Addis Ababa, Ethiopia - July 13
At a United Nations development summit, world
leaders, the International Monetary Fund and development organizations
recommend the elimination of a type of hedge fund that preys on
countries in financial crisis. So called “vulture funds” are featured in
a global agreement to be signed this week at the Financing for
“These predatory funds undermine development and can destabilize a
country’s economy,” said Eric LeCompte, Executive Director of the
religious development organization Jubilee USA Network. “From Zambia to
Peru, they target, litigate and collect aid monies that should be
building schools and hospitals.”
When countries face economic hardship, "vulture funds" buy a
country's debt cheaply and then sue for full repayment. After Zambia
received international debt relief in 2006, a hedge fund called Donegal
International sued Zambia to collect $55 million on a $15 million debt
the fund purchased for $3.3 million on the secondary market. NML Capital
sued Argentina over debt holdings and refused to participate in
Argentina's debt restructuring. The Argentina case put a broader
spotlight on this type of litigation.
“World leaders are saying enough is enough,” stated LeCompte who is
attending the summit and participated in agreement negotiations. “The
final agreement recommends changing contracts to prevent the behavior or
legislating the funds out of existence.”
On July 1st, Belgium was the latest country to pass a law restricting
this behavior. Three of the ten paragraphs in the United Nations
agreement that focus on debt, state concern or recommend ways to stop
these hedge funds. Two additional paragraphs promote aspects of global
bankruptcy and responsible lending and borrowing which further deter
“It’s inspiring to see the global community unified against this behavior,” noted LeCompte.
The same world leaders, United Nations, International Monetary Fund and development organisations who say 'enough is enough' to this kind of predatory lending have no such opposition to the kind of lending about to be imposed on Greece, where the bulk of the fall out will hit the majority population, those who have already been suffering and struggling for years now. Worldwide countries are continuing to suffer and struggle under and against harsh financial conditions and austerity forced on them by decisions taken by their own leaders in compliance with international lending institutions.
What would be inspiring, to quote from the final sentence above, would be to see the global community, alive and kicking, unified in their challenge to the capitalist system. What would be inspiring would be to see a global majority coming together in solidarity knowing that together we could build a system to supercede capitalism that would undoubtedly improve the condition for us all.
Together we can achieve socialism.