The ruling by the United States justice system ordering the payment, by Argentina, of debts contracted with ‘vulture funds’ has sparked condemnation from human rights organizations around the world. These funds, which profit from investing in bonds that are in or near default (and, therefore, cheaper), total 8% of all the debt contracted by the country in the 2000s. The remaining 92% was renegotiated with creditors.
According to Judge Thomas Griesa, who presided over the case, the government should pay the ‘vulture funds’ before making payment to the bondholders that accepted more flexible terms. This puts the country in ‘technical default’, with serious consequences for the economy and for the economic, social and cultural rights of the Argentine people, who are already grappling with unemployment and the lack of housing and education.
More than 100 human rights organizations, among them Conectas, have published a joint statement criticizing the judge’s decision. According to the statement, the current crisis “should not be viewed as an isolated case, but rather as the expression of a global problem that impacts the effective implementation of human rights”.
The ruling, say the organizations, “increases the incentives for sovereign debt holders to refuse to negotiate in future debt crises, which will in turn render all but impossible the implementation of debt restructuring processes for countries in need”.
They claim that the solution to the problem requires the enactment of laws that restrict predatory activities on the financial market and the creation of an independent international mechanism to guarantee human rights in countries facing debt restructuring negotiations.
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