Since well before the inception of the Jubilee 2000 campaign, activists have been questioning the term “debt relief.” Is “relief” is really the right word for what we’re seeking?

One problem with “relief” programs like the World Bank’s Heavily Indebted Poor Country Initiative (HIPC) is they presume that the people of the developing world owe money in the first place. Thinking about it that way, debt relief seems like a show of mercy, a favor from the compassionate North to the beleaguered South. This is a convenient perspective for lenders, who can get away with band-aid assistance packages so long as others are convinced that any amount of “debt relief” is an exercise in generosity.

Frustrated by this paradigm, several legal thinkers have turned to international law for a more definitive response to the Global South’s debt crisis. They have unearthed a relic of customary international law called “the doctrine of odious debts.” The basic premise of this theory is that a country and its people should not be held to pay debts incurred without their consent and against their interests. The odious debt doctrine, if revived as a legal rule, would have sweeping economic implications for countries like the Democratic Republic of Congo, Nicaragua, South Africa and the Philippines, where dictators once looted national treasuries to furnish their spending habits or suppress the citizenry.

More importantly, the odious debt doctrine could switch the focus of the debt debate from one of bail-outs and Western largesse to one of moral and legal imperatives. Illegitimacy arguments turn blame for the debt crisis back where it belongs: on the lending countries who were greedy enough, or focused enough on geopolitical imperatives (e.g. the cold war), to loan money to corrupt autocrats.

So what’s the problem? Why isn’t the doctrine of odious debts simply enforced?

The doctrine belongs to a murky body of theory known to lawyers as “customary international law.” The tenets of customary international law are not explicitly codified in international treaties, but instead reflect arguments or ideas that have been used as the bases for those agreements. As such, courts can afford to be selective in their application of customary law – it’s not recorded anywhere, and a court may ultimately choose whether or not to submit to it.

The doctrine of odious debts arose toward the end of the 19th century, when the United States acquired Cuba as a protectorate after prevailing in the Spanish-American war. The Paris Treaty, signed at the end of the war to settle disputes between the U.S. and Spain, dissolved all debts owed by the Cuban government to Spain. This clause turned on the American argument that those loans had funded dictators who propped up Spanish rule by suppressing popular movements for Cuban sovereignty.

After originating during American negotiations with Spain, the doctrine of odious debt resurfaced periodically for the next several decades. Bolsheviks invoked the doctrine to repudiate the debts of the tsarist regime, and Costa Rica used the argument while refusing to pay off loans from British banks to Federico Tinoco. Former president and U.S. Chief Justice William Howard Taft presided over this arbitration, known as Great Britain v. Costa Rica. By his reasoning, the loans were illegitimate because “the bank knew that this money was to be used by the retiring president . . . for his personal support after he had taken refuge in a foreign country.”

Acceptance of the doctrine peaked in the late 1920s when prominent legal authors like Alexander Sack and Ernst Feilchenfeld suggested its viability as an international legal rule. But in the seventy years that followed, the odious debt doctrine experienced a steady decline in legal importance and public visibility. Only in the last 10 years have contemporary legal scholars in Canada and the United States latched back onto the doctrine as a means for dealing with Southern debt.

Writers like Michael Kremer and Patricia Adams have championed the campaign to bring the doctrine of odious debts back to the discussion table. Most of these thinkers envision the creation of a new global arbitration agency, charged solely with evaluating the sustainability and legitimacy of international loans. This panel would both assess the legality of past loans and act as a gatekeeper for future lending, certifying present regimes as non-odious and allowing them to borrow.

While visions for this panel vary greatly from one proposal to the next, everyone talking about odious debt seems to stick to at least one theme: that the “odious” standard, which applies only to loans that are undemocratic and against popular interest, is the right one. Kremer, in a recent paper with Seema Jayachandran for the Brookings Institute, examines the feasibility of several less stringent alternatives, but doesn’t offer any reasons for preferring them.

The odious standard would be an improvement on the current framework of debt relief, but it would probably not be the fairest standard for determining the legitimacy of loans. A more just proposal would require that all loans taken without popular consent (meaning legislative approval) should be considered illegitimate. This is a looser standard than the doctrine of odious debt, as it requires only one of its two conditions.

The “national interest” component of the odious standard poses a spate of moral and practical problems. Its chief flaw is paternalism – the standard requires a small clique of international judges to decide what a nation’s interests are. The people of the nation may never have the chance to voice their own interests.

This is particularly troubling, because interpretations of what constitutes a “national interest” are bound to be subjective, and even within a particular country would vary greatly according to one’s social and economic position. Creating such a vague standard would open the arbitration panel up to abuse and potentially bring its own legitimacy into question.

Under U.S. laws on debt, one factor remains constant: real consent is always required. If your parents die insolvent, you do not assume their debts unless you want to. When the companies go into debt, investors who are not officers never lose more than they choose to put in. In fact, investors have the right to sue the managers of the business they have invested in if they can demonstrate mishandling of finances. Elected representatives approve all loans entered by the U.S. government, and citizens have the right to sue them personally if they squander taxes on expenses not related to the country’s (or state’s, etc.) interests.

The time has come to afford the same protections to the Global South that people in the U.S. benefit from. In addition to putting those protections in place, “debts” which are illegitimate under the informed-consent standard should be repudiated and cancelled.