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10 March, 2017

Demystifying Alexander Nahum Sack and the doctrine of odious debt

Eric Tousaint’s study of the odious debt doctrine

by Eric Toussaint

Part 5 - The trivialization of wars of conquest

Sack considered perfectly normal that States should wage wars of conquest and make the conquered pay a tribute. He deemed that in the case of war, creditors’ rights were secondary to those of the State. “The government may wage a war that incurs considerable expense, material losses, losses in terms of human lives, etc. The war may even result in extremely burdensome peace conditions for the State which will have to pay out war indemnities in cash and in kind (railway rolling-stock, ships, artillery, etc.). Such actions on the part of a government, and their consequences, may have a negative impact on the debtor State’s finances and ability to pay. These are all risks to be borne by creditors who have no power to bind the government either in its right to dispose freely of private estate and State finances, or in its right to wage war.” (p. 58)

In the hierarchy of the values that Sack adopts, there is manifestly no place for peoples’ rights to self-determination and peace. Furthermore, as indicated above, in face of States’ inalienable right to wage war with all that entails, he considers that creditors have no other choice than to bow before the raison d’Etat.

He cites uncritically a decision of the French Conseil d’Etat which clearly indicates that the right to wage war includes the right to plunder: “Does the fact that the French army helped itself to the public funds of an occupied country (Venice) mean that the French State owes the said funds to the creditors of the occupied State? — Nay. — Here we have an act of war which does not permit of any claim.” (p. 58)

This sentence rather undermines Sack’s affirmation that there is continuity of the obligations of public borrowers towards their creditors (see the next point).

It is worth remembering that at the time when Sack was working on his book, peoples’ right to self-determination had become an element of official doctrine, both in the USA and in the Soviet Union.

This right is inconsistent with colonialism and the annexation of territories of nations dominated by the major powers. Yet as will be shown further on, Sack is plainly convinced of the “benefits” of imperialist politics as implemented by the former Tsarist empire, for example, over the non Russian peoples under its yoke, or the German empire in its African colonies.

Source and references:

[1] [2] [3] [4] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20]

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