Thursday, November 29, 2012

Argentina Granted Breathing Space in Debt Default Crisis

Argentina has been saved from a “technical default” after a U.S. appeals court indefinitely suspended a federal judge's ruling on paying holdout creditors in the latest installment in the country’s ongoing debt saga.

The previous ruling had given Argentina a December 15th deadline to pay $1.3 billion to creditors who had refused to swap their debts for new government bonds, which Argentina has paid reliably since 2005. The ruling would have stopped Argentina’s payments to other bondholders, sparking a new fiscal crisis.

The holdout creditors represent a small minority of bondholders after 93% of creditors accepted debt swaps in 2005 and 2010, which restructured the $100 billion of debt on which Argentina defaulted in 2001 when in the midst of an economic collapse.

Argentine president, Cristina Fernandez Kirchner, has declared the country will continue to meet its agreed to financial obligations in the meantime and has defended her hardline stance against the holdouts. “We constitute the counter model of a world where the financial capital has become king and master and wants to punish us,” she said.

Since the original ruling, Argentina has threatened to annul 59 bilateral investment treaties signed by the country, which have the World Bank’s International Center Settlement of Investment Disputes as the arbitral tribunal for disputes between the State and multinationals.

Comparing Argentina to debt-ridden Greece in a Guardian opinion column, Cambridge economics professor Ha-Joon Chang argues that the case, which pits the interests of a small number of investors against the welfare of a country, demonstrates the need for countries to be able to declare themselves bankrupt in the manner of a business.

In the Financial Times though, Jude Webber details Argentina’s long and turbulent debt history, arguing “Argentina has struggled to manage its money throughout its two centuries as an independent nation.”

Despite the ruling, on Tuesday Fitch Ratings slashed Argentina’s sovereign credit rating five steps to CC from B on “increased probability” of a default.

The appeals court has set a February 27th deadline for oral arguments in the case.

News Briefs
  • Venezuelan judge Judge Maria Lourdes Afiuni is being tried in absentia after refusing to enter the courtroom, alleging violations of her rights, the AP reports. Afiuni was charged with corruption after she angered President Hugo Chavez when she she granted bail to Eligio Cedeño, a businessman and banker with ties to the Venezuelan opposition. Cedeño had been jailed on charges that he had evaded currency controls and, on release, fled to the United States. Her cause has gained international attention, even from prominent leftists usually more supportive of Chavez. Her trial began amid a scandal generated by her revelation in a new book that she was raped while imprisoned in 2009 - a claim that has been disputed by the authorities.
  • Honduras Culture and Politics reports on the ruling by the Constitutional Branch of the Honduran Supreme Court declaring a law for cleaning up corruption in the police is unconstitutional. The law calls for an examination of every police officer, requiring them to pass a confidence check that involves a psychological exam, a lie detector test, an examination of their finances, and a drug test.Those that fail face immediate dismissal, although of the 233 officers that have failed the tests, so far, only 33 have been dismissed. The decision, which came on the same day that  Lobo Sosa government sought to extend the bill for another six months, was ruled unconstitutional because it removed the police officers' right to due process and their presumption of innocence.
  • Colombia has withdrawn from a treaty that binds it to the UN International Court of Justice in protest over last week’s ruling that handed control of some of its resource-rich waters to Nicaragua, the Miami Herald reports. President Juan Manuel Santos said the Hague-based court had used “undefined” and subjective criteria and its ruling was full of “mistakes” and “omissions.”
  • The Costa Rican Supreme Court has temporarily suspended parts of a recently enacted cybercrime law, which provide for prison sentences of between four and eight years for anyone publishing “secret political information,” Reporters Without Borders reports. The law is not confined to national security but could also be applied to information “from national police bodies or security concerning defense matters or foreign relations” or which affects “the fight against drug trafficking or organized crime “.
  • Indigenous Ecuadorians protested against the auction of exploration rights for 13 oil blocks covering nearly eight million acres of rainforest in the Amazonian region, Upside Down World reports. The story follows news that the Ecuadorian government’s much praised initiative to get the world to pay it to not exploit oil in the Yasuni national park has so far raised $300 million.
  • The New York Times has more on the plight of Alan Gross, the American contractor imprisoned in Cuba for illegally supplying internet connections. Gross’ lawyers claim he should be considered for early release as he has cancer, a claim denied by Cuban doctors and a prominent New York rabbi and physician, who recently visited Gross and concluded  the 1 1/2-inch growth on Gross’ right shoulder appeared to be a noncancerous hematoma that should clear up by itself.
  • The Guardian features an opinion piece from Luis Hernandez Navarro, the opinion editor of Mexico's La Jornada. Describing a series of protests planned to mark the inauguration of Mexican President-elect Enrique Peña Nieto, Navarro concludes “a mixture of discontent and scepticism towards his government is palpable throughout the country.” 
  • The Council on Hemispheric Affairs looks at the candidates to take over from Hillary Clinton as Secretary of State and their attitudes towards Latin America. COHA looks at favourite John Kerry’s work highlighting the Contra scandal in Nicaragua, his mixed voting record on Free Trade Agreements and his attitude towards Cuba, and another strong candidate, Susan Rice, and her so far rocky relationship with the region after clashes with Brazil and hardline policy towards Cuba.
  • The Inter Press Service looks at the history and current state of feminism in Cuba to mark  the centennial of the birth of the local feminist movement.