Odious Debts

O-di-ous Debts n. [repayable debts left to an incoming government by its corrupt predecessor]

According to international law, incoming governments inherit their predecessors' debts. In some cases, a moral conflict arises when implementing this law. For example, a potentate (dictator) may embezzle money from his country's treasury and leave his successors with a mountain of debt. The succeeding generations are now liable for repaying this debt.

In this context we speak of odious debts. According to the classical definition, three conditions have to be met for loans to be considered odious debts:

  1. The loan is taken out without approval by the population.
  2. The loan is not used in the interest of the population.
  3. The lenders are aware of the wrongful use of the money.

Legal Situation

At present, there are no legal international procedures for assessing or abating odious debts. There are several reasons for this. Among other things, states still dispute the criteria for determining when debts are odious. Should debts be considered odious even if a majority of the population was in support of the regime?

Up until now, Switzerland has not taken a clear official stand on this point. According to federal authorities, Switzerland has not provided any loans that could be considered odious debts.

National Agencies:
Aktion Finanzplatz Schweiz: AFP is campaigning on the subject of odious debts and organises conferences on this topic, amongst other things. (www.aktionfinanzplatz.ch)

International Agencies:
Odious debts: Panel for the exchange of information including on the subjects of odious debts and third world debt. (www.odiousdebts.org)