BUENOS AIRES, Argentina — Argentina has finally run out of wiggle room in a billion-dollar showdown over foreign debts unpaid since the country's world-record default a decade ago, and the stakes couldn't be higher for President Cristina Fernandez.
Late Wednesday night, a federal Court of Appeals judge in New York ordered Argentina to pay immediately and in full everything it owes to the so-called "vulture funds" she blames for much of her country's troubles. That adds up to $1.3 billion, due by Dec. 15.
The judge also barred Argentina from paying other bondholders until it satisfies this judgment, putting the president's back against the wall: If she doesn't reverse her longstanding position and pay up, she risks triggering another historic Argentine debt default, this time totaling more than $20 billion.
"It is hardly an injustice to have legal rulings which, at long last, mean that Argentina must pay the debts which it owes. After 10 years of litigation, this is a just result," US District Judge Thomas Griesa said.
Argentina's government did not immediately respond to Griesa's orders, delivered just before the US Thanksgiving holiday, which has closed bond markets in New York.
Argentina's president and economy minister insisted earlier this week that they won't pay a single dollar to the plaintiffs, and said they would appeal to the US Supreme Court. But the judge gave Fernandez no room to maneuver, lifting his stay and ordering that the money be put in an escrow account for the plaintiffs to collect.
"These threats of defiance cannot go by unheeded," the judge wrote. "The less time Argentina is given to devise means for evasion, the more assurance there is against such evasion."
If Fernandez refuses, the judge said that the Bank of New York, which processes Argentina's bond payments, will find itself in violation if it doesn't hold up payments to all other bondholders.
That remedy sent jitters through the legal departments of the most powerful financial institutions in the United States.
The US Federal Reserve and the Clearing House, a trade group representing the world's largest commercial banks, told the judge to make sure his order won't affect the US funds-transfer system, which automatically moves an average of $2.6 trillion a day in half a million transfers among more than 7,000 banks.
The entire system depends on transfers being "immediate, final and irrevocable" when processed. Requiring intermediaries to identify, stop and divert payments according to court orders "would impede the use of rapid electronic funds transfers in commerce by causing delays and driving up costs," the trade group said.
NY judge orders Argentina to immediately pay foreign debts, including money owed to hedgie Singer
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NY judge orders Argentina to immediately pay foreign debts, including money owed to hedgie Singer
