A/HRC/33/54 debt- distressed and poor States.69 These studies show that such legal disputes are becoming increasingly common and costly for the States concerned.70 Litigation and attachment attempts by vulture funds may pose difficulties for the State in accessing international capital markets and may also entail a significant decline in international trade for the debtor State. 58. In reality, the problem arises from the way in which vulture funds operate and the strategies they deploy to obtain disproportionate profits from speculating in sovereign debt and on how this affects the State’s capacity to fulfil its human rights obligations.71 According to the Independent Expert on the effects of foreign debt on human rights, the settlement of excessive claims by vulture funds against poor countries with unsustainable debt levels has a direct, negative effect on the capacity of the Governments of these countries to fulfil their human rights obligations, especially in terms of economic, social and cultural rights, particularly the rights to health, water and sanitation, food, housing and education.72 59. Through lengthy and costly litigation, vulture funds contribute to diverting States’ resources from other, more pressing development, social and human rights issues (see A/HRC/14/21, para. 35). Protracted litigation may cause important delays in resolving the debt crisis and limit the State’s capacity to commit resources and efforts necessary to bring the country out of the situation. It may worsen the already significant economic and financial consequences attached to the crisis and lead to policies that have a severe impact on the enjoyment of human rights.73 Some of the most prominent negative impacts deriving from the activities of vulture funds are described in the following paragraphs. Activities of vulture funds hinder the State’s capacity to fulfil economic, social and cultural rights 60. Litigation by vulture funds represents a substantial burden on the budgets of already poor countries. Harmful conditions of loans or high and abusive interest rates may make repayment extremely difficult. The State having to repay far more than the amount originally borrowed may be obliged to redirect into debt service resources previously allocated for essential public services, also triggering cuts in public spending (ibid., para. 57). Such a course of action hinders the State’s capacity to fulfil economic, social and cultural rights (i.e., to adopt appropriate measures towards their full realization) and, ultimately, has an impact on the economic growth and development of the country. 74 69 70 71 72 73 74 16 The effects of disruptive litigation on the debt sustainability of HIPCs have been tracked on an annual basis by the Millennium Development Goals Task Force and the International Monetary Fund. Schumacher, “Sovereign defaults in court”, p. 2. The assessment of how vulture funds hinder the capacity of recovery of States undergoing a debt crisis would imply systematically collecting and analysing data on the number of lawsuits filed, the debt service burden and budget allocations. It would also require a more detailed follow-up and analysis of relevant economic and social indicators. “‘Vulture funds’ – United Nations expert on foreign debt welcomes landmark law to address profiteering”, press release, 20 April 2010. A debt crisis may entail a great deal of economic destruction and economic reversal along with sacrifice in human rights terms. A country can lose 5-15 per cent of its GDP. Li Yuefen, presentation to the Advisory Committee. The State’s obligation to fulfil requires positive measures by the State when other measures have not succeeded in ensuring the full realization of these rights and can entail issues such as public expenditure, governmental regulation of the economy, the provision of basic public services and infrastructure, taxation and other redistributive economic measures. OHCHR, Economic, Social and Cultural Rights: Handbook for National Human Rights Institutions (United Nations publication, Sales No. E.04.XIV.8), p. 18.