Making case debt repudiation, two recent opinion editorials published Lagos independent daily, Day, rallied Nigerians get behind government’s continued push debt cancellation.

In “The verdict: hell with creditors?” Day columnist Olusegun Adeniyi considered whether Nigeria should invoke international legal Doctrine Odious Debts, basing case part on 2002 paper US scholars James K. Boyce Léonce Ndikumana.

In their paper, “Africa’s debt: who owes whom?”  [PDF here] authors argued substantial fraction foreign loans Africa intended domestic investment consumption have instead been “captured African political elites channeled abroad form capital flight.” way, said, “public external debts (contracted via borrowing African governments private firms with government guarantees)” have been “transformed into private external assets.”

The authors say African countries rich natural resources, particularly those “headed corrupt regimes,” have experienced large-scale capital flight most. For example, estimate former president Mobutu Sese Seko during 32-year rule over Democratic Republic Congo salted away billions borrowed funds, foreign aid revenues state-owned mineral companies.

Responsibility diversion borrowed funds falls not only on past African governments, but on their creditors, including private bankers well bilateral multilateral institutions. According Boyce Ndikumana:

“Knowingly unknowingly, these creditors financed accumulation private assets with their loans. many cases, creditors continued pour loans hands corrupt regimes, despite ample evidence these funds were not being used legitimate purposes. Sound banking practice would have dictated moratorium on lending such governments. Failure halt lending suggests either creditors were shielded losses were pursuing other objectives. On one hand, private lenders were shielded risk guarantees provided governments international institutions. All too often, these guarantees encouraged irresponsible lending. On other hand, official creditors continued lend client regimes political strategic reasons. Mobutu regime military regimes Nigeria are examples instances where lending supported dictatorships region.”

The writers suggest African countries could invoke Doctrine Odious Debts selectively repudiate liability public debts incurred past regimes were not “used finance bona fide domestic investment public consumption.” They called on creditors substantiate their claims repayment showing where their money went how used benef citizens borrowing country.

A similar argument put forth month Iraqi debt campaigners letter country’s creditors and, before that, Iraqi National Assembly’s (INA) Economic Financial Committee, which late last year recommended interim Iraqi government citizens Iraq refuse recognize debts incurred corrupt regime Saddam Hussein – move endorsed Union Iraqi Jurists.

Perhaps Nigeria ready follow suit?

Last week, Africa’s “odious” debt officially acknowledged member British Prime Minister Tony Blair’s Commission Africa.

Responding release Commission’s final report, K.Y. Amoako, executive secretary United Nations Economic Commission Africa, acknowledged Africa had accumulated “odious debt” result “irresponsible borrowing irresponsible lending.”

“Aid,” said Mr. Amoako, “that more designed help wealthy donors than poor recipients Cold War’s fuelling African conflicts backing dictators who were hostile their own people.”

It has been well argued throughout Cold War era, Western powers helped sustain number corrupt despotic African governments order secure their loyalty against former Soviet Union.

Referring recent resolution passed Nigeria’s House Representatives “wake up call creditors,” David Ugolor, president African Network Environment Economic Justice (ANEEJ), said resolution challenged creditors take action on Nigeria’s demands cancellation its “odious” debts, run risk debt repudiation if did not.

Another Day columnist, Kayode Komolafe, denounced standard argument marshalled against debt forgiveness “untenable.”

“[Critics] say would affect credit-worthiness debtor-nation adversely having potential rupturing international financial system. They point irresponsibility governments incur these debts,” he said.

But, he argues, Boxing Day tsunami Asia demonstrates how debt forgiveness can become “a veritable instrument foreign policy”:

“[After tsunami] compassion superceded technical economic calculations . . . affected countries were offered debt forgiveness light distress found themselves. Now, not an economic decision, laudable foreign policy informed clear socio-political considerations.”

Mr. Komolafe made reference comment made Nigeria’s Finance Minister, Dr. Ngozi Okonjo-Iweala, when she said creditors should not require tsunami occur before are able appreciate “excruciating pains” external debt. She argued cumulative consequences disease, ignorance hunger are destructive lives people living debtor-nations.

During an interview last week on Nigeria’s House resolution stop servicing its external debt, Dr. Mansur Muhtar, director-general Nigeria’s Debt Management Office, said Nigeria’s creditors had often been “more interested giving out money” recycling their “petro-dollars,” order prevent interest rates sliding, than had been exercising due diligence.

“[Creditors] kept encouraging these monies taken without due regard fact these monies were not being judiciously used, could have been leakages system. proper due diligence essence, which should normally case. Any responsible [lender] should have made sure projects [the loans financed] were viable money channeled those projects I think not appropriately done,” he said.

In response an article opposing Doctrine Odious Debts published late last year IMF magazine, Finance & Development, Patricia Adams Canadian-based, foreign-aid watchdog Probe International pointed out private sector has had “no trouble grappling with law figuring out how ‘odious debt-proof’ its loans.” private sector she said were already “careful establish their due diligence evidentiary basis defend today’s loans” future.

In much lending project finance today, she said, “the lenders know purpose loan an elaborate set representations warranties binds borrower.”

Referring 1898 US “odious debt” repudiation “Cuban debts” after Spanish-American War – on grounds debts were spent contrary interests Cuban people, Ms. Adams said:

“If lender doesn’t exercise due diligence establish whether steel imported used cannons rather than cradles, guns shoot innocent civilians rather than criminals,” IMF article warned, “then I say, American commissioners Spanish-American War peace conference said, ‘the creditors beginning, took chances investment.'”