One of the big financial businesses of the 19th century was to buy cheap Latin American sovereign debt, and then enforce payment by use of gunships. Apparently, the system is back, and its opponents too.

The Paris Club of official creditors decided to prevent aggressive investors buying poor countries' debt at a low price and then suing to recover large sums of money. There is growing irritation among international development agencies and NGOs over the actions of "vulture funds", which buy up discounted debt, often of developing countries, and then sue the government for more money than they paid. The emergence of litigation by vulture funds is forcing some poor countries to use spare money to settle debt claims, angering the other creditors who have written off the debt.

A British high court judge ruled in February that Zambia must pay the investment firm Donegal International a much larger sum than the $4million it had paid for the country's debt. The International Monetary Fund, World Bank, and Western creditors wrote off a large part of Zambia's debt in 2006.

I remember reading that among many others, Turkey and Venezuela's debt was recovered by these methods. Theodor Herzl offered to settle Turkey's debts for a charter of South Syria, then a Turkish province.





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