Greece's vote to reject further austerity demands gets Cristina Fernandez's approval

Buenos Aires

FEW heads of state have heaped more praise on Greece after it spurned creditor demands than Argentine President Cristina Fernandez de Kirchner.

In the wake of the vote to reject further austerity demands on Sunday, she took to Twitter to call it an "outright victory of democracy and dignity".

She followed that up with posts championing "the brave Greek people" and underscoring that "Argentines understand what this is about. We hope Europe and its leaders understand the message of the polls".

Greece's refusal to bow to creditors is likely to embolden Ms Fernandez as she faces off against bondholders led by Elliott Management, who've effectively shut Argentina out of overseas debt markets since 2001, according to AllianceBernstein's Marco Santamaria.

It's not only Ms Fernandez who may take heart.

Daniel Scioli has seen his lead grow as the frontrunner in October presidential elections as he aligned himself more closely with Ms Fernandez's stance against creditors she calls "vultures".

"It gives some more courage to those that want to pursue a more confrontational line," Mr Santamaria, a money manager at AllianceBernstein, said in New York. "The polls suggest that maybe people" approve of Ms Fernandez's policies.

Creditors led by billionaire Paul Singer's Elliott Management rejected Argentina's efforts to restructure debt after the country's US$95 billion default in 2001 and instead won the right to full payment in court.

Ms Fernandez has refused to obey a US court order that prevents Argentina from paying its foreign bonds until it settles with the so-called holdouts; the country defaulted for a second time in July 2014.

The turmoil in Greece is in many ways reminiscent of what Argentina experienced in 2001. The Latin American country's economy plunged into recession, and the government imposed restrictions on withdrawing cash from bank accounts, helping spark riots that forced then-president Fernando de la Rua to resign.

"One of the similarities between Argentina's 2001 crisis and Greece today is that there is a recessionary environment that makes it very difficult to keep adjusting economic policies," Mauro Roca, an economist at Goldman Sachs Group Inc, said in New York. "The similarity is that the cost of austerity is so great that it is politically unfeasible, which was reflected in the referendum and in Argentina precipitated the departure of a government." BLOOMBERG

Read more on the Greek crisis here