Initial reflections on the UN decision to establish a multilateral legal framework for the processes of public debt restructuring

1 October 2014 by Jubilee South-Americas , CADTM AYNA , Lutheran World Federation

Since the imposition of the economic policies of the last dictatorship [1], the Argentine people have continued to suffer the impacts and consequences of the debt generated in that period and its subsequent restructurings. Amidst repeated crises and via structural adjustment after another, a model of production has been consolidated that is designed to ensure the foreign exchange required to “service” a debt whose origins and development are illegitimate, and whose sustained growth every effort has been made to try to disguise.

The failure of the official policies adopted to deal with this debt exploded again in June this year, in the face of the scarcity of foreign exchange and the refusal of the U.S. Supreme Court to hear the appeal of the Argentine government in one of the cases it faces concerning the collection of public bonds in the hands of so-called “vulture” funds.
It is in this context, and after a decade of litigation in foreign forums, that the Argentine government finally sought, and gained, the support of the G77 + China, to present the draft resolution that was adopted by the UN on September 9th.

With 124 votes in favor, 11 against and 41 abstentions, the General Assembly decided to launch negotiations to draft and adopt, within the peremptory period of one year, a “multilateral legal framework for sovereign (sic) debt restructuring processes” [2].
Given the importance that some attribute to this decision, we want to share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. some initial reflections arising from the text of the Resolution itself, and the concrete situations of indebtedness, restructuring, and demand for and continual payment of debts that have shaped, and continue to shape, the present and future of most Latin American and Caribbean peoples.

1) As a starting point, we reaffirm our support for all those initiatives with regard to the debt that favor the rights of peoples - including their sovereignty, self-determination and dignified life (“well living”) - as well as the rights of nature. We thus will continue to demand that the community of nations take the measures necessary to stop the usurious, exploitative and plunderous system of indebtedness, and to make reparations for the social, ecological, historical and financial debt that it has created and deepened.
2) In this regard, it is useful to distinguish between two types of actions. There are actions that seek to make the system of indebtedness, and the domination that it exerts, work more “efficiently”, and there are others that seek to challenge the perverse logic and consequences of that system. Undoubtedly, the recent General Assembly decision is of the former category. Once the chain of indebtedness has exploded, it aims to facilitate its recomposition and improve its functioning but without touching, indeed leaving intact, the system of perpetual indebtedness which is a fundamental tool of financialised and imperial capitalism, responsible for the continual transfer of wealth and nature from the 99% to the 1% of the world´s population.
3) The target raised is that of “debt sustainability”, considered in the Resolution to be key in order not to hinder the development (also “sustainable”) of South countries that, for decades, continue to be classified as “developing”. Although it is not stated, the real goal is the sustainability of payments and therefore the collection of debts whose “normal” servicing has become impossible, in order to ensure the continuity, predictability and continuous growth of the system of indebtedness itself. The Resolution fails to express any concern about the costs and consequences of this sustained payment. The well-being of those who are condemned to pay is not an objective. Rather, it seeks to ensure that the process of plunder does not exceed the limits of “sustainability”, so that those who benefit from the system can continue to satiate their unlimited greed.
4) While the Resolution acknowledges that the international financial system, and the debt and crises that it generates, leave a strong mark on the lives of peoples and countries, it avoids asking why “sovereign (sic) debt crises are a recurring problem,” or why “it is still difficult to find a lasting solution to the problem of external debt” [3].
5) The Resolution is based on a false premise: if there is debt, it is because, previously, there was an inflow of resources. Public debt – both internal and external - does not quite fit this criterion. Most public debt has been generated without any counterpart in goods or services to the people. It grows as a result of usury, abusive commissions, flawed conditions, the transformation of private into public debt, successive re financings, etc., which, among other strategies, provoke a continuous self-generation of new debt. The system even takes advantage of crises, such as humanitarian emergencies or the climate crisis, in order to generate more debt. It is a scheme that demands the constant surrendering of wealth and natural goods, while the balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. of outstanding debt continues to rise. Furthermore, the original purposes and uses of most indebtedness usually respond much more to the interests of the lenders than to those of the borrowers. In general, not only do affected peoples have little if any say, but in addition, their rejection is often ignored or worse yet, repressed and criminalized.
6) It is thus extremely telling that the Resolution adopted evidences no concern for the origin and legitimacy of debts whose payment and collection it aims to facilitate, in particular considering that it should be a priority of the UN to strengthen the willingness and ability of peoples and States to investigate and denounce their illegitimacy and illegality, and indeed stop paying debts which compromise their present and future.
7) Although the Resolution cites nearly every Summit, Conference, and Goal that the UN has established in recent years, it surprisingly avoids any reference to the Guiding Principles on External Debt and Human Rights [4], approved by the same nations in 2012. It seems as though in seeking to safeguard the system of indebtedness, there was no interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. in remembering that according to all international standards and doctrine, human rights take precedence over any contract.
8) It is worth noting that several of the countries that voted now to establish a binding framework for debt restructuring - including Argentina, the country that pushed the Resolution - just two months ago did not accompany with their vote, the historic decision of the UN Human Rights Council to negotiate a multilateral convention in order to hold the major private players in the international economic, financial and debt system - transnational corporations including vulture funds Vulture funds
Vulture fund
Investment funds who buy, on the secondary markets and at a significant discount, bonds once emitted by countries that are having repayment difficulties, from investors who prefer to cut their losses and take what price they can get in order to unload the risk from their books. The Vulture Funds then pursue the issuing country for the full amount of the debt they have purchased, not hesitating to seek decisions before, usually, British or US courts where the law is favourable to creditors.
- accountable for the fulfillment of human rights [5]. We ask whether coherency and priorities are on the side of safeguarding the “good” functioning of the financial markets, or of protecting and promoting human rights, the rights of peoples, and those of Mother Earth.
9) The Resolution adopted by the General Assembly refers to the Principles on Promoting Responsible Sovereign Lending and Borrowing [6], presented by the United Nations Conference on Trade and Development UNCTAD
United Nations Conference on Trade and Development
This was established in 1964, after pressure from the developing countries, to offset the GATT effects.

in 2011, in order “to reduce the prevalence of sovereign debt Sovereign debt Government debts or debts guaranteed by the government. crises, prevent unsustainable debt situations, maintain steady economic growth and help achieve the Millennium Development Goals ...” [7]. But curiously enough, what is highlighted is the importance of “encouraging, to this end, responsible sovereign borrowing” (our emphasis), apparently leaving aside the co-responsibility of those who make the loans or buy the bonds and charge usurious interests.
10) In conclusion, we recall that it is peoples and nations who are sovereign. Debts are not sovereign, nor is the payment thereof. For over 100 years now, different legal interpretations such as the Calvo, Drago and more recently, Espeche, Doctrines have set limits to the asymmetric power of lenders in the established debt system. Also, the Doctrine of Odious Debt Odious Debt According to the doctrine, for a debt to be odious it must meet two conditions:
1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
2) Creditors cannot prove they they were unaware of how the borrowed money would be used.

We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.

(See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).

The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”

Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”

So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts.
, which clearly establishes the absence of any obligation to pay debts generated without the consent of the people and against their own interests. Strengthening the sovereignty of peoples and nations, especially in the South, means rather to recapture the spirit of these doctrines in order to confront the pretended rights of the market and the lenders, whose only concern is to continue to deepen the system of perpetual indebtedness and domination.

Latin America and the Caribbean, September 25, 2014

Translation from the original in Spanish courtesy Dialogue 2000 - Jubilee South Argentina

Jubilee South / Americas, Lutheran World Federation Program on Illegitimate Debt and Ecological Justice, CADTM-AYNA


[1March 24, 1976 – December 10, 1983


[4UN Human Right Council, April 2012, A/HRC/20/23.

[6UNCTAD, Principles on Promoting Sovereign Lending and Borrowing, Geneva, updated April 2012

[7Resolution A/68/304, idem.

Other articles in English by Jubilee South-Americas (4)


Abya Yala Nuestra América
Abya Yala is the name given by the Kuna Indians of Panama and Colombia to the American continent before the arrival of Christopher Columbus and the Europeans. The expression “Abya Yala” means “land in its full maturity” in the language of the Kunas. The indigenous Aymara leader of Bolivia Takir Mamani proposed that all indigenous peoples of the Americas should name their homelands by this name, and use this name in their documents and oral declarations, arguing that “to place foreign names on our cities, towns and continents is to subjugate our identity to the will of our invaders and their heirs.” Abya Yala was chosen in 1992 by the indigenous nations of America to name America instead of Amerigo Vespucci.



8 rue Jonfosse
4000 - Liège- Belgique

00324 60 97 96 80