According to The Latin American Tribune, spurred by the conflict between Argentina and the hedge funds, the UN General Assembly has passed a resolution to put an international legal framework in place in order to regulate the process of restructuring sovereign debt.
“The peoples of the world have spoken and we have decided that the time has come to embark on an ethical, political and legal path together that can put an end to this unbridled speculation,” Argentine Foreign Minister Hector Timerman told the UN General Assembly after Tuesday’s (September 9) vote.
The proposal that came from developing and emerging countries that comprise the G77 plus China, passed with an overwhelming majority of 124 votes in favor, 11 against and 41 abstentions.
The US, Japan and several countries of the European Union (EU) voted against the resolution that advocates the adoption of “a multilateral legal framework for sovereign debt restructuring processes.”
The modalities for the intergovernmental negotiations on a multilateral legal framework will be defined before the end of 2014, the resolution said.
The objective is to increase “the efficiency, stability and predictability of the international financial system and achieving sustained, inclusive and equitable economic growth and sustainable development, in accordance with national circumstances and priorities,” the resolution said.
According to Timerman, the resolution is “the faithful reflection of the relevance and urgency that the clear majority of the nations of the world assign to a reality leaves us unprotected in the face of use and abuse by speculators” take advantage of the absence of an international framework.
The Argentine foreign minister recalled that today his country is suffering the consequences of the problem and defended the need to “change the future and prevent more people paying with hunger and misery for the speculation of these sinister gentlemen of opulence: the vulture funds.”
The Argentine foreign minister’s address was supported by representatives of a large number of countries that stressed the need to act in order to guarantee all nations the possibility of lasting economic growth.
See US Supreme Court ruling:
COMMENT: It seems that Buenos Aires has persisted in pursuing virtually any international forum that will support its narrow point of view, a decision rendered by the US Supreme Court, even though Argentina continues to characterize US hedge funds as “vultures,” wherein all the hedge funds desire is equity it exposed to financial risk when Argentina defaulted on its debts.
The United States strongly opposed to the proposal, warning that the creation of such a mechanism would create “uncertainty in financial markets” and could cut off or hinder the channels of funding to all countries.
Washington said that the UN is not the appropriate forum for this discussion, an argument that was also made by other countries such as Italy, which spoke on behalf of the EU and criticized the excessive urgency with which the proposal had been made.
Most noteworthy is the point that this is a bilateral issue between the United States and Argentina, not one which should be arbitrated by the UN.
Responding to both criticisms, the Bolivian ambassador to the United Nations and G77 President Sacha Llorenti said that the General Assembly is the “most legitimate place” to address the question and that, far from being premature, the resolution had come “too late.”
Llorenti and Timerman expressed their willingness to engage in dialogue in preparation for the future convention, especially with those countries that voted against the resolution.
The Argentine foreign minister said that his country is already working to present a proposal for a legal framework to the G77 that will be negotiated with the rest of the UN member states with a view to approving it in a year.
“We think that perhaps with more time...with more exchange of ideas, we can arrive at a consensus and that they participate in the drafting of the convention,” the minister said at a press conference.