The Financial Times, UK
May 29, 2003
From Mr Justin Alexander.
Sir, I am surprised that Lex Rieffel (Letters, May 26) was so disparaging of proposals for assessing odious debts by Michael Kremer and Seema Jayachandran (“Make sovereign debt too risky to issue”, May 9), given that their work is published by his own Brookings Institution.
He says their proposals are unnecessary because the Paris Club already determines illegitimate debt. However, the Paris Club’s rules and principles contain no mandate for judging debt legitimacy but only for restructuring debt at risk of default. Moreover, the Club represents the interests of the creditors and when the issue is legitimacy a more neutral body is clearly needed.
Lawyers from Iraq and some creditor countries are developing an arbitration tribunal to assess which of the financial claims on Saddam Hussein’s regime should legally and justly pass on to the Iraqi people. The US-Iran claims tribunal provides a useful model for this and the doctrine of odious debts provides important precedents in international law.
Such a tribunal would be economically and politically preferable both to debt restructuring by the Paris Club and to debt repudiation by Iraq.
It would allow the new Iraq to demonstrate respect for international law and, as the first application of odious debts this century, would, in the words of the financier George Soros, “send a signal to the financial markets that it’s dangerous to deal with oppressive regimes”.
This would restrict the financing of oppressive regimes, leading to greater stability and democratisation in the future, to the benefit of the global economy and markets.
Justin Alexander, UK Co-ordinator of JubileeIraq.org, London SE1 0HX, UK