TabGroup The legal doctrine of odious debts was given shape by Alexander Nahum Sack in 1927. Sack, a lawyer in Tsarist Russia an adviser to the Provisional Government in 1917, and after the Russian Revolution, a professor of law in Paris, Chicago and New York, authored a major work on the obligations of successor systems: The Effects of State Transformations on Their Public Debts and Other Financial Obligations. With colonial territories becoming independent nation states and colonies changing hands, with monarchies being replaced by republics and military rule by civilian, with constantly changing borders throughout Europe, and with the ascendant new ideologies of socialism, communism and fascism overthrowing old orders, Sack's debt theories dealt with the practical problems created by such transformations of state. Like many others, Sack believed that liability for public debts should remain intact, for these debts represent obligations of the state — the state being the territory, rather than a specific governmental structure. This he based not on some strict dictate of natural justice, but on the exigencies of international commerce. Without strong rules, he believed, chaos would reign in relations between nations, and international trade and finance would break down.
But Sack believed that debts not created in the interests of the state should not be bound to this general rule. Some debts, he said, were "dettes odieuses."
If a despotic power incurs a debt not for the needs or in the interest of the State, but to strengthen its despotic regime, to repress the population that fights against it, etc., this debt is odious for the population of all the State. This debt is not an obligation for the nation; it is a regime's debt, a personal debt of the power that has incurred it, consequently it falls with the fall of this power.
The reason these "odious" debts cannot be considered to encumber the territory of the State, is that such debts do not fulfill one of the conditions that determine the legality of the debts of the State, that is: the debts of the State must be incurred and the funds from it employed for the needs and in the interests of the State.
"Odious" debts, incurred and used for ends which, to the knowledge of the creditors, are contrary to the interests of the nation, do not compromise the latter — in the case that the nation succeeds in getting rid of the government which incurs them — except to the extent that real advantages were obtained from these debts. The creditors have committed a hostile act with regard to the people; they can't therefore expect that a nation freed from a despotic power assume the "odious" debts, which are personal debts of that power.
Even when a despotic power is replaced by another, no less despotic or any more responsive to the will of the people, the "odious" debts of the eliminated power are not any less their personal debts and are not obligations for the new power....
One could also include in this category of debts the loans incurred by members of the government or by persons or groups associated with the government to serve interests manifestly personal — interests that are unrelated to the interests of the State.
For creditors to expect any protection in their loans to foreign states, their loans must be utilized for the needs and interests of the state, otherwise the loans belonged to the power which contracted them, and were therefore, "dettes de régime."
The doctrine of odious debts is open to abuse by self-serving interpretation. So, to avoid arbitrarily repudiated debts, Sack proposed that a new government be required to prove that the debt ill-served the public interest and that the creditors were aware of this. Following these proofs, the onus would be upon the creditors to show that the funds were utilized for the benefit of the territory. If the creditors could not do so, before an international tribunal, the debt would be unenforceable.
Since those words were penned by Alexander Sack, Probe International’s own Patricia Adams argued in her landmark book, Odious Debts: Loose Lending, Corruption, and the Third World’s Environmental Legacy that the legitimacy of the Third World’s debts should be tested according to the Doctrine of Odious Debts and the rule of law. Now, citizens, governments, and legal scholars the world over are collecting the evidence, building the legal arguments, and writing the legislation to challenge the Third World's debts and change the workings of international finance forever.
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The government of the Maldives wants its money back — $400 million to be precise. read more »
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Independent think tank Ibon Foundation says the Philippines' next administration can ease up on debt payments by subjecting these to more sensible prioritization like stopping payments on onerous and odious debts, negotiating better credit terms, and giving preference to creditors more amenable to the country’s development efforts. read more »
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The 'Africa Development Indicators 2010' report on 'quiet corruption' is one more example of the World Bank's distractive politics. Distractive because it seeks, wittingly or unwittingly, to sidetrack issues that are fundamental to understanding the continuing poverty and underdevelopment of Africa. Distractive also because it seeks, probably consciously and purposely, to exonerate the World Bank from its own role in perpetuating Africa's mal-development. read more »
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Ecuador’s strategic default on some of its external debt last year has drawn much commentary and generated passionate reactions. Some commentators who advocate creating a mechanism for addressing odious or illegitimate debt encouraged Ecuador to repudiate its obligations and have generally applauded its decision to do so. For those who are sympathetic to efforts to create such a mechanism, however, this enthusiasm may be misplaced. read more »
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Max Mader and André Rothenbühler Despite multilateral initiatives such as the Heavily Indebted Poor Countries (HIPC) initiative and the Multilateral Debt Relief Initiative (MDRI), in 2007 the world’s developing countries still spent a combined total of approximately USD 1.5 billion every day on external debt servicing. Amongst their number are the poorest countries in the world; these low income countries spent around USD 34 million every day on external debt servicing.1 In the current global financial crisis, many of the countries which have benefited from debt relief in recent years now face substantial risk of new debt distress. read more »
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The Gleneagles Summit, for all its good intentions, gave rise to unrealistic expectations. The heavy emphasis on aid and debt relief made Western actions appear to be chiefly responsible for poverty alleviation in Africa. In reality, the main obstacles to economic growth in Africa rest with Africa’s policies and institutions, such as onerous business regulations and weak protection of property rights. read more »
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Dambisa Moyo, author of Dead Aid, talks to the CBC about finding new and more innovative ways to help residents in the developing world. Moyo argues that the aid model of institutions such as the World Bank have helped to stifle economic growth in the developing world. read more »
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Foreign aid is again in the spotlight after the recent G8 meeting in L’Aquila, Italy. One area that garnered particular attention from the media was the decision by G8 leaders to increase aid to Africa for food security and agricultural development to $20-billion—a 33% increase from the previously promised $15-billion.
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As the World Bank and the IMF drastically increase lending to countries in the developing world, local politicians are beginning to question the loans. The Conference of Nigeria Political Parties (CNNP) recently expressed outrage over the ruling People’s Democratic Party plan to obtain a $1-billion loan from the World Bank. read more »
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- AFRODAD The African Forum and Network on Debt and Development (AFRODAD)is a civil society organisation born of a desire to see lasting solutions to Africa\'s mounting debt problem and its negative impact on development.
- Alternative Information and Development Centre Based in Woodstock, South Africa, has organized a campaign to challenge apartheid's odious debts.
- Campagna per la riforma della Banca mondiale (CRBM) A Rome-based coalition of 41 Italian development NGOs, environmental associations and human right groups advocating on international financial institutions and Italian investment agencies to promote environmentally and socially sustainable investment in solidarity with local communities affected by projects and investment worldwide.
- Canadian Environmental News Network offers news of direct significance to Canada and Canadians on the environment, international development, urban issues, and consumer affairs.
- Center for Public Integrity provides the American people with the findings of investigations and analyses of public service, government accountability and ethics related issues.
- debtchannel.org a global portal site on international debt launched by OneWorld.
- Development Today Nordic Outlook on Development Assistance, Business & the Environment
- Drop the Debt the international movement to cancel the unpayable debts of the world's poorest countries.
- ECONDAD a regional network coordinating West African NGOs/civil society organizations working on debt, structural adjustment policy and the monitoring of international financial institutions within and outside the region.
- erlassjahr.de is the German branch of the worldwide Jubilee movement for international debt cancellation. The network of currently more than 800 institutional members urges national and international creditors to write off Southern countries' debts to a truly sustainable level and to reform international debt management towards an international insolvency framework.
- FERN - Forests and the European Union Resource Network FERN promotes the conservation and sustainable use of forests and respect for the rights of forest peoples in the policies and practices of the European Union. Currently, their main campaign areas are climate change, forest certification, export credit agencies, WTO & trade agreements, intergovernmental agendas, aid & development co-operation and rights of forest peoples.
- Halifax Initiative is a Canadian coalition whose goal is to contribute to the fundamental transformation of the international financial system to achieve poverty eradication, environmental sustainability and the equitable re-distribution of wealth.
- Jubilee + UK UK based international campaign to cancel Southern Nation's debt .
- Jubilee Canada the Canadian Ecumenical Jubilee Initiative.
- Jubilee Iraq Jubilee Iraq is a network of business people, lawyers, doctors, economists, politicians, civil society groups and many others working to ensure that the Iraqi people - emerging from decades of war, oppression and sanctions - are not forced to pay Saddam's bills.
- Jubilee South is a coalition of Jubilee Debt campaigns and social movements from Africa, Asia and Latin America.
- Jubilee USA Network recognizing that much of the debt charged to many countries is unjust and unpayable, and profoundly aware of the great social and environmental toll that these debts exact, the Jubilee USA Network calls for a Jubilee cancellation of debt.
- Probe International Probe International's campaign to enforce the doctrine of odious debts.
- The Green Beanery is a non-profit merchant of home coffee roasters and green coffee beans, established to support Probe International.
- The Social Justice Committee is committed to recognizing the root, global causes of poverty, social injustice, and environmental degradation.
- The South African Institute of International Affairs The South African Institute of International Affairs is an independent, non-governmental organisation which aims to promote a wider and more informed understanding of international issues among South Africans.
- Transparency International the global coalition against corruption.
- Worldwatch Institute an independent, nonprofit environmental research organization based in Washington, DC
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