Vulture Funds Claiming Third World Nations

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Over the past several years, the United States, in conjunction with other leaders in the international community have been working towards the elimination of poverty in third world countries through long-term development projects. By helping build infrastructure and assisting in livelihood programs, the United States has improved conditions all over the world. However, one recent impediment has arisen towards these third-world nations, vulture funds.

Vulture funds seem like a dream come true for third-world developing nations initially. A wealthy investor from another country agrees to buy up a nation’s debt for a relatively small amount of money in return. In Zambia in 2007, Michael Sheehan bought up Zambia’s $55 million debt for a mere three million dollars. What happens following the initial transaction, however, is terrifying for both the third-world nation and the international community.

The investor, only weeks later, either sues the nation for the full amount of their debt in courts or threatens the nation economically. In the case of Zambia, the value of their entire education budget, $55 million was threatened, and Michael Sheehan later won $15 million in court in the settlement. While this is financially devastating to a country alone, the negative impacts run far deeper.

Many third world nations are run by a dictator or have very little form of structured government. With the prospect of an entire debt for a nation being purchased, the dictator flees the country. However, when the investor comes back for the debt, the people are forced to pay the entire amount using what very limited means that they possess. Moreover, once a third world nation has been severely devastated economically, priorities shift from long-term development for a stable future to just living to make it through tomorrow. As a result, development programs and growth are stunted and valiant efforts by the international community to uproot a nation out of poverty have gone to waste.

What should be done to ensure that this kind of profiteering does not take place any longer? Crafting legislation in Congress is one step to ensure that laws are created that have harsher penalties for the investor or stronger protect the third world nation are a start. Nick Dearden of the Jubilee Debt Campaign states that “wealthy investors will no longer be able to grow rich from the misery of others.”

The United States can take the lead after Great Britain to craft this legislation and ensure a strong future for all.





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