epa Opinion A tango lesson for Greece The Greek debt load isn’t sustainable. Take it from an Argentine.

The threat of a Greek default and exit from the eurozone constantly invites comparisons with Argentina’s record default in 2002, which followed the end of the peso’s peg to the U.S. dollar.

There are many parallels and just as many differences. However, there is one point that I believe is most relevant for the negotiations between Athens and its creditors in Europe and the International Monetary Fund: debt sustainability.

In my experience as chief negotiator for two agreements with the IMF and Argentina’s debt restructuring of 2005, it is critical that the resulting level of debt is sustainable from day one, not two or three years down the road — let alone by 2020.

This was not the case of Greece. In the initial restructuring in 2012, European leaders gave a “haircut” to Greece’s debt that bore no relationship to what the country could afford to repay.

Instead, EU political leaders opted for a debt reduction that would be acceptable for private investors, but left the Greek people and political system with the burden of adjustment.

Part of the problem was that the European institutions were not ready to handle a financial crisis of such magnitude, and rightly used the past couple of years to adapt and prepare.

When we hammered out Argentina’s debt restructuring, we knew the write-off in our calculations would exceed previous restructurings, including the 42 percent for Russian bonds and the 27 percent for Ecuadorian debt.

Unfortunately, these were not useful comparisons. The Russian default centered on domestic-law debt held by a few international hedge funds and by Russians banks. However, authorities took advantage of the more limited scope of the domestic debt problem and avoided defaulting on its global bonds.

In terms of size as well as macroeconomic efforts, Argentina’s case more closely resembled post-war Germany. It took until the London Conference of 1952 to advance Germany’s debt restructuring, with a write-off of more than 77 percent and a flexible repayment schedule.

At the time, Argentina had one of the highest ratios of debt from multilateral creditors to total debt. But instead of pursuing the necessary fiscal corrections and facing up to the restructuring reality, Argentina opted for a bailout from the IMF in 2001. In doing so, the country missed the chance to sort out its finances with a larger write-off.

Debt becomes too rigid

A similar mistake has been committed in the case of Greece, which has signed two bailouts with its European partners and the IMF.

By not restructuring economies in crisis early on, multilateral lenders have allowed two negative effects to take hold:

Official credit facilitates “capital flight.” Bondholders with better information get out early, leaving the burden of the increased official debt to the treasury of the country receiving aid, which leads to higher taxes. Reducing the level of private debt and increasing official multilateral creditor debt means the “rigidity” of the debt also increases.

In the second stage, government officials and international financial institutions start to worry because, at the end of the day, government loans are part of the budgetary process of the lender countries and elected officials must consider their own citizens.

They get cold feet, as is happening with Greece now, especially in the case of Germany.

In theory, such official loans have “preferred creditor status,” meaning they are repaid first.

Is that really possible, considering Greece’s debt structure today?

In practice, preferred creditor status can only be respected if the increase in indebtedness assures the debt can be ultimately be repaid.

But the Greek experience shows sustainability has not been considered.

It’s obvious key policymakers have made no accurate projection for Greece’s performance, yet we are supposed to believe that things will work out almost 10 years from now, when we don’t even know where we are going to be next year.

I am afraid that in the current circumstances, we have to look for creative solutions which may involve even more government money.

This could well mean that a great deal of the official debt with European institutions has to be transformed into a sort of “perpetual bond” with an extremely low interest rate.

As in Argentina in 2005, Greece and European institutions have a tremendous responsibility for shaping future debt restructuring. All market participants, particularly official institutions, should support Greece and help advance the regulatory framework that is essential in times of crisis.

This would help the wider international community create a more predictable economic environment.

Guillermo Nielsen was Argentina’s secretary of finance and chief debt negotiator from 2002-2005, during two stand-by agreements with the IMF and the private debt restructuring of 2005. He was later the Argentinian ambassador to Germany.