Committee for the Abolition of Illegitimate Debt

Norway recently acknowledged its responsibility in the illegitimate indebtedness of five countries - Ecuador, Egypt, Jamaica, Peru, Sierra Leone - and decided to unilaterally cancel part of its claims on these countries (amounting to euro 62 million).

From 1976 to 1980, Norway exported 156 ships to countries in the South for a total cost of euro 440 million - not to support their development but to come to the aid of its own ailing naval industry. Such exports relied on loans that the countries concerned had received from the Norwegian Guarantee Institute for Export Credits (GIEK). Today Norway acknowledges that this export campaign was a failure in terms of development policy. It is still a creditor for 7 of those 21 countries (the 5 mentioned above, plus Burma and the Sudan) while these debts have brought nothing to the respective populations but poverty, unjustified debt and misappropriation of funds.

In Ecuador for instance, a study carried out by the Center for Economic and Social Rights (CESR) and the Commission for Civil Control of Corruption (CCCC) revealed that the initial debt to buy the ships was a private debt of USD 13.6 million but that it became a public debt of USD 50 million illegally taken over by the Ecuador government.

CADTM, which has long militated for recognition of the notion of odious debt Odious Debt According to the doctrine, for a debt to be odious it must meet two conditions:
1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
2) Creditors cannot prove they they were unaware of how the borrowed money would be used.

We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.

(See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).

The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”

Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”

So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts. , applauds the decision of the Norwegian government to ackowledge its responsibility in the matter of a profoundly illegitimate debt that puts an intolerable burden on the countries concerned. In addition, CADTM is pleased to see that this debt cancellation will not be taken into account in the figures for Norwegian public development aid, contrary to what is practised elsewhere, which seriously distorts the actual amounts allocated by the countries of the South for purposes of development.

CADTM considers that this decision of the Norwegian authorities is the result of the excellent mobilisation and awareness-building work achieved by activists and movements for the abolition of the debt in the countries concerned, especially in Norway and Ecuador.

CADTM observes with satisfaction that Norway is for once breaking with the solidarity of member countries of the Paris Club Paris Club This group of lender States was founded in 1956 and specializes in dealing with non-payment by developing countries.

(an informal group of 19 rich creditor countries) by deliberately acting unilaterally. In this way, Norway demonstrates that it is possible to make real progress as regards the debt by refusing to remain within the Paris Club framework, in which the indebted countries remain isolated in the face of a united front of major powers. Unfortunately however, Norway has already made it clear that discussions on the cancellation of the Norwegian debts will again be part of the Paris Club approach in 2007.

Consequently, and following the demonstrations [1] and that have taken place so far this year, CADTM demands no less than the removal of the institutional anomaly which goes by the name of the Paris Club, and which has hindered any fair solution to the debt problem for 50 years.

Finally CADTM calls upon all official creditors to acknowledge their responsibility in the over-indebtedness and underdevelopment of countries in the South, to declare that these debts are odious, and to immediately cancel their total claims upon developing countries.