Argentina is in a dispute over defaulted bonds. US billionaire Paul Singer's company, NML Capital, has won a victory in the US Supreme Court, ordering Argentina to pay the full value of bonds which NML Capital bought for a low price from their original holders, hoping to make a profit which President Cristina Fernandez has described as "1,608 per cent," which she describes as extortionate.

BRIAN PRECIOUS: These bonds appear to have defaulted in 2001. Were they issued by the government of Carlos Menem before Argentina's economic collapse at the turn of the century?

ALICIA CASTRO: The debt defaulted after the 2001 crisis was taken on by successive Argentinian administrations, dating as far back as the mid1970s.

Following this default, with a great deal of effort, the Argentinian government and people undertook one of the most successful debt-restructuring processes of all time, in which we managed to restructure over 92 per cent of the debt through two debt swaps in 2005 and in 2010.

This enabled Argentina to start down a successful path to growth with social inclusion, including vast reductions in poverty and unemployment, and a significant increase in social spending and education.

NML Capital is part of a group of financial speculators who buy up devalued debt at rock-bottom prices from the original creditors and then pursue obscene gains through judicial litigation.

Argentina has always intended to restructure 100 per cent of its debt. But in their quest to make extraordinary gains, NML has systematically refused to negotiate with our country.

BP: The original bond holders understandably sold these bonds on. For what fraction of their original value?

AC: Not all the bond holders sold their bonds. Most of them stood alongside Argentina in its debt-restructuring-process.

It should also be remembered that those bonds were extremely profitable and that they had already brought their holders very healthy profits by 2001.

The value of the bonds that year fluctuated significantly as a consequence of the crisis at the time.

Vulture funds such as NML purchased these bonds for a total value of $48 million, and today, in accordance with a US court ruling, Argentina is being ordered to pay them $1.3 billion, constituting a profit of over 1,600 per cent, as you mentioned yourself.

BP: Have any domestic US or international authorities expressed dismay at the activities of companies such as NML Capital in this regard because of the way this makes a nation's government responsible for the economic mismanagement of one or more of its predecessors?

AC: Quite frankly, I do not know anyone here in Britain who agrees with this US legal ruling. Recently, a large cross-party group of British parliamentarians, renowned economists, intellectuals, journalists, public-opinion leaders, trade unionists and activists added their names to a statement of "Solidarity with Argentina against the vulture funds," which they handed on to our embassy here in London.

Additionally, on June 4, more than 100 British MPs submitted an early day motion against the actions of these speculators and in favour of Argentina.

Furthermore, international support received by Argentina includes countries like France, Mexico and Brazil - as amici curiae - and ranges from multilateral lending agencies to political bodies like the G77 and China, comprising 133 countries, Mercosur and Unasur.

BP: Would this set a dangerous legal precedent for developing countries trying to restructure their debts?

AC: Absolutely. Not only for developing countries but also for developed ones. Even a body like the IMF, a pillar of global capitalism, expressed concern over the negative ramifications that the US court's ruling could have for the financial system as a whole, since the verdict has rejected any notion of creditor responsibility for bad debt and therefore any onus on the creditors' part to renegotiate it.

What's more, the US Supreme Court claims to have acted in the interests of preserving New York's status as a major capital market.

However, the effect may well be the opposite, driving away borrowers to more orderly
markets.

BP: US analysts are warning that, unless Argentina pays these bonds at their full original value, it will find it harder to borrow in future. How much would it harm Argentina's economy and redistributive programmes if she were to bow to this pressure?

AC: Argentina will meet its obligations, pay off its debts and honour its commitments as it has been doing, in order to put an end to the ploy of presenting an absurd court decision with systemic effects at an international level as a "technical default," which is merely a sophisticated way of trying to bring us to our knees before global usurers.

The redistributive programmes that have served the Argentinian people so well, especially its working class, will go on because, as President Cristina Fernandez de Kirchner has put it, they are already part of the DNA of this government's policies.

BP: Is it not in US trading interests for Argentina's economy to recover as far as possible from the disastrous economics of the beginning of the century?

AC: I would say so, and in fact, Argentinian trade has been growing steadily and strongly for the last 10 years on the back of the growth of its economy.

In today's globalised world, economies are more interdependent than ever, so the well-being of one country is unquestionably tied to the well-being of others.