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Wednesday, March 6, 2013

NML v Argentina, II

This is my second post on NML v Argentina in the 2d Circuit.  I learned from Credit Slips that the 2d Circuit had issued "an order requiring Argentina, by March 29, to specify 'the precise terms of any alternative payment formula and schedule to which it is prepared to commit.'" I am skeptical that Argentina would propose anything the court might find acceptable, even assuming (which is a big assumption) the court thought it had the power to enter an order putting something in place that left contract rights impaired.  There are a lot of reasons why I think this but briefly:

1) The tenor of Argentina's counsel's oral argument (with senior government officials in the court room) was inconsistent with seeking a compromise resolution.  I would expect a counsel seeking such an outcome would try very hard to portray itself as the more reasonable party and its opponent as the unreasonable person.   When counsel told the court its client would disregard the court's order in favor of NML, that comes off, to me, as someone not trying to position the dispute for compromise. 

It's theoretically conceivable that the client could have observed the proceeding and come away with a greater willingness to compromise based on what it observed.  But I would put the odds at that as low.

2) I don't think people in the US appreciate the political strength of an anti-US / anti-North / nationalist posture throughout South America. When Chavez died yesterday, it was announced in front- page, large-type, banner headlines throughout the region.  This for a guy who has made a wreck of social order and economic opportunity in his nation, and delivered little to fulfill the grandiosely populist promises he made throught the years, but he's garnered prominence for his aggressive anti-US chauvinism.  Even Chile, which is run on very different, pro-market principles, declared three days of national mourning on occasion of his death, and its leading newspaper, La Tercera, has, as of the drafting of this post, given over its entire homepage exclusively to content related to Chavez. 

In Argentina, its Minister of Security has gone on record supporting the claim of Chavez's vice-president that Chavez was injected with cancer by "enemigos de la patria".  Noting that other current or recent heads of state in Paraguay and Brazil have also been diagnosed with cancer, the Minister says the coincidence is "suggestive" and warrants a scientific investigation. The Minister is quoted saying [my translation]: "these leaders have been producing  and are producing, profound transformations in Latin America society.  We've gone  through 200 years, since San Martin and Bolivar, of failure to forge a path toward unity due to external factors."

That does not strike me as a government that seems likely to be working things out with U.S. hedge funds or subjecting itself to U.S. court orders.