Jubilee's partners at New Rules for Global Finance are looking for feedback from across the globe on how the international community should deal with sovereign debt issues. This is a great opportunity to participate in a global discussion on one of the most important issues of our time. To participate, please click here.
Submissions are due October 6. Thanks in advance for taking part!
By Aldo Caliari Director, Rethinking Bretton Woods Project - Center of Concern Co-Chair, Jubilee USA Network Board of Directors
In June of this year, the US Supreme Court extinguished the last hope that a US judge’s ruling handing “vulture funds” a victorious precedent to sue poor countries and make extraordinary profits at the expense of debt relief granted by other creditors, could be reversed.
Less than three months later, debt justice campaigners had reason to celebrate that something good may come out of it, after all. The UN General Assembly, in a historical vote held on September 9th, adopted a resolution to initiate negotiations towards a multilateral legal framework on sovereign debt restructuring.
The ruling had been part of a case “vulture fund” NML initiated against Argentina. This fund had acquired Argentine sovereign debt bonds after the 2002 default and had not accepted the terms of the agreement reached by Argentina with over 92 per cent of the bondholders in 2005 and 2010, and sued in US courts for payment of a 100 per cent of the instruments value plus interest aiming to achieve what, at the current moment, represents a 1600 per cent return on their original investment.
The first half of the month has seen several developments in Argentina's debt dispute with holdout creditors. Notably the UN passed a resolution last Tuesday that begins the process of creating a global bankruptcy process. The following article in Latin Post features reflections on the UN vote from Jubilee's Executive Director Eric LeCompte.
Argentina Debt: Lawmakers Pass Legislation to Sidestep U.S. Court Order, U.N. Votes to Begin Treaty Negotiations over Vulture Funds
by Rebecca Myles
Argentine lawmakers passed a measure on Thursday that will allow the country to sidestep a U.S. court order that froze money to pay back debt.
The law passed the lower house by a vote of 134 to 99 in favor after it was approved by the Senate last week.
Under the new law the repayment location is moved from New York to either Buenos Aires or Paris or through a bondholder.
Argentina has to make good on debt payments of $200 million by Sept. 30, according to AFP.
The law is seen as the latest move by Argentina in a legal battled with creditors who refused to join the restricting deal when Argentina defaulted on its debts of $100 billion in 2001.Under that deal, 93 percent of the country's creditors accepted a cut of 70 percent of the face value of their Argentine bonds.
United States and Ten Other Countries Vote Against Super Majority by Sophia Har
The UN General Assembly passed a historic resolution to begin treaty negotiations to enact a global bankruptcy process and stop predatory hedge funds. The resolution passed by a super-majority vote of 124-11 with 41 abstentions. The US voted no along with 10 other countries. The bankruptcy process could make it more difficult for hold-out investors to block countries from debt restructuring and could limit future defaults. "The strong majority vote shows how powerful the global consensus is to stop predatory financial behavior," noted Eric LeCompte, Executive Director of the religious debt relief organization, Jubilee USA. "If we are going to solve what global leaders believe is the root cause of inequality, we need a bankruptcy system in place." LeCompte serves on UN expert groups working to create an international bankruptcy process.
Washington, DC - As the Third International Conference on Small Island Developing States (SIDS) continues in Samoa, the agreed upon final outcome statement fails to address the major debt and tax crises facing many of the attending countries. According to the World Bank, 10 of the 30 most heavily indebted countries in the world are small islands.
"While the final statement talks about the urgency to raise revenue for these struggling islands, it's baffling that there is hardly a mention of their debt crises and no proposed tax plans," stated Eric LeCompte, who sits on related UN expert working groups and is the Executive Director of the religious financial reform group, Jubilee USA.