Argentine Foreign Minister: Remember the Drago Doctrine—We Will Not Cede Our Sovereignty!
August 20, 2014 • 10:11AM

In a press conference Tuesday with chief of staff Jorge Capitanich, Argentine Foreign Minister Hector Timerman issued a hard-hitting warning to the U.S. government, which has yet to give an official reply to the lawsuit which Argentina filed against it at the International Court of Justice at The Hague on Aug. 7.

Reiterating that the Obama Administration is responsible for the illegal actions of its judiciary, and that to hide behind the so-called "independent judiciary" is the "product of a certain kind of ignorance," Timerman warned that his government will continue to demand that the U.S. respect its sovereign right to continue paying its debts "without interference that violates international law."

He added that the suit filed at The Hague "is directed against the United States, in the context of a conflict between states, not against the vulture funds," or the courts. Judge Thomas Griesa's rulings seek, he emphasized, "to provoke economic and political measures to force the will of a member state of the United Nations," such that Argentina won't be able to meet its debt obligations, affecting decisions on its sovereign debt restructuring.

The attack on Argentina today, he warned, is similar to the military assault on Venezuela in 1903, to forcibly collect its debts to European bondholders. That incident gave rise to the Drago Doctrine, he explained, authored by then Argentine foreign minister Luis Maria Drago, whose memorandum to the Teddy Roosevelt government asserted that foreign debts cannot be collected by force.

To date, Timerman said, the United States government has yet to reply to "either our government or the [International] Court, as to whether it agrees to settle this controversy born of the illegal decisions its government has allowed, thus violating Argentina's sovereignty." Argentina has only heard through "third parties" that the U.S. rejects the Court's jurisdiction.

Instead, Argentina has been subject to attacks from members of the U.S. Congress, many of whom are generously financed, he said, by vulture fund kingpin Paul Singer to the tune of millions of dollars—donations intended to pressure Argentina to pay the vulture funds. Timerman reported that the Argentine government decided to file suit at the International Court, after he and two other government officials were informed that U.S. State and Treasury Deptartment officials had instructed the Executive Branch not to discuss the debt and restructuring issue with any Argentine official.

Citibank Could Lose Its Argentine Banking License

In an Aug. 7 speech, Argentine President Cristina Fernandez de Kirchner delivered an undisguised threat to Citibank's local branch: obey our laws, and pay restructured bondholders whose bonds are governed by Argentine law, or face the likelihood of shutdown.

Citibank's branch, she said, is an Argentine bank which happens to have foreign stockholders. "As this is an Argentine bank," she said; "we expect it to obey Argentine laws," adding a reminder that "the regulatory authority which grants it the right to operate here is the Central Bank of the Argentine Republic."

So, as Citibank's lawyer Karen Wagner told The New York Post, if the bank chooses to obey New York Federal Judge Thomas Griesa's sweeping order not to pay restructured bondholders (many of whose bonds are governed by Argentine and European laws), it will find itself in "an untenable and extremely dangerous position," which could lead to the loss of its Argentine banking license "and its takeover by the Republic." Thus, Citibank's frantic request that the U.S. Second Court of Appeals in New York hear its appeal of Griesa's ruling before Sept. 30, the date on which payment to bondholders is due. A hearing date has been set for Sept. 18.

Citibank is especially nervous, because it has a huge retail banking presence in Argentina, and "also in South America," the Post points out, all of which "is siding with Argentina" in its battle with the Queen's predatory vulture funds. About 18% of Citibank's revenues comes from Ibero-America