“It’s one thing to put a gun to your head. It’s another thing to pull the trigger.”

So stated a high-level portfolio manager at New York hedge fund Elliott Management Corp., summing up Argentina’s predicament as it attempts to fight off more than a dozen plaintiffs who are seeking as much as $1.5 billion on Argentine debt that’s been left unpaid for more than a decade.

After exhausting every last legal option – even appealing to the U.S. Supreme Court, which declined to hear its case in June – the South American nation has until midnight Wednesday to change its mind.

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If it does not pay, the consequences could be devastating for Latin America’s No. 3 economy, which is already battling some of the highest inflation on the planet, not to mention force it into its first default since 2001.

Those skirmishing with Argentina represent the last of the nation’s bondholders who refuse to accept reduced payments on their debt. The majority of Argentina’s bondholders – about 93 percent – agreed to lower payments in 2005 and 2010. By a legal quirk, the so-called “holdouts” have succeeded in halting payments to all of the bondholders until Argentina agrees to settle with them. If Argentina does not, it will officially go into default July 30.

David Tawil, president of Maglan Capital, a New York-based hedge fund that’s closely watching the situation unfold in Argentina, said Wall Street is on tenterhooks, as some think Argentina may yet broker an 11th hour deal.

“Argentina may seem like it’s out of tricks, but they have so many tricks,” he told Newsweek. “They’ve lost the legal battle, but they don’t care. It says ‘game over’ on the screen, but Argentina does not acknowledge it. People are wondering if it might still somehow find a way out of this.”

Argentina’s President Cristina Kirchner has vowed never to allow the country to submit to what she views as “extortion,” by the holdouts, which she calls “vulture funds,” and which include Paul Singer’s Elliott Management. A multibillion-dollar hedge fund, Elliott’s NML Capital division is leading a group of 19 plaintiffs demanding full payment on Argentina’s bonds dating back to its 2001 default.

In a statement last week, Elliott said talks with Argentina in the past 30 days, moderated through court-appointed Special Master Daniel Pollack, have not progressed. To many, this does not come as a surprise, as Argentina has stated before it will not pay the holdouts and has gone so far as to pass a law prohibiting the country from paying them at all.

“Argentina’s government made it clear that it will be choosing to default,” Elliott said in the statement, adding: “Its representatives simply stated that no solution was possible. This outcome is unfortunate and completely unnecessary. We will continue to seek ways to engage Argentina in negotiations, but there is currently a total lack of willingness on Argentina’s part to solve the problem.”

A representative from Elliott told Newsweek that Argentine officials have at no point agreed to speak directly with the fund and have only had contact with the special master, who has confirmed the talks have yet to gain traction.

Jay Newman, the point person for Elliott’s longstanding Argentine bond investment, has not disclosed how much is at stake for the fund. But a former portfolio manager from Elliott, Mark Brodsky, who now runs his own New York-based hedge fund, Aurelius Capital Management, estimated last year that the amount of profit he stood to make on his investment in Argentine bonds came to around $500 million.

Elliott and Aurelius both bought the Argentine bonds for pennies on the dollar after the 2001 default in hopes of making a big profit.

This is not the first arms-length standoff between Elliott and Argentina, whose tensions have boiled over in dramatic fashion before.

In an attempt to seize Argentine assets against its unpaid bonds in 2012, Elliott secured a court order to force the seizure of a 113-yard-long, Argentine naval tall ship in a port in Ghana. The incident not only grabbed international headlines, but climaxed with Argentine sailors brandishing weapons on the deck of the ship and threatening Ghana’s port officials with gunfire after waiting for weeks to be released.

The faceoff underscores just how far Elliott is willing to go to extract full payment from Argentina on its debt – even if Argentina does default Wednesday. (In fact, the default would hurt Argentina far more than Elliott, which is accustomed to long, litigious battles before reaping payouts.)

“It really does not affect us, we will just keep on going,” said the Elliott portfolio manager. “We will continue to seize assets, enforce judgments. Argentina can’t isolate themselves from the U.S. or in places where our claims are enforceable forever. That would be amazing in today’s world.”

The impasse has raised red flags about whether Washington should allow Wall Street money tussles to spill over into foreign relations, as the row prompts Argentina to seek to strengthen its ties with China and Russia.

Aurelius Capital’s Brodsky has said he believes that Argentina is a “unique” situation and poses a conflict that, despite its critics, is “less than meets the eye.” Those who object to the tactics of the holdouts, he says, are “fear-mongering.” For its part, Elliott, which has assiduously lobbied Washington to allow it to aggressively pursue repayment options on its Argentine debt without interference, has been demonstrably generous to the Beltway.

Elliott, which says it has reached out to Argentina on numerous occasions to forge a settlement, told Newsweek it remains open to exploring flexible terms on with Argentina, if the country is ever willing to negotiate.

Reached in Buenos Aires this week, Argentine government officials declined to comment. Both in New York and Buenos Aires, investors are awaiting the final verdict on the talks, which have continued. Neither Elliott nor Aurelius would comment on the status of the discussions as of late Tuesday.

“We don’t know what will happen,” said one trader at Louis Dreyfus Commodities in Buenos Aires. “We are really just hoping for the best.”

He added that some members of the firm’s team had traveled to New York this week to catch word of the outcome of the talks as soon as it might come down. Conversely, many of New York’s financial establishment have traveled to Argentina to do the same.

Privately, many observers say they do not know what to expect if Argentina defaults, because, unlike in 2001, this time it could actually pay – if it wanted to.

“I don’t know if the markets will react as strongly as with your typical default, because this is a technical default,” said Maglan’s Tawil. “The point is, there is no need for any of the disruption that’s going to happen. This is a case of two sides where each side consists of some very stubborn opponents.”

By all accounts, it is shaping up to be one of the more bizarre debt-collection tales ever witnessed on Wall Street.

“You’re talking about two sides that are not even on the same planet. They do not speak the same language. They do not play by the same rules,” Tawil said.

Perhaps a lawyer for the Ghana Ports and Harbors Authority, Asare Darko, speaking in 2012 on the tall ship debacle, had it right when he drily noted, “This is turning into an international disaster.”