Eric Tousaint’s study of the odious debt doctrine
by Eric Toussaint
Part 2 - Whether a regime was despotic or democratic was of little concern to Sack
As far as the jurist was concerned, when there is a change of regime caused by annexation, division or revolution, the new regime must honour debts accumulated by the previous regime. There would, then, be continuity on State obligations towards creditors even after a radical regime change. This was the conservative and reactionary position that held sway over international relations at the time.
Moreover, the democratic or despotic nature of the former regime or the new one did not influence this general rule. In Sack’s view, what counted was the existence of a regular government exercising power within the State’s territory:
“By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.” (p. 6). (trans. CADTM)
According to Sack, the new regime may question the validity of the debts it inherits, should those debts prove to be odious. In such a case, the new regime must obtain an international authorization to waive the rule of continuity of obligations regarding debt repayment.
The conditions he proposed are to be found at the end of this study. In a nutshell, we shall see that Sack makes a distinction between the nature of the debt bond and the nature of the government: an odious government may underwrite non-odious loan bonds, and a government not characterized as odious, that is nevertheless legitimate and democratic, may underwrite odious debts.
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