[GJM] [Intertax] Odious lending: debt relief as if morals mattered

[robert searle]

Dear All,

      The following may be of interest..

R.Searle

--- Christensen tjn <Christensen.tjn at neweconomics.org>
wrote:

> Dear Colleagues,
>  
> The following email from Steve Mandel is relevant to
> those with an interest in odious debt.
>  
> Best wishes,
>  
> John
>  
> ++++++
>  
> Dear John Christensen,
> 
> As the world bank meetings open in Singapore, I am
> launching a new discussion document from nef (the
> new economics foundation) saying that the time has
> come to look again at foreign debts forced wrongly
> on developing countries - so-called 'odious debt' -
> and shift the spotlight onto the 'odious lenders' -
> the bankers who made large loans to illegal regimes.
> 
> The nef research, Odious lending: debt relief as if
> morals mattered, demonstrates the true scale of the
> impact of debts that result from 'odious lending',
> and how that impact continues to grow until the loan
> is cancelled. Long after 'odious debts' are
> technically off the books, subsequent generations
> are still effectively paying for them. Taking 13
> clear examples of odious lending, nef's new
> calculations reveal that amongst the worst cases: 
> 
> *	Indonesia has already 'overpaid' in the region of
> US$151 billion relating to odious debts - twice the
> level of recorded debt. This means that Indonesia
> has made a cumulative net transfer to the North of
> US$138 billion to date - or 90 per cent of
> Indonesia's GDP. 
> *	Argentina has already 'overpaid' in the region of
> US$77 billion relating to odious debts - 75 per cent
> of the country's recorded debt. 
> *	Nicaragua has odious debt of over five times the
> country's total GDP. 
> 
> The case for debt cancellation on the grounds that
> the vast loans made to 'odious' regimes should not
> be enforceable under international law, is gaining
> momentum. But until now, no-one has tried to put a
> price on the repercussions of odious debt that
> reverberate for many decades - even after an
> oppressive and corrupt borrower regime may have left
> the scene.
> 
> The nef research reveals that for at least ten of
> these countries, their total debt results from
> 'odious lending'. For the ten countries identified
> as having 100 per cent odious debt: Indonesia,
> Argentina, Nigeria, Phillipines, Pakistan, Peru,
> Sudan, South Africa, Democratic Republic of Congo
> and Nicaragua, all debt servicing is inappropriate.
> This means that they have, in fact, been
> 'overpaying' and are owed not just a total
> cancellation of all outstanding debt, but a
> substantial repayment, currently amounting to US
> $383 billion.
> 
> Not only are successor governments saddled with
> paying off the loans - but because the borrowed
> money was often not put to productive use, there are
> inadequate funds to repay interest and capital. The
> result is a vicious circle of debt in which new
> loans have to be taken out by successive governments
> to service the odious ones, effectively 'laundering'
> the original loans. This can give a legitimate cloak
> to debts that were originally the result of odious
> lending. And, as the nef research reveals, the net
> loss to these countries economies' often exceeds the
> total outstanding debt.
> 
> nef proposes a new process for dealing with the
> problem including a new independent body that would
> assess the track record of regimes that incurred the
> debts and declare whether it was odious or
> legitimate. Loan contracts entered into by 'odious'
> regimes would then be deemed unenforceable. And, for
> the backlog of the past, debtor countries would be
> able to apply to an independent arbitration panel
> for a debt work-out. A moratorium would be declared
> on all debt service while the case was examined.
> Odious debts would be declared null and void before
> debt service could be considered on the rest. The
> key components of the nef proposal are: 
> 
> *	an internationally recognised independent body to
> decide on the odious nature, or otherwise of regimes
> 
> *	on a country by country basis, arbitration panels
> consisting of representatives of: creditors to
> odious regimes (the 'odious lenders'), legitimate
> creditors, present government and civil society with
> a mutually agreed chair to decide on debt work-out,
> designed to leave any country no worse off than they
> would have been if there were no odious loans. 
> 
> As well as relieving legitimate governments of the
> burden imposed on them by undemocratic predecessors,
> this would make it much more difficult for future
> dictators and other corrupt regimes to raise loan
> finance, thus greatly strengthening the forces of
> democracy and justice.
> 
> I attach a four-page summary, but for the full
> document please go here
>
<http://www.jubileeresearch.org/news/Odiouslendingfinal.pdf>
> .
> 
> Yours,
> 
> Steve Mandel
> 
> > _
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