IT’S ALL ABOUT THE MONEY. The Argentine Government, the debt and the “vulture funds”
- Romina Mazzaferri
- 1 dic 2012
- 2 Min. de lectura
(As a freelancer)
“Default” is a often-heard word in Argentina. One of the most terrible examples had happened on December 2001. After the worst economical and political crisis, with riots in the main cities and with the devaluation of the National currency (the Argentine peso), there was, as consequence, inflation. The Government of that time met severe challenges trying to refinance its debt. And one of the Presidents announced that the country will not be able to afford the debt.
By the way, “one of the Presidents” refers to that special time with a kind of parade of presidents within two weeks. Even Hollywood made jokes about that. In an interview to Arnold Schwartzenegger, two years before being elected as Governor of California, he said to an Argentine reporter: “You are from Argentina, the country that had ten presidents within a week!” Besides the miscalculation with the numbers, the idea of the republican actor s was right: there were five presidents within two weeks. And one of them, Adolfo Rodríguez Saá -who was in the Presidency for only a week after Fernando De la Rúa quit- announced the debt default: Argentina refused to pay to the creditors.
Most of these creditors were private European and Asian citizens who had invested their savings and retire pensions in bonds. During these critical moments, the “vulture funds” had acquired bonds at very low prices and then began to ask for repaying immediately.
Ten years went by.
During them, Argentina offered two debt-restructuring which were accepted for almost all the bondholders. But there was a small minority who rejected the agreement and requested the full repayment. This is the case of NML Capital, a subsidiary of US Elliot Management Corporation, one of the called “vulture funds”. NML is litigating for full repayment in the court of the New York judge Thomas Griesa.
Actually, one of the Argentine National Navy school ship is seized in the Ghanaian Tema Harbour, in Africa. But what does this event has to do with the Argentine debt? While the school ship ARA Frigate Libertad (ironically Freedom in English) was in the middle of an instruction trip across three continents, once it arrived to Ghana, it was detained by order of the Accra High Court because Argentina refused to pay to NML Capital Ltd the debt of more than $300 million in bonds. The ARA Libertad is seized in Ghana since October. The International Tribunal of the Law of the Sea (ITLOS) has now the case between Argentina and Ghana and will give its verdict about the vessel on December 15th.
Meanwhile, in the United States…
On November judge Griesa has ordered to Argentina to pay $ 1.33 billions to the “holdouts”. Argentina appealed the order. Then, NML and another holdout –Aurelius- requested that Argentina should have to post a security deposit about $ 250 millions by this month as a guarantee of good faith to pay.
Finally, the US Court has refused to order to Argentina to pay that security deposit. By now.
The default ghost is again in Argentina. The vulture funds are willing to be paid and Argentina economy has another priorities. It could be a matter of good and bad faith. But it is, as almost always, all about the money.
