Right case, wrong court
Argentina has far too strong a case against the vulture funds to debase it with a largely political stunt like going to the World Court in The Hague. Even at the political level it is not an especially smart move apart from the obvious calculation of the short-term domestic dividends to be gained from tapping the country’s nationalist subconscious. If Argentina’s fragmented opposition today is testimony to the supreme skill with which Kirchnerism has played “divide and rule” tactics over the last decade, taking the entire United States to the World Court is precisely the opposite strategy — given the profound differences between US President Barack Obama and vulture fund billionaire Paul Singer (not to mention the repeated eloquence of Nobel Prize for Economics winner Joseph Stiglitz on Argentina’s behalf), why put everything Yankee into the same bag?
Yet this essentially legal move needs to be mainly judged at that level where it offers absolutely minimal value or impact beyond the gesture politics. Firstly, a Washington usually reluctant to accept World Court jurisdiction has to pick up the gauntlet and that is highly unlikely (indeed declined yesterday, it seems) because the US can present watertight objections entirely consistent with its own premises. In the US the separation of powers is constitutionally sacrosanct and although the White House voiced its misgiving about the adverse precedent for global debt restructuring at every step of the legal ladder (from Manhattan magistrate Thomas Griesa’s original pro-holdout ruling through the Second Circuit Court and all the way to the Supreme Court), the last word has now been said and there is nothing doing but to comply from a US viewpoint. It is true that Argentina is justified in taking the US to the World Court insofar as its entire legal system is involved (and not just Singer) and it is also true that the separation of powers cuts both ways — if the White House respects US court autonomy, the judges should also stay out of international relations. But the voluntary prior acceptance of US jurisdiction is perhaps a fatal weakness in Argentina’s case. In a planet of nearly 200 countries the World Court itself might well prefer to stick to the bilateral disputes genuinely involving international law rather than stray into this issue basically revolving around contractual obligations. Nor is there any sign of Argentina having undertaken the usual diplomatic preamble preceding the final step of resorting to the World Court.
None of the above detracts from the basic validity of Argentina’s objections to Griesa’s ruling but a right case is rarely served by going to the wrong court.