Argentinian turkey vulture in flight
Why we’re backing Argentina against the vultures
Last week TUC General Secretary Frances O’Grady signed a public statement opposing the decision of a New York judge to force the democratic government of Argentina to put the private interests of a ‘vulture fund’ ahead of the public interest of millions of voters in one of Latin America’s growing number of countries committed to social justice. Thanks to our friends at the Jubilee Debt Campaign, you can make your voice heard too. The ITUC has expressed concern that the decision will reinforce financial speculation.
These ‘vulture funds‘ make millions by buying up cheap the debts of countries whose previous governments – often dictatorships – engaged in unsustainable borrowing (again, often for military adventures or just plain arms races.) They were largely following the ‘advice’ of international financial institutions like the IMF and the World Bank when the ‘Washington consensus’ was unchallenged, and face a vicious circle as those same institutions who encouraged spiralling debt insist on cuts to social programmes and public services to allow the huge interest payments on the debt to be met!
Governments can escape this vicious circle. The debts are ‘rescheduled’ or written off (either by multinational agreement or in Argentina’s case, unilateral action). But this is when the vultures pounce, and insist on a pound of flesh for the debt they bought cheaply, at rates which are far higher than other debtors have agreed to, and can cripple the economic recovery rescheduling is designed to promote. The global unions’ Washington expert, Peter Bakvis, has explained in more detail how this works.
Britain has – as a result of campaigns led by the Jubilee Debt Campaign, with TUC support – banned vulture funds from using our courts. So they have engaged in the sort of forum shopping that right-wing commentators would call benefit tourism, if the vulture fund owners were poor instead of stinking rich (in this case billionaire hedge-fund mogul Paul Singer) and gone to the US. Where a judge appointed by Richard Nixon (readers with long memories will realise that this means ‘a long time ago’ – 42 years to be precise: how’s that for job security?) was still willing to put private profit ahead of the public interest.
The TUC’s backing for Argentina is hardly revolutionary. The South American state’s approach has been backed by commentators ranging from Mark Weisbrot in the New York Times to the Financial Times’ Martin Wolf (£). But it’s the right thing to do: elected governments need to show that they control the financial markets, rather than the other way round!