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General News of Saturday, 10 November 2012

Source: Associated Press News(APN)

Argentine Sailors Declare War?

Argentine sailors brandish weapons to stop Ghana officials from moving seized sailing ship

Sailors aboard an Argentina navy sailing ship seized in a billion-dollar international debt controversy brandished weapons to block Ghanaian officials from moving the vessel to a less busy dock, an official of the Ghana Ports and Harbors Authority said Saturday.

Crewmen on the ARA Libertad showed their rifles to deter Ghanaian officials from boarding the South American ship Thursday, Kumi Adjei-Sam, the corporate affairs manager of the ports authority, told The Associated Press.

Ghana's government has not commented on the show of force against officials of this African nation.

Ghanaian judge Richard Agyei-Frimpong ruled last week that the Libertad should be moved from its current position while Argentina fights a court order to hold the ship against payment of $1.3 billion to a group holding bonds on which Argentina defaulted in 2002.

Ports officials say the ship's current location prevents other vessels from berthing, costing the agency tens of thousands of dollars a day in lost fees. Argentina's Defense Ministry issued a statement Friday saying the ship will not budge while the detention order is being appealed.

It said the ship's crew, under orders from Buenos Aires, pulled up the gangplank to prevent Ghanaian authorities from boarding. In response, Ghana shut off water and electricity and brought a crane to lift officials onto the ship to move it.

"An order was for the crew to show up on the deck, with its regular weapons, with the purpose of dissuading any attempt to board it," the Argentine ministry said.

The ministry said the Ghanaians should stop "illegal measures such as forcing us to move and cutting off basic supplies, which represent a violation on our sovereignty and an act of hostility."

Ghanaian courts ordered the ship detained Oct. 2 in response to U.S. court decisions in favor of investors holding bonds on which Argentina defaulted.

Argentina's problems grew larger Friday, when U.S. District Judge Thomas Griesa warned Argentine President Cristina Fernandez not to "defy and evade" his orders on how much Latin America's third-largest economy will have to pay bondholders. Griesa will decide the amount Dec. 1, a day before Argentina is due to make the first of three payments of more than $3 billion to bondholders who accepted restructuring of their debt at a loss.

Some of the money will go to NML Capital Ltd. and other holdout plaintiffs who are seeking about $1.33 billion in unpaid principal and interest, Griesa said. Fernandez has refused to post $20 million with a court in Ghana to release the Libertad and insists Argentina will not pay a single centavo to what she calls "vulture funds" that held or bought up the defaulted bonds that remained after other holders agreed to restructure more than 90 percent of the debt in 2005 and 2010. Many received as little as 25 cents on the dollar.

Argentina lost its long battle against bond holdouts in the U.S. courts last month, when an appellate panel rejected every argument Fernandez's government made against paying $1.33 billion in principle and interest to investors holding the original bonds.

The ruling effectively gave Argentina a stark choice: Either pay all of its bondholders equally, or pay none of them at all.

Argentina argued that forcing it to pay the holdouts could provoke another severe economic crisis, but the U.S. appellate court said "nothing in the record supports Argentina's blanket assertion." It agreed with Griesa, who ruled that with more than $40 billion in foreign reserves, Argentina has the ability to pay.

Fernandez said Friday that U.S. courts are harming those who showed faith in Argentina during the bond restructuring.

"Those who believed in Argentina, who put their trust in Argentina, they restructured the debt and we're paying it religiously, one after the other," Fernandez said.

But judges said last month that Argentina must keep promises it made when it issued the original debt in the 1990s and that performing debt does not take priority over defaulted debt.

"Argentina has the duty to pay with the judicial resolutions of the United States in the bond cases," Griesa said Friday. "Our courts are not helpless." The judge's new warning dented the price of Argentine global bonds due in 2017, which fell more than 6 percent Friday and have plunged about 12 percent since the court order last month.

Enrique Dentice, an economic analyst for Universidad de San Martin in Buenos Aires, said Griesa's order "will greatly harm those who joined the swap at the time" and respected Argentine law.

He said Argentine rules forbid the reopening of debt restructuring even as U.S. law requires honoring the original clauses of bonds issued there.