Argentina’s reaction to Thomas Griesa’s New York court ruling was probably enough to make the octogenarian judge choke on his Thanksgiving turkey.
It was expected that Argentina would promise to fight – but what is surely guaranteed to make the judge’s blood boil was the offended tone Argentina struck.
Argentina says it will fight his ruling – in the Second Circuit appeals court to which the judge’s ruling is automatically sent; in the US Supreme Court; and in “any international instance that is necessary and available”. That was not a surprise.
Ditto its argument that his ruling tramples on the rights of the holders of 93 per cent of the defaulted debt who accepted a brutal haircut in the 2005 and 2010 restructurings and accepted rescheduled repayment over 30 years.
But while Hernán Lorenzino, the economy minister, did not expressly say Argentina would not pay, he took exception to the judge’s attitude in his ruling.
Judge Griesa had cast doubt – fuelled by comments from Buenos Aires in recent days that the government won’t pay a cent to “vultures” – on Argentina’s willingness to comply with his rulings. To quote him:
For the past ten years Argentina has repeatedly submitted matters to the District Court and the Court of Appeals, and received what was undoubtedly fair treatment, since Argentina prevailed in most matters. The court went on to urge that the Argentine government should back away from these ill-advised threats to defy the current court rulings, and that any defiance of the rulings of the courts would not only be illegal but would represent the worst kind of irresponsibility in dealing with the judiciary. This did not stop the highest Argentine officials who have continued to the present time their inflammatory declarations that the court rulings will not be obeyed.
Argentina says the ruling is illegal under its law (its so-called “padlock law” prevents it from negotiating with holdouts) and is a kind of “colonialism” that puts future sovereign restructurings at risk. The New York judge, it says, is trying to impose his rulings on important financial institutions across Europe, such as Euroclear.
The whole thing highlights something that is becoming increasingly evident. We’ve said it before on beyondbrics and we’ll no doubt say it again: there’s a growing gap between how Argentina sees itself and the world, and how the world sees it.
Argentina can continue to see itself as a plucky country daring to question the way the world has been run (to suit rich countries, big financial institutions and their lackeys, it frequently argues). But the prospect of yet more litigation from a country regarded by some as a scofflaw; unfit to belong to the G20 club; in default, still, with western creditors in the Paris Club; and facing the prospect of sanctions by the IMF over faulty inflation data will do nothing to enhance its battered reputation.
Argentina sees Kansas-born Judge Griesa as a kind of Wicked Witch of the East (Coast) and would like nothing more than for him, like Dorothy, to go home, taking his rulings with him.
But that’s not going to happen. Instead, there’s a very real prospect of it being another December, another default. Argentina’s 2001 default happened on December 23. Its anniversary is just one month away.