LatinNews Daily Report - 29 March 2012

Argentina: On 26 March the US government chastised Argentina for its failure to abide by two rulings issued by the World Bank (WB)'s International Center for the Settlement of Investment Disputes (ICSID) and suspended the country from its Generalized System of Preference (GSP). The decision by President Barack Obama, who personally signed the communiqué and informed the US Congress in a formal statement, has more political than economic effect. In response, the Argentine foreign ministry issued a strongly-worded statement accusing the Obama administration of “giving in to the lobby of vulture funds” and describing the decision as “unilateral”, “lamentable” and “incomprehensible”. This is a marked escalation in the rhetoric between the two administrations and a marked change from the more moderate exchanges of recent months. Pressure from Washington can be expected to increase as US policy makers are worried that Argentina may opt to spend its foreign reserves domestically, following the almost certain reform of its central bank (BCRA) statutes, instead of honouring its debts. The US has been voting against Argentina's loan requests both within the Inter-American Development Bank (IDB) and the WB since mid 2011. Argentina's suspension from the GSP also comes on the back of the country's listing for the first time, earlier this month, as a country/jurisdiction of primary concern in relation to money laundering.

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