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The Argentine Libertad, held in Ghana due to a sovereign debt dispute. http://commons.wikimedia.org/wiki/File%3ALibertad.JPG |
by Blake Hulnick
Twitter: @bhulnick
When Argentina officially
took its place on the UN Security Council on October 22nd, the
celebrations were brief, and Argentina’s Minister of Foreign Affairs, Hector
Marcos Timerman, had an urgent piece of business to raise with Secretary-General Ban
Ki-moon. The Fragata Libertad, an Argentine naval frigate, had been detained in
Temma, Ghana for weeks, and the government continued to demand its
unconditional return.
The Libertad finds itself in this unusual predicament because a
U.S.-based investment firm petitioned courts in Ghana for its seizure in their
quest to be made whole on a long-unpaid $1.6 billion judgment stemming from
Argentina’s 2001 default. The unfolding situation provides a rare public glimpse
into a novel field in international law beginning to reverberate throughout the
human rights community.
The Argentine government called the
attachment of their ship a violation of the Vienna Convention’s diplomatic
immunity rules and even outright extortion, but the issue may be more
complicated. For years, so-called “vulture funds” have built a business model
acquiring distressed sovereign debt, often at deep discounts on the secondary market
from frustrated creditors. The funds then pursue collection in every corner of
the world, often at many times the original amount. Where they succeed, the
result can be a substantial profit. The funds’ harshest critics say they
frustrate third world debt relief efforts, hamper hard-won
economic reforms, and raid the treasuries of poor countries struggling to provide basic social services and
ensure the human rights of their citizens.
