Last minute talks between Argentina and predatory US hedge funds failed to reach agreement on July 29, effectively pushing the country into default.
Argentinian economy minister Axel Kicillof confirmed that no deal had been reached. This made it inevitable that the country would be unable to meet its repayment obligations by midnight, placing the country in default for the second time in 13 years.
Kicillof said that two hedge funds that bought Argentine bonds at knockdown rates from the previous default and then demanded full payment, had refused to compromise.
But he insisted that Argentina could not be regarded as being in default since the money for the repayment was in a US bank account ready to be paid. The account, however, was frozen by a US court decision.
鈥淭hat money is there,鈥 Kicillor stressed, blaming a ruling by US District Judge Thomas Griesa for preventing its transfer.
鈥淎rgentina paid. It is going to continue to pay. The one who is responsible for this situation is Judge Griesa.鈥
He added: 鈥淲e are going to pay those who hold bonds that have been defaulted on, but on reasonable terms, not on terms that amount to extortion.鈥
Argentina had deposited the sum due for payment to those bond holders who had accepted a write-down in their value in deals reached in 2005 and 2010.
But Griesa, whose decisions have invariably favoured the vulture funds, stopped the bank forwarding payment to the restructured creditors unless it also paid NML Capital and Aurelius Capital Management US$1.3 billion at the same time.
Kiciloff said: 鈥淲hat we offered them in terms of profit was 300%. It was not accepted, because they want more and they want it now.鈥
Jubilee Debt Campaign director Sarah-Jayne Clifton said: 鈥淭his situation has been forced upon Argentina by predatory vulture fund speculators and the bizarre rulings of a US judge.
鈥淧aying the vulture funds 鈥 would be genuinely disastrous, leading to billions of dollars in counter-claims from other holders of the debt.
鈥淭his case will have a deeply troubling global impact, making it harder for countries across the world to resolve future debt crises.鈥
[Reprinted from .]
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