I'm No Lawyer, But... -

I'm No Lawyer, But... - Jason at Iraq Now asks whether Iraq has any moral duty to repay its debt to the likes of France, Germany and Russia:

"The question before the world here is this: Does a nation’s obligation to repay an international debt attach to a people, a land, or a government?

Put another way—when a brutal and oppressive dictatorship such as Saddam’s has incurred mountains of debt, with no democratic participation in fiscal policy whatsoever, and the proceeds from the loans are spent irresponsibly, or even used against his own subjects, then very serious questions can be raised about the obligation of the people of Iraq to pay back the loan. The debt may be considered “odious� to the Iraqi people, and while they may take a purely pragmatic decision to honor those debts in order to secure cash flow and financing from other sources, they are not under any moral obligation—and perhaps under no legal obligation to do so."

He then goes on to at least partially answer the question.

Among many of the answers:

I’m (ahem) borrowing this term from the financial world. Essentially, the doctrine of moral hazard means that the lender must accept responsibility for the credit risk of the borrower. If the lender feels that he can rely on government or the courts, or any other third party to bail him out of a loan gone bad, then he will have no incentive to perform normal due diligence on the credit-worthiness of the borrower. Rather, when you remove risk from the lender’s equation, he has a perverse incentive to lend his capital to the riskiest debtors he can find, since those loans pay the highest yields.

And much more.

This begs many questions, foremost of which: Is the US signing up to be a bill collector for lenders in three nations that were stupid enough to lend money to a corrupt dictator? If so - why? We didn't do it.

And all you Dean supporters - see all that the "international community" did to keep him in power? Does that even bother you?

Anyone?

Posted by Mitch at December 16, 2003 06:00 AM