New York judge's ruling sparks nationalist surge in Argentina

Stakes are high for Argentina's President Kirchner in a legal tug-of-war over full repayment of bonds from the country's 2002 default. Kirchner says her country is the victim of 'judicial colonialism.'

By Emily Schmall,?Contributor / December 10, 2012

The stakes couldn?t be higher for Argentine President Cristina Fern?ndez de Kirchner as a legal tug-of-war with a $20 billion US hedge fund plays out in a New York case that has sent nationalist sentiment soaring in Argentina and raised concerns about the impact on future efforts to help debt-ridden countries recover.

Skip to next paragraph

' + google_ads[0].line2 + '
' + google_ads[0].line3 + '

'; } else if (google_ads.length > 1) { ad_unit += ''; } } document.getElementById("ad_unit").innerHTML += ad_unit; google_adnum += google_ads.length; return; } var google_adnum = 0; google_ad_client = "pub-6743622525202572"; google_ad_output = 'js'; google_max_num_ads = '1'; google_feedback = "on"; google_ad_type = "text"; google_adtest = "on"; google_image_size = '230x105'; google_skip = '0'; // -->

Subscribe Today to the Monitor

Click Here for your FREE 30 DAYS of
The Christian Science Monitor
Weekly Digital Edition

NML Capital, part of American billionaire Paul Singer?s Elliott Management, is among a handful of creditors demanding full repayment of bonds that Argentina defaulted on in 2002, rather than the partial repayment to which most creditors agreed.?They were buoyed by the Nov. 21 ruling of United States District Judge Thomas Griesa, who, arguing that Argentina must treat all its creditors equally, said the Southern Cone country must pay $1.33 billion to NML ? as well as satisfy the demands of other creditors ? by Dec. 15, or potentially face a second, ?technical? default.?

A US court of appeals, however, issued a stay on Griesa?s order, sending it back to let the court figure out the mechanics by which it would force Argentina, a sovereign nation, to submit to local courts.

Legal experts are watching the NML case closely because of implications they say it could have elsewhere in a scantly regulated area of international finance. President Kirchner, whose?approval ratings arein a slump as the commodities-heavy economy slows, has seized the moment to shore up national sentiment among a population that remains wary of foreign creditors after Argentina?s $100-billion sovereign debt crash, the largest in history.?Kirchner has used the conflict to cast Argentina as the victim of predatory ?vulture funds? seeking to impose ?judicial colonialism.?

?One judge wants to frustrate Argentina?s greatest achievement,? Kirchner told crowds in Buenos Aires?s Plaza de Mayo Sunday, during an event to commemorate Argentina?s return to democracy in 1983. The crowd responded with hisses and boos.

In recent months, the government?s inability to settle with a handful of holdouts led by NML has resulted in one of its Navy tall ships being impounded in Ghana and an expensive court case in New York.

Young Argentines who grew up in the shadow of former President Carlos Menem?s free-trade indebtedness in the 1990s argue that refusal to pay is a way to avenge previous wrongs ? and perhaps even make a statement to the world that Argentina is skeptical of globally managed economic action.***

?They had opportunities, but they are not interested in our national project to pay off the debt. They?ll make more money if we fail,? says Maximiliano Oliva, a taxidriver and psychology student from provincial Quilmes.

American entities are concerned as well. If Griesa?s ruling is upheld, it could throw a wrench into global bond markets, the New York Federal Reserve said earlier this month. For example, Greece reached a restructuring agreement with private bondholders last February to accept a 74-percent "haircut" ? in other words, only getting 26 percent of their money back. But, some ask, if the Griesa ruling holds, who?s to say once-cooperative bondholders won?t raise their own suit, citing this ruling as precedent for why they deserve more?

University of Texas bankruptcy expert Jay Westbrook says the case?s major tension? and why it could easily wind up before the US Supreme Court ? is that the sovereign-bond market is not equipped to handle this dispute. The introduction of collective-action clauses, which force bondholders to accept the terms of a majority-supported deal, were not introduced until the mid-2000s, long after Argentina and other countries had inked sovereign-debt contracts with investors like NML.

Source: http://rss.csmonitor.com/~r/feeds/csm/~3/5i9IVl5qA-E/New-York-judge-s-ruling-sparks-nationalist-surge-in-Argentina

tim lincecum hologram pulitzer prize winners nfl 2012 schedule gmail down ryan oneal file taxes online