BUENOS AIRES, Argentina (AP) — President Cristina Fernandez says Argentina can't possibly comply with U.S. court orders to pay $1.5 billion in cash to winners of a decade-long debt dispute, the position her country was left in Monday when the U.S. Supreme Court refused to hear her government's final appeal.
Delivering a nationally broadcast address Monday night, Fernandez expressed willingness to negotiate, but said there is simply no way that Argentina can pay in cash, in full, starting just two weeks from now, which is what the U.S. courts have ordered.
"What I cannot do as president is submit the country to such extortion," Fernandez said.
Under the U.S. court orders, Argentina must hand over $907 million to the plaintiffs, or lose the ability to use the U.S. financial system to pay an equal amount due June 30 to holders of other Argentine bonds.
Fernandez said the total owed to the plaintiffs is $1.5 billion including interest, and paying it all immediately in cash the way the courts ordered could trigger another $15 billion in other cash payments to the remaining holders of defaulted debt. That "is not only absurd but impossible," since it represents more than half the Central Bank's remaining foreign reserves, she said.
She repeatedly vowed to keep making payments on the vast majority of the country's performing debts, which are held by bondholders who agreed previously to provide debt relief that enabled Argentina to rebound from its economic crisis of 2001. Even if Argentina can't use the U.S. financial system to do so, she said, teams of experts are working on ways to avoid such a default and keep Argentina's promises.
Meanwhile, she suggested that she has a moral obligation not to make the court-ordered payments to NML Capital Ltd. and other investors she calls "vulture funds."
"It's our obligation to take responsibility for paying our creditors, but not to become the victims of extortion by speculators," Fernandez said.
The president said her government has repeatedly shown its willingness and ability to negotiate debt accords, and called on her countrymen to "remain tranquil" despite the Supreme Court loss. "It was known that this would happen," she said.
Earlier Monday, the markets reacted in fear that Fernandez would take just such a stance. Argentine stocks plunged as economists, analysts and opposition politicians practically begged her to comply.
The justices not only rejected Argentina's appeal without comment — they also ruled 7-1 that bondholders could force Argentina to reveal where it owns property around the world. That could make it easier to collect on other debts that have gone unpaid since Argentina's economy collapsed.
Justice Antonin Scalia wrote that U.S. federal law offers no shield to Argentina's assets. Justice Ruth Bader Ginsburg worried that this could expose even its embassies and military ships to seizure if the government doesn't pay.
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