Poverty Scavengers
by Danny Glover
and Nicole Lee
"Vulture funds render the commitments to debt relief made
by the U.S. and other wealthy nations meaningless."
This article originally appeared in TomPaine.com.
In June of 2006, world leaders stood with British Prime
Minister Tony Blair and pledged their support for debt relief for impoverished
African nations. The intent of their principled gesture was to help a select
number of countries pull themselves out of the quagmire of debt which prevents them from building infrastructure, schools and hospitals.
But, it was also a pragmatic gesture. Poverty breeds insecurity, and as
President Bush noted in his State of the Union address, poverty alleviation must be a cornerstone of our foreign
policy to create a secure world. For the most part, the world applauded the
efforts of the G-8 leaders, and the slow process to full debt relief began. But
in the shadows stands a financial creature that threatens the resolve of the G-8
on African debt relief and threatens U.S. foreign policy related to development
assistance for Africa and this administration's so-called war on terror.
A vulture is a creature that lurks around waiting for
another animal to be near death before it swoops in. The vulture is a cagey
bird that hovers over the weak waiting for an opportunity to finish it off.
Vulture funds are a group of financial institutions that buy African and Latin
American debt from the lending country for a reduced amount and then
press the struggling nations into courts as they demand payment of the full
loan and interest several times the original value of the debt. This practice
is crippling countries that welcomed international debt relief but are now facing the possibility of debt relief from the G-8 being
meaningless. They will now have to pay the new owners of their loan.
"Vulture
funds are a group of financial institutions that buy African and Latin American
debt from the lending country for a reduced amount and then press the
struggling nations into courts."
In the African country of Zambia, over 70 percent of people live in poverty. The
average wage is just over a dollar a day, one in fivepeople are infected with
HIV/AIDS and life expectancy is merely 37.7 years.Yet, in the midst of qualifying
for debt cancellation by G-8 nations, the Donegal Corporation, owned by
American businessman Michael Sheehan, boughtZambian debt from Romania. In
April, British courts awarded Donegal 15 milliondollars, almost five times the
value Donegal paid for the debt.
The morally bankrupt actions of vulture funds render the
commitments to debt relief made by the U.S. and other wealthy nations
meaningless. U.S. taxpayer money, pledged to provided relief and assistance
through debt relief, will fall into the hands of these greedy corporations. At
the upcoming G-8 Summit President Bush should call for a commitment by world
leaders to address debt relief and vulture funds. The U.S. Treasury should
follow the lead of U.K. Chancellor Gordon Brown and limit the awards vulture
funds can claim for these debts. Congress must examine this practice and its
impact on our overall foreign policy interests. The international community
must employ effective means to protect countries like Zambia who have fallen
prey to these vulture funds, including implementing fair and transparent
international mechanisms to resolve these matters.
Vulture funds are aptly named. They present a threat to the
end of world hunger. They undermine U.S. foreign policy and increase the
possibility of a rise in terrorist organizations in sub-Saharan Africa and
Latin America. People of good will and good intentions must join with
international civil society and call for the end of this treacherous practice.
Danny Glover is chairman of the board of and
Nicole Lee is executive director of TransAfrica Forum.
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