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Risk of new Argentinian debt default after vulture fund verdict

Endgame approaches in ‘debt trial of the century’ after shock Supreme Court loss

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 Stop Vulture Funds support statement at the Argentina Embassy in London

Reacting to today’s decision by the United States Supreme Court not to hear Argentina’s appeal against a $1.3 billion award to two US-based vulture funds, Sarah-Jayne Clifton, Director of the Jubilee Debt Campaign, said:

“The Supreme Court’s decision places profits for financial speculators ahead of justice and risks forcing Argentina into a second debt crisis. The vulture funds never lent Argentina any money, they just speculated on its debt when the country was on its knees and they’re now seeking profits of over 1,000%.”

“The decision confirms that the system for dealing with sovereign debts is fatally flawed – a system where irresponsible lenders are now actively discouraged from taking losses when a debt burden becomes unsustainable. If Argentina now chooses to default rather than cave in to extortion, as any democratic nation is fully justified in doing, people of conscience around the world will support them.”

Argentina’s next payment on its restructured bonds is due on 30 June, meaning it has two weeks to decide whether to make payments to the vulture funds at the same time, as ordered by US courts, or halt payments on all its debts (1).

The restructured bonds are held by the more than 90% of Argentina’s private sector creditors who agreed to take losses after Argentina’s 2001 default. Earlier this year over 100 UK MPs supported action to stop vulture funds profiteering from Argentina’s debt (2), while thousands of campaigners supported calls from social movements in Argentina for a public audit of the debts, many of which date back to the countiry’s brutal military junta (3).

Sarah-Jayne Clifton continued:

“This decision could also have major implications for other heavily indebted countries like Greece, Ireland and Jamaica. It points to the urgent need for a fair and transparent workout mechanism for international debt, as well as for countries like the US and UK to bring forward legislation to stop predatory vulture funds profiteering from the misery of countries in debt crisis.”(4)

ENDS

For more information phone Jubilee Debt Campaign on 07855 939998.

1. A leaked memo from Argentina’s lawyers last month indicated that the country’s best option in the event of an appeal loss would be to default on its restructured bonds and then re-route them beyond the reach of US courts. See http://ftalphaville.ft.com/2014/05/31/1866762/recalcitrant-moi-the-courtroom-version/?

2. http://jubileedebt.org.uk/news/british-mps-support-action-prevent-vulture-funds-scavenging-argentina

3. 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.

4. 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.

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  • agent0060

    You need to get a grip on yourselves and learn about the real world. Argentina set out to perform a major scam. It knew that it would never be able to redeem its bonds as per the original bond conditions. With the accession of Nestor Kirchner to the presidency of an already corrupt country, the stage was set. Nobody has yet explained where a million US dollars of official funds disappeared to whilst he was governor. But back to the bonds. Argentina had, cynically, offered the bonds to small private investors on the basis that they would be in no position to challenge a state. Unfortunately, for Argentina, its incompetent American lawyers “forgot” to include a collective action clause. But Kirchner moved to overcome that by telling bondholders to take the “haircut” or get nothing. That’s a matter of public record. For 12 years, Argentina has fought a legal action it could not win if the law was properly applied. And, at last, it has been properly applied. And Argentina will have to pay. And I do sincerely hope that all the bondholders that were defrauded now take action on the grounds that they were forced into the “haircut” under duress. Argentina committed a major fraud against thousands of ordinary people and should not be allowed to get away with it.

    Your attempt to demand legislation for Argentina will, of course, founder on the simple principle that legislation cannot be made retroactive. But you do your own limited credibility no good by supporting a corrupt and criminal state. Or perhaps you pay no attention to queries about why Cristina Kirchner has increased her “personal” fortune from half a million US dollars (with her deceased husband) to 16 million US dollars the last time she bothered to make an assets declaration. All, supposedly, from hotels existing, or built on, land illegally purchased, at knock-down prices, from a corrupt provincial “government”. And what about the suitcases and holdalls full of cash stored in various bunkers or flown out on the official “presidential” aircraft to appropriate tax havens. Argentina and its current president, together with most of its current “government” is corrupt, criminal and crooked. Get your blinkers off. The evidence is there. The honest people of the world will not let you succeed. As you seem to be either blind or as corrupt, criminal and crooked as Argentina.

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