A Critique of the Odious Debt Doctrine

Albert H. Choi
Eric Posner

This working paper is hosted by The Berkeley Electronic Press (bepress) and may not be commercially reproduced without the permission of the copyright holder. http://law.bepress.com/uvalwps/olin/art35

Abstract
Defenders of the odious debt doctrine, which bars creditors from collecting sovereign debts that financed the personal consumption of former dictators, argue that this rule would benefit populations following dictatorships and discourage would-be dictators from staging coups in the first place. We show that optimism about the doctrine is based on unrealistic assumptions about the motives and practices of dictators. With more realistic assumptions, the odious debt doctrine could be eneficial or harmful, depending on circumstances. Defenders of the doctrine have not made the empirical case that the net benefits would be positive if the doctrine were incorporated into international law, and there is ample reason for skepticism that they would be.