Skip to main content

Demystifying Alexander Nahum Sack and the doctrine of odious debt

Eric Tousaint’s study of the odious debt doctrine

by Eric Toussaint

Part 15 - Arguments used by Taft which could inspire Greece, Argentina, Tunisia, etc.

Certain arguments used by Taft are useful to the cause of the Greeks and other peoples groaning under the weight of debt.

Taft asserts that the debts and other obligations contracted by Tinoco are null and void because he did not adhere to the constitution he himself had had adopted after his coup. That constitution stipulated that the type of obligations Tinoco had contracted required a joint vote of the Senate and the Chamber of Deputies. However, only the Chamber of Deputies had voted in favour of granting the oil concession and the tax exemptions to the British company. Consequently, according to Taft, the contract was not valid.

As many Greek jurists and the Greek Debt Truth Commission have pointed out, Articles 28 and 36 of the Greek constitution were violated at the time of the adoption of the Memorandum of Understanding of 2010, which resulted in the accumulation of a new debt of 120 billion euros. Regardless of the democratic or non-democratic nature of the regime in place in Greece, the fact that it contracted obligations toward creditors in violation of the Greek constitution, is in itself an argument for nullity. Obviously numerous other arguments can be added to that one in establishing the legality of repudiating the debts whose repayment is being demanded by Greece’s current creditors.

If we move to another spot on the planet, that argument could also be used in Argentina to justify repudiation of the obligations contracted with foreign creditors by the various democratic regimes that have succeeded one another since the fall of the dictatorship in 1983. Argentina’s constitution does not allow the courts of another State to be given jurisdiction when the nation contracts debts or other types of obligations.

Another argument in the opinion handed down by Taft is useful. Recall that Taft declared that the Bank “[…] must make out its case of actual furnishing of money to the government for its legitimate use.” It is clear that the creditors who have granted loans to Greece, Portugal, Cyprus, Ireland and Spain since 2010 are incapable of demonstrating “furnishing of money to the government for its legitimate use”, since that money has served mainly to repay foreign banks in the major lender countries and the loans were granted on condition that policies contrary to the interests of the country be conducted.

This argument also applies to the debts contracted by Tunisia and Egypt after the fall of those dictatorships in 2011. The debts were not contracted in the interests of the people and of the nation. They were not contracted for legitimate purposes.

In conclusion, the interest of Taft’s ruling is that it does not base the nullity of the debts claimed against Costa Rica on the despotic nature of the regime that contracted them. Taft’s ruling is founded on the use that was made of the loans and on adherence to the country’s internal legal standards. Taft’s ruling affirms that while in principle there is a continuity of obligations of States even in the case of a change of regime, those obligations may be repudiated if the funds borrowed were not used for legitimate purposes. He adds that if the contracts resulted in violation of the internal rules in force in the country (for example its constitution) or contain irregularities, that country has the legal right to repudiate those contracts.

We have no sympathy for Taft and it is obvious that his motives were anything but disinterested. But whether we like it or not, Taft’s arbitration constitutes an international reference for application of the law with respect to debts and other obligations. It is fundamental for States to avail themselves of their right to repudiate illegitimate debts.

Source and references:


[1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [16] [17] [18] [19] [20]

Comments

Popular posts from this blog

Former Pentagon official confirms: Trump prepares for war with Iran

globinfo freexchange
Right after Trump's sudden announcement that he will withdraw the US forces from Syria, we had some mixed reactions. Some liberals reacted angrily, but most of the reactions from the liberal machine were rather moderate, or at least not as intensive as someone would normally expect.
On the other hand, Trump's supporters and all those who had enough of the pro-war neoliberal establishment, felt a kind of vindication, as it appeared that Trump would eventually keep its promise for an 'anti-interventionist' policy.
But the blog wrote immediately a 'not so fast' article to explain that most of the Americans and all those who are tired of the US endless wars, should not rush to celebrate. We estimated that Trump's move is probably a sign that he is going to re-organize troops and go after the big target called Iran.
Indeed, shortly after the move, Trump, suddenly again, announced that he will also pullout troops from Afghanistan.
And then, about…

Panicked neoliberal tools attempt to trigger a war of generations against AOC's progressive counterattack

globinfo freexchange
We were slightly surprised to see such an article title in one of the primary info tools of the global neoliberal regime and financial capital. But the subtitle immediately clarified everything.
When we read the title “Alexandria Ocasio-Cortez and the Revenge of the Millennials” of the article in Bloomberg, we thought that we might be in front of a small miracle. We thought that the time has come for some people inside the core of the establishment apparatus to admit that the younger generations have lost dramatically from this brutal system. And so, the time has come to overthrow it, take their 'revenge'.
But no, it was too good to be true.
The subtitle immediately revealed the trick: “The Democrats’ major economic initiatives tend to favor the young at the expense of the old.”
Then, inside the article we read: “Almost every major new economic initiative proposed by Democrats — the Green New Deal, Medicare for all, debt-free college — has a common feature: Un…

Confirmed: Germany builds its own imperialist empire

globinfo freexchange
Almost two years ago we identified Germany's efforts to develop its military in the context of its ambition to build its own sphere of influence.
As we wrote, Brexit will give the chance to Germany to increase influence due to the change of power balance, especially now that France appears weak - crawling behind Berlin's austerity, sado-monetarism and neoliberal destruction. These conditions (created in the Greek experiment), are necessary to Germany in order to retain a model in favor of its surpluses. These could become the solid ground upon which Germany could build a strong, modern military machine.
Therefore, Merkel knows that the economic domination is not adequate for a country to become a major power. It is also important to have a strong military presence in its “sphere of influence”, or, its financial/debt colonies, if you prefer. The German military presence in Lithuania is a first step towards this direction as the Baltic countries have already be…

The desperate efforts of the Western neoliberal establishment to build a new propaganda machine

globinfo freexchange
The UK government and other Western governments and the US in recent years have had increasing difficulties persuading enough of their populations as to the legitimacy of the foreign policies that they have been pursuing.
And at the same time, Western countries have been going through a period of political crisis and economic crisis.
Piers Robinson, Chair in Politics, Society and Political Journalism at the University of Sheffield, further explains:
I think a lot of this drive is as much about trying to shore up shaky official narratives and trying to shore up political systems in a situation of political crisis, as it is actually about countering Russian propaganda.
I would suspect that that's a little bit of an excuse here to really what's going on of problems much closer to home.
This is not just to do to UK, this is Europe-wide. And there are also indications from the documents that they are intending to start to have some kind of impact within the United…

WikiLeaks disturbing and hopeful findings on Tulsi Gabbard's path to progressiveness

The definite detachment from the Clintonian machine
globinfo freexchange
Searching the Podesta emails inside WikiLeaks we found a rather disturbing fact about Tulsi Gabbard who recently announced that she will run for the 2020 US presidency. Iraq War Veteran, Jon Soltz, chairman at VoteVets at the time, sent an email on Aug. 2012 to Hillary Clinton top lobbyist, John Podesta, in order to thank him for his contribution to Gabbard's campaign in Hawaii.
Soltz wrote (emphasis added):
This morning, we are one step closer to making history. In Hawaii, VoteVets PAC-endorsed Iraq veteran Tulsi Gabbard has won her primary, in a stunning come-from-behind victory. If she wins in November, she along with Tammy Duckworth (who we also feel very good about), would be the first female combat veteran ever elected to Congress in United States history! This is happening because of you. Your tens of thousands of dollars in donations for Tulsi's campaign, through VoteVets PAC, allowed her to run a fir…

The difference between Bernie Sanders and Jeremy Corbyn and what the US elections won't allow you to decide

globinfo freexchange
A country that has been completely taken over by the banking mafia and the corporate power will never allow people to decide on the most important issue: the abolition of the dominant system that works against them.
Professor Richard Wolff explains:
Because of Bernie Sanders, particularly, we now have the word Socialism floating around, but typically it's about, more or less, really among Democrats. Like Mr. Sanders is ambiguously an independent but he's also a Democrat.
So, the ‘Socialists’ seemed to be the Democrats who want to do more for people. Social welfare, social supports, state supports, versus those who don't want to do quite so much - the centrist Democrats, like Clinton and Obama.
But the real question is a program of change. Socialism is a change of system it goes away from capitalism to do something else. It would be interesting if we could have an election ‘do we want that?’, ‘would we like a different system?’.
There are countries doing t…

The IMF is dismantling Argentina all over again

Part 1
In September, Argentine president Mauricio Macri accepted the 2018 Atlantic Council’s Global Citizen Award. In attendance were many of world’s neoliberal power players and policy makers, among them International Monetary Fund (IMF) Managing Director Christine Lagarde.
Facing the crowd, Macri gleefully admitted that “with Christine, I have to confess we started a great relationship some months ago,” referring to a series of loan agreements with the IMF amounting to $57.1 billion dollars. “I expect that this is going to work very well, and we will end up with the whole country crushing on Christine,” he continued.
This dynamic of chasing an improved image with the world’s big banks and the dominant economies in the West is emblematic of Macri’s priority to secure a relationship with the IMF and improve the country’s image with global financial institutions. But it comes at a devastating cost for the majority of the population who will suffer from neoliberal policy prescriptions of…

How neoliberalism manufactured consent to secure its unlimited power

From David Harvey's A Brief History of Neoliberalism
Part 11 – The Reagan/Thatcher neoliberal legacy: a bizarre form of a sinister political doctrine from which it would be difficult one to escape
But Thatcher had to fight the battle on other fronts. A noble rearguard action against neoliberal policies was mounted in many a municipality –– Sheffield, the Greater London Council (which Thatcher had to abolish in order to achieve her broader goals in the 1980s), and Liverpool (where half the local councillors had to be gaoled) formed active centres of resistance in which the ideals of a new municipal socialism (incorporating many of the new social movements in the London case) were both pursued and acted upon until they were finally crushed in the mid-1980s.
She began by savagely cutting back central government funding to the municipalities, but several of them responded simply by raising property taxes, forcing her to legislate against their right to do so. Denigrating the progressive…

Banishing Truth

by Chris Hedges
The investigative reporter Seymour Hersh, in his memoir “Reporter,” describes a moment when as a young reporter he overheard a Chicago cop admit to murdering an African-American man. The murdered man had been falsely described by police as a robbery suspect who had been shot while trying to avoid arrest. Hersh frantically called his editor to ask what to do.
The editor urged me to do nothing,” he writes. “It would be my word versus that of all the cops involved, and all would accuse me of lying. The message was clear: I did not have a story. But of course I did.” He describes himself as “full of despair at my weakness and the weakness of a profession that dealt so easily with compromise and self-censorship.
Hersh, the greatest investigative reporter of his generation, uncovered the U.S. military’s chemical weapons program, which used thousands of soldiers and volunteers, including pacifists from the Seventh-day Adventist Church, as unwitting human guinea pigs to measure…

All the right progressives are running for 2020 ... but they need a really smart strategy to have a chance against the neoliberal beast

globinfo freexchange
More than a year ago we wrote that the 2016 electoral process in the US was particularly useful because it highlighted many interesting unprecedented aspects. One of them, is that you don't need the mainstream media to promote you. Especially the young Americans discovered and promoted Bernie Sanders through the independent and social media on the Internet. Another aspect, is that you don't need big money to support you. These new conditions could be proven valuable towards the creation of a third political movement, coming straight from the people, which could seriously challenge the current corrupted political establishment.
We also wrote that we can think at least four progressives that should join forces to lead such a political movement right now: Jill Stein, Bernie Sanders, Tulsi Gabbard, Elizabeth Warren.
Three of them already revealed their intention to run for the 2020 US presidency. Assuming that the Greens won't change leadership, Jill Stein wi…