, including $500 million in public debt directly owed to the U.S. government, sanctions automatically were invoked prohibiting various forms of loans and military assistance. But that money, rather than going out the front door to Argentina, has gone out the back through World Bank loans.
What sense does it make to have sanctions on the one hand when you take them back surreptitiously with the other?
Congress needs to enact a provision that no new funds will be provided to the World Bank or the Inter-American Development Bank unless the Treasury secretary certifies that the U.S. is actively opposing loans to countries that fail to abide by U.S. court rulings and international law, including the World Bank’s own ICSID rulings.
We can’t tell the American people to make sacrifices to battle our debts and deficits if we are handing out their money and piling up more debt for countries that refuse to meet their financial obligations.
It just doesn’t make any sense.
Donald A. Manzullo, Illinois Republican and a senior member of the House Committee on Financial Services.