Archive for category Latin American Politics

Argentine President Mauricio Macri sworn in

Mauricio MacriMauricio Macri was sworn in Thursday as Argentina’s president, promising to end an era of combative politics and bring Argentines together even as his predecessor and many of her supporters shunned his inauguration.

With tens of thousands of supporters waving blue-and-white flags in the streets, Mr. Macri, 56, said he would pragmatically tackle a host of thorny economic problems and protect the poorest Argentines.

After receiving a ceremonial scepter and sash at the Casa Rosada, the country’s presidential palace, Mr. Macri joined his wife, Julieta Awada, 41, in waving to supporters from a balcony. Reprising a frequent feature of his campaign, Mr. Macri danced a solo performance before meeting with foreign dignitaries.

“Our point of encounter will be the truth,” Mr. Macri said in his first speech as president. During his campaign, Mr. Macri repeatedly accused his predecessor, Cristina Kirchner, of lying about government statistics.

Missing from his inaugural was Mrs. Kirchner, whose decision to shun the event was seen as the first challenge to his administration as it ends 12 years of populist rule and tries to pursue more business-friendly economic policies.

Congressional members of Mrs. Kirchner’s Victory Front party also snubbed the ceremony. Mr. Macri will need broad legislative support to resolve a legal conflict with U.S. hedge funds that has prevented Argentina from borrowing money in global credit markets.

Mr. Macri’s opposition “Let’s Change” coalition narrowly beat Mrs. Kirchner’s ruling party candidate, Daniel Scioli, in a runoff election last month. In his inaugural address, Mr. Macri sought to reassure voters who fear he will abandon Mrs. Kirchner’s popular social welfare programs.

“We are going to take care of everyone,” he said. “The state is going to be present where it has to be for every Argentine, especially for the neediest of us.”

Huge numbers of Argentines participated in Mr. Macri’s inaugural parade, singing patriotic songs and chanting, “Yes we can.” Most spoke enthusiastically about him.

“We have a lot of faith in Macri,” said Lidia Iluminati, 60, a schoolteacher. “He did a good job as the mayor of Buenos Aires and I’m confident he will inspire foreign companies to invest in Argentina.”

But he faces an uphill battle with Kirchner supporters and the nearly 49% of Argentines who didn’t vote for him. Many of those people worry he will favor rich people and investors.

“I watched his speech and thought he looked like an aristocrat. His policies will hurt people,” said Melina Shombron, 23, a student.

Mr. Macri didn’t make any policy announcements on Thursday. His new finance minister,Alfonso Prat-Gay, told reporters that the government will “not overwhelm anyone with a package of policies.”

Mr. Prat-Gay said he would need some time in office to study government accounts before announcing new plans. “After that, we’ll be making the economic decisions we need to make,” he said.

Mr. Macri confronts Latin America’s most dysfunctional economy except Venezuela’s, with rising poverty and inflation nearing 25%. The Argentine economy contracted 3.1% in per capita terms between 2011 and 2014, the deepest drop in Latin America, according to local consultancy Orlando J. Ferreres & Asociados.

Mr. Macri has vowed to cut inflation to a single digit within two years, though advisers are trying to find way to do so without weakening the economy.

Mr. Prat-Gay previously said the government would eliminate a burdensome system of currency controls “as soon as feasible.” Mr. Macri’s advisers also said his administration will cut income taxes for lower-to-middle-income workers, seeking to boost consumer spending before a devaluation that is widely expected to accompany the elimination of currency controls.



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Brazilian Impeachment Crisis Causing Turmoil Across Nation

DILMA RECEBE PRIMEIRO-MINISTRO FRANCÊS NO PLANALTOBrazil’s impeachment plot thickened Wednesday with speculation rife over whether President Dilma Rousseff will be abandoned by a key ally and the Supreme Court stepping in to put the whole process on hold.

For Rousseff, the court’s decision late Tuesday to freeze the impeachment machine for a week offered badly needed respite as she fights to avoid being ejected one year into her second term at the head of Latin America’s biggest country.

However, she risked getting bad news later Wednesday when she meets with Vice President Michel Temer, who has hinted strongly he will join the push to impeach.

Temer is from the centrist PMDB party, the main coalition partner for Rousseff’s leftist Workers’ Party, and if he walks out on her, she will find it harder to get the one third majority needed in Congress to defeat impeachment.

Although Temer has kept a cryptic silence on his ultimate intentions, he has dropped strong hints that he no longer considers himself bound to his constitutional boss, including sending a letter on Monday to complain about her lack of trust in him.

Brazil’s first female president, a moderate leftist, is accused of illegal budgeting maneuvers, but says the practices were long accepted by previous governments. She calls the attempt to bring her down a “coup.”

The turmoil is stirring passions across the South American country of 204 million people, where Rousseff’s Workers’ Party has been in power since 2003 with the help of the PMDB.

Nationwide opposition rallies are planned Sunday and on Tuesday Rousseff supporters marched in central Rio de Janeiro, which will host the 2016 Olympics.

Political uncertainty is also adding to the economic mess, with GDP down 4.5 percent in the third quarter year-on-year, and the national currency down a third against the dollar this year. A vast corruption scandal centered on state oil giant Petrobras has also put a hole in investor confidence.

In the latest sign of the dismal economy, the government announced year-on-year inflation for November of 10.48 percent, the highest in 12 years.

The stock market in Sao Paulo, however, shot up 3.75 percent on speculation that Rousseff will be deposed, opening the door to ending of months of political gridlock and launching economic reforms.

Late Tuesday, the Supreme Court made a dramatic intervention, ordering a freeze until next Wednesday on the congressional commission that is taking a first look at Rousseff’s impeachment case.

The suspension was ordered in response to an appeal from Rousseff allies that the opposition had illegally insisted on secret votes, not the usual open ballots, while picking who would sit on the congressional commission.

The goal, according to the opposition, was to stack the body with anti-Rousseff deputies.

The commission is tasked with making a non-binding recommendation which would then set the tone for formal impeachment votes in the lower house and Senate on the president’s fate.

The court will rule next Wednesday on what to do, but is not expected to scupper the whole impeachment process.

In comments Wednesday, Temer said the commission vote had been “legitimate,” another sign that he is shifting into outright opposition against Rousseff. If she is deposed, Temer would become interim president.

In parallel with Rousseff’s struggles, her main foe, the speaker of the lower house Eduardo Cunha, is also trying to save his career.

Cunha, from the PMDB’s openly anti-Rousseff wing, is the architect of the impeachment drive and also oversaw the controversial session Tuesday to form the commission.

But in an illustration of the almost surreal level of corruption eating away at Brazil’s elite, Cunha himself faces criminal corruption charges that he took millions of dollars in Petrobras-related bribes and hid money in Swiss bank accounts.

On Wednesday, an ethics committee yet again postponed a decision on whether to open an enquiry into Cunha’s activities, which could then lead to him being forced out. It was the sixth such delay.

The conservative politician says the charges are politically motivated and has fought fiercely to retain his post.

Analysts say that the entire impeachment crisis has in part been linked to Cunha’s battle to distract attention from his case and ensure his continued influence as speaker.

A report in the specialist website Congresso em Foco said Wednesday that one third of members elected to the impeachment commission are themselves already facing criminal probes or trials.


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Brazil’s President Wins Re-election in Close Contest

Foto Oficial Presidenta Dilma Rousseff.  Foto: Roberto Stuckert Filho.Brazilians narrowly voted leftist President Dilma Rousseff back into office on Sunday after a virulent election campaign that split Latin America’s biggest economy between poor north and richer south.

Rousseff, Brazil’s first woman president, went into the run-off contest as slight favorite and defeated center-right challenger Aecio Neves by around three million votes.

With 99 percent of votes counted, she had won a 51.52 percent vote share to 48.48 percent to Neves, the business world favorite.

“Thankyou very much,” Rousseff, 66, tweeted as it became clear she had won.

The race to lead the world’s seventh-largest economy was seen as a referendum on 12 years of government by the Workers’ Party (PT),  eight under working-class hero Luiz Inacio Lula da Silva and four under Rousseff, with voters weighing the PT’s social legacy against Neves’s promise of economic revival.

The bitterness of the campaign, the most vitriolic since democracy was restored in 1985 after two decades of military rule, threatens to leave the country sorely divided.

The PT endeared itself to the masses with landmark social programs that have lifted millions from poverty, increased wages and brought unemployment to a record-low 4.9 percent.

But the outlook has darkened since Rousseff first took office in 2010, the year economic growth peaked at 7.5 percent.

She has presided over rising inflation and a recession this year, amid protests against corruption, record spending on the World Cup and poor public education, health care and transport.

Neves vowed to reboot the economy with market-friendly policies while safeguarding the PT’s social programs.

But Rousseff’s supporters cast him as a fat cat who will govern for the upper class and that view looked to have prevailed, Mark Weisbrot of the US Center for Economic and Policy Research said Neves’ more liberal plans would not have guaranteed badly needed investment.

“It may seem like ‘the markets’ are demanding such things, but if they ever got them, they would not react well at all,” said Weisbrot, citing the experience of the Eurozone, where “the markets” had demanded austerity.

“The resulting triple-dip recession did not attract investment rather it repelled investment,” Weisbrot said.

Rousseff cast her ballot in Porto Alegre, the southern city where she grew up.

“We are voting for a more equal Brazil with more opportunities,” Rousseff said.

Neves, 54, gave V for victory signs as he cast his ballot in Belo Horizonte, where he served two terms as governor of Minas Gerais state, insisting that “change has already begun.”

Despite support for her social policies, Rousseff has been hit by corruption scandals, especially a multi-billion-dollar embezzlement scheme implicating dozens of politicians, mainly her allies, at state-owned oil giant Petrobras.

As the fiery campaign wrapped up, conservative news magazine Veja quoted a suspect in the case as saying Rousseff and Lula personally knew of the scam, a claim the president vehemently denied.

But the issue will dog her, said independent consultant Andre Cesar.

“If the allegations are confirmed that could spark a political crisis,” Cesar said.

The graft issue swayed some, but not others.

The campaign has been a fierce battle for Rousseff, a former guerrilla once jailed and tortured for fighting the country’s 1964-1985 military regime.

First, she had to fend off environmentalist Marina Silva, who exited the first round three weeks ago with 21 percent of the vote to 42 percent for Rousseff and 34 percent for Neves.

Silva then endorsed Neves, whose comeback briefly lifted him into first place and prompted a furious Rousseff counter-attack.

She accused Neves of nepotism as Minas Gerais governor and played up a report that he once hit his then-girlfriend in public.

Neves, the grandson of the man elected Brazil’s first post-dictatorship president, responded by accusing Rousseff of lying and “collusion” in the Petrobras kickbacks.

As well as their president, voters also elected governors in run-offs in 14 states, with Luiz Fernando Pezao of the Brazilian Democratic Movement Party (PMDB), a Rousseff coalition ally winning in Rio de Janeiro.

Nationwide 281 people were arrested for election-related “irregularities,” one for taking a “selfie” in the poll booth in Sao Paulo state, while two buses were set on fire in the same state.

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Bachelet Scores Convincing Win in Chile


Michelle Bachelet was elected as Chile’s president again on Sunday in a landslide victory that hands the centre-leftist the mandate she sought to push ahead with wide-reaching reforms.

Bachelet won with about 62 percent support, the highest proportion of votes any presidential candidate has obtained since Chile returned to holding democratic elections in 1989.

Evelyn Matthei, the conservative candidate of the ruling Alianza coalition, conceded defeat after capturing just 38 percent of the vote, the right’s worst performance in two decades.

Bachelet, who led Chile between 2006 and 2010 as its first female leader, will look to capitalize on her resounding win to make changes aimed at redressing persistent inequality in the world’s top copper exporter.

“Today we embark on a new era … Chile has decided it is the moment to begin deep transformation,” she told crowds of cheering supporters waving flags and sounding horns outside the La Moneda presidential palace as dusk fell on a warm summer evening.

A physician by training, Bachelet is a moderate socialist and has promised 50 reforms in her first 100 days, once she takes office in March.

Her flagship policy is a hike in corporate taxes to 25 percent from 20 percent, to pay for social reforms that include a gradual move to free higher education.

Yet she is a long way from the hard-left radicalism that has shaped Venezuela andArgentina in recent years, and is closer to the pragmatic, business-friendly stance of Brazil‘s President Dilma Rousseff.

Bachelet has committed to stick to the path of fiscal prudence that has characterized theeconomy of the Andean country in recent decades.

“There are two things we know that don’t change in Chile,” said political scientist Patricio Navia. “One is that we always have earthquakes. And the other is that since 1990 governments are fiscally responsible. That goes without question.”


Bachelet’s large margin of victory will come as a relief to her, if not a surprise.

Loved by many Chileans for her warm and personable style, her approval ratings were sky-high at the end of her first term. Constitutionally barred from seeking immediate re-election in 2009, she was the runaway favourite to win this year’s vote since before she even launched her candidacy.

But it has not all been plain sailing. Her campaign suffered a setback last month, when the presence of eight other candidates fractured the first round vote and left her just short of the majority needed to seal the election outright.

Her opponent, Matthei, a brusque former labour minister, was a last-minute choice for Alianza in July and struggled to gain traction against Bachelet.

Hailing from the more conservative branch of the governing coalition, Matthei was tainted in the eyes of many Chileans by her association with the repressive 1973-1990 dictatorship of General Augusto Pinochet. Her father was a general in the ruling junta and she supported Pinochet in a 1988 plebiscite.

Dissatisfaction with President Sebastian Pinera’s government also weighed on Matthei’s campaign. Despite solid economic growth and plaudits for its fiscal responsibility, the government was seen as out of touch and slow to respond to demands for change.

Chile’s free-market economy and copper-fuelled growth have made it a Latin American success story in the last two decades. However, there are still sharp social divisions, illustrated by Sunday’s vote in Santiago’s upscale Las Condes district, where only 24 percent voted for Bachelet.

A single mother who was a victim of torture during Pinochet’s rule, Bachelet is seen as a “people’s candidate”.

“This triumph is a small step towards the changes that are coming to Chile,” said 19-year-old education student Beatriz Jorquera as she joined the crowds outside La Moneda.

Bachelet returned to Chile earlier this year to run for the presidency after a spell heading the United Nations’ gender equality body, U.N. Women.

Politically naive when she was elected eight years ago, she is now a more sophisticated operator and is in a better position to get things done, those close to her say.

Top of her list is reforming education. Good quality schooling is generally only available in Chile to those who can pay, and sometimes violent student protests demanding change have hurt the Pinera administration.

Bachelet also plans to change the Pinochet-era constitution and electoral system.

But her power will be constrained by a divided Congress. Despite losing seats in November’s Congressional elections, Alianza still has a large enough majority to block at least electoral and constitutional changes.

There are some indications that they will be willing to bargain, but the price may be watered-down reforms.

The wide majority in Sunday’s vote “will give her momentum going into government,” said political scientist Kenneth Bunker. “But she’s still going to have to negotiate in Congress.”

The president-elect also faces high expectations from those who voted her in, and she is not likely to be given much of a honeymoon once her four-year term starts.

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Biden asks Ecuador to REJECT Edward Snowden’s request for asylum

Biden Ecuador

Vice President Joe Biden called Ecuador’s President Rafael Correa, asking him to reject an asylum request made by fugitive former National Security Agency contractor Edward Snowden, it was revealed today.

‘They did discuss Snowden, but I don’t have additional details,’ Deputy National Security Advisor Ben Rhodes told reporters traveling with President Barack Obama in Africa.

It’s the highest-level conversation between the U.S. and Ecuador that has been publicly disclosed since Ecuador began considering the possibility of offering Snowden a sanctuary.

During his regular Saturday television appearance, President Correa spoke about his phone conversation with Mr Biden, stating that no decision will be made on Showden until he sets foot on Ecuadorian soil, be it in the country itself or in one of its embassies, the Wall Street Journal reported.

Mr Correa added that the NSA leaker ‘will have to assume his own responsibilities’ for blowing the whistle on secret programs the U.S. intelligence agencies have been using to spy on foreign and domestic targets.

Ecuador’s leader also pointed out that the world’s attention should be on America’s clandestine data collection scheme rather than Snowden’s fate.

Earlier this week, Correa said that a letter of safe passage that was allegedly issued to the 29-year-old NSA hacker by an Ecuadorian diplomat stationed in London was void.

Since fleeing Hong Kong to Russia last weekend, Snowden had his U.S. passport revoked, and he is believed to be still holed up in the transit area of a Moscow airport.

Mr Correa also promised that the first ones to be consulted on Snowden’s asylum request ‘would be the U.S. as we did in the [Julian] Assange case with England.’ He was referring to the elusive WikiLeaks founder, who has been staying in the Ecuadorian Embassy in London for nearly a year.

Meanwhile, Ecuador’s Foreign Minister Ricardo Patino said on Friday that his government  had held talks with Russian officials about when and how Showden, who has no travel documents, could leave the terminal where he has been staying for a week in a state of legal limbo.

Earlier this week, Ecuador revealed it could take months to decide whether to grant asylum to Snowden. He is currently in a transit area of a Moscow airport but it is believed he is hopeful Ecuador will protect him.

Foreign Minister Patino compared Snowden’s case to that of Julian Assange, the founder of WikiLeaks, who has found refuge in the Ecuadorean Embassy in London.

‘It took us two months to make a decision in the case of Assange, so do not expect us to make a decision sooner this time,’ Patino told reporters.

Snowden, who is charged with violating American espionage laws, fled Hong Kong last Sunday and flew to Russia.

Russia only acknowledged his arrival only on Tuesday, when President Vladimir Putin said Snowden was still in the transit zone of Moscow’s Sheremetyevo Airport.

Foreign Minister Sergey Lavrov confirmed that he remained there on Wednesday.

Snowden had also booked a seat on a Havana-bound flight on Monday en route to Venezuela and then possible asylum in Ecuador, but he failed to board the plane.

Despite U.S. officials called for Snowden to be extradited immediately, but Russia said it would not as they have no extradition treaty with the country and Snowden has not committed a crime in Russia.

‘He hasn’t violated any of our laws, he hasn’t crossed our border, he is in the transit zone of the airport and has the right to fly in any direction he wants,’ Lavrov said.

Asked if Ecuador would provide protection to Snowden while considering his request for asylum, Patino said through a translator that if Snowden ‘goes to the embassy, then we will make a decision.’

Patino refused to say what criteria his government would use, but added that it would ‘consider all these risks’, including whether it could hurt trade with the U.S. and damage Ecuador’s economy.

WikiLeaks gave a terse update on Snowden’s condition earlier on Wednesday, saying in a statement posted to Twitter that Snowden was ‘well’.

WikiLeaks says that one of its staffers, Sarah Harrison, was traveling with Snowden, but the statement gave no indication if the update came from her, from Snowden, or from some other source.In a conference with reporters on Monday, Assange said that he was limited in what he could say about Snowden due to security concerns. He denied reports that Snowden was spending his time at the airport being debriefed by Russian intelligence officers.

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Chavez names successor as cancer fight takes toll

Hugo Chávez, President since 1999.

Venezuelan President Hugo Chavez’s cancer relapse and his sudden announcement that he will undergo a fourth cancer-related surgery in Cuba have thrown the country’s future into question, and his designated political heir has begun trying to fill the void.Underlining the gravity of the situation, Vice President Nicolas Maduro broke into tears on Monday at a political rally hours after Chavez flew to Havana.

“Chavez has a nation, he has all of us, and he’ll have all of us forever in this battle,” said Maduro, who wiped away tears while speaking to supporters. “Even beyond this life, we’re going to be loyal to Hugo Chavez.”

Maduro called for the president’s supporters to rally behind his candidates in upcoming gubernatorial elections on Sunday, and he also inaugurated a new cable car system in a poor neighborhood. Maduro, who spoke passionately and wore the red of Chavez’s socialist movement, seems set to take on a larger role as the president’s chosen successor.

Chavez said for the first time on Saturday that if he suffers complications, Maduro should take over for him and should be elected president to continue his socialist movement.

Analysts say Maduro faces monumental challenges in trying to stand in for his mentor and hold together the president’s diverse “Chavismo” movement, while also coping with economic problems that are weighing on the government.

Maduro may inherit political power, “but he definitely can’t inherit the charisma” of Chavez, said Luis Vicente Leon, a pollster who heads the Venezuelan firm Datanalisis. He said that during his nearly 14 years in office Chavez has been the glue that has held together groups from radical leftists to moderates, as well as military factions.

Leon said it’s unclear if Maduro has what it takes to hold the movement together if Chavez dies. “Internal divisions could make the revolution unstable in the future,” Leon said.

Political analyst Vladimir Villegas, who has known Maduro since his adolescence, said the vice president’s experience years ago as a public transit union leader will probably help him in the difficult task of mediating between different groups of Chavez allies.

Maduro is considered to belong to a radical leftist wing of Chavez’s movement that is closely aligned with Cuba’s communist government. But Villegas said he thinks Maduro will know how to contain his radicalism for practical purposes.

“The priority will be the preservation of political stability, for which it will be necessary to begin negotiating with internal groups and even with the opposition,” said Villegas, who hosts a radio program. “This situation is going to force him to proceed with caution.”

Villegas also said that Maduro will need to “hold on to the trust if the Chavista base and to neutralize the fractions that are going to bet… on him not doing well.”

Before leaving for Havana early Monday, Chavez met with military commanders at the presidential palace and promoted his defense minister, Diego Molero, to the rank of admiral in chief. Chavez showed Molero and other military commanders a golden sword that once belonged to independence hero Simon Bolivar.

Holding the sword, Chavez told the officers that he fully trusts them. He also warned of potential conspiracies by enemies, both foreign and domestic.

“I’m totally sure that our homeland is safe,” Chavez told them. He urged them “not to give in to intrigue.”

Chavez announced that his cancer had reappeared and named Maduro as his chosen successor during a quick weekend visit to Caracas after spending 10 days in Cuba for treatment. He said he wanted to return to deliver his message to the nation, and his appearance after a prolonged absence allowed him to send a clear directive to his movement that it should follow Maduro if cancer cuts short his presidency.

Many in Venezuela have interpreted his message as indicating that he now faces long odds.

Video of his departure, played hours later on state television, showed Chavez raising a fist as he climbed the stairs alone. From top of the stairs, he waved and shouted “Long live our homeland!”

Also visible in the doorway of the plane were his eldest daughter, Rosa, and a grandson.

The 58-year-old president won re-election in October and is due to be sworn in for a new six-year term on Jan. 10. If Chavez were to die, the constitution says that new elections should be called and held within 30 days.

Chavez said on Saturday that if such new elections are held, Maduro should be elected president in his place.

In the meantime, Maduro is helping to lead a government with serious economic problems including a swelling budget deficit and a currency that has a rapid drop in black market trading.

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Argentina facing likely debt default

English: Argentine President Cristina Fernande...


Argentina has vowed to continue its fight against Elliott Associates and other holdouts from its 2002 debt default, but Fitch Ratings doesn’t think it will win.

The ratings agency slashed the country’s sovereign debt rating yesterday, determining that “a default by Argentina is probable.” Argentina’s international law bonds are now rated CC. Fitch also cut its Argentine law bonds to B-minus.

Prior to the downgrade, both sets of bonds were rated B, four steps below investment grade.

Argentina is in danger of a technical default on exchange bonds it issued to creditors that accepted its debt restructuring—and a serious haircut in 2005 and 2010. A federal judge in New York has ordered the country to pay $1.33 billion into an escrow account for the holdouts, including Elliott affiliate NML Capital and Aurelius Capital Management, before it can make a $3 billion coupon payment on the exchange bonds. Argentina has vowed it will not pay the holdouts, which it calls vultures, but has also said that it will not default again.

Argentina’s eocnomy ministry said late on Monday it had filed an appeal and denounced Griesa’s ruling as “an attack on sovereignty that shows ignorance of the laws passed by our Congress.”

Any change to the terms of Argentine sovereign bonds must be approved by the country’s Congress.

The ministry said that if Griesa arranged a formula offering holdouts the same terms presented in the 2010 restructuring, Argentina’s Congress could debate it.

That proposal is unlikely to persuade the holdouts, however.

Earlier on Monday, investors holding $1 billion worth of restructured Argentine debt filed an emergency motion in a U.S. federal appeals court to fight the ruling, which they fear could prevent payment on their bonds and lead to a fresh default.

About 93 percent of bondholders agreed to swap defaulted debt from the 2002 default for new paper at a steep discount.

But holdouts, led by Elliott Management Corp’s NML Capital Ltd and Aurelius Capital Management, rejected the swaps and are fighting for full repayment in the courts.

Griesa’s order dismayed investors who took part in the two debt swaps and fear the G20 country will now enter into “technical default” on about $24 billion in restructured debt.

It was those holders who filed the motion on Monday in the U.S. 2nd Circuit Court of Appeals seeking to halt Griesa’s order.

The motion would ensure that interest payments to the bondholders continue while the appeal is decided,” said David Boies, a lawyer representing the investors. “Exchange bondholders agreed to take under 30 cents on the dollar to support Argentina’s debt restructuring.”

Argentina’s motion was filed to the same appeals court.

Aside from sparking howls from investors who participated in the debt restructurings, Griesa’s ruling was a setback for Argentina’s combative, left-leaning President Cristina Fernandez, who calls the holdout funds “vultures” and has vowed never to pay them.

Fernandez’s decision to vilify holdout creditors, who are loathed by most Argentines, makes payment a difficult prospect, and a local law prohibits offering a better deal than that given in the swaps. Doing so might expose Argentina to lawsuits from creditors who tendered their paper.

On the other hand, another default, albeit a technical default, would tarnish Fernandez’s record on managing the economy, deepen Argentina’s isolation from global financial markets and hit investment at a time of sluggish growth.

Some analysts fear the case’s implications could stretch far beyond Argentina and its creditors, hampering future debt restructurings and the operation of global payment systems.

The Argentine government is due to pay exchange bondholders at least $3.3 billion in principal and interest in December.

But if Griesa’s demand for payment of the $1.3 billion into an escrow account for holdouts is upheld by an appeals court and Argentina still refuses to pay, U.S. courts could embargo payments to the creditors who accepted the debt restructurings.

That would push Argentina into a technical default.

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