This is how things stand: Argentina is on the verge of losing its decade-long court battle against the holdout creditors, which the Casa Rosada calls “vulture funds.” These investors bought the country’s sovereign debt at absurdly low prices when the nation was drowning in the 2001 economic crisis. While 92.4 percent of Argentina’s creditors accepted a discount on payments in 2005 and 2010, the holdouts refused. They sought full disbursement through lawsuits on American soil, where the courts had settled conditions for payment to many investors. Then, they took to the sea and embargoed Argentina's flagship navy vessel, Libertad, for 77 days in Ghana. And then, they targeted the presidential airplane. President Cristina Fernández de Kirchner has to rent private aircraft for her international trips to keep suing bondholders from seizing her official plane as collateral. Now, an 84-year-old district court judge for the Southern District of New York, Thomas Griesa, is forcing Argentina to yield to its creditors.
In November 2012, Griesa ordered Argentina to pay $1.33 billion to three holdout investors. The Argentinean government appealed the ruling before the US Supreme Court. The court upheld Griesa’s sentence on June 16, 2014, leaving Argentina to face the judge and the “vultures” on its own.
The administration politicized the court battle and thus earned more allies than it ever had before. United States President Barack Obama backed Argentina in its appeal to the Supreme Court. The government also received an explicit vote of support from France. The Group of 77 and China, influential columnists at the Financial Times, the International Monetary Fund, most opposition leaders, and almost all members of the Organization of American States (OAS) support Argentina. Still, none of that has helped in Griesa’s courtroom.
The judge has ordered Argentina to negotiate with its holdout creditors before the end of its grace period on July 30
On Thursday, Argentina’s Economy Minister Axel Kicillof said: “We ask the international community to take action and to do it soon, before the precipice Judge Griesa has put ahead of us gets closer.” Kicillof was addressing OAS members in Washington, D.C. where he received an enthusiastic show of support, though the United States and Canada abstained. Roberta Jacobson, the American representative at the OAS, said she could not interfere in the judicial process because it is “an independent branch” of government. And therein lies the key factor in this case: Griesa looks like a totally independent branch, free from any kind of pressure, whether it be political or economic or from the media.
The judge has ordered Argentina to negotiate with its holdout creditors before the end of its grace period on July 30. The South American nation must pay $539 million by that date to various “good” investors who accepted the discounts. Griesa, however, is prohibiting Argentina from paying its debts to the “good” bondholders before it pays the $1.5 billion ($1.33 billion plus interest) to the “vultures.” The Argentinean government refuses to comply, saying that if it pays the $1.5 billion, other “vultures” will claim $15 billion more.
On Monday, several Argentinean officials will meet with a court-appointed mediator in New York. If Argentina does not reach an agreement with the “vultures,” it will automatically default on its loans on July 30 and cause a situation that no one wants to see.
Judge Griesa was born in Kansas and graduated from Harvard University. President Richard Nixon appointed him to the district court in 1972. The Argentinean government has been attacking him for almost 10 years. Griesa, however, neither answers to nor appears in the press. Judging by his behavior over the years, these attacks do not seem to make an impression on him.
Griesa is free from any kind of pressure, whether it be political or economic or from the media
His hands did not shake when he ruled against the almighty truck drivers’ union in a corruption scandal, or when he struck down the Federal Bureau of Investigation in a 1970s case against the Trotskyist Socialist Workers Party. He did not shake as he ruled against creditors and in favor of Argentina after the 2001 crisis. In June, he pronounced a ruling against the American tobacco industry and in favor of the City of New York.
In 2010, then Argentinean Economy Minister and now Vice President Amado Boudou (who is currently facing corruption charges) called the judge a “serial embargoer.” But former Economy Minister Roberto Lavagna told Radio Continental that “to call Judge Griesa a serial embargoer you’d have to not know anything about his record, which shows him to be extremely serious, extremely responsible and he has always been extremely understanding with Argentina. There is a famous session – it must have been in 2003 or 2004 – where he publicly told off, chastised, the creditors and their attorneys for their behavior. But the truth is that his criteria have changed in the last few years as he watched the comings and goings and certain technical errors on Argentina’s part.”
On June 16, the day the US Supreme Court struck down Argentina’s appeal, President Fernández gave a speech in which she attacked Griesa. She said that to comply with the ruling would mean extortion. The next day, the judge told the government’s counsel, as noted in court transcripts, that: “I have to say that the speech of the president was unfortunate in this respect. I'm not attempting to criticize political speeches, and that is not my job. But it was more than a political speech. It made a very strong commitment to pay the exchanges. As for the people who are to be paid under the equal treatment, it refers to them or their situation as extortion. That really does not give me confidence in a good faith commitment to pay all the obligations of the Republic.”
Griesa did not talk about the personal attacks against him. The language of Kirchneristas and antikirchneristas seems to be beyond his universe. His expressed objective is to uphold the law or its interpretation. And there he is – immune to all criticism and pressure.
Translation: Dyane Jean François