In a hearing yesterday morning in Manhattan, Federal Judge Thomas Griesa refused Argentina’s request to reinstate a stay on his earlier ruling mandating that the Fernandez de Kirchner government must pay $1.6 billion dollars to the vulture funds that speculated on the nation’s defaulted debt.
Attacking the Argentina government for its “incendiary rhetoric,” Griesa claimed that a stay is “unnecessary,” and ordered both sides to negotiate “promptly and continuously” with Special Master Daniel Pollack until a “settlement is reached.” According to The Wall Street Journal, Griesa said that Argentina should negotiate for “more time” during those meetings, the first of which is scheduled for July 23 at 10:00 am.
The deadline by which Argentina must pay is July 30, the end of the thirty-day grace period that began on June 30, the original date on which the Fernandez de Kirchner government had been ordered to pay the vultures. Argentina’s lawyer, Jonathan Blackman, told Griesa today that reaching an agreement by July 30, without a stay in place, “simply cannot be done.”
Speculation is rampant as to what Argentina might do next—but the issue here is a political, not a technical one. The government continues to maintain that paying the vultures is not an option, as this would trigger the RUFO (Rights Upon Future Offers) clause, which states that Argentina may not make a better offer to holdouts (as the vultures call themselves) than what was offered to the restructured bondholders.
The vultures are meanwhile salivating over what they can extract from Argentina. Bloodthirsty plaintiff Elliott Management, owned by multimillionaire Paul Singer, went to court in San Francisco last week, to demand the embargo of U.S.-based funds belonging to the state oil firm YPF and its U.S. partner, Chevron Corp., as payment for its claim. The two companies are partners in the development of Argentina’s giant Vaca Muerta shale oil and gas reserve.
As cabinet Chief of Staff Jorge Capitanich pointed out in his July 21 press conference, these reports very clearly demonstrate the vultures’ “voraciousnes in appropriating real assets.” He added that were the RUFO clause to be activated, this would cause Argentina’s debt to balloon by $120 to $500 billion, and inflict enormous institutional harm on the country, as the President and her cabinet could become the subjects of criminal and civil suits for hundreds of millions of dollars.