The United States Supreme Court has decided not to hear Argentina’s appeal against a $1.3 billion award to two US-based vulture funds.
Argentina’s next payment on its restructured bonds is due on 30 June. The Supreme Court decisicion was handed down on 16 June, giving the country 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. Last month, a leaked memo from Argentina’s lawyers indicated that the country’s best option in the event of an appeal loss would be to default on its restructured bonds and re-route them beyond the reach of US courts.
The restructured bonds are held by the more than 90 per cent of Argentina’s private sector creditors who agreed to take losses after the country's 2001 default. Thousands of campaigners have supported calls from social movements in Argentina for a public audit of the debts, many of which date back to the country’sl military junta under whose rule 30,000 people were ‘disappeared’ and widespread abuses of human rights were committed.
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 per cent.”
“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.”
She concluded: “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.”
Last month, over 100 British MPs signed an Early Day Motion supporting action to prevent vulture funds profiteering from Argentina and forcing the country into default. The 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”. It “urges the Government to share its experience of legislating on vulture funds with the US administration" and to "bring forward legislative proposals to prevent vulture funds ignoring international agreed debt restructuring for Argentina and Greece in UK courts and support the creation of a fair, independent and transparent arbitration mechanism for sovereign debt."
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 was handed to the Argentine Embassy in London, supporting Argentina’s right to refuse to pay vulture funds.
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 in sub-Saharan Africa.
* Read the Early Day Motion here: http://www.parliament.uk/edm/2013-14/666