Part 4-I Section Outline

Foreign Debt: Forgiveness and Repudiation

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1. Understanding Debt Forgiveness: What It Means, Why It Is Important, Where the Debt Comes From, and Whether Debt Forgiveness Is a Good Idea
1. Debt Forgiveness—a Creditor’s Act of Excusing a Borrower’s Repayment of an Existing Obligation—Is Important for Poor Countries Struggling to Meet Their Welfare Needs.
2. Global Economic Conditions and Domestic Strife in the 1970s and 1980s Caused Debt Burdens in Poor Countries to Reach Unsustainable Levels.
1. Global Economic Conditions and Domestic Strife in the 1970s and 1980s Caused Debt Burdens in Poor Countries to Reach Unsustainable Levels.
3. Supporters of Debt Forgiveness Underscore the Welfare Needs of Impoverished Nations; Opponents Highlight the Unintended Consequences and Limited Impact of Debt Forgiveness.
2. The Debt Forgiveness Movement Takes Shape: The Path to Debt Forgiveness Initiatives through Grassroots Activism and Multilateral Creditor Action
1. Debt Relief Becomes a Public Issue: JUBILEE 2000 and other NGOs Press for Debt Forgiveness.
2. Responding to the Issue of Third World Debt: The World Bank and IMF Implement the Heavily Indebted Poor Countries Initiative (HIPC) to Provide Debt Relief to Impoverished Nations.
1. HIPC: a six-year program for reducing debt to sustainable levels and for implementing structural reforms intended to promote long-term stability.
2. Critics broadly attacked HIPC for being too limited, too slow, and counter to the interests of debtor nations.
3. HIPC addressed its shortcomings by expanding its definition of unsustainable debts, making greater relief available to more countries, and by making relief available sooner.
4. HIPC approved over $35 billion in debt forgiveness for thirty countries in its first decade.
5. Critics continue to attack HIPC for failing to provide debt relief to enough countries or in sufficient amounts to reach debt sustainability and for failing to address the underlying causes of unsustainable debt.
3. The United Nations’ Millennium Development Goals for Reducing Poverty Inspired the Multilateral Debt Relief Initiative to Provide 100% Multilateral-Debt Forgiveness to Impoverished Nations.
4. The Lack of Progress toward MDGs and the Slow Pace of Debt Forgiveness Continue to Attract Criticism
3. The Doctrine of Repudiation of Odious and Illegitimate Debts: What It Is, What It Would Accomplish, Practical Obstacles to Its Implementation, and Alternative Approaches for Eliminating Onerous Debts.
1. The Doctrine of Odious Debts Begins as a Synthesis of the “War Debts” and “Hostile Debts” Doctrines That Governments Used to Justify Repudiation of Pre-existing Debts following a Regime Change.
1. Modern scholars expanded the doctrine’s scope to encompass all loans used for nefarious purposes, provided to dictatorial regimes, or that are otherwise illegitimate.
2. Examples of odious and illegitimate debts in Africa, the Middle East, and Latin America illustrate the multi-billion dollar burdens that result from onerous lending practices.
2. Repudiation of Odious Debts Achieves Two Purposes: It Eliminates Debtors’ Obligations to Repay Past Onerous Debts, and It Discourages Lenders from Making Odious Loans in the Future.
3. Practical Considerations Limit the Feasibility of the Repudiation Doctrine for Odious Debts: Which Definition of Odious Debts Will Apply, Who Will Decide Which Loans Are Odious, What Enforcement Mechanisms Will Be Necessary to Administer the Doctrine, and How Will the Doctrine Respond to Changed Circumstances.
4. Obstacles to the Implementation of the Repudiation Doctrine Spark the Exploration of Alternative Approaches for Eliminating Odious Debts: Traditional Mechanisms for Bi-lateral Debt Forgiveness and the Extension of Domestic Legal Regimes to International Lending Practices.

[Part Four Bibliography]

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