The problem of illegitimate debt is one of definition. Clearly we know that many – most even – of the debts owed by the poor countries of the world are bad, that they violate jus cogens, human rights, the peremptory norms of international law. Clearly we know that by any reasonable moral standard, the loans extended to leaders like Mobutu and Marcos – with full knowledge of their misdeeds – should be cancelled without question, alongside those which were for projects that could never have been built, or loans which could never realistically have been repaid, or loans which simply disappeared into Swisss accounts. But nobody could argue that all debts were bad.
The problem is not therefore one of morality – the moral argument is black and white – but one of definition. Creditors have complex systems for defining and measuring concepts such as sustainability or payability, but how can we approach them asking for cancellation on the basis of legitimacy when there is no collectively agreed definition for that term? In this context the power to define becomes highly political. As one famous radical said: ‘Power is the ability to define things and have them react accordingly.’
The World Bank does an awful lot of defining. EUROAD, the European Network for Debt and Development, recently circulated a World Bank formula for establishing whether or not a debt was odious (a narrow subset of illegitimacy).
This excerpt shows – rather like Swift’s Laputa – how defining things bureaucratically tends to lead us quite quickly into the absurd. A juridical method for defining legitimacy – while producing an outcome that would probably satisfy nobody wholly – would at least create a definition that was meaningful enough to ground a productive debate. And with the bad debts still being collected, it’s vital that that debate happens soon.
money Monday!
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