The idea of odious debt in International Relations and the lunacy of modern democracy


The speed of which new developments come to light, discussed or debated in the media or the international political and economic forums these days is almost unprecedented. However the amount of real, sober or even honest information that we receive is actually diminishing week by week.   We live in such a quick pace that even the information that we consume has become a fast food commodity. No one tries to read or listen into different views and form an independent personal view anymore. We base our conceptions, perceptions only by reading the headlines of some ‘well perceived’ media forums and by listening a 1 minute report from a news channel. That’s it. That is the reason why tabloids receive such high readerships. The more serious effects of tabloids on journalism is that it has deformed the way news are presented in almost all forms of print media.

Here I would like to present some examples from recent developments that reveal the sickening world of the media and news coverage.

First, very few media have even reported on a historical basis the notion of odious debt as far as the debt crisis the countries in the Eurozone and mainly Greece is facing now. As if Greece is the first country that has ever faced a  debt crisis. At times, major powers—invoking what has come to be known as the doctrine of “odious debt”—have argued that new regimes should not be responsible for debts incurred by old ones. After the Spanish-American war, for example, the United States argued that neither Cuba nor the United States should be responsible for debt incurred by the colonial Spanish  government. In the famous Tinoco Arbitration of 1923, the panel suggested that credits knowingly extended to a country for a dictator who used the money for his personal purposes should not be recoverable.

Some years ago, the fall of Saddam Hussein in Iraq has prompted renewed calls for reviving this doctrine and creating an odious debt exception to state succession. Surprise, surprise the USA have promoted this idea about the huge debt of Iraq because they would have to manage the country anyway now that Saddam was gone. However the American government tried really hard and succeeded to have the country’s debt declared unpaid  without using officially the legal terminology of the odious debt because they were afraid that they would have created a legal precedent for other countries to do the same. The reasons though and the logic that America went on to cancel Iraq’s debt was essentially the odious debt legal framework.

Despite these incidents, the international community has not yet adopted a general doctrine of excusing odious debts. Rather, the default rule is that sovereign debt is to be repaid, regardless of the circumstances under which it was contracted or for which the debt was used. Whereas international powers may act in an ad hoc way to assume or restructure sovereign debt of favoured countries, no general off-the shelf doctrine is available to be applied in a neutral manner across cases. The doctrine is that if you are strong enough you can pass anything that suits your interests. Well that was the case, and probably it still is, but again some years ago the  newly elected president of Ecuador after months of social unrest  managed to declare almost 70% of his country’s huge debt as odious and therefore void.

Greece’s accumulation of this huge debt has all the characteristics of a debt that can be declared as an odious debt. If one knows or tries to be informed of the numerous economic scandals that over the last decades many politicians in Greece were involved with German companies like Siemens or other European corporations from the defence industry will understand that the debts the Greek government assumed benefited in reality a very small minority of national and international investors.

Or one needs to think the criminal financial loans that Goldman Sachs sold to Greece while at the same time betting with the famous Credit Default Swaps against Greece to repay its debts. These sort of news or analysis is almost non-existent in the media in Europe. The media simplify their views and focus on just how much is the debt of Greece’s or Italy’s and what is the amount of the next financial aid package coming from the EU. No one questions the conditions and terms of the aid packages, no one questions if the way that the EU has responded in the crisis has been really helpful or effective, honest or proper. The EU directories and the ideas coming fro the IMF and the ECB are taken as granted as gospel.

One newspaper in Germany actually decided to dig in and investigate the issues behind the Greek crisis and the EU rescue packages and response.


The German newspaper Handelsblatt send a research tour to Greece consisting of a 20-member team in order to get information and to investigate the situation in Greece. The report of the German journalist team describe ‘an exhausted country, a country suffering from a double burden: Its self-inflicted debt chaos and a European rescue policy which is only making matters worse’.

One month in Greece was enough for the reporters to realize what it has been evident to the Greek public for almost more than 2 years. The austerity measures are shrinking the economic strength of the country while at the same time exaggerating the country’s debt extreme levels. The report from Handelslblatt goes on and states: ‘You can’t get muscles by starving…If I were from Greece I would sue my helpers for malicious injury. And at dusk, I would be there at Syntagma Square with all the others, in front of the Parliament, in order to demonstrate my disapproval of a policy of crisis which only intensifies the crisis.’
While most of the European media where quick to celebrate with reserved optimism the recent debt cut agreement in Brussels for Greece the reporters of the German newspaper quickly realized that this action was once again something too little done too late.

‘Most of all, it is one and a half years too late. If at that time debts had been cut in half, today’s deficit would be below 100 per cent of economic strength. The way it is now, however, access to the capital market will remain blocked for Greece in the foreseeable future. A further complication is that about one third of the debt instruments is owned by the Greeks themselves, 74 billion Euros belong to their banks and thus their savers, 26 billion Euros belong to their social funds and thus their pensioners. They have become palpably poorer overnight.’

The newspaper’s report makes an interesting link to the treatment given to Greece today with the treatment the US representative Jeffrey Sachs, known since then as Dr Shock, and his Chicago Boys tested in Boris Yelzin’s Russia: ‘Hasty deregulation, the churning out of privatizations and social cutbacks in the budget. They created the kind of Wild West capitalism which still splits the Russian society into billionaires and have-nots to this day’.

The role of “the modern European Dr Shock“ is to extract money from the economy instead of enabling investments pushing this way a country from recession into depression.

Another interesting link the report from the German newspaper makes is the claim that should Western Germany had treated its ‘brothers and sisters in the GDR like the Greeks are treated now the people there would still drive “Trabant“ cars and wait for bananas. Everything we did do right in the GDR – the debt relief of one hundred per cent for companies, the incentive programs for medium-sized companies which at first did not even exist, the incremental wage increase in order to create purchasing power – we are getting wrong in Greece.’

Well, that is half the truth because it ignores the imperial monetary war that the German government the Bundesbank and Helmut Schlesinger waged in cooperation with global powerful investors like George Soros against the other major European currencies in order to first finance the reconstruction of Eastern Germany and then force the EU into monetary convergence.

Europe since the fall of the Berlin wall is been driven once again by the fascist chariot of a powerful united Germany which has the same imperial goals as before and only the wisdom to use a different set of means and methods to achieve them. Germany has started on a program to dismantle the South and to re-nationalize Europe in a way that would allow them to control it as a hegemon.

Again the sober investigative analysis of the German newspaper was drowned in the sea of shallow, loud, pompous and guided mainstream reports.  These opportunistic and sensationalistic coverage of news and of such major social issues in our times by the media reveal, since the media represent  a mirror of the society, the sickening lunacy of our so called democratic societies where we allow the faceless psychopathic unethical global financial markets decide the future of ours all  and to pass judgment on political decisions of once independent nation-states. One may ask how such powers manage to control so many of the aspects that control our lives. The answer is simple. They do so by making use of a magical revolving door of power by which the same elitist technocratic people interchange powerful positions in key institutions that produce wealth and manufacture belief of consent. The sad thing is that we the populous are stupid enough to believe there is nothing to do to change this.


2 thoughts on “The idea of odious debt in International Relations and the lunacy of modern democracy

  1. Well, not everyone believes there is nothing that can be done to change this. Look at the occupy movement, the Zeitgeist movement, more and more people start to realise this

    1. The fact is the occupy movement proves exactly that many people realized that there is so little that can be done to change the situation modern societies has come because they see that the discourse as far as our modern economic system is essentially the same from any side of the political spectrum, socialist, liberal center left or center right. Of course there is hope and there will always be as long as there is some sort of freedom of expression but the danger now is that the global elites have so much more power now to control public opinion and to drown social movements that do not serve their interests.

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