By: Mary Donahue
These past five weeks, a political battle has been brewing, but not here in Washington, D.C. Rather Albany, New York became the epicenter of Jubilee USA’s fight to stop Vulture Funds from profiting off the debts of some of the world’s poorest nations. And with the end of this session of the New York State Legislature last night, we prevailed, with the legislation never even seeing the floor for a vote!
Vulture Funds, private hedge funds generally incorporated (quite conveniently) in locales known for secrecy and lax tax policies, target the debts of nations facing default, including countries that are going through the Highly Indebted Poor Countries (HIPC) Initiative to achieve full debt relief. Vulture Funds buy some of that debt on the secondary market, often for pennies on the dollar, and just as the country receives debt relief freeing up revenue, sues the debtor nation for the full amount of the original loan, plus interest. Because the Vulture Fund bought the debt at a deeply discounted rate, these vultures can make up to a 400% profit off loans they paid pittance for while crippling nations.
Money that could have been invested by the developing nation into education, healthcare and infrastructure is instead feeding the coffers of already astoundingly wealthy Vultures. While we have proof that debt relief positively impacts the lives of citizens, - Tanzania built nearly 32,000 new classrooms in 3 years after receiving debt relief and in Uganda, 2.2 million people gained access to clean water because of revenue freed up by debt cancellation - debt relief is significantly undermined when freed-up resources become prey for Vulture Funds instead of investment for a country’s citizens and future.
Litigation-happy Vulture Funds pursue legal action in courts located in the Global North, particularly the US. And that’s how Albany became the battleground for this latest skirmish.
There was an attempt to push Vulture Fund supported pieces of legislation through the Assembly and Senate at the last moments of the legislative year, in hopes that no one would notice. These Bills would have promoted and protected Vulture Funds in New York courts, making it easier for vultures to pursue their prey. But Jubilee USA was able to mobilize thousands of supporters in New York to write and call their State Senators and Assembly Members, later being informed that Jubilee supporters were the first constituents to contact offices about these pieces of legislation. And those contacts made all the difference.
The Vulture Funds employed high-powered lobbying firms and spent considerable resources in an attempt to get this legislation through. In a true David and Goliath showdown, Jubilee USA went up against the behemoth resources being employed by the Vulture Funds, and won! The New York State Legislative session is over for the summer, and the Vultures’ Bills never even made it out of committee because of constituent opposition. But, with a new session coming up this fall, the Vulture Funds will likely continue on their quest to get this legislation through. So while we celebrate this huge victory over Goliath, this David is looking towards the fall and preparing to keep fighting.
Photo Credit: CC-BY-SA-3.0/Matt H. Wade at Wikipedia.
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