Info Service on Finance and Development (Sept14/04)
30 September 2014
Third World Network
Nations: Rights Council condemns activities of vulture funds
Published in SUNS #7884 dated 30 September 2014
Geneva, 29 Sep (Kanaga Raja) -- The UN Human Rights Council on Friday
condemned the activities of vulture funds "for the direct negative
effect that the debt repayment to those funds, under predatory conditions,
has on the capacity of Governments to fulfil their human rights obligations,
particularly economic, social and cultural rights and the right to
In a resolution (A/HRC/27/L. 26) adopted by a vote, the Council requested
its Advisory Committee, composed of 18 experts, to prepare a research-based
report on the activities of vulture funds and the impact on human
rights, and to present a progress report of that research to the Human
Rights Council for its consideration at its thirty- first session.
The Human Rights Council held its regular twenty-seventh session from
The resolution on the activities of vulture funds was adopted by a
vote of 33 in favour, five against and nine abstentions.
Those that voted in favour were Algeria, Argentina, Benin, Botswana,
Brazil, Burkina Faso, Chile, China, Congo, Costa Rica, Cote d'Ivoire,
Cuba, Ethiopia, Gabon, India, Indonesia, Kazakhstan, Kenya, Kuwait,
Maldives, Mexico, Morocco, Namibia, Pakistan, Peru, Philippines, Russian
Federation, Saudi Arabia, Sierra Leone, South Africa, United Arab
Emirates, Venezuela and Viet Nam.
The Czech Republic, Germany, Japan, United Kingdom and the United
States voted against the resolution, while Austria, Estonia, France,
Ireland, Italy, Montenegro, Republic of Korea, Romania and the former
Yugoslav Republic of Macedonia abstained.
The draft resolution was introduced at the Human Rights Council by
Argentine Foreign Affairs Minister Hector Timerman on behalf of Argentina,
Algeria, Bolivia, Brazil, Cuba, Pakistan, Russia, Uruguay, and Venezuela.
Pointing out that a total of 74 co-sponsors have supported this draft
resolution, the Argentine Minister told the Council on Friday that
the issue of foreign debt and its effects on the enjoyment of human
rights has been on the agenda of various UN human rights bodies for
over two decades.
Since 1990, the Human Rights Commission and subsequently the Human
Rights Council, in various resolutions and decisions, highlighted
the challenges represented by the burden of foreign debt on the full
enjoyment of human rights, in particular economic, social and cultural
rights, he said.
Along these lines, he noted, the independent expert on foreign debt,
Mr Cephas Lumina, had referred to vulture funds, describing their
activities as those that managed to divert a country's financial resources
that was saved from debt cancellation, thereby undermining the capacity
of governments to guarantee the human rights of their people.
For the most part this has happened in Africa, where the activities
of vulture funds have endangered or even removed the capacity of these
states to carry out their development and poverty reduction programmes.
The Argentine Minister highlighted the need for financial reform along
ethical lines that would produce in its turn economic reform to benefit
It is not only developing countries that have highlighted the threat
of vulture funds to the full enjoyment of human rights. As far back
as 2002, the then finance minister (Chancellor of the Exchequer) of
the United Kingdom, and subsequently Prime Minister, Mr Gordon Brown,
had referred to the severity of the problem in a special session of
the UN General Assembly.
According to Mr Timerman, a legal vacuum exists in terms of debt restructuring
and it leaves sovereign states vulnerable to the abuse of speculators.
In some general comments before the vote, Algeria, referring to a
report of the independent expert Mr Lumina, said that vulture funds
have negative effects on debt relief measures that have been adopted
by the international community and these funds have a destabilising
effect on the economies of countries that are the victims of these
Algeria said that among the main messages of the draft resolution
are the fact that the international financial system is inadequate
today and therefore needs to be reformed; that the debt burden has
a major impact on developing countries and their development; and
that there is need to shed an objective light on the activities of
vulture funds and their impact on the right to development.
Cuba said that the draft resolution brings before the Council a subject
of vital importance to developing countries, namely, the negative
effect of vulture funds on the enjoyment of human rights.
Venezuela said that for many years it has been hearing in international
fora, in particular in the Human Rights Council about the negative
effects on the enjoyment of human rights of the excessive and unjust
debt burden. Today, this is exacerbated by the global crisis of capitalism,
Pakistan said that all countries have a sovereign right with regards
to their debt restructuring. Highlighting for this to not be influenced
by political and extraneous pressure tactics, it said that these tactics
undermine the capacity of states particularly developing countries
to fulfil their human rights obligations and to achieve sustainable
Pakistan further said that vulture funds reflect the inherent flaws
in the current financial system and could be used to challenge the
sovereignty of indebted countries through economic pressure and huge
In an explanation of the vote before the vote, the United States said
that it will call for a vote and will vote ‘no' on the resolution.
It said that it remains committed to the stability of the international
financial system. It however said that this resolution raises serious
Discussions on mechanisms to advance orderly debt restructuring are
technical in nature and if not handled appropriately, risk creating
uncertainties which could drive up borrowing costs or even choke off
financing for developing countries, it maintained.
There are already active discussions underway in other more appropriate
fora that take these complex technical considerations into account,
it said, adding that the issue that this resolution purports to address
falls outside of the scope and mandate of the Human Rights Council
and does not belong in this forum.
Italy, on behalf of the European Union members of the Human Rights
Council, said that there should be no doubt over its solidarity with
countries that have faced or are still facing economic and financial
crisis. However, in its view, the Human Rights Council is not the
appropriate forum for discussing issues related to financial policy.
France, announcing its intention to abstain on the vote, said that
the effectiveness of international mechanisms for the restructuring
of sovereign debt is a core concern of France. It said its stance
and position of amicus curiae in the dispute between Argentina against
litigious creditors before the US Supreme Court clearly demonstrates
However, it considers that the issue of restructuring of sovereign
debt does not fall within the mandate of the Human Rights Council.
The issue of sovereign debt restructuring should be discussed within
the competent international bodies, which is already the case, it
said, citing as examples the International Monetary Fund and the Paris
In the resolution adopted on Friday, the Human Rights Council noted
the concern expressed in the declaration that Heads of State and Government
of the Group of 77 and China issued on the occasion of the summit
entitled "For a New World Order for Living Well", held in
Santa Cruz de la Sierra, Bolivia, on 14 and 15 June 2014, that reiterates
the importance of not allowing vulture funds to paralyse the debt
restructuring efforts of developing countries, and that these funds
should not supersede the State's right to protect its people under
It affirmed that debt burden contributes to extreme poverty and hunger
and is an obstacle to sustainable human development, to the realization
of the Millennium Development Goals and to the right to development,
and is thus a serious impediment to the realization of all human rights.
The Council also noted that "the international financial system
does not have a sound legal framework for the orderly and predictable
restructuring of sovereign debt, which further increases the economic
and social cost of non-compliance."
It expressed its concern about the voluntary nature of international
debt relief schemes which has created opportunities for vulture funds
to acquire defaulted sovereign debt at vastly reduced prices and then
seek repayment of the full value of the debt through litigation, seizure
of assets or political pressure.
Condemning the activities of vulture funds, the Council reaffirmed,
in this context, that "the activities of vulture funds highlight
some of the problems in the global financial system and are indicative
of the unjust nature of the current system, which directly affects
the enjoyment of human rights in debtor States."
It called upon States to consider implementing legal frameworks "to
curtail predatory vulture fund activities within their jurisdictions".
The Council encouraged all States to participate in the negotiations
aimed at establishing a multilateral legal framework for sovereign
debt restructuring processes, as referred to in General Assembly resolution
68/304, and invited States participating in the negotiations to ensure
that such a multilateral legal framework will be compatible with existing
international human rights obligations and standards.