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4 September 2014, Gateway House

Washington and the Argentine default – analysis

Ambassador R. Viswanathan's article on the Argentine default for Gateway House was republished by the Eurasia Review. Ambassador Viswanathan is Distinguished Fellow, Latin American Studies at Gateway House

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‘Argentina has defaulted’, screamed the headlines in financial newspapers on July 31 this year. But it was not an accurate report. Argentina did not default. It was forced into default by a New York southern district court judge Thomas Griesa.

The Argentine government had deposited the payment of $539 million on June 26 – ahead of the due date – at a bank in New York to be transferred to the 92.4% bond holders. But Judge Griesa had blocked the transfer until Argentina paid the $1.3 billion plus interest, and also demanded by the vulture funds that hold just 1.6% of the bonds.  Joseph Stiglitz, the Nobel Laureate, and Martin Guzman from Columbia University termed the artificial default “Griesafault ”.