Vultures Here, Vultures There: the Never Ending Debt

Ver original del texto aquí:  Buitres de aquí, Buitres de allá: la deuda de nunca acabar

The debt--despite being a truly taboo subject--is always a hot topic in Argentina.  Its growth during the dictatorship, the recognition of its illegitimacy, and its conditioning of the return to democracy; its role in the privatizations, the application of harsh austerity measures, and the denationalization of the economy, leading to the collapse of 2001; the partial suspension of payments that allowed an economic recovery to get underway--all facets of the domination exercised through the debt during just the last three decades, with its dramatic costs in human, socioeconomic, environmental, and political terms.

Nevertheless, since 2005 the Argentine government has made an enormous effort to convince the population that the problem of the debt is over. For sure, it has had a lot of help from the economic elite, their mass disinformation media, and a large part of the political opposition. 

But after the mega bonds swap that year, and the cash payout to the IMF--quite a reward for its policies simultaneously being denounced as genocidal--the government has made much fanfare of its so-called policy of "deindebtedness”. Endless graphs were developed in an effort to show that the external debt no longer weighs on the economy and that, especially after the second swap in 2010, there remained only a few problem “holdouts”: purchasers of defaulted bonds who refused the restructuring swaps in order to demand full payment of what they never invested, and the government repeated as mantra it would not pay.  Little was said of the colossal increase in the internal intra-state debt, the draining of reserves, or the growth of provincial and municipal debt. Not even the imposition of currency controls in 2011 was enough to change the tune: escalating external debt payments were seldom linked to the increased pressure on foreign–currency reserves.

But in October of 2012, the debt returned to the front lines when the vultures obtained the judicial seizure in a distant African port, of the Argentine Naval frigate paradoxically named Liberty.  For sure, the accent was put mostly on the manifest injustice of the hedge funds´ claims, seeking through the courts to collect many times over what they had paid for the defaulted bonds in their possession.  Or attention was focused on the similarly manifest arbitrariness of the New York courts' decisions, which not only dictated the immediate, full cash payment of the total demanded by the vulture funds, but also its payment under terms that would risk a "technical" default of the rest of the debt that the government indeed services religiously as a result of the 2005 and 2010 bond swaps.

The attack of the speculative “vulture” funds further demonstrated the asymmetry of power with which global capitalist finance and trade operate, including the systematic dismantling of the judicial framework of national sovereignty which, since the mid seventies, has been taking place in favor of the pretended "freedom" and "rights" of capital and the mega-corporations that concentrate it (A telling perversity of international law is the fact that sovereign immunity is indisputable in the case of war-ships, but not in the case of the resources needed by a State merely to feed its population...).  But it also brought to light a reality very different from the official story then being offered by the government: a debt that continued to exist, to grow, and to condition the liberty, prosperity, rights and sovereignty of the Argentine people.  

Now, the year 2014 has kicked off with inflation officially exceeding a yearly rate of 40%, the start of the school year delayed by the refusal to fix a wage-hike for the teachers, a mega-devaluation recently concluded that automatically sends some 500,000 people below the poverty line, rapidly eroding reserves and public coffers flooded with unrecoupable National Treasury bonds.  The 2014 national budget, approved just a few months ago and even more out of phase with reality now than before, projected an increase in the debt of US$12.7 billion and a 73% increase in interest payments as compared to 2013.  

These numbers will surely fall far short of reality, yet they already amounted to an expenditure exceeding the total earmarked for education and healthcare combined.  And in November, Argentina surely entered the annals of history by actually naming a "Minister for Debt Restructuring".  Although there is no transparency in the official statistics available, it will doubtless become increasingly difficult to cover up the critical situation of a debt that is again exploding in the hands of those who, far from having resolved it as a problem, have only managed to kick it a little further up-field.

In fact, the government no longer talks about its policy of “deindebtedness" but rather how to go back to indebting itself on international markets.  That is why it has been pursuing negotiations all over the place--with the Paris Club, the International Center for the Settlement of Investment Disputes ICSID, the IMF, the World Bank, the vulture funds--and has even now laid aside its objections to the negotiation of a Free Trade Agreement - a sort of transatlantic FTAA - between the European Union and the Southern Cone Market MERCOSUR.  All in a race to see whom it pays most and earliest--while teachers, pensioners, healthcare professionals, and hungry children are asked to refrain from even getting in line.

It is in this context that Dialogue 2000 has continued its action over recent years.  We work to denounce the tremendous human costs of this "development" model, which finds in the system of indebtedness an almost perfect tool for the extraction of wealth and permanent impoverishment, for territorial occupation and looting, and for the suppression of sovereignty and self-determination.  Likewise, we continue to promote the networking and convergence of efforts among diverse sectors and movements, inside the country and abroad, with the goal of building alternatives that assure full compliance with the rights of all persons, peoples, nations, and Mother Nature herself.

Today there is renewed urgency in our call for a comprehensive and participatory Debt Audit, with the suspension of all payments until the legitimacy of the claims can be established.  On the one hand, since the illegitimacy and even illegality of a large part of these claims have been proven for years, in part through the judicial investigations and court-appointed expert findings incorporated into the well-known "Olmos Case". The final court judgment in that case - awaiting execution since the year 2000 - invoked some 400 proven irregularities and violations of the law.  And on the other hand, because of the tremendous cost entailed by continuing to “honor” a totally dishonorable debt, both in terms of the net extraction of the wealth produced and needed by the Argentine people it provokes, and in terms of its sustaining and deepening an economic model organized to serve the debt rather than the population.  

Despite claims to the contrary, there is no law in the world that obliges a sovereign State to pay an illegitimate debt claim, at the expense furthermore of the health, education, employment, and indeed, ever-increasing indebtedness, of the people it is supposed to defend and protect.  The UN’s Guiding Principles on Debt and Human Rights reaffirm this over and again, and the Independent Expert on Debt and Human Rights, Dr. Cephas Lumina, highlighted this reality during the Mission he undertook to Argentina in November of 2013, as can be seen in his Declaration of initial findings and Final Report to the UN Human Rights Council.

Among pending tasks here in Argentina is that of pursuing the realization of a comprehensive Debt Audit, even without the blessing of the Congress, constitutionally responsible for "managing" the debt.  Particular focus needs to be brought on the claims that Paris Club member countries, and the government, are pressing to settle. A 2007 presidential decree authorizes payment to the Paris Club without stipulating either a final amount or conditions, and in January of this year the Argentine Finance Minister made a new offer with the hope of finally resolving the pending claims.  We must continue to denounce the possibility of a Paris Club deal and mobilize in the face of what is little more than a new instance of armed robbery: debts going back 35 years to the dictatorship--in some cases for projects never carried out--; newer debts to pay the old illegitimate claims and sustain the privatizations supposedly imposed in order to pay the debt; usurious interest rates and fines for not having been able to withstand the stranglehold.  We must also recognize that the government is now considering paying any amount to the lender countries of the Paris Club, with the sole aim of initiating a new cycle of indebtedness and looting which has nothing to do with people´s needs or ecological rights.  Enough!  

To audit the debt is to put to account the operations of the lenders and the concessions made by the borrowers, the interests pursued by both and the various debts--social, ecological, political, and economic--that their illegitimate deals have generated against the rights of the population.  A comprehensive debt audit would allow us to demonstrate how the vultures from abroad always fly in tandem with the vultures at home, and how, among other favors, they both feed off the constant renunciation of sovereignty invoked in the pertinent contracts and treaties.  

That is why another of the demands that Dialogue 2000 will continue to pursue this year is the voiding of all contractual debt obligations and bond emissions, and treaties such as those for the protection of investments, free trade, and recognition before the ICSID, which cede jurisdiction to foreign courts and extra-judicial fora in a manner that is unconstitutional and in violation of sovereignty.  The vulture funds from abroad, the "bad guys in the movie", would have far less chance to pursue their abusive demands if the government did not continue to cede them a supposed "right" to ignore Argentine sovereignty and the State´s obligation to exercise its self-determination in favor of the human rights of the Argentine people rather than the interests of potential foreign investors.   At the same time and with nearly the same arguments that in past years brought us together to defeat the FTAA, we also will join forces with other organizations and movements in the country and region to prevent the signing of a Free Trade Agreement between the European Union and the Mercosur.

2014 already looks to be a critical year, not only in Argentina--which is facing strong economic, financial, and political pressures, the pre-electoral bankruptcy of the government's own program, and huge challenges to the formation of an alternative project—but throughout the region.  Big capital and the powers that protect it are hovering over the wealth we produce, our natural goods, our lives, and our futures, and the perverse system of never-ending indebtedness continues to be a powerful tool in its efforts to maintain and even strengthen, their domination in the region. 

For our part, at Dialogue 2000  together with the rest of the Jubilee South/Americas network, we see no other option than to continue to denounce the human and ecological cost of these policies, and to organize, mobilize, and above all strengthen articulation among popular forces in order to put an end to the bloodletting and promote alternatives that are emerging and growing, through the hope, the struggles, and the integration of peoples throughout the region.  
-Beverly Keene, Dialogue 2000 – JS Argentina
Buenos Aires, February 20, 2014

Translation from the original in Spanish, courtesy of C. Autremont.