At the meeting held at the UN on April 30, 2015 to debate about the establishment of a global framework for sovereign debt restructuring, the Minister called for a “democratic framework and general principles democratically accepted by the countries for debt restructurings. Only a multilateral organization with an equitable participation of countries can address these issues”, he said.

In this regard, Kicillof thanked the attendees for understanding the importance of creating “a legal tool at an international level”, and because they “decided to intervene in a problem related to the performance of the global economy.” The Minister stressed that “vulture funds are a parasite for development and global growth. They are an obstacle to countries in distress.”

Last September, the Human Rights Council of the UN adopted a resolution, promoted by Argentina, condemning the vulture funds and requesting that an investigation be carried out on their activities and its consequences. Moreover, it called for the establishment of a committee to examine the creation of a multilateral framework for sovereign debt restructuring processes.

“The current situation is that small speculative funds seek to hinder the debt restructuring process undertaken by Argentina,” explained Kicillof during the meeting held at the UN, where the initiative launched by the G77 + China, in order to create a global mechanism to prevent the actions of the vulture funds, is discussed.

For Kicillof, the establishment of a Debt Restructuring Mechanism “demands urgent action by all countries, in a plural and democratic context, due to its international significance and historical relevance.”

In New York, Axel Kicillof, Minister of Economy, reviewed the historical context of the sovereign debt creation, in order “to understand how the vulture funds have become an obstacle,” he said.

“In the 70s, the private commercial banks began to lend to countries the surplus dollars for which there were no profitable possibilities. That situation led to a strong increase of the debt. Between 1979 and 1980, the Federal Reserve raised the interest rate from 11% to 20%. This rise in the interest rate produced a very complex phenomenon for emerging countries with high debt levels. It generated the ‘debt crisis’,” explained Kicillof, stressing that “we are on the eve of a change in global financial conditions attached to a growth in the interest rates in the central countries. It is a risk that all external indebtedness tied to interest rates become more difficult or impossible to pay.”

“Then in the 90s there was a process of privatization and atomization of the countries’ foreign debts. This transformation was what explains the appearance of the vulture funds and the extreme power they have achieved in international finances,” he said.

“In 2001 Argentina’s default was unprecedented in modern history”, which it overcame by renegotiating its debt with 93% of its creditors, but there was a small group that did not accept to negotiate, and has “excessive power and jeopardizes the debt restructuring process addressed by our country.”

The Minister explained that the vultures “forced the interpretation of the pari passu clause. It currently states that the holdouts must be paid at the same time as those who accepted the restructuring. With this legal interpretation, it is impossible to restructure a debt because no one will ever accept a debt exchange. It has no logical or financial rationale. However, the vulture funds were able to have this validated by the US courts. There is no clearer indication of international legal uncertainty than the reinterpretation given to the pari passu clause”

“We must all work on solutions so that no country is vulnerable to being attacked by tiny speculative financial groups, which through extortion prevent a nation to raise their head again; that the development of that country can get back on track; that the country recovers its capacity for economic policies and may focus them on more urgent problems, which are why we looked for that financing in the first place, which is the growth of our countries, for the  process of social inclusion, the recovery of sovereignty for our countries and for the dignity of our countries,” concluded Kicillof.