An Argentina supporter reacts as she watches a screening after Argentina lost to Germany in the 2014 World Cup FinalReuters
When Argentina reached the World Cup Final on July 13, the country's significant woes were temporarily forgotten. From Santa Fe to Buenos Aires football fans drank, danced and dreamed about a date with destiny.
Millions had flooded the country's streets throughout the tournament, cheering Lionel Messi and co all the way to Rio de Janiero. The sweetest glory, lifting the World Cup in arch-rival Brazil's flagship stadium, the Maracana felt inevitable.
Argentina's improbable victory was cruelly snatched away at the last minute, of course, leaving players and fans to reflect on multiple wasted chances.
While the superstars in white and blue have left, destined for beaches in remote corners of the globe, Argentina has had to sober up to its economic predicament.
The Vulture Fund Dispute
Argentina's latest date with destiny falls on Wednesday July 30.
Buenos Aires has careered to the brink of defaulting on its debts. In June, the United States Supreme Court threw out Argentina's case against a fund that bought a large (and cheap) chunk of its debt after Argentina's 2001 default.
The Cayman Island-based fund, NML Capital, has been holding out for full payment of principal and outstanding interest, according to the terms agreed in 2001.
The vast majority of Argentina's 2001 creditors restructured the debts, first in 2005 and again in 2010, accepting around $0.30 on the dollar. Among others, NML did not.
Argentina appealed to the Supreme Court against a previous judgement that prevented it paying off its creditors who had restructured their debt if it did not also pay the holdouts.
The Supreme Court decision means that Argentina must either reach a deal with the hold-outs or pay it off in full by 30 July. If a deal is not reached, it will default on its debts.
Argentina has to find $1.3bn to pay off the holdouts. It also needs to find $539m in interest payments on restructured debts by the same deadline.
Argentina has a track record of pushing things to the last minute and the possibility of a deal remains.
Yet, the likelihood that the country will default for the eighth time in its history, and the second time this century, is growing with every hour.
Second Default in 13 Years
NML has lambasted Argentina's government throughout proceedings, accusing Buenos Aires of stubbornness as it marches towards default.
"Today, Argentina's government made clear that it will be choosing to default next week," the fund said in a 24 July statement.
While NML professed as "willing to be flexible in forging a solution. Argentina again refused to negotiate any aspect of the dispute".
"Instead, its representatives simply stated that no solution was possible," it added.
Economists and analysts have come around to the idea that Argentina is willing to default.
"The only possibility to avoid default now is for the hold-outs to request the judge to put the ruling on hold," said IHS Latin America Analyst Carlos Caicedo in a note.
"If the judge does that, Argentina would be able to pay the exchange bondholders what is due to them on July 30, avoiding default. Argentina is adamant that only under these circumstances – a stay on the ruling – would it consider negotiations with the holdouts."
CFK Unapologetic
Since the Supreme Court decision on 30 June, Argentina's President Cristina Fernandez Kirchner has embarked on a media offensive, targeting the holdouts and the US legal system.
Argentina's government ran advertisements demonising the holdouts as 'vulture funds' during the country's World Cup matches. It also published full page ads in US newspapers, attacking the 'vulture funds', and one of the American judges that ruled against Argentina.
The aggressive nature of the public campaign leaves the impression that CFK is preparing the ground for a default.
Default the Least-Worst Option for Argentina?
Mired in recession, Argentina's economy already suffers from runaway inflation and a worrying shortage of foreign exchange reserves.
The Latin American country's leaders have said the default would have no negative effect on ordinary Argentinians, or the economy at large.
"There's no link to the economic activity. It's independent to the evolution of these restructuring processes," said Jorge Capitanich, head of the cabinet. Analysts tend to agree, pointing out the differences between 2014 and 2001.
For starters, Argentina's positive trade balance means the country has a guaranteed flow of cash. It has also fostered economic ties with China, signing a number of investment agreements with Beijing.
"Argentine authorities seem to have reached the conclusion that to default now and renegotiate later would be the less costly option," said IHS's Caicedo.
"If Argentina does not choose to default and opts to pay the holdout creditors, this carries the risk that those bondholders that agreed to restructure defaulted debt in 2005 and 2010 would demand a similar treatment."
However, a default would only serve to further isolate Argentina from international markets.
It could usher in a new period of inflated borrowing costs, for public and private ventures, while the long-running disputes would need to be revisited and resolved in the future anyway.
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