Argentine leader seeks pope’s backing for debt battle

The hedge funds won a decision that derailed Argentina's bid to restructure its debt by barring it from paying creditors who had accepted 70% losses without also paying the plaintiffs the full $1.3 billion due
KIRCHNER. Argentinian president Cristina Fernandez de Kirchner delivers a speech during a conference in Buenos Aires, Argentina, 11 September 2014.Ramiro Gomez/EPA

BUENOS AIRES, Argentina – Argentine President Cristina Kirchner will visit her compatriot Pope Francis Saturday, September 20, seeking to enlist his support for her fight against hedge fund creditors before taking her pitch to the UN.

Kirchner, whose center-left government is mired in a bitter US court battle with what it terms “vulture fund” creditors, will have lunch with the pope at the Casa Santa Marta, his Vatican residence.

She has not always had a warm rapport with Francis, who used to proffer barbed criticism of Argentine current affairs when he was archbishop of Buenos Aires and Kirchner’s late husband and predecessor Nestor was president.

But the relationship has taken a u-turn since the former Jorge Bergoglio became pope, his distance and worldwide popularity making him an easier ally for Kirchner.

And she will likely get a sympathetic ear for her calls for global reform to stop speculative creditors from buying up struggling countries’ bonds then suing for full payment, thus blocking them from restructuring their debt.

“The pope has taken a firm position on international asymmetries and the negative role of usury in financial capitalism,” said sociologist Ricardo Rouvier, head of the political science program at the University of Buenos Aires.

Fighting for the poor and condemning economic injustice have been at the heart of Francis’s 18-month-old papacy.

“The current economic system, which worships a god called money, is bringing us to tragedy,” the pontiff said earlier this month.

UN debt reform drive

That resonates with Kirchner’s condemnations of the two American “vulture funds,” which bought up defaulted Argentine bonds on the cheap after the country’s 2001 economic crisis and then sued the country for full payment in US federal court.

The funds won a decision that derailed Argentina’s bid to restructure its debt by barring it from paying creditors who had accepted 70-percent losses without also paying the plaintiffs the full $1.3 billion due.

Blocked from servicing its debt, recession-hit Argentina defaulted again in July.

After meeting the pope, Kirchner will travel to New York to address the United Nations General Assembly on Wednesday.

Argentina is lobbying to create a UN convention that would prevent a minority of bondholders from scuppering debt-restructuring plans for countries facing insolvency.

A resolution to negotiate such a framework passed the 193-member General Assembly earlier this month with 124 votes, though the United States and most other major powers voted against or abstained.

Pope ‘worried’ about Argentina

Discontent has been mounting in Argentina over the recession, annual inflation of more than 30% and growing pressure to devalue the peso for the second time this year.

Kirchner, 61, is struggling to right the economy with just over a year to go in her second and final term.

But her administration drew sharp criticism from the business community Thursday as Congress passed a controversial bill allowing the government to impose price controls and regulate production levels.

Francis, 77, has not been back to Argentina since being elected pope in March 2013, but he and Kirchner have met twice since.

Outside the debt reform issue, the pontiff and the president may not see entirely eye to eye.

One of Francis’s closest associates, Vatican chief of ceremonies Guillermo Karcher, said ahead of Kirchner’s visit that the pope was concerned about the Argentine political situation.

“The pope is worried about governability, about a healthy democracy,” said Karcher, a fellow Argentine. –

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