Committee for the Abolition of Illegitimate Debt

[1] The advert appears on page 5 of the 11 January 2013 edition of the Buenos Aires Herald. It:
 Declares support for Argentina´s right to refuse to pay the vulture funds
 Condemns the decision of the New York Court which implies that the payment of vulture funds supersedes a state’s right to protect its people under international law.
 Calls for a debt audit in Argentina to ascertain the extent of illegitimate debt so that Argentina will no longer be forced to pay this odious debt
For a copy see: http://www.jubileedebtcampaign.org.uk/download.php?id=1110

[2] Argentina defaulted on its debt at the end of 2001. It’s economy was in turmoil after following a set of policies laid down by the International Monetary Fund. Despite three years of recession, the economy kept contracting. Over half the population - 20 million people - was living below the poverty line. Default was undoubtedly the right thing to do. After several years of stagnation Argentina’s economy started growing within a few months. Argentina became the fastest growing economy in the Americas. Eleven million people were pulled out of poverty and unemployment more than halved in the successive 5 years.
After default, Argentina offered its bondholders a deal - new bonds of lower value in exchange for the old bonds they held. In effect a steep discount on the amount owed. Many took the offer, but not all. One of these companies - called NML Capital - is a subsidiary of Elliott Associates, a US hedge fund that pioneered ’vulture fund’ activity by winning a case against Peru in the 1990s, getting back 400% what they paid for Peru’s debt. NML has been harassing Argentina through foreign courts for years. A recent case involved the impounding of a naval vessel by a court in Ghana. The Libertad was recently released by an international tribunal and returned to Argentina on 9 January. In November 2012 a New York court ruled that Argentina was obliged to pay $1.3bn to NML. It ruled that if the state fails to pay this then it could not make payments on the debt Argentina restructured in 2005 and 2010 and would be judged to have defaulted anew. The ruling also binds the US banks which process the payments. It means such banks could only process payments if Argentina were also paying the vulture funds, something President Cristina Fernández de Kirchner has vowed not to do and which Argentina has a law against doing. The original ruling was to apply to the last debt repayment in December, but a reprieve was given, and a new court date has now been set for 27 February.

[3] See http://ftalphaville.ft.com/tag/pari-passu-saga/

[4] Last year Jubilee Debt Campaign uncovered documents which showed that Argentina still owes debts to the UK government based on arms sales to the Argentine junta in the years leading up to the Falklands War. Argentina’s £45 million restructured debt includes loans for two Type 42 Destroyers and two Lynx helicopter which were used in the invasion of the Falklands. The archives include a letter from then Foreign Secretary David Owen, showing the British government was keenly aware of the odious nature of the Argentina regime - describing it as ‘worse’ than Pinochet’s Chile - and that conflict over the Falkland Islands was possible. However, Owen states that “complete consistency in our approach” towards Argentina was not possible. The loans were run up by a government department called the Export Credits Guarantee Department - which has recently changed its name to UK Export Finance. The Liberal Democrats have a policy to audit all the debt owed to UK Export Finance and cancel those found to have come from “reckless loans to dictators known not to be committed to spending the funds on development”.