Odious Securitization

Abstract:     
The odious debt doctrine exposes a fundamental dilemma in international finance - the desire not to saddle a population with a debt to which it did not consent and from which it did not benefit, coupled with a practical need to ensure that capital continues to flow. The odious debt doctrine would undermine international debt obligations of a state that are entered into (1) without the consent of the people; (2) not for the benefit of the people; and (3) both of the above with the knowledge of the creditors. This Essay raises questions about the doctrine with respect to each of these criteria: (1) Given the dazzling variety of modern financial products, how should we define the types of debt obligations subject to the doctrine? (2) Should the fact that the proceeds of a loan are used in part for the commonweal defeat the application of the doctrine? (3) Should the broad, deep, and faceless capital markets offer an escape from culpability for the financiers of international delicts because public bondholders are to be presumed unfamiliar with the credit? The Essay offers observations on each of these issues.

Keywords: international finance, odious debt, securitization, Iraq, occupation, international bonds

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