Greg Palast: President Obama has failed to exercise his authority to stop a New York judge from ordering Argentina to pay
JAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I’m Jaisal Noor in Baltimore.
In breaking news, Argentina has sued the United States in the World Court, alleging a U.S. court violated Argentina’s sovereignty for ruling it must pay so-called bondholders who refuse to sign on to the country’s debt restructuring after its 2001 economic collapse. Argentina defaulted on its debt last week. The U.S. must first agree to follow the court’s ruling or the case will not proceed. But our next guest says today Obama could instantly and easily solve this problem by a simple gesture.
We’re now joined by Greg Palast. Greg is an investigative reporter for the BBC and The Guardian. He’s the author of the New York Times bestsellers Billionaires & Ballot Bandits, The Best Democracy Money Can Buy, Armed Madhouse, and Vultures’ Picnic.
Thank you so much for joining us again, Greg.
GREG PALAST, INVESTIGATIVE REPORTER, BBC AND THE GUARDIAN: Glad to be with you.
NOOR: So, Greg, help us sort through this crazy situation, where you have Argentina wanting to pay off its debt holders that agreed to the debt restructuring, but a New York judge has blocked this from happening, and now Argentina is going to the World Court, saying it’s not going to get pushed around by the U.S. courts and by one particular bondholder by the name of Singer. Tell us a little bit about who he is and how we got into this mess.
PALAST: Okay. For the BBC and Guardian I’ve been hunting this guy, Paul Singer, known as “the Vulture”, all over the planet, up the Congo River, Peru, Argentina, and Detroit, okay?
This guy is called “the Vulture” for a good reason. I didn’t give him the nickname. He’s called that by everyone in the banking community. What he does is he buys–he finds old debts that were considered long settled by nations that were in a civil war, like the Congo or Argentina, or the U.S. auto industry, okay? And what he does is he then–after a deal has been worked out, he waits about ten years, and then he suddenly shows up and says, hey, wait, you owe me! Well, how much? Oh, say, 10,000 percent more than I paid.
In the case of Argentina, he bought a bunch of bonds, about $30 million worth. Argentina, listening to the bad advice from the IMF years ago, went bankrupt 15 years ago. Since then they’ve done well. They had a workout on the agreement. Actually, almost all their bondholders are being paid very nicely. They pay every month. In fact, Argentina just dropped a half a billion dollars into a New York bank and said, pay off the people we owe. But “the Vulture” has swooped down, Paul “the Vulture” singer, and said, remember those $30 million in bonds that I have? Well, I want you to pay me $3 billion. I want to repeat that. He’s got $30 million. He wants $3 billion, 100 times what he paid.
Now, and normally this would be left out of any court. In fact, in Britain after I ran a report on him, he was barred. Paul Singer, “the Vulture”, was barred by British courts from using the courts anywhere in the Commonwealth around the planet. But he bounced back into U.S. courts, where he’s generally laughed out of these courts. But we found this 84-year-old judge named Griesa, appointed by Richard Nixon, an old Republican political hack who’s–you know, you cannot remove senile judges from the bench, by the way, under the U.S. Constitution. They’re there for life–and, it seems, beyond. And he said, oh, you’ve got to pay “the Vulture” absolutely everything he wants.
And not only that, but Argentina is not allowed–you’ll love this–Argentina is not allowed to pay off all its other creditors, any of its other creditors, ’cause it’s got the money, it’s not allowed to pay off anyone unless it gives Paul Singer, “the Vulture”, everything he wants. It’s insane.
And the Obama administration, the U.S. State Department when Hillary Clinton was secretary of state, wrote the judge and said, this is madness, this is devastating to our allies. And, plus, every single workout we’ve ever had, like any crisis we’ve ever dealt with–the Greek, euro crisis, anything–we can’t have people suddenly pulling out of the woodwork and saying, wait a minute, everyone else has gotten out of the way, but now pay me.
This guy, the reason why he’s barred from British courts is that he stopped. We’d eliminated the debt of the Republic of the Congo. The American taxpayers and the European taxpayers forgave that debt. Then suddenly this guy shows up and says, well, since everyone else’s debt has been from forgiven, you can now pay me. He took $10 million worth of bonds and got, like, $200 million. He took the money, this Paul “the Vulture”s Singer that was designated for ending a cholera epidemic. So he’s been barred from European courts. But not in the United States. And this is one of the problems. This is why Argentina’s not going to the World Court.
But the problem is, in the meantime, because a judge has said–and this is insane–insanely weird this is insane, insanely weird. And I can tell you this because, yeah, I went to a law school. I went to the law school where Obama taught, the University of Chicago. And I can tell you it’s, like, completely off-the-wall that the judge has said, you cannot pay the other creditors until you pay this guy. So Argentina’s in default not because they don’t want to pay. It’s actually written checks. But Argentina is in default. This is causing a massive crisis, tremendous hardship for our ally.
NOOR: And, Greg, the judge has even threatened to hold the banks where Argentina’s money is being held in contempt of court if they transfer these funds.
PALAST: I mean, the one good thing about the judge is that he’s threatened to throw a bunch of American bankers in jail, and for the wrong reason. All they are doing is they took money from Argentina to pay off the various banks and bondholders who hold Argentine bonds. But unless you pay this guy his pound of flesh or his ton of flash, they’re not allowed to actually pay anyone. So the bankers can actually go to jail for making a payment on a debt. It’s, like, one of the most upside down, insane-o stories.
The problem is, while the Obama administration and the State Department has said this is madness from a legal standpoint, from a foreign-policy standpoint, from just plain fairness, it’s mad, and has asked the judge to change his position. But the thing is, Obama has the power under the Separation of Powers clause of the U.S. Constitution–he’s a constitutional lawyer and he knows this–he can actually stop the case dead cold. Now, all the president has to do under the U.S. Constitution–it’s been done many, many times over the years–say this particular case interferes with my conduct of foreign policy. This is a national security matter, and it’s getting serious. The nation of Argentina has now done a massive currency swap with China. They are realigning their alliances to Venezuela, to China, to Russia. So it’s actually having massive foreign-policy implications for the U.S.A. This is where the president needs to step in and say, no, no, no, this game’s up, gentlemen. And weirdly, George Bush did this to stop this same vulture from seizing U.S. assets of the Congo.
Now, the thing is, I should say that Paul “the Vulture” singer is the number-one billionaire donor to the Republican Party in New York, the number one donor to the Republican Party in New York. He is considered by everyone the most influential donor. When he gives money, others followed. He’s chairman of something called Restore Our Future, which has Billy Koch in it, Koch brother money. It has just a whole pack of billionaires. Singer runs that and tells the other billionaires where to put their money. He’s fearsome and he’s fearless. And if you want to know why Obama hasn’t sent the note to the court saying “shut Singer down”, it’s that the guy has billions and is not afraid to spend it running vicious, vicious attack ads. This is his specialty.
NOOR: And so now the U.S. is facing Argentina in the World Court if they agree to abide by the court’s decision. How likely do you think this case is to–that it will proceed?
PALAST: Well, it might proceed in the World Court, but that’s not going to stop Singer from attempting to attach assets in the U.S.A. Remember, Argentina’s paid the money. They just paid a half a billion into an account at the Bank of New York. Singer’s going to try to seize that because the U.S. tends to tell the World Court to go fly, as we well know.
And this judge may say, I don’t care what the World Court says; they don’t have any power over me. If the president wants to, if the president absolutely wants to make a difference here, the president can send me a note. Thirty years ago this same judge was told, do not ignore a foreign policy, separation of powers foreign policy notice from the president. But the president has to be explicit. The president has to say, drop the case; it interferes with my conduct of foreign policy; that’s it, boy. And it’s done.
But Obama’s been–you know, I can’t say one shouldn’t be afraid of Singer. In fact, Singer’s goons called my bosses at BBC Television in London, saying that they’re keeping a file on me and to watch out if they’re going to run any story about Singer by me. And, you know, the BBC said, well, we’ll run the story, but we’ll run the file, too. He never produced the file. So in other words, threats, intimidation, planted stories, all this crap, that’s his specialty. He’s not called “the Vulture” for his work with the Red Cross.
NOOR: Craig Palast, thank you so much for joining us.
PALAST: You’re very welcome.
NOOR: You can follow us @therealnews on Twitter. Tweet me questions and comments @jaisalnoor.
Thank you so much for joining us.
DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.