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Don’t cry for Argentina, fight back!
by Beverly Keene
26 November 2012

The prized Argentine naval frigate named “Liberty”, has been retained in a Ghanaian port since October 2, by virtue of the claim filed there by the same vulture fund that yesterday obtained an order from a New York Judge to pay all the holders of Argentine bonds, whether they entered into the forced restructurings in 2005 and 2010 or not.

The “stop discrimination” vulture ruling has attracted global attention due to the havoc that it stands to provoke in relation to debt restructurings around the world – whether South or North. But also due to the judge´s injunction, upheld earlier by a related Appeals Court ruling, that would place in contempt of court not only Argentina, if it fails to comply, but also the New York banks and clearing houses that presently intervene in order to transfer payments to those bondholders who did accept the earlier restructurings.

Failure to make the next round of scheduled interest payments on December 15th would place Argentina in a situation of technical default, provoking huge profits for those hedge funds that have been betting on just such an outcome. Complying with the Judge´s order, among other consequences, would force Argentina to renegotiate all of its restructured debt claims, given the inclusion of clauses that committed the country to refrain from recognizing better terms to those “holdout bondholders” than those recognized to the investors who accepted the swap.

An initial reading of the most recent New York ruling, however, forces a spotlight onto three priority considerations:

1. The decision is a serious affront to justice. It fails to take into consideration the consequences for the people of Argentina, and for the inhabitants of all countries that have been forced into processes of indebtedness, and the subsequent restructuring of unpayable debt claims.

Justice demands that legal decisions regarding debt claims recognize the primacy of international human rights obligations over any and all financial or commercial claims or transactions. The recently approved UN Guiding Principles on Debt and Human Rights underscore the human rights responsibilities of all relevant actors in international debt agreements, including states, multilateral institutions, and private enterprises.

2. The decision is the result of the tremendous imbalance of power that dominates the international financial system, facilitating the unscrupulous and unacceptable action of international speculators, and rendering the fruit of their action – unbearable, unjust, and illicit debt claims – totally illegitimate. Enormous debt loads were accumulated in the 70´s and 80´s in countries like Argentina under military dictatorships and through the massive and systematic violation of all human rights, due to the pressure of international banks and speculators that were seeking to make more spectacular profits in the South than they could then in the North. Under their extorsionary weight, governments throughout the South were then subjected to the neoliberal Washington consensus of the 90s. They were forced to auction off the people`s patrimony to the vulture funds of that day, but also to submit to the new rules of the game: the surrender of state sovereignty and immunity to the market, waiver of jurisdiction, treatment of debt as investment, equal treatment of foreign and domestic claimants, etc.

Such surrendering of state sovereignty, including the waiver of jurisdiction, must be recognized as null and void, whether incorporated into the issuance of bonds, the signing of Bilateral Investment Treaties or Free Trade, Economic Partnership or other Commercial Agreements, or adherence to ICSID, the World Bank`s Center for the Settlement of International Investment Disputes.

3. The decision seeks to legitimize debt claims that are illegitimate and illicit. The bonds now held by the highly aggressive “vulture funds” that have been pursuing their Argentine prey for 10 years now, in courts all over the world, are direct descendants of the debt accumulated in Argentina at a cost of 30,000 disappeared, in order to sustain the civilian-military dictatorship that ruled the country between 1976 and 1983, and force the country into the neoliberal strait jacket. That debt has been the subject of extensive judicial investigation in Argentina, and in July, 2000, Federal Judge Jorge Ballester ruled that it was the result of at least 477 fraudulent and arbitrary acts. A federal court decision to declare the debt null and void is still pending as are several federal court investigations covering various aspects of all the successor debt – including the megaswap carried out in May, 2001, just months before the final collapse of the debt-burdened Argentine economy that only a few years earlier had been the nunmber one poster-child of IMF and World Bank policies for disciplining the South into the global economy ruled by the North.

The debt claimed of Argentina must be audited, not paid. The realization of a comprehensive, public, and participatory audit that investigates the legality and legitimacy of the process of indebtedness in relation also to its purposes and the accumulation of social and ecological debt, is more urgent than ever. Among other results, it would provide the people and the government of Argentina with the information we need to recover our sovereignty, defend our rights, and advance our demands for justice and reparations.

Beverly Keene

Dialogue 2000 – Jubilee South Argentina

Buenos Aires, November 22, 2012

Beverly Keene