By Matthew Russell Lee
UNITED NATIONS, October 10 -- With the International Monetary Fund having its Annual Meeting, Managing Director Christine Lagarde began by saying the quota reform, blocked by the US, is crucial.
Then at the IMF's October 10 press conference about the Middle East, even as Press questions about Yemen and other topics were pending, the IMF called on USAID to ask a question about Syria.
Then at the IMF's October 10 press conference about the Middle East, even as Press questions about Yemen and other topics were pending, the IMF called on USAID to ask a question about Syria.
See video here at Minute 41, question of Mona Yacoubian, USAID's Deputy Assistant Administrator for the Middle East Bureau.
The IMF's transcript omits that the question was from USAID, that the questioner said, "Mona Yacoubian from USAID."
It is often said that these press conference are limited to the media, including to the Free UN Coalition for Accesswhich advocates for press access including at the IMF. How then can a US government agency ask a question about Syria? And what does it mean?
Inner City Press submitted a question on October 10 about Yemen, still not answered, and during the Africa briefing about Mali and South Sudan. Does the IMF answer questions from the US government but not from the press? Was it just a mistake?
Back on October 6 with the dispute between Argentina and hedge or vulture funds more and more discussed, the International Monetary Fund released a paper and held an embargoed press call on the topic of "Strengthening the Contractual Framework to Address Collective Action Problems in Sovereign Debt Restructuring."
Inner City Press asked the IMF's Sean Hagan, General Counsel and Director of the IMF's Legal Department, how his "market based" approach relates to the vote take last month in the UN General Assembly and to respond to the critique that the lack of quota reform at the IMF undermines the legitimacy of its approach.
Hagan said the UNGA's approach is "treaty based," and that
"There was insufficient support in our members to support that approach, there has been in no change in the attitude of our members when we discussed this last year.”
But in essence the membership of the IMF is the same as the UN General Assembly -- it's just that in the IMF votes are weighed to wealth, measured in the past. The UN is controlled by five permanently veto-wielding Security Council members. At the IMF for now there is one veto: the US.
Hagan made much of Kazakhstan including some of the IMF supported language in its most recent bond issuance. He mentioned copycat litigation, already pending in Grenada. He said it seems the issue will be discussed at the upcoming IMF and World Bank Annual Meetings in a session involving "civil society organizations." We'll have more on this.
For now, the IMF on October 6 said "Directors acknowledged that the recent New York court decisions with respect to Argentina may exacerbate collective action problems, although most felt that the extent of their impact on the restructuring process is still unclear. Directors welcomed the recent modification of pari passu clauses in certain sovereign bond issuances to explicitly exclude the obligation to effect ratable payments."
So beyond the cited Kakastan, how prevalent is this?
The IMF also on October 6 discussed "the inclusion of an enhanced collective action clause (CAC) that includes a more robust 'aggregation' feature to address collective action problems more effectively."
Back on September 11, two days after 124 nations in the UN General Assembly voted to start a process on sovereign debt restructuring, Inner City Press asked the International Monetary Fund, "What is the IMF's comment on the “sovereign debt restructuring” resolution adopted by the UN General Assembly on September 9? The resolution cites the IMF's work on the issues, in 2003."
At the IMF's embargoed briefing that day, IMF spokesperson William Murray provided a long answer, including that the IMF is working on a "market based" solution, particularly on debt contractual terms to prevent "hold out" problems. He mentioned, as he had to, Argentina, which has had it own contentious relation with the IMF.
Clearly, Argentina -- and Bolivia as chair of the Group of 77 -- were aware of these IMF efforts when they pursued the issue in the UN General Assembly. But it's a power game.
When Argentina's foreign minister Héctor Timerman held a press conference at the UN at 5:30 pm on September 9, he was flanked not only by Argentina's ambassador to the UN Maria Cristina Perceval but also the chair of the Group of 77, Sacha Llorenti of Bolivia.
They spoke of 11 countries opposing their resolution on sovereign debt and vultures funds, or sovereign debt restructuring, including the United States. Timerman took the high road, saying that Argentina would present a project with the G77 and speak with all opponents.
He asked how the UN General Assembly, which he called the most democratic forum, could be involved in so many fields but not this one. Why indeed.
Back in June, Inner City Press thanked Timerman and his finance minister Axel Kicillof on behalf of the Free UN Coalition for Access, then asked if Elliott Management and Aurelius Capital hold stakes in other G77 members, and if the case shows the need for reform, that countries should have at least the same debt restructuring rights as corporations.
Kicillof added, states and the people (pueblos) they represented. He said that in the G77 meeting, Peru had spoken. An attentive Inner City Press reader chimed in with a question about Ecuador, which sold bonds just this week.
But in that case, new language tried to avoid the Argentina decision of the US Supreme Court, just as Belize and Armenia have also done on their debt. Watch this site.
