Patricia Adams, Odious Debts Online
September 25, 2007

The World Bank has issued a discussion paper [PDF] in which its unnamed authors dismiss the concept of odious debts as “controversial” and attempts to define it as having met with “insurmountable difficulties.”

The paper, “The Concept of Odious Debt: Some Considerations,” was released Sept. 7 by the Bank’s Economic Policy and Debt Department (PRMED) as part of its ongoing work program on debt-related issues and financed, in part, by a Norwegian trust fund. The goal, the Bank says, “is to contribute to the debate on the issue of ‘odious debt.'”

According to an accompanying World Bank press release, the paper “provides a simple summary of the main aspects of the ‘odious debts’ debate, and examines how the underlying concerns of the proponents of this doctrine may more constructively be addressed in other ways than advocating a unilateral repudiation of debts.”

But, in fact, few proponents advocate unilateral repudiation of debts. Rather, civil society organizations and legal scholars are exploring mechanisms to test, under the rule of law, the legal enforceability of those debts, including the World Bank’s.

Having set up this straw man, the Bank paper then knocks him down with its “more practical” solutions for dealing with odious debts: improve lending and borrowing practices (of which the Bank claims to be a leader), and negotiate debt relief through existing mechanisms (organized by, who else, the Bank).

But it would be a mistake to reward corrupt lenders and borrowers by burying their crimes with forgiveness. That would only perpetuate the problem.

This paper is not a serious treatment of the rigorous scholarly debate now occurring over the concept of odious debts (which ODO will begin covering in the next issue). But readers should review the Bank’s paper anyway because the Bank is inviting comment and because, to us at ODO, it is a sign that the Bank is worried about a rise of odious debt challenges of its own claims. Very worried.