Monday
July 28, 2014
Monday, June 9, 2014

Another D-Day

Strongly competing with Vice-President Amado Boudou’s court appearance scheduled for today in this week’s news will be the United States Supreme Court’s decision this Thursday over whether to take up a Manhattan court ruling favouring holdout creditors against Argentina’s appeal — an Argentine delegation to lobby in the US Congress headed out to Washington yesterday. It should be stressed that this qualifies as an Argentine and not a government delegation because it includes opposition politicians (from the PRO centre-right party and Sergio Massa’s Renewal Front) to plead the national case — UNEN and the centre-left will be signing a declaration of support but not contributing to the delegation. No matter how effective the lobbying on Capitol Hill, it will not guarantee influencing Thursday’s US Supreme Court decision in any way (and nor should it in a country which respects the separation of powers). What is striking beyond any doubt is the cross-party stance against holdouts not accepting the 2005 and 2010 haircuts, even if incomplete — although it is also striking that if about one-sixth of the British House of Commons backed Argentina’s stand against “vulture funds” last week, only around one quarter of Argentine opposition deputies are prepared to join the delegation.

Thursday’s US Supreme Court call is anybody’s guess at this stage. The risks posed by a decision against Argentina to other debt restructuring programmes around the world (and also to New York as a venue of international financial jurisdiction), the superior plaintiff status as a sovereign country at odds with a tiny handful of creditors and all the recent efforts towards repayment or compensation (with CIADI international arbitration tribunal, Repsol oil and the Paris Club) encourage optimism. But there are also doubts whether an intensely busy US Supreme Court would gratuitously take on this complex issue without any direct US interest at stake or any jurisdictional conflict to resolve. Yet even in the latter scenario, the crisis would not necessarily be immediate — even if the Supreme Court leaves Manhattan judge Thomas Griesa with the last word in this case, he would still have to define how the holdouts are to be paid off (no simple matter because payment in full or even preferential terms would contradict the pari passu principle of equal treatment for creditors underlying his ruling).

We can only speculate at the start of this decisive week but all should be revealed soon enough on the day the World Cup starts — potentially an even bigger distraction than the Boudou case.

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