Argentina digging in for lengthy debt dispute
Argentina鈥檚 request for the International Court of Justice to intervene in its debt battle underscores the nation鈥檚 doggedness in fighting a group of hedge funds a week after the conflict led to a default. Given that the standoff has dragged on for the past 13 years, our correspondent expects the conflict to remain unresolved for a while longer.
鈥淚 don鈥檛 see a solution in the time period of a month,鈥� says our correspondent in Buenos Aires. 鈥淎rgentina is too belligerent in its attitude.鈥�
A month ago the default seemed unlikely to many analysts and observers,聽, as the government had recently shown a strong push to regain access to global credit markets and it behooved the nation to avoid the default鈥檚 negative impacts to markets, inflation, and the local currency. That was a welcome expectation to investors such as Citigroup, which has since said that it could lose as much as $80 million due to regulators鈥� response to the default.
鈥淭he general consensus was that Argentina is not stupid, they鈥檇 shown increasing practicality,鈥� says our reporter. 鈥淚 think we underestimated Argentina鈥檚 pride in its position, its ability to stick to its guns and not be scared of what a default could do.鈥�
The default will undoubtedly add an 鈥渦nwanted headwind to a beleaguered economy,鈥� adds our reporter, though in the short-term there have been few negative effects from the nation failing to pay interest on its restructured debt July 30. Argentina had deposited the $539 million payment with bond trustee Bank of New York Mellon, but US District Judge Thomas Griesa blocked its distribution because the government ignored his ruling to also pay the hedge funds.
Argentina argues that the US court is violating its national sovereignty. But before the International Court of Justice can step in, the US State Department must first accept the UN tribunal鈥檚 jurisdiction (the US withdrew from the ICJ in 1986 after the court ruled it owed Nicaragua war reparations).
While the Obama administration has shown support for Argentina鈥檚 position 鈥撀爄ssuing a brief saying that it "would be gravely concerned" about a similar action by a foreign court 鈥撀爐here appears to be little chance of the US accepting The Hague as mediator....聽For the rest of the story, continue reading at our new business publication聽
