Washington, DC -The UN General Assembly votes Tuesday on a convention that could enact a global bankruptcy process and stop predatory hedge funds. Bolivia proposed the resolution that if voted upon is expected to pass by a majority. The executive board officers of Jubilee USA sent United States UN Ambassador Samantha Power a letter urging her to support the resolution. Jubilee’s 400 US faith communities are holding the Ambassador in prayer as she prepares to vote.
“One out of five people lives in extreme poverty and the International Monetary Fund argues the root of inequality is sovereign indebtedness. Much progress was won, and there is much more progress for us to win together,” states the letter from Jubilee USA’s leadership, a group of religious leaders and experts on global finance. “Unfortunately, much of our bipartisan progress won in previous debt relief initiatives is now threatened by predatory behavior and hold-out investors. In this moment we pray for your leadership again and invite you to protect what we’ve won and finish what we’ve started.”
If the resolution passes without a super majority or consensus vote, the convention would have less weight, but a formal treaty process would still move forward. Argentina initially put forth the resolution that could protect developing countries from predatory funds and create a system where defaults are less likely. Last week, the International Capital Market Association (ICMA) challenged predatory behavior by proposing new rules that would make it more difficult for hold-out investors to stop debt restructurings.
“There’s a global consensus from investors to anti-poverty advocates that the status quo hurts all of us,” stated Eric LeCompte, the head of the religious financial reform coalition known as Jubilee USA Network. “We need global leaders to not only address the behavior in the long term, we need them to outlaw it in the short term. Defaults are too common and we all need stability.”
The UN resolution and the investor proposals come after Argentina’s court defeat to predatory funds. During the course of that legal dispute, the International Monetary Fund, US Government, United Nations and World Bank all expressed concern that a legal victory for predatory funds and hold-out investors would make debt restructurings more difficult.
Read Jubilee USA’s letter to Ambassador Power here.
Read the Proposed UN Resolution here.