Tuesday, December 16, 2003
Odious Debt
There’s a lot more legal background to the subject than I can deal with in IraqNow, but readers should be familiar with the concept of “odious debts.”
Here’s the skinny:
The question before the world here is this: Does a nation’s obligation to repay an international debt attach to a people, a land, or a government?
Put another way—when a brutal and oppressive dictatorship such as Saddam’s has incurred mountains of debt, with no democratic participation in fiscal policy whatsoever, and the proceeds from the loans are spent irresponsibly, or even used against his own subjects, then very serious questions can be raised about the obligation of the people of Iraq to pay back the loan. The debt may be considered “odious” to the Iraqi people, and while they may take a purely pragmatic decision to honor those debts in order to secure cash flow and financing from other sources, they are not under any moral obligation—and perhaps under no legal obligation to do so.
Now, creditor nations have argued long and loud—going back at least to the turn of the century--that the obligation to repay attaches itself to the land, not to the government. Note the artful avoidance of the argument that the obligation attaches to the people, since that would require the postulate that the people are somehow represented by the government—obviously a perverse argument in Saddam’s case.
In either case, though, Saddam’s foreign debts, by some counts, total near 100 billion dollars—a near hopeless figure for an economy in which laborers make less than five bucks a day.
So here’s another econ concept with which IraqNow readers should familiarize themselves…
Here’s the skinny:
The question before the world here is this: Does a nation’s obligation to repay an international debt attach to a people, a land, or a government?
Put another way—when a brutal and oppressive dictatorship such as Saddam’s has incurred mountains of debt, with no democratic participation in fiscal policy whatsoever, and the proceeds from the loans are spent irresponsibly, or even used against his own subjects, then very serious questions can be raised about the obligation of the people of Iraq to pay back the loan. The debt may be considered “odious” to the Iraqi people, and while they may take a purely pragmatic decision to honor those debts in order to secure cash flow and financing from other sources, they are not under any moral obligation—and perhaps under no legal obligation to do so.
Now, creditor nations have argued long and loud—going back at least to the turn of the century--that the obligation to repay attaches itself to the land, not to the government. Note the artful avoidance of the argument that the obligation attaches to the people, since that would require the postulate that the people are somehow represented by the government—obviously a perverse argument in Saddam’s case.
In either case, though, Saddam’s foreign debts, by some counts, total near 100 billion dollars—a near hopeless figure for an economy in which laborers make less than five bucks a day.
So here’s another econ concept with which IraqNow readers should familiarize themselves…
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