By Paul ByrneJuly 1, 2015BUENOS AIRES, Argentina — As Argentines closely watch the financial turmoil in Greece recalling their own worst crisis 14 years ago, the architect of the South American country’s recovery has a message for the European nation: Renegotiate your debt.Greece is in a financial limbo now that its bailout program has expired, cutting it off from vital financing and pushing it one step closer to leaving the euro. The country has put limits on cash withdrawals in order to keep banks from collapsing.Its situation was further worsened Tuesday when it failed to repay a $1.8 billion debt to the International Monetary Fund, the first developed country to do so.Former Argentine Economy Minister Roberto Lavagna is credited with playing a key role in his country’s recovery after its $100 billion debt default in 2001. He said Tuesday that a “strong restructuring” of its debt is the way to help Greece come out of its crisis and avoid conflict within the European Union.“It’s not the definitive condition … but it is necessary” to avoid a political conflict, Lavagna told The Associated Press. “Democracy is worth more than markets.”Lavagna who was economy minister in 2002-05, led Argentina’s recovery from the 2002 recession, considered by many the worst in the country’s history, and spearheaded its 2005 debt restructuring.Argentina’s financial collapse was so bad that one of every five Argentines was out of work. The peso, which had been tied to the dollar, lost nearly 70 percent of its value, and banks froze deposits and barricaded behind sheet metal as thousands of protesters unsuccessfully tried to withdraw their savings.Lavagna said the demonstrations in Greece “are way more peaceful” than in Argentina, where at least 27 people died in protests and looting in December 2001 as the economy unraveled. He said that at the time, Argentina also lacked international support and didn’t have the obligations of an economic union like the European Union.‘By Rick NoackJuly 1, 2015After Greece defaulted on a payment to the International Monetary Fund on Wednesday, Prime Minister Alexis Tsipras signaled that he may accept bailout terms outlined by the country’s creditors. It’s not the first time that Greece has defaulted on its sovereign debts: In 2012, it did so twice. This time, the repercussions could be much worse as international creditors are unlikely to save the country from being forced to leave the euro zone and return to the Greek drachma.Nobody really knows the consequences of a “Grexit,” but since 1998, at least 16 sovereign bond issuers have defaulted, according to ratings agency Moody’s. Apart from Greece, there are four other countries that have defaulted twice in the last 17 years: Ecuador, Jamaica, Belize and Argentina.The Moody’s list only takes into account recently defaulted sovereign bond issuers. Sudan, Somalia and Zimbabwe have been in default to the IMF for several years or decades, as well, and continue to do so. Sudan started defaulting to the IMF in 1984, according to an extensive database collected by the Bank of Canada, which is why it is not included on the map above that focuses on defaults that started after 1998.Can Greece learn from previous defaults?A closer look at recent and more historical incidents of states being unable to fulfill their financial obligations reveals that the Greek case is indeed unique.Argentina is most frequently brought up in discussions on the potential effects of a Greek default. Asked about the lessons for Greece, Domingo Cavallo, who was Argentina’s economics minister when that nation defaulted in 2001, told the BBC: “Defaulting not only on the foreign debts but also on the domestic debts and all foreign contracts at the beginning of 2002 was really a tragedy for Argentina.”In 2014, Argentina became a defaulted sovereign bond issuer for the second time in only 15 years. (Reuters)The default’s repercussions were devastating: More than half of all Argentines lived in poverty in 2003. Inflation and unemployment rose sharply. Despite the dramatic consequences for Argentines, the default appears to have had a limited impact on other economies. “Argentina’s sovereign default in 2001 was then the largest ever, and yet even it did not provoke contagion in global markets,” the Financial Times concluded last year when Argentina faced yet another default.But Argentina was not part of a currency union such as the euro zone. Furthermore, Greece is geopolitically significant, given its NATO membership and its proximity to the Middle East.Somewhat less momentous was Russia’s experience in the late 1990s. When oil prices dropped in 1997, Russian exports plummeted and caused a budgetary crisis. Despite an IMF loan, Russia later defaulted on its domestic as well as foreign obligations. It took until 2000 to restructure the Russian debts.The situation became so dire that Russia had to demand humanitarian aid. Rising oil prices helped the country overcome its crisis soon afterward. Greece, however, only has limited access to valuable natural resources, and its manufacturing sector is weak. Tourism, one of the country’s few reliable revenue streams, would likely suffer from a euro zone exit.Other countries that have recently defaulted on sovereign debt include Pakistan, Ukraine, Ivory Coast, Moldova, Uruguay, Nicaragua, Grenada, the Dominican Republic, the Seychelles and Cyprus.That sounds like a lot of defaults, but according to research by the Bank of Canada, the share of total sovereign debt in default out of world public debt or world GDP has sunk since reaching a peak in the 1980s.Since 1800, Germany has defaulted four timesWhat appears striking is that some of the countries that have been particularly tough on Greek debts have faced the same fate over the last two centuries. Spain, for instance, has defaulted six times.And Germany — Europe’s leading economy, which has been especially been keen on enforcing austerity in countries such as Greece, Spain and Portugal — has defaulted four times over the last two centuries. Perhaps their experience proves countries can come back from a default, given time.By Richard Lough and Nicolás MisculinJuly 1, 2015(Reuters) – For shell-shocked Greeks struggling with temporarily shuttered banks, long lines at ATMs and limits on withdrawals, Argentines who survived similar financial chaos more than a decade ago have some guidance.“The advice I would give is to go get your money out of the bank,” said Leo Suckewer, a Buenos Aires restaurant operator, recalling Argentina’s “corralito”, or freeze, on bank accounts in late 2001, aimed at halting a run on banks.That move preceded the decision to abandon pegging the peso to the dollar as well as convert savers’ dollar holdings into local currency. The radical policies plunged millions of Argentines into poverty as the economy contracted violently after three years of steady decline and triggered deadly rioting, the fall of the government and Argentina’s record default on $100 billion of sovereign debt.But within a year from a sharp devaluation in early 2002 the country returned to economic growth – something that Greece must now crave, with its economy shrinking by more than 25 percent since 2009.There are striking similarities between the Argentine economic crisis of 2001-2002 and the turmoil in Greece: rigid monetary regimes, creditors battling against domestic politics to fix the problem and banking systems at breaking point.On Tuesday, German Chancellor Angela Merkel ruled out new negotiations with Greece until after it votes on a bailout proposal by creditors. That left Athens virtually no hope to avert a midnight default, and could set Greece on a path out of the euro.Some economists argue that Greeks might be better off going back to its old drachma currency as it would allow Athens to spend more freely and point to Argentina’s rapid recovery from the brink of collapse.Riding an export boom for commodities such as soybeans and spending heavily to fuel consumer demand, Argentina became one of the fastest growing economies in the Americas with growth averaging above 8.5 percent annually between 2003 and 2007.NO RUSH TO “GREXIT”Yet Roberto Lavagna, Argentina’s economy minister in 2002-2005 and architect of its recovery, said it was too early for Greece to consider ditching the single currency.“Devaluation is not the central issue today, because it means leaving the euro. I don’t think that is necessary.”He said, however, that creditors had to accept that Greek debt “had reached a point where it has to be restructured” and that further belt-tightening made no sense.“Greece cannot afford to be sucked into austerity reforms,” Lavagna told Reuters. “On the contrary, it needs to boost productivity which is what we did back then.”One thing that Greece does not have is an export cash cow that helped Argentina ride out of its slump.Domingo Cavallo the former economy minister who imposed Argentina’s “corralito” but lost his job before the peso devaluation a month later, warned Greece against leaving the single currency.“The exit of Greece from the euro zone … would produce a sharp devaluation of the drachma,” Cavallo wrote in a blog this week. “Inflation would follow and it would generate a sharp reduction of real wages and pensions.”Cavallo said such a drop would be worse than declines resulting from a negotiated bailout package.FINANCIAL SYSTEM COLLAPSEIn any case, Greeks may need to brace for more pain.Argentina spiraled deeper into economic, political and social chaos after its “corralito” was imposed. It was a period that saw five presidents in two weeks. Crowds of young, educated Argentines emigrated to their grandparents’ ancestral homes in Europe.In 2002, the economy shrank 11 percent.“The collapse in the financial system was in part a result of the default but also to a large extent because the government was forced to turn dollar deposits into pesos. Many of the banks had negative capital,” said Alejo Costa at investment bank Puente in Buenos Aires.“And the financial system collapse led to a collapse in production. That will be the biggest concern to Greece.”To avoid its own banking collapse, Athens needed to persuade creditors to restructure its debt and lower the purchasing power of Greeks by cutting salaries.“Then you will have deflation and you will regain competitiveness without leaving the euro, without an exchange rate devaluation,” Costa said. “But that is extremely difficult to sell to the public.”Greek Prime Minister Alexis Tsipras blames German-driven austerity for his country’s economic crisis and has steadfastly refused to meet creditors’ demands for further belt tightening, in particular on pensions, in return for a bailout.The “corralito” and subsequent devaluation still haunt Argentines, who more than a decade on hold scant faith in the peso. Many express sympathy for the Greeks.“We were saved by soy,” said Walter Lorenzo, a 57-year-old television studio technician. “What’s going to save them? Fishing?”By Dimitra DeFotisJuly 1, 2015With successful international bonds issued by the city and province of Buenos Aires as examples, Fitch Ratings thinks local Argentine governments can refinance and issue more debt in the near term.The Province of Buenos Aires recently issued a $500 million note denominated in dollars due in 2021 that accrues a fixed 9.95% rate, allowing the province to exchange $375.4 million in debt maturing in October. The use: infrastructure projects. And in February, Buenos Aires also issued a $500 million bond under a $2.3 billion medium-term note program, allowing the city to roll over debt that would have matured this year.Fitch writes that several other provinces are exploring international debt issuance to refinance with longer maturities, while raising funds for infrastructure. But, Fitch adds, many of these issuances are exposed to foreign currency — especially dollars. The caveat, writes Fitch’s Humberto Panti Garza:“According to the Fiscal Responsibility Law, any debt should be authorized by the sovereign. This may affect the process, due to authorization delays or if the amounts requested are not authorized. Except for San Luis, La Pampa and the CBA, all other state and local governments have adhered to this law. Despite international investor interest, the process could be complex and time consuming, as it requires political negotiations with the sovereign.”Argentina defaulted on its debt in 2001, leading to a doubling of unemployment, a spike in inflation, and a weak economy that resulted in half of Argentines living in poverty. It restructured most of its debt, but some holdouts didn’t agree to the terms. With a presidential election this fall, however, the issue of “vulture” funds wanting to be made whole following the default and subsequent agreements is on the back burner. For background on Argentina’s debt restructuring, see our free post, “Argentina Bonds: A Bargain In Disguise?” Also see the BBC story, “What Can Greece Learn From Argentina’s Default?” and our free post, “Argentina’s Take On U.S. “Vulture” Bond Investors.”As for Argentine equities, Petrobras Argentina (PZE) has been the year’s big winner, up nearly 29% in dollar terms, while bank and insurance holding company Grupo Financiero Galicia (GGAL) is up nearly 16%. The Global X MSCI Argentina ETF (ARGT) is up nearly 6% this year.