chapter  12
22 Pages

Odious Debt, Odious Credit, Economic Development, and Democratization

ByTom. Ginsburg *, Thomas S. Ulen **

Scholars who have recognized the odious debt problem have proposed several creative solutions. Of these, three general forms of proposed solutions can be identified. It includes do nothing approach, ex ante approach, and ex post approach. This chapter recognizes two dimensions of the odious debt problem that have received too little attention—the potential role of the "odious creditor" and the connection between obligations to repay sovereign debt and the process of economic development and democratization. Proposals for solving the odious debt problem should be seen not as purely legal doctrine, but as attempts to achieve admirable foreign policy goals related to development and democratization. Advancing the goals of the odious debt doctrine requires making democracy an element of lending decisions by international financial institutions (IFIs). Making IFIs take democracy seriously will both enhance democracy in the developing world and alleviate the agency problem in donor countries.