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Argentina is still mired in a court battle with a group of U.S. bondholders tied up in its debt. A federal judge in New York has declared the government of Argentina in contempt of court for defying orders. NPR's Jim Zarroli reports that the judge will decide later whether to impose financial sanctions on the country.

JIM ZARROLI, BYLINE: Judge Thomas Griesa has often expressed frustration with Argentina and its unwillingness to pay off a small group of hedge funds, who have refused to accept anything but full payment for bonds they hold. Yesterday, he went further than ever, taking the very rare step of declaring the government in civil contempt. He said the country has been defying his rulings by attempting to replace the U.S. bank that serves as trustee in the case with an Argentine bank, which would give the government more influence over the case.

The Argentine legislature has also recently passed a law that would attempt to move the debt proceedings to Buenos Aires. But Griesa said the bonds were sold in the United States with the expectation that any disputes would be heard in New York. In fact, he said that was one of their selling points. Griesa said he would decide later how much of a fine to impose on Argentina. Lawyers for the hedge funds have urged the judge to fine the government as much as $50,000 a day. Meanwhile, attorneys for Argentina said the contempt ruling was not only legally inappropriate, but would make matters worse. The government sent a letter to Secretary of State John Kerry, warning that the ruling would result in an unprecedented escalation in the conflict. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.

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