The long arm of international capital has seized an Argentine navy tall ship called "Liberty" that has called on Philadelphia and other global ports in goodwill and training tours, in an attempt to make good on Argentine government bonds that defaulted back in 2001.
A court in Ghana, a West African nation and ex-British colony that is cultivating close ties with Western business after a long, unprofitable experiment with state socialism, "ordered an injunction and interim preservation order against the A.R.A. Libertad, a 100-metre long tall ship" at the request of US investor Paul Singer's hedge fund, NML Capital, managed by Elliott Capital Management Inc., a New York firm that specializes in collecting old government debts.
"Argentina slammed the interception of the Libertad as a 'trick which these unscrupulous financiers' had pulled, adding that it “violates the Vienna Convention on diplomatic immunity”, reports the Financial Times here.
From an Argentine government statement (via FT): “Vulture funds have crossed a new limit in their attacks on the Argentine republic,' by tax dodgers seeking “usurious gains... It is President Cristina Fernández de Kirchner’s decision not to give way to the extortive international and local events which vulture funds have been conducting and [the government] will continue to denounce them in different forums" such as the United Nations.
Most of Argentina's deadbeat debt was restructured at 30 cents on the dollar. Elliott refused to take the loss and has battled in world courts to seize Argentine assets. Elliott has so far won $1.6 billion in US and UK court awards, including a court order that would prevent Argentina from paying interest on newer bonds until Elliott is paid off on the old ones. But Argentina has balked at making the payments.
Libertad, with a crew of 200, is worth an estimated $10 million+.
Hard to know what's most remarkable for a lay observer here: that a hedge fund would be so relentless when other debtors settled long ago; that an African court would pick a rich US hedge fund over another indebted "developing" country; or that Argentina's military wasn't able to keep its proud mascot ship from being seized by civilians. President Fernandez may act outraged, but the incident makes her government look weak in every way.