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British MPs support action to prevent vulture funds scavenging Argentina

“Debt trial of the century” could cause financial shockwaves

Over 100 British Members of Parliament have signed a motion supporting action to prevent vulture funds profiteering from Argentina and forcing the country into default. The Early Day Motion, signed by 106 MPs, “notes that vulture funds are trying to force Argentina to default on its debt through a legal case in New York” and “urges the Government … to bring forward legislative proposals to prevent vulture funds ignoring international agreed debt restructuring for Argentina and Greece in UK courts”.

Sarah-Jayne Clifton and Tim Jones from Jubilee Debt Campaign, and Daniel Ozarow from the Argentina Research Network, hand-in the 2,000 people petition at the Argentina Embassy in London

Sarah-Jayne Clifton and Tim Jones from Jubilee Debt Campaign, and Daniel Ozarow from the Argentina Research Network, hand-in the 2,000 people petition at the Argentina Embassy in London

Two vulture funds, NML Capital and Aurelius Capital Management, are suing Argentina in New York for huge profits on a debt they bought cheaply following the country’s debt crisis. The New York courts have ruled that Argentina should either pay the vulture funds, or none of its lenders at all, a decision which could force the South American country to default on its debt. The US Supreme Court is currently deciding whether to hear an appeal in the case, a ruling on which is expected on 12 June.

If the vulture funds win the case there will be no incentive for lenders to restructure unsustainable debts. This would send shockwaves through the financial system, and have major implications for countries in debt crisis such as Greece, Ireland and Portugal.

Sarah-Jayne Clifton, Director of Jubilee Debt Campaign, which helped organise the petition, said:

“The vulture funds never lent Argentina any money. They speculated on the country’s debt in pursuit of huge profits. The fact that the vulture funds can even bring such a case shows how the international debt system works for the benefit of rich speculators. If they ultimately win the case, it will make it even easier for reckless lenders and speculators to make profit from the crises they help to cause.”

Daniel Ozarow of the Argentina Research Network in the United Kingdom, which also promoted the petition, said:

“It is astonishing that under the international debt system’s existing rules, collective punishment can potentially be imposed upon millions of Argentines for the benefit of a handful of billionaire speculators. This is just the latest in a series of ideological assaults by global capitalism’s institutions upon those less powerful states that have dared to introduce economic models that deviate from neoliberalism’s hegemony.”

In addition, a petition signed-by more than 2,000 British people has been handed to the Argentine Embassy in London, supporting Argentina’s right to refuse to pay vulture funds.

The signatories “declare our support for Argentina’s right to refuse payment to the vulture funds” and “condemn the New York Court decisions which imply that payment of vulture funds supersedes a state’s right to protect its people under international law”. The petition also supports “calls for a public debt audit in Argentina to ascertain the extent of illegitimate debt”. It is feared that if the vulture funds win the case, it will be harder for other heavily indebted countries, such as Greece and Ireland, Jamaica and Pakistan, to restructure their debts.

Campaigners in Argentina, including Diálogo 2000, are calling for a public audit into Argentina’s debt, to determine whether it is legitimate. Much of the debt originated with the military junta of the 1970s and early 1980s, under whose rule 30,000 people were ‘disappeared’ and widespread human rights atrocities committed. Jubilee Debt Campaign have uncovered documents which show that much of Argentina’s remaining debt to the UK comes from loans for the export of British-made naval vessels and helicopters, which were then used by the Argentine regime during the invasion of the Malvinas / Falkland Islands. Last week, Argentina agreed to pay western governments, in a body called the Paris Club, in full plus interest for debts arising from lending to the military junta.

In 2010, the UK Parliament passed legislation to prevent vulture funds from seeking unfair profits in UK courts in cases against 40 so-called ‘Heavily Indebted Poor Countries’, primarily countries in sub-Saharan Africa. As well as calling for this legislation to be extended to the likes of Argentina and Greece, the Parliamentary motion also calls on the UK government to share its experience of legislation with the United States government.


Countries

Argentina, United Kingdom, United States
Jubilee Debt Campaign is a company limited by guarantee, number 3201959
Jubilee Debt Campaign's registered charity number is 1055675