(image by Jubilee Debt Campaign/ cc/ Flickr)
Argentina will not submit to Wall Street's "extortion" of their debt, said President Cristina Fernandez de Kirchner in a national address Tuesday night.
De Kirchner's comments came after it was announced that the U.S. Supreme Court refused to hear an appeal by the South American country despite their argument that obliging predator banks would "encourage creditor free-for-alls" and "intensify and prolong the suffering of the poor in countries undergoing sovereign debt crisis."
On Wednesday, following news that the Supreme Court would uphold two lower court rulings which demanded that Argentina pay $1.3 billion in debt holdouts to "vulture" funds before repaying their other restructured debts, Standard & Poor lowered the country's rating to CCC-. According to the credit rating bureau and reported by Bloomberg News, this is the lowest rating for any nation that's currently assessed by the company and is nine levels below "investment grade."
"I am blown away by the [Supreme Court] decision," said Eric LeCompte, executive director of the religious anti-poverty organization Jubilee USA. "For heavily indebted countries trying to support extremely poor people, this is a devastating blow. These hedge funds are equipped with an instrument that forces struggling economies into submission."
Speaking with The Real News on Tuesday, economist Bill Black explained that the country's economic troubles began after they "ceded control over their monetary policy to the U.S. Federal Reserve," which sparked rampant inflation. Argentina was able to restructure their debt with roughly 92 percent of their bond holders. However, U.S. "vulture funds" that owned the remainder of the debt took the South American nation to court demanding full repayment before the other bond holders are recompensated.
During her address, the Argentine president paraphrased the ruling of the district courts, saying that they demanded their portion of the debt be paid "all together, without quotas, right away, now, in cash, ahead of all the rest."
De Kirchener also reiterated the country's commitment to repay its restructured debt, saying: "It's our obligation to take responsibility for paying our creditors, but not to become the victims of extortion by speculators."
According to Black, the Supreme Court's decision spells "terrible news for all of the developing world."
Despite agreement by the White House and the International Monetary Fund that by tying developing nations to extreme debt is extremely damaging, Black says, the court ruling serves as "a device for keeping nations that are in crisis in very long-term crises instead of having them recover," he adds.
"So we have the organs of the United States of America being used to enforce an order that the executive branch of the United States of America says is a disastrous policy and grotesquely unfair and likely to cause immense harm to the peoples of the world. And the Supreme Court, as it has done through the great bulk of its history, has sided with big business and big banks and hedge funds against the peoples of the United States, and now the peoples of the world."
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