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updated: 11/10/2012 7:39 PM

Argentine crew prevents Ghana from moving ship

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Associated Press

ACCRA, Ghana -- The Argentine crew aboard a tall sailing ship seized in a billion-dollar international debt controversy brandished weapons to block Ghanaian officials from moving the ARA Libertad to a less busy docking, according to an official of the Ghana Ports and Harbors Authority.

The sailors pulled out their rifles to prevent Ghanaian officials from boarding the Argentine navy's signature vessel on Thursday, the corporate affairs manager of the ports authority, Kumi Adjei-Sam, told the Associated Press on Saturday.

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Ghanaian Justice Richard Agyei-Frimpong ruled last week that the Libertad should be moved from its current position while Argentina fights a court order to hold it against payment of $1.3 billion to a group holding bonds on which the South American nation defaulted in 2002.

Ports officials say the ship's current location prevents other vessels from berthing, costing the agency tens of thousands of dollars per day in lost fees.

Argentina's Defense Ministry issued a statement Friday saying the ship will not budge while the detention order is appealed.

It said that the ship's crew, under orders from Buenos Aires, pulled up the gangplank to prevent Ghanaian authorities from boarding. In response, Ghana shut off water and electricity and brought a crane to lift authorities onto the ship to move it.

"An order was for the crew to show up on the deck, with its regular weapons, with the purpose of dissuading any attempt to board it," the Argentine ministry said.

It urged the Ghanaians to stop "the illegal measures such as forcing us to move and cutting off basic supplies, which represent a violation on our sovereignty and an act of hostility."

Ghana's Foreign Minister Mohammed Mumuni has not yet responded to the show of force by the Argentine crew.

Ghanaian courts ordered the ship detained on Oct. 2 in response to U.S. court decisions in favor of investors holding bonds on which Argentina defaulted.

Argentina's problems grew larger on Friday, when U.S. District Judge Thomas Griesa warned President Cristina Fernandez not to "defy and evade" his orders to pay the holdouts on December 2, the same day it is due to pay $3 billion to bondholders who accepted restructuring of their debt at a loss.

He said he would announce how Argentina should pay on Dec. 1.

Fernandez has refused to post $20 million with a court in Ghana to release the Libertad and insists Argentina will not pay a single centavo to what she calls "vulture funds" that held or bought up the defaulted bonds that remained after other holders agreed to restructure more than 90 percent of the debt in 2005 and 2010. Many received as little as 25 cents of the dollar.

Argentina lost its long battle against bond holdouts in the U.S. courts last month, when an appellate panel rejected every argument it made against paying $1.33 billion in principle and interest to investors holding the original bonds.

The ruling effectively gives Argentina a stark choice: either it pays all of its bondholders equally, or pays none of them at all.

Argentina argued that forcing it to pay the holdouts could provoke another severe economic crisis, but the U.S. appellate court said "nothing in the record supports Argentina's blanket assertion." It agreed with Griesa, who ruled that with more than $40 billion in foreign reserves, Argentina has the ability to pay.

Fernandez said Friday that U.S. courts are harming those who showed faith in Argentina during the bond restructuring.

"Those who believed in Argentina, who put their trust in Argentina, they restructured the debt and we're paying it religiously, one after the other," Fernandez said.

But judges said last month that Argentina must keep promises it made when it issued the original debt in the 1990s, and that performing debt does not take priority over defaulted debt.

The judge's new warning dented the price of Argentine global bonds due in 2017, which fell more than 6 percent on Friday and have plunged about 12 percent since the court order last month.

Enrique Dentice, an economic analyst for Universidad de San Martin in Buenos Aires, said the judge's order "will greatly harm those who joined the swap at the time" and respected Argentine law.

He said Argentine rules forbid the reopening of debt restructuring even as the U.S. law requires honoring the original clauses of bonds issued there.

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Associated Press Writers Luis Andres Henao contributed from Santiago, Chile, and Michael Warren from Mexico City.

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