The Bush administration generally supported Argentina in its long battles against its creditors. After President Kirchner successfully played hardball with the IMF, President Bush took him aside in New York urged him to “keep negotiating firmly with private creditors.” President Bush jokingly introduced Kirchner at a U.N. meeting by saying, “Here comes the conqueror of the IMF!”At a later meeting with the Argentine leader in January 2004, Kirchner convinced the already-sympathetic U.S. president to support his position by reminding him that Enron’s creditors took an even bigger haircut (86%) than the one Kirchner was demanding (65%).
There were multiple ways the Bush administration could have supported the creditors — helping them coordinate, lending verbal support to the Global Committee of Argentina Bondholders (GCAB), supporting Congressional efforts to sanction Argentina — but it took none of them. In fact, the Bush administration (in contrast to earlier Reagan policy) actively supported Argentina against its creditors in American courts. (The link is to a 2006 paper from a conservative legal foundation, which was apoplectic about the policy.)
But now, the Obama administration is taking a much harder line! The United States has decided that it will not file an amicus curiae brief on behalf of Argentina as its latest dispute winds its way to the Supreme Court. As a result, the IMF has also decided to back away from its support for Argentina. This a reversal for the United States: you can read an April 2012 brief favoring the Argentine position here.
I have no idea how this will shake out at the Supreme Court, but the Obama administration appears to have lost patience with Argentina. My guess is that the exasperation actually stems from the Argentine refusal to pay its ICSID judgments rather than any particular sympathy for the creditors.
But regardless of the cause, it is a big change in U.S. policy, and it spells trouble for Buenos Aires.