What are the lessons of Argentina's successful debt restructuring? For a success, in its own terms, it unquestionably is: Argentina has gained 76 per cent acceptance of a deal to reduce $100bn in debt by about 70 per cent in net present value. Everybody needs to learn the lessons. But Argentina also needs to exploit its opportunity. Alas, it seems more likely to deserve its reputation for never losing an opportunity to lose an opportunity.
The first lesson is that if a sovereign has decided that it makes more sense to default than to service its debts, only a more powerful sovereign can change its mind. Private creditors cannot seize the assets of a sovereign as they can the assets of a private bankrupt, at least in a country with a functioning bankruptcy regime. The late Walter Wriston of Citibank once said that "a country does not go bankrupt". He was right. Countries do not go bankrupt. But their creditors do.
