Odious Debt, Adverse Creditors, and the Democratic Ideal

Abstract

In the context of transitions from authoritarianism to democracy, the odious debt doctrine has often been raised as a claim to adjust or sever sovereign debt obligations, based on the purported odiousness of the previous regime and the notion that the debt it incurred did not benefit, or was used to repress, the people. Ultimately, the normative force of the odious debt doctrine comes from the primacy of the democratic ideal: when the debt was contracted not only was this done by a non-representative government but the debt served the purpose of that government in denying the political freedom of the people. Using Greece as an example, the chapter demonstrates how odious debt applies to debt incurred not only by dictators but by democracies and how, in the latter circumstances, international creditors are implicated in ‘hostile’ acts against the demos. It concludes with suggestions on the remediation of odious debt.