THE Jubilee Debt Campaign has hailed new UN rules on so-called
"vulture funds" as an "important step forward in fixing the broken
global debt system".
The UN's General Assembly passed a resolution last week that
called for a legal process for handling governments' debt to be set
up, to prevent speculators' capitalising on financial crises in the
Vulture funds buy up the debt of countries that are struggling
financially, and are about to default, for very low prices, and
then sue the governments of these nations to be repaid the full
Several such funds hit the headlines recently when they refused
an offer from Argentina of 30-per-cent repayment of government
bonds bought in 2002 in the depths of the country's worst ever
The repayment deal has been accepted by 93 per cent of
Argentina's creditors, but a court ruling in the United States,
instigated by the remaining "holdouts", is preventing Argentina's
paying any of its creditors until it also pays back the vulture
funds a much higher percentage.
There are currently no established international procedures for
restructuring sovereign debt, but the Jubilee Debt Campaign is
hoping that the UN vote will lead to a system to protect developing
countries that go into default from expensive and drawn-out debt
The Campaign's director, Sarah-Jayne Clifton, said: "The
resolution represents an important step forward in fixing the
broken global debt system, and developing countries have shown
fantastic leadership in pushing it through, despite the opposition
of the UK and a handful of other rich-country governments."
The UK was one of only 11 nations to oppose the vote, together
with the US, Australia, Canada, and Ireland, among others. Almost
all developing countries were in favour, while most European
Ms Clifton also criticised the Chancellor, George Osborne, and
his deputy, Danny Alexander, a Liberal Democrat. She accused them
of favouring the interests of the financial sector over "economic
stability and justice for people in countries in debt distress".
She said that both the Coalition Agreement and the Lib Dem
manifesto in 2010 supported taking action against vulture
Last year, more than 100 MPs signed a parliamentary motion that
called for "the creation of a fair, independent, and transparent
arbitration mechanism for sovereign debt".