Argentina 'no to extortion'

Fernandez on Tuesday vowed not to give in to "extortion" after a US Supreme Court ruling that Argentina should pay at least $1.3 billion to hedge fund investors who had shares on its bonds.

In a televised speech, the Argentine president said the country was able to pay back part of the debt that it defaulted upon, as agreed in a prior restructuring deal. But she added that Buenos Aires would not give in to a form of blackmail.

"We want to fulfill and honor our debt and we will do that... I ordered the economy ministry to set up all the tools needed to make the payment to those who trusted in Argentina," Fernandez said in a televised speech, although it remained unclear how the outstanding payouts would be financed.

Fears of fresh default

The president said she was not willing to pay cash to the winners of the court battle - who did not agree to the restructuring deal - even if not doing so closed the doors of the US financial system to Argentina.

Analysts have expressed fears that such a development could tip the country into another default.

"What I cannot do as president is submit the country to such extortion," said Fernandez in her address. "It's our obligation to take responsibility for paying our creditors, but not to become the victims of extortion by speculators. The US ruling might open up Buenos Aires to proceedings from other creditors.

'Vulture funds'

The legal fight stemmed from the country's 2001 economic crisis, which left Argentina unable to pay the bills and forced it to seek a restructured debt arrangement with creditors in 2005 and 2010.

While some 92 percent of bondholders agreed to write off two-thirds of the pre-crisis values of the bonds, others refused. Some of the holdout creditors sued, including hedge funds.

Fernandez has described the plaintive creditors, led by the hedge funds NML Capital and Aurelius, as "vulture funds."

Giving in to the US court would prove difficult for Fernandez- A key facet of the brand of politics promoted by her and late husband Nestor Kirchner is that Argentina preserve its sovereignty and economic independence at all costs.

rc/crh (AP, AFP, dpa, Reuters)