A marathon session in Congress, which began at noon yesterday, ended 20 hours later at 8:30 AM this morning with Congress’ Lower House voting to pass the agreement with the holdouts. The vote stood at 165 votes to 86, meaning that there was an impressive turnout of 251 out of 257 deputies. Nobody abstained.
This approval implies that, if the bill passes the Senate, the Casa Rosada will be able to pay off the holdouts or “vulture funds” who have held out on Argentina’s previous restructured payment offers. It is a political victory for President Mauricio Macri’s Cambiemos coalition, which has had the solution of the vulture funds conflict as a policy centerpiece.
The bill, called the “Public Debt Normalization and Access to Public Credit Law,” includes:
- Ditching the Lock Law, which prohibits Argentina from offering a better deal to the holdouts than the one they presented in 2005 and 2010 (the restructured debt).
- Ditching the Sovereign Payment Law, which requires payments to be made locally and not through the US.
- Enabling the government to incur more debt, this time of up to US $12.5 billion, half of which will be destined to paying the holdouts
Let’s break down the vote: the bill counted on the support of the 89 Cambiemos deputies as well as 35 from the Renewal Front (FR) led by Sergio Massa. Another 17 votes came from the new Justicialist (PJ) caucus (by caucus we refer to a group of legislators from the same party who vote along the same lines. The PJ caucus famously split from the Victory Front (FpV) caucus last month over disagreements over how they ought to provide opposition to the ruling Cambiemos coalition – the PJ thought they should be more conciliatory.)
The surprise came from six FpV deputies, three from Misiones Province, who voted in favor of the bill, opposing the FpV caucus consensus of voting firmly against.
The government accepted to modify various aspects of the bill via negotiations with various Lower House caucuses in order to approve the measures.
How did it all come to this, you ask? After Argentina’s economic meltdown in 2001, the country defaulted on its international debt. A group of creditors purchased some of the defaulted bonds and refused to accept debt restructuring plans in 2005 and 2010 that would have exchanged the original bonds for bonds worth 30 cents on the dollar, insisting instead the debt be repaid in full. Hence former President Cristina Fernández de Kirchner’s nickname for them, “vultures”: she also swore that Argentina would “never” pay. New York Judge Thomas Griesa ruled in the holdouts’ favor and Argentina is now faced with negotiating the payment.
The next stop for the bill is the Senate.