Kent Hernandez/FUSION

In a rare interview, Argentina's ambassador to the US says that her country is not in default, rails against Argentina's "predatory" creditors, and says that a US court order is itself illegal.

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Argentina's official government representatives rarely sit down for detailed on-the-record discussion of their country's fraught debt situation, especially in English. So Fusion jumped at the opportunity to ask debt-related questions of Argentina's ambassador to the USA, Cecilia Nahón. (The full transcript, annotated by me, can be found here, while my interview with Arturo Porzecanski, a professor sympathetic to Argentina's opponents in this case, can be found here.)

An LSE-trained economist, Ambassador Nahón came out swinging. Argentina, she said, is not in default, despite the fact that its creditors are not receiving their payments:

Nahón says that Argentina "will continue doing everything we can to make sure bondholders get their money" — but, that said, there are certain things Argentina won't do. For instance, the court-appointed "Special Master", Daniel Pollack, has tried to set up a series of negotiations with the lead litigants against Argentina — the so-called vulture funds. But Nahón says her country can't do that: the vultures are the ones who are extorting Argentina, and Argentina is not going to negotiate with them alone. Instead, Argentina wants to find a solution which applies to all of its holdout creditors, including the judgment creditors who are not part of the current litigation. Since those creditors are not included in the Special Master's negotiations, Argentina isn't interested in negotiating only with its most aggressive and most litigious creditors.

And while Argentina was (eventually) happy to pay the Paris Club of bilateral creditors the full amount it owed them, including $1.1 billion in past-due interest and $3.6 billion in penalties, that deal doesn't set a precedent when it comes to the vultures, says Nahón. Dealing with other countries is one thing; dealing with "the most aggressive and predatory players of the international financial system, the scourge of the international financial system" — that's something else entirely.

What's more, the ruling handed down by the US courts, says Nahón, is itself illegal: it violates the Foreign Sovereign Immunities Act, and makes no sense even in terms of the contract ostensibly being enforced. "It's a Frankenstein", she says. Which sets it apart from the rules of the Paris Club, and hardly makes it likely that Argentina is going to accept its legitimacy and pay up.

Still, Argentina is at this point all but untouchable, as far as the international capital markets are concerned. What mistakes did the country make, in arriving here? None at all, says Nahón, who says she is "very proud" of the way the country has dealt with its debt over the past ten years of acrimonious New York litigation.

But isn't Argentina's inability to borrow money going to cause a crunch at some point this year? Very few countries have the ability to keep on paying their debts without being able to borrow. Again, Nahón isn't worried. Argentina is set for this year, she says, and indeed has been approached by various banks, offering solutions which would allow the country to borrow new money. If and when Argentina finds itself needing to borrow, she says, it will cross that bridge when it comes to it.

So where does that leave the friendly bondholders, the majority of Argentina's creditors, who haven't been paid in months? Nahón's answer is simple: it's no longer up to Argentina at this point, they should take it up with the judge.

Nahón might not be as much of a fire-breather as Argentina's president, Cristina Fernández de Kirchner, or its finance minister, Axel Kicillof. But in her own way, she's just as intransigent. Argentina, she says, has done nothing wrong. Which says to me that the current stalemate is going to persist at least until January, when a new government gets sworn in.