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Odious Debt

Definition

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. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.

What is 'Odious Debt'

Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious debt when government leaders use borrowed funds in ways that don't benefit or even oppress citizens. Some legal scholars argue that successor governments should not be held accountable for odious debt incurred by earlier regimes, but there is no consensus on how odious debt should actually be treated. In practice, countries often end up repaying it to uphold their ability to borrow at favorable interest rates.

Explaining 'Odious Debt'

Legal scholars have identified regimes associated with odious debt in Nicaragua, the Philippines, Haiti, South Africa, Congo, Niger, Croatia and other countries whose rulers have looted national funds for their personal accounts or used the money to restrict liberties and inflict violence on their own citizens. In the European debt crisis of the early 2010s, some critics called Greek's debt odious.


Further Reading


Congo's odious debt: external borrowing and capital flight in Zaire
onlinelibrary.wiley.com [PDF]
… Department of Economics … ruled that the current government of Iran was liable for the debts, but the Tribunal wrote that in doing so it “does not take any stance in the doctrinal debate on the concept of 'odious debts' in international … odious debt from being issued in the first place …

From Odious Debt to Odious Finance: Avoiding the Externalities of a Function Odious Debt DoctrineFrom Odious Debt to Odious Finance: Avoiding the Externalities of a Function Odious Debt Doctrine
heinonline.org [PDF]
… Department of Economics … ruled that the current government of Iran was liable for the debts, but the Tribunal wrote that in doing so it “does not take any stance in the doctrinal debate on the concept of 'odious debts' in international … odious debt from being issued in the first place …

The odious debt doctrine after IraqThe odious debt doctrine after Iraq
www.jstor.org [PDF]
… Department of Economics … ruled that the current government of Iran was liable for the debts, but the Tribunal wrote that in doing so it “does not take any stance in the doctrinal debate on the concept of 'odious debts' in international … odious debt from being issued in the first place …

Odious debts or odious regimesOdious debts or odious regimes
heinonline.org [PDF]
… Department of Economics … ruled that the current government of Iran was liable for the debts, but the Tribunal wrote that in doing so it “does not take any stance in the doctrinal debate on the concept of 'odious debts' in international … odious debt from being issued in the first place …



FAQ


What is Odious Debt?

Odious debt is a concept that describes debts incurred by a regime for purposes that do not serve the best interests of the nation and its people.

Where did this concept originate?

The concept originated in international law.

What does this concept describe?

This concept describes debts incurred by a regime for purposes that do not serve the best interests of the nation and its people.

How can you identify odious debt?

You can identify odious debt by examining whether or not it was incurred for purposes that served the best interest of the nation and its people.

Is there any other way to identify odious debt?

Yes, you can examine if it was incurred without transparency, accountability, or democratic oversight.

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