Introduction

Victor R. Caivano/Associated Press

A federal judge in New York has ruled that Argentina must pay a small group of creditors in full — about $1.5 billion — even though it got 93 percent of its other bondholders to accept partial payment in a debt restructuring after its 2001 default.

Now it faces default again because the judge has refused to let it pay any other creditors until it pays these hedge-fund investors, whom critics call “vultures.” Critics of the ruling say it will encourage other creditors to demand full payment, scuttling the debt deal and make future debt restructurings elsewhere impossible.

Is it fair to make Argentina choose between defaulting and paying some of its past creditors in full? Could that help prevent struggling countries from recovery economically?