Argentina thrown to the vultures

01.03.2016 - Silvia Swinden

This post is also available in: Italian

Argentina thrown to the vultures
(Image by Magnus Kjaergaard for Wikimedia Commons)

In June 2015 the Jubilee Debt Campaign explained:
‘Argentina’s economy is being held to ransom by a small handful of very wealthy speculators – so-called ‘vulture funds’.

‘A New York court has awarded two US vulture funds a $1.3 billion payout on debts bought up after Argentina’s debt crisis of 2001. What’s more, Argentina has been told it is ILLEGAL to pay its other debts unless it also pays the vultures.

‘With a $900 million payment due on 30 June (plus a 30 day grace period), Argentina is being forced towards a new debt default.

‘Debt scavengers

‘The vulture funds bought up billions of dollars worth of Argentina’s debt in the early 2000s when the country’s economy was on its knees and its people were suffering horrendous poverty. Defaulting on its debts was the only option. 93% of lenders agreed to reduce Argentina’s debt burden, and the country’s economy has recovered. But vulture funds have spent more than a decade demanding the full amount plus interest and penalties. The decade-long legal battle has been called the ‘debt trial of the century’.

‘We believe there is no ethical justification for Argentina making this payment. These ‘vulture funds’ never lent money to Argentina – they are profiteering from a country in debt crisis. What’s more, many of the debts originate from the time of Argentina’s brutal military dictatorship – many Argentinians argue they should not be repaid at all.’

But all the good work done by Argentina at international level to create a more just system regarding sovereign debt is quickly being undone by the new neoliberal government of Mauricio Macri, which has agreed to pay the vultures all they are demanding. And maybe more. It has been calculated that they are getting around US$4 for every 25 cents invested in buying Argentina’s debt when its economy collapsed 15 years ago.

The agreement to pay circa US$4.65 billion, which puts Argentina again in a situation of profound debt and inability to plan an independent future has been applauded by international markets and the International Monetary Fund (which was partly instrumental in the 2001 collapse of the South American country’s economy through inflated interest rates). But before the payments can be made they have to be approved by Congress, where the President’s faction does not have a clear majority. Will he dare invoke another ‘Decree of Necessity and Urgency’, as he has done now so many times since coming to power? Or what kind of pressure will be put on Congress?

Economic violence is as lethal as its physical counterpart. If there is any part of the system in which we live that represents a clear and serious danger to the lives and well being of millions of human beings is the so called vulture funds, the speculators that move in whenever they see an economic collapse, the weakening of a country. Together with the Tax Havens and other predatory speculators they have created bastions of dehumanisation and immorality, leading to a concentration of power and resources never seen before in human history. This may well be, (as in 2007) also the trigger for the collapse of the whole economic system. The rumbling noises of another financial earthquake have been rattling the markets for some time now, but we cannot see any change of behaviour that would create any hope. Would you bail them out, again?

A transition to a Humanist Economy is the best alternative to the disaster looming in the horizon. A mixed economy of cooperatives, small and medium enterprises with workers participation in profits and decision-making, the progressive elimination of speculation and participatory, real democracy to look after the interests of all, rather than a tiny minority. The proposals are on the table, but still invisible to the majority of people as the media is largely in the hands of the financial elite.
Argentina will not be the only, or the last one, to be thrown to the vultures before a new system starts to emerge from the ashes of the present one, but well informed people’s participation can make the transition faster and less catastrophic.

Categories: Economics, International issues, North America, Opinions, South America
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