The seizure in the Ghanaian port of Tema of an Argentine Navy ship may serve as a warning of the degree to which U.S. Republican presidential candidate Mitt Romney's entanglement with sleazy "vulture fund capitalists" could have a negative influence on U.S. foreign policy.
The ARA Libertad is a large sailing ship often seen in "tall ship" events. It is employed by the Argentine Navy to train its own naval cadets and those of neighboring countries. Earlier this month, it was on a goodwill visit to Ghana, but the goodwill has suddenly turned to an international incident.
On October 2, a Ghanaian judge ruled that Ghana's authorities must seize the ARA Libertad pending resolution of a debt claim by Elliot Management Corporation.
Elliot Management is headed by Paul Singer, a U.S. hedge fund manager who has his business address in the Cayman Islands. Singer is the chairman of the Board of the business friendly Manhattan Institute. He heads the lobbying group American Task Force Argentina.
He is also a major funder of the 2012 electoral campaigns of Mitt Romney, Paul Ryan and other Republicans. According to muckraking journalist Greg Palast, Singer and his company have contributed more than $2.3 million to Republican candidates in this election cycle.
They have made a fortune buying up distressed sovereign debt from countries such as Peru, Congo-Brazzaville and Argentina, at sharply discounted prices. They then go after the countries in question to demand payment of the full original amount, hoping to make huge killings. This is the strategy that these people have used within the United States, most spectacularly with Delphi, the auto parts manufacturer, as Palast has also detailed.
The Argentine sovereign debt was accrued during the military dictatorship of the 1980s and the corrupt government of Carlos Menem in the 1990s. By the beginning of the 21st century, Argentina was in deep economic and political trouble, the government caught between the demands of its creditors and those of its increasingly impoverished and angry people.
The late President Nestor Kirchner, elected in 2003, opted to emphasize the latter, and defaulted. Since that time Argentina has been able to pull itself out of its slump, while gradually restructuring the original debt, paying its creditors at about 30 cents on the dollar. But Elliot Management and its subsidiary NML Capital, who didn't lose a penny on the default, have refused this deal and demand full payment of the original amount, to the excess of $300 million. If Argentina gives in to this demand, it would harm Argentina's and other countries' ability to deal with their sovereign debt.
So Singer and his minions took advantage of Ghanaian courts to go after Argentine government assets in the form of the Libertad. Heretofore, there was no quarrel between the two countries, and the court action in seizing the ship has absolutely nothing to do with Ghana.
But according to Judge Richard Adjei Frimpong's interpretation, Singer has the right to go to court in Ghana merely because of the presence of the ship there. This may harm Ghana's interests. Recently, the left-leaning group of Latin American countries, of which Argentina is an important member, has been in discussions with African governments about economic cooperation that would be greatly to Africa's benefit. Will this ridiculous incident harm such negotiations, at least as far as Ghana is concerned?
At writing, the Libertad is still tied up at the quay in Tema, though Ghanaian authorities have asked the captain to move it as it is creating problems for commercial shipping. Judge Frimpong has also ordered the government to cut off the electrical and water supply to the ship, making life aboard untenable.
Most of the crew has been flown back to Argentina leaving just the captain and a skeleton crew of 43. Argentine President Cristina Fernandez de Kirchner has gone to the Security Council of the United Nations to ask for its intervention, based on international law that protects ships belonging to state entities.
It is unlikely that the UN will intervene, however, until the case has been adjudicated by the Ghanaian Supreme Court. President John Dramani Mahama may be unwilling to shortcut the judicial procedure, as he is up for re-election in December, and may fear being seen as acting unconstitutionally.
Given the closeness of Romney, Ryan and other Republican politicians such as Sen. Marco Rubio of Florida to Singer, will they show their gratitude for the massive campaign season largesse of these vulture capitalists by acting as their international debt collectors?
The Obama administration has not been very supportive of the leftward movement in Latin America, and has also butted heads with Argentina on the debt issue. It has moved to block international loans to Argentina.
But it refused to seize Argentine Central Bank deposits in the United States to pay the demands of Singer and his ilk. Romney, personally beholden to people like Singer and Elliot Management because of their campaign contributions, might be much more aggressive in helping his vulture capitalist friends.
That is yet another reason we can't let Romney win by default on November 6.
Photo: Occupy Detroit Oct. 14, 2011. John Rummel/PeoplesWorld.org