Freitag, 22. Juni 2012

Odious Debts

The first recorded word for ‘freedom’ in any human language is the Sumerian amargi, a word for debt-freedom. (David Graeber)
Debt has always been used to suppress and enslave people and many revolutions in the history of mankind have been about the cancellation of debts.

It is thus not surprising that the legality of debts have also concerned legal thinkers for a long time. 1927, legal theorist Alexander Nahum Sack formulated an international doctrine that describes what debts by countries should not be legaly binding in international law:
"When a despotic regime contracts a debt, not for the needs or in the interests of the state, but rather to strengthen itself, to suppress a popular insurrection, etc, this debt is odious for the people of the entire state. This debt does not bind the nation; it is a debt of the regime, a personal debt contracted by the ruler, and consequently it falls with the demise of the regime.

The reason why these odious debts cannot attach to the territory of the state is that they do not fulfil one of the conditions determining the lawfulness of State debts, namely that State debts must be incurred, and the proceeds used, for the needs and in the interests of the State.

Odious debts, contracted and utilised for purposes which, to the lenders' knowledge, are contrary to the needs and the interests of the nation, are not binding on the nation – when it succeeds in overthrowing the government that contracted them – unless the debt is within the limits of real advantages that these debts might have afforded.

The lenders have committed a hostile act against the people, they cannot expect a nation which has freed itself of a despotic regime to assume these odious debts, which are the personal debts of the ruler" (Source Wikipedia)
This doctrine has been frequently used in the past to argue for the cancelation of debts that preceding governments imposed on their successors.

It was invoked by the USA in 2003 after the fall of Saddam Hussein, when the USA declared that the Iraky people should not be responsible for the debts of Saddam Hussein.

2008 Raffael Correa succesfully installed an international audit for the legality of Ecuadorian debts that freed Ecuador of a very large portion of their international obligations.

The Syriza Party in Greece demanded just such an audit for the debts that Greece has accumulated in the past. The relief that has been expressed in the EU about the victory of Nea Democracia probably resulted from the fact that this audit will not happen for one more legislative period (or until ND/PASOK are forced to resign).

The Greece documentary DEBTOCRACY looks into just a view of the debts that now serve as an excuse to crush Greece, and finds some that would be very inconvenient for the new rulers of greece and the troica.

The makers of DEBTOCRACY have recently finished another documentary called CATASTROICA that concerns itself with the privatisation measures that are imposed on Greece by the troica. Privatisation always follows after a country has accumulated ilegal debts that economic hit men have successfully "negotiated".

Both movies can be found online at

I myself also have doubts, that the debts that have been amounted in the crisis to "save" the international financial institutions are legitimate. Reading the above definition, the debts, that we as the tax payers are asked to pay, are very odious to my nose, as they are obviously very much "contrary to the needs and the interests of the nation".

Addendum: there is one obvious criteria I would definetly add to the above definition of odious debts.

"If a loan has been signed after the contractor of the debt has been influenced by the creditor with private advantages that have been offered by the creditor or third parties with the intend to corrupt the contractor, or if the contractor has been influenced by blackmail or force, the public should not be obliged to pay these debts."

I would guess that most of the current national debts could be argued to fall under this criteria.

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