Sovereignty and Vultures, Debt and the Commons


 Sovereignty and Vultures, Debt and the Commons

As 2014 ends, a year that some will remember as the “year of the vultures,” as a multi-sectoral Assembly which brings together a range of the country’s popular movements and organisations, we would like to share our thoughts and proposals so as to continue contributing to and encouraging the debate and mobilizations necessary to try to change existing policy.

Indeed, Argentina’s public debt reappeared in public discourse in June this year, thanks to a series of investment funds, known as "vultures", and the inordinate decisions of the US judiciary in one of the many lawsuits brought against Argentina following the suspension of debt payments at the height of the crisis at the end of another year - in 2001.

Homeland or Debt

Our Assembly was  actually born in response to the inappropriately posed choice "Homeland or Vultures", because we consider that defending our homeland - our Sovereignty and Human Rights, our heritage and commons –more strategically means overcoming the serious problem of indebtedness that has compromised our wellbeing and future ever since the dictatorship era.
Undoubtedly, the path followed until now by successive governments, and endorsed by Parliamentary delegation, has failed to deliver in terms of freeing our people from the country's debt burden, including its most immediate consequences such as impoverishment and the imposition of a primary-sector oriented, extractive production model.

To the contrary, added to the dictatorship’s debt that has been proven to be illegal, fraudulent and illegitimate[1] has been that generated by successive (and also illegitimate) restructurings, which have been denounced legally as well.

These restructurings have included the selling off of public enterprises and state property at vile prices and the acceptance of conditionalities such as the abominable structural adjustment, the acceptance of foreign adjudication, and the renunciation of sovereign immunity. All of these policies have been denounced by the UN’s Human Rights Council and its Independent Expert on Debt and Human Rights[2]. They have left our country in an extremely vulnerable state, not only against the “vulture” investors but also exposed to the whims and predatory actions of all manner of lenders, large corporations, financial institutions and imperialist countries.

For these reasons, we propose suspending payment of the public debt and undertaking a thorough investigation of its illegitimacy and illegality. This should be accompanied by outlawing any transfer of sovereignty to the jurisdiction of foreign courts and other similar measures. In doing so, we seek to change the logic with which the current government - as with its predecessors – deals with the problem. Most recently, we have again demanded of our Parliamentarians that they establish the Bicameral Commission to Investigate the Debt adopted in September, and that they explain why they have failed to do so until now[3].

Now, both at home and abroad, many await the New Year with expectancy. Following the expiry of the “RUFO” Clause, they suppose that new opportunities for negotiations and possible payments to the vultures will present themselves[4]. But we are much more concerned with the fact that day after day, year after year, with or without the "vultures", we continue to be forced to pay a debt that we don’t actually owe, at the expense of deteriorating health services and education, loss of jobs or their increasing precariousness, of decent pensions, as well as of our fundamental right to self-determination. And behind the much publicized "we refuse to pay the vultures", what is hidden is actually increasing indebtedness in the course of new adjustment and further selling off of our natural resources and territory itself.

Debt, Dependency, Domination

The debt, it is good to remember, should be seen as a system that is permanently self-perpetuating. The great trick of this debt-system is that for as long as we fail to question its legitimacy and merely accept servitude by continuing to pay interest and refinance capital, the debt will never stop growing. This is simply the theoretical and practical formulation of the usury trap of perpetual debt, and one of the reasons for its profound illegitimacy.

But the system of debt is also a structural element of a broader system, designed to perpetuate the ceding of sovereignty and the subordination of governments and their populations to hegemonic economic power. This is an essential mechanism in the overall functioning of global finance capital and in turn, of the characteristics of our production model’s structural dependence on it. It will always be necessary to repay debt through greater indebtedness because balance of payments crises return systematically. Full repayment remains elusive.

The origins of the debt that we serve today are determined by the dependent nature of how Argentina was originally inserted into the global economy. Thus we can describe three key moments of our contemporary indebtedness. First, the Military Dictatorship during which the neoliberal project was established in our country, through genocide. Secondly, the Menem era -when the neoliberal project was both consolidated and also entered into crisis.

And finally, the current stage, Kirchnerism, which began with Duhalde in 2002 and involves a modifying of the means by which Argentina is integrated into the global market. The agrobusiness model associated with the landed oligarchy and other extractive industries like megamining, unconventional oil and gas with their associated fracking techniques, and megaprojects in general, play a central role in the reorganization of our economy’s dependence. As in previous stages, these also serve to increase the debt and the intervention of foreign capital. The crisis of Kirchnerist governability does not imply that this model will cease to continue in other guises.

The existence and continued growth of the debt are not unrelated to other instruments of domination such as the criminalization of poverty and of social struggle, militarization, and the control of international markets and the international legal framework. Hence preventing those vultures that are recognized as such from getting away with what they can, only leads us to the perfecting and perpetuation of the system of looting. Those of us within the Assembly propose that the system must be changed.

The current state of public debt

The Government regularly manifests its willingness to repay the debt and indeed, instead of investigating and auditing it, has decided to convert us into "serial payers" of a debt that we do not owe. Proof of this is that over the last decade - the proclaimed "victorious decade" – we have made US$ 190 billion of debt payments as the President herself has boasted on several occasions.

However, by the end of 2013 (the latest data available from the Ministry of Economy), the amount of debt owed by central government had reached some US$ 300 billion[5], more than double the amount following the 2005 debt swap. During the year 2014, the debt is estimated to have increased by another US$ 28 billion[6], given the numerous payouts that were agreed (and not accounted for in the original budget). These include settlements made to investors under ICSID adjudication, compensation to Repsol for the partial YPF nationalisation, penalties and additional interest payments made to the Paris Club and the currency "swap" with China – the latter which has increased national reserves at the expense of more debt. So even disregarding the possibility of any future agreement with the vultures or other holdouts, it can be clearly seen how Argentina’s debt represents an enormous hole that can never be filled.

The government constantly boasts of its policy of "debt reduction". In her recent speech on the country’s 31 years of democracy, the President even claimed that the policy marks the most important turning point in our history as an independent country. But the truth is that the national debt has been growing rapidly every day for several years, increasing now by as much as 10 to 15 billion dollars annually due to the refinancing of maturities and interest payments. 40% of this debt is held in pesos rather than foreign currencies, and 60% is held by other state entities. ANSES (the State’s social security agency) holds 62% of its investments in government bonds and National Bank of Argentina (BNA) holds 50% in this way. The state’s other major creditor is the Argentine Republic’s Central Bank (BCRA).

Thus it is not the case that the State is actually engaging in debt reduction. Instead it has been changing the structure of the debt, converting illegitimate external debt into an internal debt burden with profound popular repercussions. Not only has the burden of foreign lenders remained unresolved, but this has led to an irrecoverable debt being accrued by ANSES, BNA and the Central Bank, the cost of which is continuing poverty for millions of pensioners, eroding workers’ savings and leading to a loss of purchasing power through runaway inflation. This poses an important debate, considering for example that ANSES is a supposedly independent institution and that pensioners should be administering their own pension pot.

The perpetual debt trap implies, however, that regardless of the sacrifice that is made, it will never be enough. In the absence of twin commercial and fiscal surpluses, the recourse that the government is pursuing with ever-greater gusto, is to return to the financial markets in order to take on more debt.

As a case in point, in recent weeks it has floated two new debt instruments- peso bonds tied to the value of the dollar (a new set of pre-established fixed exchange-rate swaps like those that Martínez de Hoz carried out during the dictatorship) and the BONAR (dollar denominated bond issues), which are payable in 2016 and 2024 respectively. These are representative of the latest “bond carnival” and our third wave of indebtedness. As we said, the first contemporary wave occurred during the dictatorship, the second under Menem and now that of Kirchnerism. Nonetheless, this accentuated internal indebtedness and the ever higher local interest rates that must be paid are not enough either.

And so, government policy follows the roadmap marked out by the then Minister of Economy - Boudou, in order to return to the international capital markets. We capitulate to paying more to the Paris Club than the amount demanded by the Club itself; instead of auditing the “ecological debt” incurred by Repsol, we agree to pay the company everything they asked for in installments, including nationalising its own business debts; we also succumb to paying the ICSID settlements without reviewing the sum demanded in national courts as had been proposed. And now, what remains to be settled is an agreement to pay the vultures and other holdouts, so that the “will to pay” policy can be fulfilled, further entrenching the country´s indebtedness and with it, the relinquishing of our homeland.

Meanwhile, the recent agreements that have been signed with Monsanto and Chevron, for example, the laws on seeds and the hydrocarbon give-away, or the new debts agreed with Russia and China which even involve the ceding of national territory, also clearly indicate that the debt burden sacrifices much more than simply our pesos, or even dollars.
Our challenges and proposals

If our country wants to break free from the perpetual debt trap, from ceding its national heritage and common goods, what is needed is a paradigm shift. That is why we will continue to insist that debt payments be suspended and a comprehensive audit of the Public Debt conducted. We consider it a matter of Truth, Justice and Rememberance: illegitimate, fraudulent and odious debt must never be paid regardless of the time passed or attempts to "legalize" it. It is time to recognize that the only debt owed is to the people, and that the people are the only creditors.

We also believe that each wave of debt accumulation has been part of a political project that has sought to reformulate our country´s dependency. In this sense, we must redouble efforts to build convergences around the link between the debt and the dependent nature of our national production model and in doing so, with all those who are engaged in multiple resistances and the construction of alternatives.

At the heart of maintaining this status quo are the same economic actors that concentrate the vast majority of the world's wealth, either directly or through the control of its political and financial institutions. For decades this antagonistic relationship has been played out in numerous fronts of popular struggle: extractivism in all its forms, human rights violations, the criminalization of social struggle, the dismantling and re-primarization of productive activities, the irresponsible advance of neoliberal privatization to now cover even the very sectors upon which life on the planet is supported, institutional degradation and, ultimately, the commercialization of absolutely everything that can generate huge profit.

This is, indeed, an effort that goes well beyond our Assembly and in which we must work together with other organizations and popular movements both in our country and in the rest of the continent. The simultaneous attacks we face on all fronts are irrational from every point of view except that of a capitalist logic of permanent accumulation and unlimited growth at any cost. Thus they must be opposed by coordinating actions among each and every sector that resists them today in each of these fields, by building upon both the visible and hidden links that constitute this superstructure of perverse domination and demystifying their existence and functionality before public opinion in general. 

On the 10th anniversary of Latin American peoples’ victory against the Free Trade Area of the Americas (FTAA), it is important to reflect on how this past victory is mirrored today, so as to help inspire us to articulate our struggles and overcome the fragmentation that exists among our movements. Only by walking together can we pursue the path towards a more just and equitable social and environmental system.

We will only be able to overcome if we understand that the multiplicity of struggles - Human Rights, Rights of Nature, Food Sovereignty, the right to land, to decent work, to participatory democracy, to a healthy environment, to health and public education, to the claims of indigenous peoples, to social equity, in short, that all the struggles which are being waged throughout our country and the continent are not being waged against any incumbent government or corporation in particular, but rather against the model as a whole, imposed by a common adversary who dresses differently according to the occasion so as to remain unnoticed and to fragment our resistances.

As an Assembly, we pledge to continue to push this cultural battle, strengthening our own struggle while at the same time socializing the products of our labour with those of other fronts of resistance, supporting and seeking support, exchanging experiences and knowledge.
We will continue to mobilize with the aim of ensuring that the Debt, our National Heritage and the Commons are taken up as central themes in the debates and actions of the popular movement. As the election year advances, we also believe that these issues must be widely discussed and disseminated. We thus renew our invitation to unite efforts in this spirit.

-Argentina, December 30th, 2014

Assembly for the Suspension of Payments and Investigation of the Debt, and for the Defence of our National Heritage and Common Goods



Translation from the Spanish, courtesy D. Ozarow, Jubilee Debt Campaign UK





[1]Olmos Case, Verdict of Judge Ballestero on July 13th 2000, forwarded to the National Congress for its consideration.
[2]See, among others, the “Guiding principles on external debt and human rights”, A/HRC/20/23, 10 April 2012, and “Final declaration on the Mission to Argentina”, A/HRC/25/50/Add.3, 2 April 2014.


[4]“RUFO” is the abbreviation for “Rights Upon Future Offers”, clause that guarantees holders of bonds that were exchanged in 2005 and 2010 the same terms, should the government make an improved debt-swap offer to the “holdouts” that refused to enter into the previous debt restructuring agreements.

[5]On top of the US$ 202.6 billion of recognized debt, US$ 11.8 billion must also be added for “non-performing debt” as well as approximately US$ 72 billion in interest and a further US$ 15 billion in GDP-linked dividends (The payment of dividends according to the level of GDP growth was a “sweetener” included in the 2005 and 2010 debt swaps, up to a total value that is equivalent to the “exact” nominal value of the originally exchanged bonds).  This figure does not include debt owed by provincial or municipal governments, nor that of trust agencies. Héctor Giuliano, “La Deuda Pública del 2015”, 26/12/14.

[6]Ibid.

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