BUENOS AIRES - The fine print Argentina blames for failed negotiations with disgruntled creditors expires Thursday, theoretically clearing the way for a deal to lift the country out of default -- if the two sides want it.
A woman walks past grafitti against so-called "vulture funds" in downtown Buenos Aires, Argentina, on October 4, 2014
Even as it careered toward its second debt default in 13 years last July, Argentina insisted it could not swerve away from the precipice because of something called a RUFO, or Rights Upon Future Offers clause.
The RUFO clause is part of Argentina's 2005 and 2010 debt restructuring agreements, hard-fought deals the South American country reached with creditors who agreed to take steep losses on their bonds after it defaulted on $100 billion in debt during its 2001 economic crisis.
The clause entitles all bondholders to equal treatment.
According to Buenos Aires, that meant it had no choice but to defy a US federal court ruling in favor of two American hedge funds demanding full payment on the defaulted Argentine bonds they bought for pennies on the dollar.
Blocked by the court from paying its restructured debt until it settles the $1.3 billion dispute with the hedge funds, Argentina defaulted again on July 30.
Now, with the RUFO clause expiring at the end of the year, the stage may be set for a deal.
But the two sides appear in no hurry to negotiate.
"The Argentine government has no incentive to launch a speedy negotiation because it would have to pay more, and that carries too high a cost in political terms," said Matias Calugati, chief economist at Argentine consultancy Management & Fit.
Paradoxically, President Cristina Kirchner's government has racked up significant political capital from the debt dispute, attacking the holdout creditors as "vulture funds" and US federal Judge Thomas Griesa as "contemptuous" of Argentine sovereignty.
"Waving the flag of 'the nation versus the vultures' has benefited the government, and retreating a step could cost it dearly," Calugati told AFP.
Argentina, Latin America's third-largest economy, holds general elections in October 2015 that will choose Kirchner's successor after 12 years of shared rule by her and her late husband Nestor.
With a hard-fought campaign on the horizon, Kirchner -- who is not eligible for re-election -- may see scoring political points for her allies as more important than settling the debt dispute.
The urgency of resolving the debt standoff has decreased since an $11 billion currency swap with China, boosting its dwindling foreign reserves to $31 billion and removing pressure to return to the capital markets it has been frozen out of since 2001.
- Patient 'vultures' -
The so-called "vulture funds" meanwhile appear content to play the waiting game.
The funds -- Aurelius Capital Management and billionaire speculator Paul Singer's NML Capital -- have their eye on the elections, too, especially the presidential bid by the business-friendly mayor of Buenos Aires, Mauricio Macri.
"Several opposition candidates have already put forth their strategy: pay up. So why rush to negotiate with the current government?" said Ramiro Castineira of consultancy Econometrica.
Of the creditors who hold the remnants of Argentina's 2001 debt, 93 percent signed up for the restructuring deals -- taking losses of up to 70 cents on the dollar -- while six percent neither accepted restructured bonds nor joined the lawsuit by Aurelius and NML.
As the clock continues to tick, the two hedge funds may persuade more of those holdouts to join their cause, said Castineira.
Argentina is closing out a rough year, with an 18 percent currency devaluation in January, spiraling inflation that stands at 30 percent or more, and an economic slowdown.
The government tried to circumvent Judge Griesa's ruling by paying its restructured debt in Buenos Aires instead of New York, but the offer fell flat when creditors shunned it.
The government says it will pay all its creditors, but not at any price.
"Argentina wants to and can pay," Economy Minister Axel Kicillof said recently.
"The problem isn't coming from Argentina, it's coming from the 'vultures' that have never wanted to negotiate. They want to get their full 100 percent and bring the nation to its knees."