Argentina’s president said Monday that she will not comply with U.S. court rulings ordering her country to pay back over $1 billion in debt.
President Cristina Fernandez, in a nationally broadcast television address, said she was willing to negotiate with the country’s creditors but that the nation was not able to comply with standing court orders to pay back the debt in full.
"It's our obligation to take responsibility for paying our creditors, but not to become the victims of extortion by speculators," Fernandez is quoted as saying by Fox News. "What I cannot do as president is submit the country to such extortion.”
The address came after two decisions by the U.S. Supreme Court that dealt severe legal blows to Argentina’s attempt to avoid paying the money.
In the first case, the high court refused to hear Argentina’s appeal of a lower court’s ruling that Argentina remained liable for the debts and that the companies holding the debts were justified in rejecting the country’s offers to restructure the payments.
The justices also ruled, in a 7-to-1 decision, that those creditors had the right to seek Argentina’s assets that may be hidden around the world. Justice Ruth Bader Ginsburg dissented from that opinion.
“By what authorization does a court in the United States become a ‘clearinghouse for information’ about any and all property held by Argentina abroad?” she wrote, according to the Washington Post.
Justice Sonia Sotomayor recused herself from both cases, presumably because she once sat on the U.S. Court of Appeals for the 2nd Circuit in New York — the court from which both cases arise.
The rulings from the nation’s highest court are seen as a victory for NML Capital, a subsidiary of Elliot Management Corp. The company is a hedge fund representing corporate investors. USA Today reports NML is owed $1.5 billion by Argentina and has twice rejected offers from the country to pay back the debt at a rate of 25 cents on the dollar. Fernandez has denounced the company as a “vulture fund.”
The money was originally loaned to Argentina in 2001 to help the country rebound from a severe economic crisis.
Richard Samp, a lawyer for the Washington Legal Foundation, an organization that lobbies on behalf of NML Capital, said the court’s decisions mean Argentina is going to have to come up with ways to pay back the money or risk having its assets seized.
“This is the end of the line for Argentina in the judicial appeal process. It has nowhere else to turn,” he said.
But Steve Hanke, an economics professor at Johns Hopkins University, said Argentina may still be able to turn to the negotiating table.
“One option is to simply say that they aren’t going to honor them, that they have no intention of paying,” Hanke said. “But the highest probability is some kind of negotiation.”