Those examples suggest a doctrine of odious debts that is broader and more. Africa s debt is a position paper by africa policy with a look at the debt situation of subsaharan africa in particular. It is home to the world s gravest health crises including the hivaids pandemic and chronic famine. Odious debt weatherhead center for international affairs. How foreign loans and capital flight bled a continent by professor leonce ndikumana. This legal doctrine holds that debts not used in the public interest are not legally enforceable. External borrowing and capital flight in zaire leonce ndikumana and james k. Venezuela crisis raises talk of odious debt doctrine. In africas odious debts, boyce and ndikumana reveal the shocking fact that, contrary to the popular perception of africa being a drain on the financial resources of the west, the continent is actually a net creditor to the rest of the world. For those who are concerned about the wellbeing or not of human and natural resources, it is also a mustread. Hence we use the average factor for africa in our computations.
The key to a loan embargo is a concept known as odious debt. Such a debt is also odious because it was contracted against the interests of the population of south africa. At the same time, mobutu and his associates extracted wealth from the country. By law, in most countries, individuals do not have to repay money that others fraudulently borrow in their name. How foreign loans and capital flight bled a continent african. International african institute royal african society social science research council u. Advancing the odious debt doctrine executive summary. It means debt incurred without the consent of the people and against the national interest 7. Boyce reveal the intimate links between foreign loans and capital flight. Ukraine takes odious path to default financial times. Government debt as a ratio of gross domestic product is used throughout the world as a measure of fiscal discipline. In his words, he had paid the bribe to the remaining big men of africa, who.
Iraq and south africa are recent examples of countries where new. Africas odious debts is a pathbreaking book that should be read by every student, professional and. African countries debt indicators are reaching thresholds that are not sustainable. Global justice, odious debts, international lending, world. Early warning african countries are borrowing too much. That was a pretty earthshaking suggestion for the u. Press release africa is center stage in the struggle for human and economic rights. As formulated in 1927, odious debt allows governments to disavow debts incurred.
The removal of iraq s saddam hussein in 2003 sparked a resurgence of interest in this subject. If government debt exceeds 60 per cent of annual gross domestic product, it is deemed to be excessive in terms of european union criteria. Challenging the legitimacy and legality of third world debt, a web site about odious debt debt incurred by regimes that were not in the interest of their people. But africas foreign assets remain private and hidden, while its foreign debts are public, owed by the people of africa through their governments. So does debt service on loans that financed capital flight. It was also contracted against the interests of the population of the entire planet.
Dismissive and limited eurodad response introduction this is response to the world september 2007 discussion paper. Weve all heard of the third world s debt crisis, of hopelessly poor nations unable to pay their debts, and of the human suffering and environmental consequences of their desperate predicament. There is a widespread acknowledgment that the debts created by saddam hussein s regime. Congos odious debt peri political economy research institute.
Finally, the article notes that an additional benefit to periodical invocation of the odious debt doctrine is that it reminds lenders that the doctrine may at some point gain acceptance in the. In 2008, zimbabwes external debt to gdp ratio was the highest among 33 african states, amounting to 186 percent of gdp. Oct 24, 2011 boyce and ndikumana, authors of africa s odious debts, argue that under international law, debts incurred by dictators should not be enforceable. The legal doctrine of odious debts was given shape by alexander nahum sack in 1927. How foreign loans and capital flight bled a continent. Africa s odious debts is a pathbreaking book that should be read by every student, professional and policymaker concerned with the causes of the regions underdevelopment. Sep 27, 2011 africa s odious debts is a pathbreaking book that should be read by every student, professional and policymaker concerned with the causes of the region s underdevelopment. According to imf list of debt sustainability analysis 2018, shown in figure 1 african countries in. Despite appealsfrom the archbishop of cape town and south africa s truth and reconciliation commissionto have the odious apartheidera debt written off, the postapartheid government has accepted responsibility for the debt. But these documents often lack the precision necessary to.
In africa s odious debts, boyce and ndikumana reveal the shocking fact that, contrary to the popular perception of africa being a drain on the financial resources of the west, the. Hanlons very broad definition reflects the ministrys problem that illegitimate threatens to cover virtually anything. 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 latterin the case that the nation succeeds in getting rid of the government. A large proportion of the publicly contracted debt was siphoned off by individuals, often in key policymaking roles, and then expatriated for private gain. P nicaragua, where the odious debt is over five times the countrys total gdp. The south african people now bear the debts of their repressors.
Africas odious debts by ndikumana, professor leonce ebook. Africas odious debts is a small book but it unleashes a punchy argument that africa s debt is a result of clandestine complicity between african leaders and foreign creditors. Africas odious debts by leonce ndikumana and james k. In addition to these two instances, united states history is rich with examples of debt repudiation by states. The concept of odious debt was formalized in a 1927 treatise by alexander nahum sack, a russian emigre legal theorist. Odiuos debt or odious payments using anticorruption. In some respects, the concept is analogous to the invalidity of contracts signed under. How foreign loans and capital flight bled a continent, leonce ndikumana and james k. But if these increases are left to run for just a few more years, many african countries may find themselves stuck back in the debt trap they so recently escaped. In international law, odious debt, also known as illegitimate debt, is a legal theory that says that the national debt incurred by a despotic regime should not be enforceable. His illustrative examples include debts that could be subsumed under odious lending to. Boyce reveal these intimate links between foreign loans and. Boyce reveal these intimate links between foreign loans and capital flight, exploring the human cost of fund transfers as well as mechanisms to promote more responsible international financial systems.
Odious debt michael kremer and seema jayachandran1 august 2002 abstract some argue that sovereign debt incurred without the consent of the people and not for their benefit, such as that of apartheid south africa, should be considered odious and not transferable to successor governments. Africas odious debts is one of the outcomes of such efforts. The book makes a compelling case that because of the way it was created, this odious debt should not be repaid today. Selective repudiation of odious debt which is distinct from acrosstheboard default can prevent. Some considerations september 7, 2007 this discussion paper has been prepared by the economic policy and debt department of the world bank prmed with inputs from the legal department leg. While the concept is not accepted by all legal scholars, it has some traction. Africas odious debt archives the real news network.
A nation s debt becomes odious debt when government leaders use borrowed funds in ways. The extent of capital flight from subsaharan africa. Ndikumana and boyce estimate that as a result, africa, the worlds poorest region. Odious, not debt anna gelpern i introduction real problems and orphan doctrines the u. It does not reflect the views or positions of the world bank s management, board of executive directors, or member states. The cost of servicing external odious debt leads to tragic underspending on health care and education.
Advocates of the odious debt argument tried to persuade nelson mandela and the african national congress to reject south africa s apartheidera debts and asked the us to write off iraq s debt. This is the second part of our series of interviews based on the book africa s odious debts. He subsumes odious debts, as well as lending where lender misbehavior makes loans illegitimate hanlon 2006a, p. The extent of capital flight from subsaharan africa is remarkable. The evolution of the concept of odious debts 393 zaorv 68 2008 the topic, the doctrine of odious debts finds little support in the legal literature. Yet there is little agreement on a workable definition of odious debts. And no debt is more odious, and therefore more deserving of forgiveness. Mar 01, 2003 one reason for the international legal communitys reluctance to accept the doctrine of odious debt is the fear that debt will be declared odious after a loan has already been made, making it. Format for printing the repec blog the repec plagiarism page. Sep 11, 2017 the concept of odious debt when an unsavoury regime or ruler borrows money for their own benefit but lumbers the countrys people with its burden was first detailed in 1927 by an. Oct 15, 2011 africa s odious debts is a pathbreaking book that should be read by every student, professional and policymaker concerned with the causes of the region s underdevelopment. Africa debt context a decade after global debt movements campaigned for debt cancellation many african countries are again in debt difficulties. I strongly recommend africa s odious debts, together with a book referenced by mr.
In 2008 ecuador refused to pay debts which, it argued, had been. Definition of the odious debt concept the modern concept of odious debts was first articulated in the postworld war i context, by the jurist alexander nahun sack, in his 1927 book the effects of state transformations on their public debts and other financial obligations. Zed books, 2011 among the public and the media in developed countries. South africas debt unforgivable finance and economics. It discusses how absence of consent, benefit and creditor awareness may reasonably be determined, and how the tricky issues relating to fungibility, securitization, and restructured odious debt can be addressed consistently with the doctrine. How foreign loans and capital flight bled a continent london. The fate of banks is thus tied to the health of the government s finances, making the whole financial system brittle. The last few years have seen a rising chorus of demands from nongovernmental and civil society organizations for the cancellation of the sovereign debt of many developing countries on the grounds that such debt is odious. The effects of state transformations on their public debts and other. Tobacco plantations in africa, also recipients of foreign aid loans. Boyce and ndikumana have written that africa may have a case on the basis of the odious debt doctrine. This process is endorsed by international positive law thompson. Africas odious debts is a pathbreaking book that should be read by every student, professional and policymaker concerned with the causes of the regions underdevelopment. Unpayable debt is external debt with interest that exceeds what the country s politicians think they can collect from taxpayers, based on the nation s gross domestic product, thus preventing it from ever being repaid.
Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. The debt of developing countries refers to the external debt incurred by governments of developing countries, generally in quantities beyond the governments ability to repay. Most of iraqs current debt was incurred by a ruthless and corrupt. We show that an international institution that investigated which regimes are odious and made its judgments publicly could reduce odious debt. The reason these odious debts cannot be considered to encumber the territory of the. In defence of the formal recognition of the doctrine of odious debts. In a masterful, easily comprehendible and professionally thorough manner, the authors demolish the myth that african countries have received large net capital flows. By enshrining a doctrine of odious debts as a recognized exception to the rule of state succession, some modern commentators have argued, a successor government would be able legally to repudiate the loans incurred by a malodorous prior regime.
The lenders know full well that the money that they place at the disposal of eskom is used to build coalfired plants. It means debt incurred without the consent of the people and against the national interest. Insolvency principles and the doctrine of odious debts. Odious debt is a legal term usually applied to the endowments of dictators in the developing world. On the measurement of debt burdens, experts noted that the concept of net present value npv of debt that is used in debt sustainability analysis may not be an. How foreign loans and capital flight bled a continentzed books, 2011, leonce ndikumana and james k. The doctrine of odious debt was invoked in 2003 by none other than the u. Africa s odious debts explodes the myth that africa is a drain on the west s finances, revealing that the continent is actually a net creditor to the rest. Of course, the more important practical issue for africa is how to bring about the repatriation of all that squandered capital.
How foreign loans and capital flight bled a continent zed books, 2011, leonce ndikumana and james k. Loose lending, corruption, and the third world s environmental legacy by patricia adams. Money borrowed by one country from another country and then misappropriated by national rulers. The experts noted that the appropriate definition of debt sustainability and the application of its concept is key to reach a longterm solution to africas external debt problem. 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 determines the legality of. The economics of odious debt doerte doemeland frederico gil sander carlos alberto primo braga december 2008 preliminary draft please do not cite abstract csos have proposed different policy approaches to protect the population from servicing odious debts, i. In africa s odious debts, boyce and ndikumana reveal the shocking fact that, contrary to the popular perception of africa being a drain on the financial resources of the west, the continent is actually a net creditor to the rest of the world. Debts that fuel capital flight can be considered odious under international law. Pdf africa s odious debts download full pdf book download.
Types of odious debts three types of odious debts have been identified by the authors. The concept of odious debts international insolvency institute. Sack, a lawyer in tsarist russia, 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. Boyce and ndikumana, authors of africa s odious debts, argue that under international law, debts incurred by dictators should not be enforceable. But all societies tolerate debt bondage when the creation of the debt is once. So says jubilee 2000, a group that lobbies for debt cancellation. It was based on two 19thcentury precedentsmexicos repudiation of debts incurred by emperor maximilian, and the denial by the united states of cuban liability for debts incurred by the spanish colonial regime. It is heartless to expect democratic thirdworld governments to repay loans made years ago to their nasty dictatorial predecessors.
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