On 2 October 2012, private company NML Capital ratcheted up pressure on Argentina by seizing the Libertad, an Argentine naval ship. NML, a subsidiary of U.S. hedge fund Elliott Capital, filed for an injunction in Ghanaian courts barring the Libertad from leaving Ghana unless Argentina pays NML US$20 million, though their total claims amount to US$370 million. The courts in Ghana sided with NML Capital, so the Libertad has been sitting in the port of Tema, Ghana under a fuel embargo for three weeks. Captain Lucio Salonio and a skeleton crew of four dozen remain onboard to maintain the ship after President Cristina Fernández ordered the evacuation of the other 281 marines. The Fernández administration released a statement calling the expropriation illegal and a violation of the crew’s human rights. Foreign Minister Héctor Timerman approached the U.N. Security Council to address the issue, though a statement by Ban Ki-Moon expressed hope that the parties can work out a resolution among themselves. Meanwhile, Juan Manuel Abal Medina, the Argentine President’s Cabinet Chief, called the U.S. financiers “vultures,” and confirmed that Argentina remains determined not to back down, not to pay, and not to give up the ship.

At first glance, the situation seems almost unreal—a repossession order for a battleship? But one must remember that the Argentine government has a history over the past decade, and particularly the past two years, of pursuing immediate goals at the expense of long-term consequences. In 2001, Argentina defaulted on US$95 billion in international debt, the largest default in history at that time. Though most of its creditors eventually accepted a partial payment and wrote off the outstanding debt, about US$7 billion of the original default remains outstanding to debt holders like NML Capital. In the last five years, as GDP growth has slowed, the government of Argentina started to take extreme measures once again. On 21 November 2008, under Cristina Fernández’s leadership, the Argentine National Congress passed a bill to nationalize US$30 billion in private pension funds. On 22 March 2012 Fernández pushed through reforms that changed the charter of the nation’s Central Bank and put the Bank’s reserves at the disposal of the Treasury. On 16 April 2012, President Fernández ordered the nationalization of YPF, the largest oil and gas producer in Argentina, unilaterally taking over shares owned by Spanish energy conglomerate Repsol. Though Repsol is seeking US$10 billion in compensation through legal action, Fernández appears disinclined to pay anything approaching a fair market value. Because she has refused to pay awards issued in decisions by the World Bank’s ICSID, the U.S. suspended Argentina’s status as a preferential trade partner on 30 March 2012. Spain pressured the E.U. to stall on Mercosur trade negotiations due to the Repsol takeover. The E.U. filed a case with the WTO concerning Argentina’s trade barriers in May 2012, and the U.S., Mexico, and Japan filed similar complaints in August. Neighboring Uruguay and Paraguay have expressed dismay over new import and export restrictions, which handicap industries that depend on trade with Argentina.

Repsol and others might think that NML Capital’s confiscation of the Libertad is giving Fernández a taste of her own medicine.