UN rights body condemns ‘vulture funds’

The UN Human Rights Council on Friday passed a resolution condemning so-called “vulture funds” like the ones pursuing Buenos Aires for payment on the Argentine bonds they hold.

“The vulture funds will not stop unless we stop them ourselves,” Argentina’s Foreign Minister Hector Timerman told the council ahead of the vote.

“The billions that these vulture funds grab in countries in the south … lead to school closures, hospitals without medicines, families searching for food in dumpsters, to misery, political instability, the fall of governments, hatred, insecurity and violence,” he said.

The resolution, tabled by Argentina, along with Brazil, Russia, Venezuela and Algeria, passed in the 47-member council with 33 votes in favour.

Nine member states abstained and five, the Czech Republic, Britain, Germany, Japan and the United States opposed the text, with Washington warning it raised “serious concerns.”

Argentina’s government fell into default on its borrowings at the end of July after a US court ruling supported a complaint from two hedge funds labelled vultures by Buenos Aires.

They bought Argentine debt on the cheap as the country struggled with the aftermath of a default on nearly $100 billion in debt in 2001.

They sued Buenos Aires for full payment in US federal court after refusing to join most of the country’s creditors in restructuring its debt, and a New York judge blocked the country from servicing its mainstream debt unless it first pays at least $1.3 billion to the funds.

Friday’s text “condemns the activities of vulture funds,” lamenting the “direct negative effect that the debt repayment to (such) funds, under predatory conditions, has on the capacity of governments to fulfil their human rights obligations.”

It warned that “particularly economic, social and cultural rights and the right to development” risked suffering.

It called on the Human Rights Council’s advisory committee to prepare a report on the activities of vulture funds and their impact on human rights.

The United States blasted the resolution, with US representative Keith Harper warning the council it could lead states “to use debt distress as an excuse for human rights violations.”

“This is not acceptable,” he said.

“The state’s responsibility for promoting and protecting human rights and fundamental freedoms is not contingent on its sovereign debt situation,” he said, also maintaining that the council was not the appropriate venue to discuss the matter.

“If not handled appropriately, (the discussions) risk creating uncertainties which could drive up borrowing costs or even choke off financing for developing countries,” he said.