Argentina summons US diplomat over default comments

Argentina's Cabinet Chief Jorge Capitanich talks to the press on Juy 30, 2014 in Buenos Aires (AFP Photo/Daniel Garcia)

Buenos Aires (AFP) - Argentina summoned the acting American ambassador Tuesday over his comments on its failure to repay debt tied up in a US legal battle, rejecting his use of the word "default."

Kevin Sullivan, the charge d'affaires and top-ranking diplomat at the US embassy in Buenos Aires, had told Argentine newspaper Clarin that it was "important for Argentina to exit default as soon as possible to return to the path of growth and attract the investment it needs."

That touched a nerve in President Cristina Kirchner's government, which denies it is in default and blames the United States for failing to rein in a federal judge who has blocked Argentina from paying its restructured debt until it settles its $1.3 billion dispute with two US hedge funds.

Sullivan's comments were "incorrect, unfortunate and inappropriate," cabinet chief Jorge Capitanich told journalists.

"They constitute undue interference in the country's sovereignty."

He said the foreign ministry had summoned Sullivan for Tuesday.

"We consider that (Sullivan's) comments are incorrect because Argentina pays and fulfills its obligations," he said.

"The impediment some bondholders have had (in collecting interest payments) doesn't come from Argentina. It's an objective problem created by a judge who's obstructing the payment process."

Argentina persuaded the vast majority of its creditors to accept 70 percent losses on the face value of their bonds after it defaulted on $100 billion of debt during its 2001 economic crisis.

But two hedge funds, US billionaire Paul Singer's NML Capital and US-based Aurelius Capital Management, refused to accept the write-down and took the country to court.

They won a ruling from US federal Judge Thomas Griesa ordering Argentina to pay them in full and blocking it from repaying other creditors until it does.

Barred from servicing its debt, Argentina missed the July 30 deadline for a $539 million interest payment, entering what ratings agency Standard & Poor's called "selective default," Fitch called "restrictive default" and Moody's simply called "default."

Sullivan also said the United States did not support Argentina's bid to create a UN convention that would prevent a minority of creditors from derailing debt restructuring plans for countries in trouble.

"We don't support the debate at the United Nations because it does not seem to us the right forum to find an efficient solution," he said.