by Pola Oloixarac for
The New York Times
BUENOS AIRES —
Argentina
has defaulted on its debt three times in the last 32 years, most
recently last month, making it somewhat of an expert on the subject.
After
failing to satisfy a judgment ordering the country to pay $1.3 billion
to American hedge funds, closing it out of international credit markets,
the hashtag “Argentina vs. the Vultures” no longer makes its citizens
anxious. They see it as business as usual.
Argentina
is disputing the ruling, by Judge Thomas P. Griesa of New York, which
forbids the country to pay the restructured debt from 2002 without
paying the investment funds that have held out for full payment. The
country has divided its bond holders into two groups: the good ones, who
settled their debt for 30 cents on the dollar; and the evil ones, who
refused to settle, taking their case to the courts and winning.
But
the so-called vultures have helped President Cristina Fernández de
Kirchner ease back into the spotlight. In fighting the angry birds of
capitalism, she is raising her profile at home, where her grip on power
was waning. She has been rising in the polls.
In
July, Mrs. Kirchner was facing the most difficult moment in her
administration. After six years in office, her policies had resulted in
an annual inflation rate that may be as high as 40 percent (official
statistics peg it at 10.9 percent), a stubborn recession and little hope
for economic growth.
Mrs.
Kirchner and her husband, Néstor, who preceded her as president and who
died in 2010, ascended to power after the crisis and debt default in
2002. Between then and the current crisis, isolation from the
international credit markets set Argentina apart from other left-leaning
but more market-friendly South American governments, such as Brazil and
Chile. With her vice president, Amado Boudou, put on trial on
corruption charges earlier this year for his involvement with the
company that prints Argentina’s currency, Mrs. Kirchner was running out
of options.
In
May, she sought to raise her profile by creating an agency with the
Orwellian name of Secretariat for Strategic Coordination of National
Thought. But the hedge funds proved a more successful foil for
coordinating the nation’s thinking. Most Argentines think it’s fair to
defy Judge Griesa and defer payment, even if it means that credit
markets consider the country an outlaw, because the system itself is
flawed.
Argentines
have a weakness for defiant characters. The writer Jorge Luis Borges
said the country sympathized with “good outlaws,” those who fought
unjust laws. Mrs. Kirchner has assumed the role with aplomb: Like the
Argentine literary character Martín Fierro, she’s the outlaw with good
intentions, the heroine who never betrayed the people and was willing
to defy the capitalists.
Argentines
have become skeptics about the usefulness of world markets. “Here,
there’s never been a market god,” says Mauricio Corbalán, 46, an urban
planner who lives in Buenos Aires. “They no longer trust the neoliberal
expert that says you have to pay, no matter what.”
In
mid-August, Mrs. Kirchner made an emotional appearance on national
television. “I know I’m taking a big decision here; I’m nervous about
it,” she said, almost in tears. She explained that the country was
trying to make good on its debt payments, but was prevented from doing
so by Judge Griesa’s ruling.
China,
Argentina’s latest power partner, is eager to see the dispute resolved.
Argentina began paying debts earlier this year to the Paris Club and
others in a failed attempt to re-enter the credit markets. But Judge
Griesa’s ruling interrupted the path to normalization, denying the
country the boost that foreign investment could bring.
Argentina’s
leaders have reacted by promoting new laws that will grant more power
to the state in regulating the economy. To curb inflation, there’s a
smartphone app, Cared-for Prices, that allows citizens to “control”
prices. Both Argentina and Venezuela share the belief that new
technologies can perfect the growing presence of the government in
people’s lives, a neo-Socialist approach that has created two of Latin
America’s most fragile economies.
Inside
the presidential mansion, known as the Casa Rosada, the minister of
economy, Axel Kicilloff, has two nicknames: “Excel” and “the Soviet.”
The
political gain from the dispute with the vultures is likely to be
short-lived, as inflation and stagnation persist. But it cements Mrs.
Kirchner’s style as a bejeweled, Ferragamo-carrying committed Socialist:
“To my left, there’s only the wall,” she said recently. Not quite.
Between that wall and Mrs. Kirchner, the Argentines stand trapped.
