Endgame approaches in ‘debt trial of the century’ after shock Supreme Court loss
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)
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/?
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.