From Odious Debt to Odious Finance: Avoiding the Externalities of a Functional Odious Debt Doctrine

52 Pages Posted: 20 Sep 2007 Last revised: 29 Jun 2013

See all articles by Christiana Ochoa

Christiana Ochoa

Indiana University Maurer School of Law


This Article looks at the generally agreed upon characteristics of the odious debt doctrine and considers the unintended consequences and externalities that would ensue if this doctrine were ever made regularly operative. The enlivened scholarly debate surrounding the odious debt doctrine assumes that debt is the sole finance vehicle for despotic governments. This is simply not the case.

Debt is not the sole finance vehicle; despots are able to raise funds through a wide variety of other methods. These include the pillaging of the nation's natural resources, property, and other valuable asset as well as the exploitation of the nation's human resources. In a world with a functional odious debt doctrine one can envision that despotic leaders, facing great difficulty in accessing private or public loans, may rely more heavily on these alternative sources of funds. Furthermore, although debt can be crippling for developing countries and merits the attention it has received, these alternative methods of despotic financing may in fact be yet more adverse than debt in both the short and long term.

This Article investigates the contents of the odious debt doctrine to query what characteristics make debt odious rather than simply onerous. It then seeks to establish that there may be little distinction between those characteristics as they apply to debt and as they apply to other types of transnational financial obligations and financing arrangements. Finally, the Article posits that if there is, in fact, little distinction, there may be valuable lessons to be learned from the odious debt doctrine for application to other types of transnational financing arrangements, and proposes that an odious finance doctrine is the better approach. The contours of such an odious finance doctrine are presented herein.

Keywords: odious debt, sovereign debt, odious finance, debt relief, expropriation, debt reduction, corruption, natural resources, natural resource exploitation, labor, corporate social responsibility, international law

Suggested Citation

Ochoa, Christiana, From Odious Debt to Odious Finance: Avoiding the Externalities of a Functional Odious Debt Doctrine. Harvard International Law Journal, Vol. 49, No. 1, 2008, Indiana Legal Studies Research Paper No. 87, Available at SSRN:

Christiana Ochoa (Contact Author)

Indiana University Maurer School of Law ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States
812-856-1516 (Phone)
812-855-0555 (Fax)


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