Odious debts: A moral account

Abstract

In this article I discuss the conditions under which sovereign debts are not morally binding for a state. Following an old legal doctrine, I call non-binding debts ‘odious’. I proceed as follows. First, I argue that alternative accounts on the morality of debts are unsatisfactory. The problem these accounts have are that they do not clearly identify the philosophical issues that underlie the notion of odious debts, or that they fail to specify what exactly the immorality of odious debts consists in. Second, I defend the view that a debt is odious when two conditions are satisfied: (i) borrowed funds were used by public officials for purposes for which they were not authorised (ii) lenders knew, or should have known, about possible unauthorised uses of those funds. If these two conditions are both satisfied, debts should not be considered debts of the state, but rather personal debts of rulers. Third, I discuss the feasibility of my approach by exploring how it would work in the current world. Finally, I discuss the implications of my account and a possible reply to it. One of the remarkable upshots of this analysis is that it will show that the problem of odious debts is widespread and pervasive.