Argentina’s former finance officials Guillermo Nielsen and Roberto Lavagna continue to defend the radical restructuring of Argentina’s $100 billion foreign debt – but only for Argentina and only at that critical historic moment. Both Nielsen, now a Buenos Aires-based consultant for several investors and investment funds, and Lavagna, the economy minister under whom he served, reiterated to Emerging Markets this month that Argentina’s debt restructuring is not and should not be a model for any other country to pursue. “I don’t see the need for the kind of responses that were necessary in Argentina,” says Lavagna. “We always said and I always said that Argentina´s debt restructuring was a specific response to a critical set of circumstances that I hope no other country faces or attempts to repeat.”
This was precisely the message Nielsen says he delivered to the Ecuadorian businessman/politician who contacted him first last December – but whose identity he holds in reserve. The ex-official points out that he was never contracted by the Ecuadorian government to advise it on its own strategy and that, once in touch with the Ecuadorians, he immediately advised Argentine government officials that its fellow Latin American country was seeking its views. Shortly thereafter, in mid-February, current Argentine economy minister Felisa Miceli dispatched Sergio Chodas, now in Nielsen’s former post, to meet with Ecuadorian officials in Quito where, according to insiders, he gave them the same advice that Nielsen anticipated: “Don’t do it.”
That Chodas concurred with Nielsen should come as no surprise: he was an integral part of the team that Lavagna formed and in which Nielsen was the most visible – and bond-holder vilified – member. Nielsen points out that Ecuador’s debt-to-GDP ratio, at less than 30%, is less than a third of the onerous rate carried by Argentina. In addition, he says that it has oil revenue potential that can be part of a valuable negotiation. Ecuador, Nielsen observes, has a far more difficult economic conundrum to face, one that Argentina confronted with disastrous consequences: a way out of its own system of US dollar convertibility. Moreover, he says that in considering Ecuador’s debt situation, he has come to the conclusion that the problem is really Venezuela’s. “As I understand it, in December Venezuela bought a substantial percentage of Ecuadorian paper and is using its influence and funding of CAF to find a solution.” A Bolivarian solution, of course.