An academic lawyer named Alexander Sack developed the concept of `odious debt` at the begining of the 20th Century. In referring to the national debt of a country he wrote: "If a despotic power incurs a debt not for the needs or in the interest of the State, but to strengthen its despotic regime, this debt is odious for the population of all the State. This debt is not an obligation for the nation."

Sacks work provided the legal rationale for action taken at the begining of the 20th Century by the USA in relation to Cuba. In the aftermath of the Spanish-American war the USA took over the administration of Cuba from Spain. Spain looked to the USA to repay the debt owed to it by Cuba. The US Government refused to repay debts they considered to have been "created by the Government of Spain, for its own purpose and through its own agents, in whose creation Cuba had no voice". The debt, as far as the US Government was concerned had been used to suppress the democratic will of the people of Cuba. It was therefore an unjust debt and as such should not be repaid.

At the begining of the 21st Century, the issue of odious debt is set to become central to the debate on Third World Debt. In 1973 the United Nations described the apartheid system as a crime against humanity. During the early part of the 1980s the apartheid regime in South Africa was faced with bankruptcy; the cost of maintaining such a regime and the economic sanctions imposed from abroad had begun to take their toll. The leaders of the movement for democracy in South Africa urged international institutions and investors not to bail out the South African economy unless deomocratic reforms were introduced. However, the Swiss Government proceeded to facilitate large loans from private banks that allowed the apartheid government to stay in power. The current democratic government, which represents those who suffered from apartheid, is now having to pay back this money.

The irony of this situation, whereby the oppressed are being asked to pay for their oppression, is not confined to South Africa. The country fromerly known as Zaire was ruled for decades by Mobutu Sese Seko, a man for whom the word kleprocrat was coined- a man who ruled by theft. It is estimated that he stole more than $10 billion, while he kept the people of his country in fear and poverty.

There was widespread knowledge of Mobuto's corruption. A certain Edwin Blumenthal resigned from the central Bank of Zaire in 1980 because of "sordid and pernicious corruption" that was so serious that "there is no chance, I repeat no chance that Zaire's numerous creditors will ever recover their loans." Mr Blumenthal was working in the central Bank of Zaire at the insistance of the International Monetary Fund. Despite his daming report, in the six years that followed, the IMF lent Mobuto over $600 million, while the World Bank provided $650 million. Western governments lent over $3billion during the same period. Mr Mobuto had the good sense to support the West in the Cold War and to allow the exploitation of Zaire's extensive mineral wealth by multinational companies.

President Marcos of the Phillippines was another dictator who improverished his country whilst amassing a personal fortune of over $10 billion. The Philippine Freedom from Debt Coalition (FDC) is the longest running campaign for debt cancellation in the developing world. The title of the FDC newsletter, People Against Immoral Debt (PAID). exposes their unwillingness to repay odious debts incurred by Marcos.

In each of these cases those who lent the money could be in no doubt about the standing of those who received it. Even if it could be argued that creditors were unaware of the use to which their loans were put, the question still remains about the moral responsibility of people to pay back money that was used to oppress them.

The Government that organised and carried out the genocide in Rwanda were in receipt of large loans. In recognising these loans as an example of "odious debt" the British House of Commons International Development Committee in its May 1998 report on Debt Relief (paragraphs 11 & 57) wrote that " the bulk of Rwanda's external debt was incurred by the genocidal regime which preceded the current administration.... Some argue that loans were used by the genocidal regime to purchase weapons and the current administration and ultimately, the people of Rwanda, should not have to repay these "odious" debts".

As well as debts incurred by corrupt or despotic regimes, questions could be asked about loans that were given for specific projects which were chosen and designed by the creditors. The World Bank plays a major role in design, implementation and monitoring of the projects that it funds. A World Bank evaluation of 18 agricultural projects funded up to 1986 in Tanzania, found that 12 produced negative economic rates of return. The World Bank simply cannot attribute sole responsibility to the Government of Tanazia for these and other project failures.

A World Bank review of its programme in Zambia concludes that the predominace of adjustment lending in Zambia in the 1980s and 1990s was a mistaken approach. Looking at 18 projects approved during 1980-1995, only three were rated at likely to be sustainable. Between 1991and 1993 public expenditure halved as a share of Gross Domestic Product. An external review of the IMF programme in Zambia, pointed out that IMF policies resulted in high levels of inflation with heavy social costs attached.

Recently a court in Argentina made a ruling about the legitimacy of Argentinia's debt. Between 1976 and 1983, under the military government, Argentina's debt rose from $ 7.5 billion to $43.5 billion. These new loans were of no benefit to ordinary Argentineans. According to the judge the loans were part of "a damaging economic policy that forced [Argentina] on its knees through various methods..and which tended to benefit and support private companies - national and foreign- to the detriment of society and state companies." He specifically cited the IMF as being culpable for lending money in an irresponsible way..

In recent years much has been done to highlight the fact that many countries cannot pay back the debts they owe. It is now time to point out clearly that it is not simply a matter of an inability to pay. Some debts should not be paid. As the slogan of Jubilee South campaigners puts it - "Don't owe- wont pay".

Contributors:

Michael O'Sullivan Columban Mission Education

Maire kelly Jubilee Ireland

Useful Websites:

www.jubileeplus.org

www.odiousdebts.org

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