The Jubilee Blog

Vulture Fund Stopped from Preying on the DRC

By Ashley Repp and Mary Donahue

Hailed as a surprising and unexpected decision, courts in the Jersey Isles ruled in favor of the Democratic Republic of Congo, dismissing the interests of the Vulture Fund, FG Hemisphere. After purchasing a debt originally owned by Yugoslavia for a mere $3 million, FG Hemisphere sued for $100 million after discovering that the DRC’s state-owned mining company held assets in Jersey. The decision handed down in favor of the DRC was the final appeal in a years-long process in which the DRC had consistently been ruled against and ordered to pay FG Hemisphere. Although the UK passed a law in 2010 against Vulture Funds, it does not apply to British crown dependencies, and Jersey, as a British dependent, is still a popular court system for vultures to operate in - and win.

While many close to the case saw little hope for the developing nation to win the appeal based on the history of the case in Jersey courts, the DRC prevailed. The UK Privy Council ruled that while the mining company is state owned, it is not so connected that it should be required to pay off debts owed by the government. While this is a victory against Vulture Funds, the longevity of this case highlights the long road developing nations still face against these vultures. Laws that protect against the greed and injustices of Vulture Funds leave glaring loopholes available that provide Vulture Funds with ample opportunity to litigate poor nations into submission. This time, justice prevailed but without the certainty that this will be the case always in the future.

Fearless Woman, indeed

By: Mary Muyia

As a fellow Kenyan, I feel very proud and inspired by Wahu Kaara.  As the Executive Director of the Kenya Debt Relief Network (Jubilee USA’s Kenyan Counterpart), Wahu Kaara has worked tirelessly as a fierce activist on behalf of those who suffer injustice.  She’s an educator, mother, grandmother, social activist, debt relief campaigner and 2005 Nobel peace prize nominee, but the list of titles does not end there. In March, Newsweek magazine named her as one of Newsweek’s 150 Fearless Women joining Oprah Winfrey, Hillary Clinton and Liberian Nobel Peace prize activist, Leymah Gbowee.

Pakistan Probing for Illegitimate Debt

By: Madelynne Wager and Mary Donahue

The Pakistan National Assembly reached a historic agreement regarding the need to audit Pakistan’s public debt. Both the ruling Pakistan Peoples Party and the opposition party, Pakistan Muslim League (N), supported the decision to examine the purpose of the country's foreign and domestic loans acquired since 1985 and how they were used. The committee will allow Pakistan to reach decisive conclusions regarding its debt after decades of political rivals accusing each other for Pakistan’s growing debt burden.

It's Still Not Enough, but It's a Start

Cote d'Ivoire spent the last decades of the 20th Century in civil war and economic turmoil. While this debt relief is a step in the right direction, Cote d'Ivoire would be better served by long-term, systemic solutions rather than debt relief of modest proportions.

By: Maddie Baker and Mary Donahue

It was announced last month that Côte d’Ivoire will receive over $4 billion in debt relief through the Heavily Indebted Poor Countries Initiative (HIPC) of the IMF and the Multilateral Debt Relief Initiative (MDRI) of the World Bank. A nation that struggled with civil war and widespread poverty during the last decades of the 20th Century, Côte d’Ivoire’s poor economic condition was compounded by crushing external debt as nearly 1/3 of its revenue was spent on servicing that debt annually. This high cost of debt was detrimental to the country’s citizens with the nation witnessing the percentage of people living under less than one dollar per day increase from 25% to 50% between 1985 and 1998.

 

Lessons from Argentina’s 2001 Default: Jubilee Co-Sponsors Panel with Argentine Embassy

By: Madelynne Wager and Mary Donahue

Last month, Jubilee USA and the Argentine Embassy co-sponsored an event on Argentina’s economic recovery and sovereign debt.  Jubilee’s Executive Director, Eric LeCompte, was on the distinguished panel with Hernán Lorenzino, Argentine Minister of Economy and Public Finance, His Excellency Jorge Argüello, the Ambassador of the Argentine Republic to the United States and Dr. Mark Weisbrot, the Co-Director of the Center for Economic and Policy Research (CEPR). Eric made a compelling presentation that highlighted Vulture Funds as a pervasive and astoundingly immoral problem in international debt issues, one that can be stopped through effective legislation and adherence to the principles of responsible lending and borrowing. Furthermore, he identified the need to establish an international debt workout mechanism, which would provide for an orderly, and most importantly, equitable way to deal with sovereign debt default and could be a vital tool to help prevent vultures from preying on poor country debt.

Mobutu's Disneyworld: Odious Debt in Africa

By: Andrew Hanauer

During his long tenure as the dictator of Zaire (now Democratic Republic of the Congo), Mobutu Sese Seko was guilty of many things, but personal frugality was not one of them.

Take, for example, his 1982 trip to Disneyworld; Mobutu invited 100 of his closest friends to join him in experiencing the thrills of the Space Mountain roller coaster and the Many Adventures of Winnie the Pooh (in which Mobutu may have been able to help save Piglet from the “Floody Place Falls”).  This trip cost Mobutu roughly two million dollars, an amount offset by the fact that the dictator “made little distinction between the nation’s resources and his personal wealth.”[i]  Or take for example Mobutu’s choice of residences when vacationing abroad, which the Washington Post noted as “a lavish townhouse in Paris, a 32-room estate in Switzerland, and a 16^th century castle in Spain.”[ii]  Or even simply his personal salary as “President,” which at one point surpassed total national spending on all social services combined.[iii]

While criticizing the exploits of a kleptocrat is relatively uncontroversial, connecting Mobutu’s actions to the current debt crisis faced by the world’s developing countries raises some uncomfortable questions for the West.  Why did western countries continue to lend money to a regime labeled “the kleptocracy to end all kleptocracies” by a member of Congress?[iv]  Why did Western banking institutions help nearly $18 billion leave the Congo in the form of capital flight during Mobutu’s reign?[v]  Why did law enforcement officials recover only a few million dollars of Mobutu’s purported $8 billion in personal wealth in Swiss banks?[vi]  And what role did the West have in perpetuating Mobutu’s crimes?

The Worth of Young Minds: Should it be Measured in Dollar Amounts?

By: Ashley Repp

As the end of June rapidly approached, millions of current and soon-to-be students looked towards July and the future with nervousness and fear. On July 1st, interest rates for federally subsidized Stafford Loans were set to rise to a staggering 6.8% from 3.2% if Congress did not vote to keep rates low.  This jump in interest rates, which would make interest rates on student loans higher than the interest rates of credit cards, would affect future repayments by a minimum of $1,000 per year.  By the end of many students’ four years, this would mean an increase of $4,000 in their debt.

 

With thousands of faithful calling and writing their Members of Congress, Jubilee helped to raise the moral voice in opposition to doubling interest rates for tomorrow’s leaders. Right before the increase, Congress had a rare act of bipartisanship and voted to maintain the 3.2% interest rate for subsidized Stafford Loans, and a victory for students’ futures was won!