Luke CoffeyLuke Coffey is the Margaret Thatcher Fellow
at the Heritage Foundation, a Washington, DC-based
think-tank. He previously served as a Special Adviser in the Ministry of
 Follow Luke on Twitter.

The flag
ship of the Argentine Navy, the ARA Libertad,
has been captured off the coast of West Africa and more than 200 members of its
crew have been detained — not by Royal Navy and not because of any dispute
dealing with the Falkland Islands. The school and training ship, valued at $10 million,
is now the property of NML Capital Ltd, a subsidiary of the US hedge fund
Elliott Management Corporation, which
has been battling Argentina over the country's debt default a decade ago.

The big
story with Argentina this year has been Cristina Fernández de Kirchner’s
increasingly bellicose rhetoric over the Falkland Islands and the 30th
anniversary of the Falklands War.

there is another issue concerning Argentina that warrants international
attention: its debt.

In 2001
Argentina defaulted on $81 billion of debt. It was the largest default in
history.  By some estimates, Argentina
still owes global investors, both private and public, up to $35.7 billion. This
very much matters to the UK, which is the world’s sixth largest investor in
Argentina and has loaned the nation tens of millions of pounds though
international institutions.

international community has been vocal on this issue. Argentina has incurred
more claims than any other country in the International Center for Settlement
of Investment Disputes, the body in the World Bank that provides facilities for
arbitration of international
investment disputes. Courts in Germany, Italy, and the U.S. have issued
hundreds of judgments ordering Argentina to repay its debt. Argentina simply
ignores these judgments and carries on without any consequences. According to
the International Monetary Fund, Argentina has almost
$50 billion
in foreign reserves — meaning they could pay off their debt if
they wanted to.

Argentina’s bad habits are spreading dangerously across Latin America too.
Venezuela now faces more than 20 international claims worth more than $40
billion — almost a tenth of their GDP. Let’s hope Greece does not follow this
example. Argentina’s actions also undermine respect for international
institutions such as the World Bank.

pathetically weak in its lack
of support
for UK sovereignty of the Falkland Islands, the Obama Administration
has been surprisingly tough on the issue of Argentina’s debt. The U.S. Treasury
last year
that it would oppose further lending to Argentina through the
World Bank and the Inter-American Development Bank (IADB), the two multilateral
development banks in which Argentina participates. Soon after that announcement
the U.S. voted against a $230 million loan in the IADB.

It is time
for the United Kingdom to follow this example. The United Kingdom ranks behind
only the U.S. as the largest contributor to the World Bank’s International
Development Association. Through this mechanism tens of millions of British
pounds — UK taxpayer’s money — has been loaned to Argentina without any real
hope of ever getting it back, much less receiving the interest that is also

As of March
2012, outstanding loans to Argentina from the World Bank alone totaled $16.2
billion. Based on Britain’s shareholdings in the two World Bank institutions
lending money to Argentina, Britain’s share of the outstanding loans is £225
million. Imagine what £225 million could buy at home during this age of
austerity. Instead, UK taxpayers are funding Argentina — a country that is
scandalously in the G20.

Every pound
entering the Argentine black hole of debt is one less pound the British
taxpayer will ever see again. Receiving international loans and refusing to pay
them back also allows Argentina to free up funds for other government expenditures
like defence.  In 2010 Argentina increased
its defence spending
by 6.6% at the same time UK defence spending was
cut by 8%.
With the austerity measures taken across the board at home, how
is this fair to the British taxpayer?

Argentina’s G20 membership should also be questioned. By no measure of its
economic performance does Argentina still deserve a seat around the G20 table.
It is not one
of the world’s top 20 largest economies
. It has refused to allow the
International Monetary Fund to review its public accounts since 2006, making it
the only G20 nation not to undergo annual reviews. According to the 2012 Index of Economic Freedom,
published annually by the Washington DC based Heritage Foundation, Argentina
ranks 158 out of 179
countries (just after Burundi)
in terms of economic freedom — again, far below any other member of the G20.
Many other nations—Poland, for example — appear far more deserving of G20

millions of Britons struggle to pay off their debt, whether it is a student loan,
credit card or mortgage. Meanwhile, Argentina simply ignores its obligations. Like
its unacceptable behavior towards the Falkland Islands, Argentina’s cavalier
attitude towards debt repayment shows a blatant disregard of international
norms. As the new Development Secretary, Justine Greening has an opportunity to
act in an area where her predecessor, the beleaguered Chief Whip Andrew Mitchell,
never did.  The UK
must lead the way in Europe
and, with the U.S., vote against any future
lending to Argentina until that nation prove itself to be a responsible
borrower. This is in the UK’s national interest and for the benefit of the
global economy.