odious debt

Tomorrow, Nigeria will pay off $6.4 billion of debt to the Paris Club of 19 industrialized lender nations. It will still owe $5 billion to the International Monetary Fund and other private lenders. One of the world's largest producers of oil, Nigeria is also one of the world's poorest nations.

The other day, I was discussing Africa's AIDS pandemic with my housemate, and the criminal failure of the US to respond appropriately. He said: "Is it America's job to help every poor country fix their problems?"

No. And America doesn't. Nor does Europe. Nothing makes me angrier than the common belief, fuelled by Western celebrity "ambassadors" to disaster zones of Africa, that the West is "helping" Africa. On an annual basis, Africa transfers billions of dollars to the global North in debt repayment, interest, and late penalties. Much of this debt was incurred by colonial regimes, and inherited by newly independent African nations. South Africa is now burdened with colossal debt incurred by the apartheid regime. None of the funds borrowed contributed in any way to the welfare of the South African people.

Imagine someone came into your home, evicted you at gunpoint, occupied your property, and then mortgaged it 3 times over. To banks who knew they had stolen your property, were occupying it illegally, and were using the loans to buy more weapons. When you finally regain what's rightfully yours, are you responsible for the repayment of that debt? With penalties, late charges, and a punishing fixed rate of 14% interest?

From:
G-8 Summit 2004; Iraq’s Odious Debt: Rhetoric to Reality, Jubilee USA, 2003

Odious debt is an established legal principle. Legally, odious debt is debt that resulted from loans to an illegitimate or dictatorial government that used the money to oppress the people or for personal purposes. Moreover, in cases where borrowed money was used in ways contrary to the people’s interest, with the knowledge of the creditors, the creditors may be said to have committed a hostile act against the people. They cannot legitimately expect repayment of such debts.