Obama Could Use US Constitution to Stop Vulture Funds

Like Argentina, the U.S. previously accused vulture funds of ''extortion'', says BBC investigative journalist.

US President Barack Obama could stop the vulture funds which threaten Argentina financially ''by a simple note to the courts'' said Greg Palast, a BBC investigative journalist and best-selling author.

Writing in The Guardian on Monday, he said Obama only needs to inform US judge Thomas Griesa that the law-suit against Argentina ''interferes with the president's sole authority to conduct foreign policy. Case dismissed.''

Thomas Griesa recently ruled Argentina must first pay the vulture funds before it could continue paying the over 90% of its creditors who had accepted a settlement with the country after it defaulted in 2002. The vulture funds, a group of aggressive New York hedge funds, did not accept a settlement and insisted Argentina pays at exuberant profit rates.

Powerful billionaire Paul Singer's Elliot Associates hedge fund has taken the lead in the litigation against Argentina.

Palast recounts how former US President George Bush previously blocked Singer from seizing US property belonging to the nation of Congo-Brazzaville based on the constitutional right to maintain foreign relations being exclusively the president's domain.

Although the US state department ''did inform Judge Griesa that the Obama administration agreed with Argentina's legal arguments'' this time the President ''never invoked the magical, vulture-stopping clause'' said Palast.

The reason is that ''there's a price for crossing Singer'' who has been aggressively funding Republican organizations since launching his law-suit against Argentina.

The Obama administration has previously referred to Singer's operations as ''extortion'', exactly the same term Argentina President Cristina Fernández used to describe the vulture funds demands on Argentina.

In 2009, Singer and fellow investors became the sole supplier of most of the parts needed by the US car industry. They then threatened to ''cut off'' General Motors parts unless the US Treasury pay them billions, including $350m in cash immediately.

At the time, the US administration caved in, unlike the Argentina administration now, which, writes Palast, has chosen to battle the hedge funds instead.

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