A tribunal in Hamburg has decided on Saturday that the Argentine navy ship seized in Ghana, the ARA Libertad, should be released back to the South American country. The ARA Libertad was seized after a vulture fund, NML Capital, brought a case in Ghana to claim ownership of the boat.
NML Capital are pursuing Argentina for exorbitant profit on a debt they bought cheaply when Argentina was in the midst of a debt crisis in the early 2000s. Today’s decision comes from the International Tribunal for the Law of the Sea. Campaigners in Argentina are calling for a full public debt audit to assess which of Argentina’s remaining debts are illegitimate.
Nick Dearden, Director of Jubilee Debt Campaign, said:
“We are delighted that Argentina has won this case. It is a disgrace that a group of speculators can seize the property of a sovereign nation in this way and points to the need for a fundamental change in the international debt system. Hopefully the ARA Libertad will now be promptly released.
“Argentina is still facing a case in the United States in which the supposed ‘rights’ of these vulture funds will be put far ahead the needs and aspirations of Argentina’s people. We must stop these funds profiteering from economic crises, wherever it takes place. If we don’t, then what is happening to Argentina today will be happening to Greece and other European countries in years to come.”
UN expert on debt and human rights, Cephas Lumina, has said:
“Vulture funds, such as NML Capital, should not be allowed to purchase debts of distressed companies or sovereign states on the secondary market, for a sum far less than the face value of the debt obligation, and then seek repayment of the nominal full face value of the debt together with interest, penalties and legal costs or impound assets of heavily indebted countries in an attempt to force repayment.”
In 2001 Argentina defaulted on unaffordable debt payments. At the time the Argentinian people had experienced three years of recession and over half the population, 20 million people, were living below the poverty line. Much of the debt from this time was regarded as illegitimate by Argentina’s people, originating in the brutal dictatorship of the late 1970s and early 1980s, a period known as the ‘dirty war’ when 30,000 people were ‘disappeared’.
The Argentine government subsequently reached a deal with most creditors to pay the equivalent of 25-35 cents on every dollar owed, over several years. However some creditors refused to accept this deal, known as ‘holdouts’. These holdouts include vulture funds such as Elliot Associates and their subsidiary NML Capital, which are thought to have bought Argentinian debt at knock-down prices during the early 2000s debt crisis, and are now suing for exorbitant profits. Argentina is making debt payments to the creditors which accepted the deal, but not the holdouts.
In a separate case in New York, a judge has ruled that every time the Argentinian government makes debt payments to any creditor, it must also make payments to the holdouts. Whilst the New York case is awaiting further clarifications and appeals, it means the Argentinian government could be faced with a choice of making unjust debt payments to vulture funds, or being forced to default on its payments to all creditors.