Most Argentines Back Their President, Not Debt
With the Argentine economy showing signs of life again following the worst economic crisis in its history, President Nestor Kirchner's defiant proposal to repay only a fraction of the nearly $88 billion the country owes to creditors in the United States, Europe and Japan is rallying voters here and angering bondholders abroad.</br></br>Argentina defaulted on the bonds in December 2001, deepening a long recession and leading to a sharp devaluation of the peso. Argentina's economy grew last year for the first time in five years, by nearly 8 percent. But with 1 in 5 workers unemployed, and more than half of the country's 38 million people living in poverty, Kirchner has not budged from his insistence that Argentina cannot afford to repay the defaulted bonds at anything close to their full prices.</br></br>Kirchner's stance has come under increasing pressure from the Bush administration, the European Union and bondholders, who have begun to pursue legal action against Argentina in U.S. courts.</br></br>The dispute over the defaulted bonds could jeopardize a pact reached last year in which the International Monetary Fund agreed to reschedule more than $31 billion in debt owed to the lender. A mission from the IMF is in Argentina this week for a six-month review of the country's efforts to comply with the terms of the deal. If Argentina defaults to the IMF as well as to private creditors it would join countries such as Sudan, Somalia and other failed states in becoming an international pariah.</br></br>"If they want to squeeze, let them," Kirchner told reporters last week. "Here we have Argentines ready to build a new destiny, a new reality."