Friday, September 19, 2014
Thursday, September 18, 2014
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.