Speaker 1: Hello, and welcome to another episode of the All Thoughts Podcast.
Speaker 1: I'm Tracy Alloway and I'm Joe. Wasn't Joe. It feels
Speaker 1: like there's a lot of terrible things happening in the
Speaker 1: world at the moment. Yeah, it does. The news has
Speaker 1: been pretty grim, between the virus, Afghanistan, natural disasters. I
Speaker 1: would I would, I would agree with your assessment. Yeah,
Speaker 1: And I think the sort of pace of the bad
Speaker 1: news means that a lot of stuff is kind of
Speaker 1: getting buried in the news cycle very quickly after it happens.
Speaker 1: So we're recording this on auguste UM. Just a few
Speaker 1: days ago, there was a massive earthquake in Haiti. I
Speaker 1: think more than a thousand people are believed to be dead.
Speaker 1: But that death hole is probably going to go up
Speaker 1: some more um. But that event has already sort of
Speaker 1: been superseded by events in Afghanistan, and people have just
Speaker 1: sort of moved on to the next big global drama.
Speaker 1: But I wanted to dedicate this episode to Haiti because
Speaker 1: if you think about what the country has recently experienced,
Speaker 1: you know, the earthquake that I just mentioned came off
Speaker 1: the back of its president getting assassinated just last month,
Speaker 1: and then of course before that, Haiti has had a
Speaker 1: long history of natural disasters, Hurricane matthew in, a really
Speaker 1: really catastrophic earthquake back in and the country itself is
Speaker 1: one of the poorest in the world, so it in
Speaker 1: many ways it just feels like Haiti can't take a
Speaker 1: break or catch a break, right, I would say, pretty
Speaker 1: much all of my life, I think Haiti has been
Speaker 1: been known for violence, extreme poverty, international attempts at reviving
Speaker 1: the economy or domestic institutions that seem largely to have failed,
Speaker 1: and then of course they sort of unforeseen disasters. But
Speaker 1: I think you know, within particularly the Western hemisphere, Haiti
Speaker 1: is known to have had an extraordinary, extraordinary, extraordinarily bad fortune. Yeah,
Speaker 1: I'm glad you mentioned international efforts to revive the economy,
Speaker 1: because today we are going to be talking about one
Speaker 1: possible effort, and possibly the most obscure of those efforts,
Speaker 1: which involves bonds UM that were issued more than let's see,
Speaker 1: almost two hundred years ago UM as part of Haiti's
Speaker 1: independence movement, and there is a discussion now about whether
Speaker 1: or not you could possibly UM sort of unwind that
Speaker 1: debt in order to pay reparations to So it's sort
Speaker 1: of um an obscure thing, but it fits right into
Speaker 1: add lots and uh, you know our obsession with old debts,
Speaker 1: So we're going to get into it. I'm looking forward
Speaker 1: to this. This is odious debt one of the one
Speaker 1: of the topics that I think you've really done a
Speaker 1: great job sort of bringing to the forefront of media
Speaker 1: and odd lots and looking forward to this and talking
Speaker 1: about this in the Haiti context. No, thank you. Um well,
Speaker 1: I have to credit one of our guests, Mit to Glate.
Speaker 1: He's a professor at the University of Virginia. He's the
Speaker 1: one that introduced me to this concept. And we also
Speaker 1: have his fellow researcher, Ugo Panizza, a professor at the
Speaker 1: Graduate Institute of Geneva. So welcome Mitt and Uko, thank you.
Speaker 1: Shall we start with the very basics for people who
Speaker 1: haven't heard the concept of odious debt before, what exactly
Speaker 1: do we mean when we say odious debt? So they're
Speaker 1: theretly two meanings of odious debt as its discussed both
Speaker 1: in the popular press and in the academic slash legal literature.
Speaker 1: One meaning is just you know, any debt that you
Speaker 1: don't like it's just has a bad odor and you
Speaker 1: don't want to pay it back. The more technical legal
Speaker 1: meaning of odious debt is that it is debt incurred
Speaker 1: by a despotic leader without the approval of the population
Speaker 1: and the knowledge of the creditors, that these debts are
Speaker 1: being used for purposes that are contrary to any benefit
Speaker 1: that would result for the populace. So the classic example,
Speaker 1: and you know during the Bush administration, odious debtspeak very popular.
Speaker 1: When the US went into Iraq. The example was Saddam
Speaker 1: Hussein borrowing hundreds of billions of dollars to buy arms,
Speaker 1: and those arms were then used to oppress the Iraqi people.
Speaker 1: So that that that is the popularized version of this
Speaker 1: odious debt concept you mentioned. Okay, so we can understand
Speaker 1: easily enough this idea that if a despotic leader borrows money,
Speaker 1: prep doesn't use the money in service of the public,
Speaker 1: and then after they go it uh see, it's odious
Speaker 1: the idea that the public would then have to bear
Speaker 1: the cost of that debt. How much is in the
Speaker 1: determination or the thinking of when debt is odious? How
Speaker 1: much or how difficult is it or how important is
Speaker 1: it to establish that the lender understood this that when
Speaker 1: they were lending that when someone bought the foreign debt
Speaker 1: of a given country, that they were buying into debt
Speaker 1: that really was not going to help the public in
Speaker 1: any way. So usually the lender is not really analyzed
Speaker 1: in these discussions of odious debts. Almost every discussion of
Speaker 1: odious debts. For example, take the Saddam Huseyne case, which
Speaker 1: is you know, the most recent a lot of the
Speaker 1: debts there were literally arms dealers selling arms to Saddam,
Speaker 1: but the primary focus was on the despotism of the
Speaker 1: leader of Saddam. It's really only in a case like
Speaker 1: Haiti and sort of more broadly colonial or imperial debts
Speaker 1: that you begin to think about the lender. And that's
Speaker 1: not something that we have traditionally done. So I want
Speaker 1: to get into the exact situation with Haiti and the
Speaker 1: money involved, but before we do, you know, we're talking
Speaker 1: about a broad definition of odious debt that really focuses
Speaker 1: on the borrower. And as you mentioned, the classical example
Speaker 1: is a despot who borrows lots of money that doesn't
Speaker 1: necessarily benefit their country's population. How did that particular interpretation
Speaker 1: of odious debt come into being because in some ways,
Speaker 1: like it seems very very um defined and specific. So
Speaker 1: this is an interesting question that you ask, And you know,
Speaker 1: I've been working on this, and Ugo probably has a
Speaker 1: different perspective, but he's also been working on this for
Speaker 1: a long time. We worked together on a debts incurred
Speaker 1: by Nicolas Maduro in Venezuela, and sort of I always
Speaker 1: took it for granted that, you know, if you have
Speaker 1: a despotic leader borrowing the future governments, especially if they're
Speaker 1: you know, democratic governments, they shouldn't be burdened by this debt,
Speaker 1: and it sort of seemed natural and logical and sensible,
Speaker 1: and I didn't think about it. It seemed right until
Speaker 1: I started working with Hugo and or other two co
Speaker 1: authors about the Haitian debt, And in that context, one
Speaker 1: of our other co authors, Mark Widermer, started asking the
Speaker 1: question of you know, why have we framed this doctrine
Speaker 1: in this particular fashion. And my best guests from the
Speaker 1: literature and talking to anthropos social anthropologists who studied this
Speaker 1: in more detail, is that it's a product of the
Speaker 1: interests who created this doctrine. Now, this is a doctrine
Speaker 1: that was created by the U. S State Department in
Speaker 1: the late eighteen hundreds after the Spanish American War. They
Speaker 1: didn't want to pay the debts that had been incurred
Speaker 1: by Spain using Cuba as collateral, and so they said,
Speaker 1: you know, you were despotic leader leaders putting down an
Speaker 1: independence movement. And then the US again in UM two
Speaker 1: thousand three two four, does not want to pay Saddam
Speaker 1: Hussein's debts. So the rejuvenation of the odious debt doctrine
Speaker 1: again is in the context of a despotic leader, but
Speaker 1: it never really touches colonial debts, where the leaders are
Speaker 1: not quite as despotic and much more complicated, in part
Speaker 1: because the countries and the scholars who pushed this doctrine,
Speaker 1: we're pushing it in a particular context. I don't know, Hugo,
Speaker 1: if you you have a different view, I mean I am.
Speaker 1: I am a former colonial s object then grew up
Speaker 1: in the Caribbean, so I have a particularly jaundiced view
Speaker 1: of all of this. I mean, there is also another aspect.
Speaker 1: So there is the aspect from let's say the Angio movements,
Speaker 1: you know, kill the debt and all this sort of stuff,
Speaker 1: and these people would like to cancel all sorts of death.
Speaker 1: So there is a more I don't know, leftist if
Speaker 1: you want to call it this way perspective, right, and
Speaker 1: there there is a debate asked me to say it.
Speaker 1: It seems reasonable that when somebody borrows to oppress its
Speaker 1: own people this that should not be enforceable. But then
Speaker 1: if you talk with market people, they tell you where
Speaker 1: you draw the line, right, It's like where where does
Speaker 1: the guy become a deskpot? And some people say, if
Speaker 1: you start going there, then nobody will ever learn to
Speaker 1: any country because you know, no countries a perfect democracy.
Speaker 1: So these other there is this other dimension. So some
Speaker 1: people said that maybe you should have an expanted that
Speaker 1: rational of obviousness. Right. So there is a famous paper
Speaker 1: by malcol Michael Kramer and C. Chandra which says, you know,
Speaker 1: at some point the official sector, my or the UN
Speaker 1: or whatever might declare this country's audious and from this
Speaker 1: moment on that contracted by this person by this country
Speaker 1: will not be enforceable. So there is a big also
Speaker 1: discussion on this exanta versus expost, which is different from
Speaker 1: the high heat case that we're talking about here. What
Speaker 1: do you walking through the basic contours of the Haiti situation,
Speaker 1: the numbers, the claims, just sort of like give us
Speaker 1: the sort of like basic summary of the colonial debt
Speaker 1: that was incurred, why the debt was incurred, how much
Speaker 1: it was and so forth. Okay, so I'll begin with
Speaker 1: the easy part the story, which is wonderful, and then
Speaker 1: I'll give google the boring part about the numbers that
Speaker 1: in the end are much more important. So I think
Speaker 1: it's a bit embarrassing. Ugo and I both consider ourselves
Speaker 1: scholars of international debt and have been doing this for
Speaker 1: at least two decades, and neither of us had really
Speaker 1: paid any attention to the Haitian independence debt of eighteen five.
Speaker 1: We it just seemed like this old, obscure thing we
Speaker 1: hadn't really heard of. It didn't seem relevant to most
Speaker 1: of what we did until this last semester last year. Really,
Speaker 1: when COVID hits and we decide in our classes, you know,
Speaker 1: maybe this is time to focus on some of the
Speaker 1: poorer regions around the world and see what's going to
Speaker 1: happen if they're really hit bad by COVID and they
Speaker 1: need to think about what kind of financial recoveries can
Speaker 1: we get. Some of my students in my Sovereign Debt
Speaker 1: class find this Haitian independence dead of eighteen twenty five,
Speaker 1: and I want to dismiss it because it is not
Speaker 1: what I had planned that we would work on in
Speaker 1: the class. And then I started looking at it and
Speaker 1: started talking to Ugo and our other co authors about it,
Speaker 1: and it's astounded. So in eighteen twenty five, Haiti has
Speaker 1: a debt imposed on it by France. France sends a
Speaker 1: bunch of gun boats. I think there were fourteen gun
Speaker 1: boats with five hundred guns pointed at the Haitian capital,
Speaker 1: and France says to the Haitian people, look, we are
Speaker 1: willing to recognize you as independent. Haiti had fought a
Speaker 1: bloody revolution against France and one its independence in eighteen
Speaker 1: o four. So two decades prior, the French under Napole
Speaker 1: Lion had tried to take back Hadi. They had failed.
Speaker 1: And then finally in eight and this is after the
Speaker 1: Louisiana purchase, France sort of decides, you know, no more colonies,
Speaker 1: at least in that part of the world. It's just
Speaker 1: too expensive when you keep losing, and so they try
Speaker 1: to negotiate with Haiti. We will give you your independence,
Speaker 1: We will recognize you as independent if you pay us
Speaker 1: a hundred and fifty million francs. Now, to get some
Speaker 1: sense of how much this is, and we go will
Speaker 1: hopefully talk about what fraction of hades revenues it was
Speaker 1: at that time. But the Louisiana purchase was about fifteen
Speaker 1: million francs. This is a hundred and fifty million francs
Speaker 1: they impose on Haiti with the gunboats pointed at them,
Speaker 1: and the calculation of this amount the historical record is
Speaker 1: not completely clear, but basically, the French King Charles needed
Speaker 1: this money to pacify the former plantation owners and their
Speaker 1: estates in France, and calculations were made based on the
Speaker 1: amount of loss that they suffered, specifically in terms of
Speaker 1: the number of slaves who went free as a result
Speaker 1: of the revolution. So that's the basic that's that's the
Speaker 1: debt that was imposed on Haiti. Haiti doesn't pay it
Speaker 1: back for almost a century, actually more than a century,
Speaker 1: and much of Haitian borrowing in the next century is
Speaker 1: just to pay back this extremely large debt that they
Speaker 1: owe to friends. Now in terms of specific numbers, um
Speaker 1: I leave that to UGO, so maybe they we don't
Speaker 1: have good estimates for GDP at that period and or revenues,
Speaker 1: but whatever estimates we have suggested this amount about ten
Speaker 1: years worth of revenue, so it's a very large number
Speaker 1: and or about three times situs GDP based on on
Speaker 1: the on the numbers that that we have now. So
Speaker 1: they were very very large numbers. And and that's me
Speaker 1: to say it's more more than the Louisiana purchase. So
Speaker 1: can we maybe talk a little bit more about why
Speaker 1: Haiti agreed to pay the indemnity? So, you know, you
Speaker 1: mentioned there were gunboats um pointed at porter of Prince,
Speaker 1: which seems quite threatening. But on the other hand, Hadi
Speaker 1: did get something out of it. And I'm sort of
Speaker 1: playing devil's advocate here, but they did get their independence
Speaker 1: recognized by France, even though they were essentially, you know,
Speaker 1: buying their freedom from slavery, which is terrible, but they
Speaker 1: got the recognition from France. That led to further recognition
Speaker 1: from places like Britain, um that opened up trade relationships
Speaker 1: and things like that. Is there an argument to be
Speaker 1: made that this can't be considered odious because the population,
Speaker 1: you know, got something out of the agreement. So you're
Speaker 1: asking the really tough question. Haiti arguably itself proposed that
Speaker 1: it would pay something to France. Now they didn't propose
Speaker 1: this incredibly large amount. They were thinking more along the
Speaker 1: lines of the Louisiana purchase, and that would have still
Speaker 1: been at least half their GDP for the year, but
Speaker 1: perhaps manageable. Haiti at that point in time was one
Speaker 1: of the rich as parts of the world, which is
Speaker 1: why France was so desperate to hold onto it. They
Speaker 1: they were a huge source of French revenues at the
Speaker 1: at that point in time. But the legal question of
Speaker 1: whether or not Haiti could be charged by France for
Speaker 1: a recognition or be independence or see for the slaves
Speaker 1: fighting a revolution and becoming independent um is quite complicated.
Speaker 1: It's not at all clear, at least in our research,
Speaker 1: whether or not at that point in time it was
Speaker 1: acceptable under international law for countries new countries to be
Speaker 1: charged for somebody else recognizing them. The law is quite murky.
Speaker 1: Now we know it happened, but whether it was legally
Speaker 1: kosher is not year. Can you charge a new country
Speaker 1: for it becoming free and fighting a revolution? Again, not
Speaker 1: at all clear, and then it's not clear either that
Speaker 1: we would apply the laws and norms of that time
Speaker 1: or whether we would apply modern conceptions of human rights,
Speaker 1: where you know, making a d pay for the freedom
Speaker 1: of the slaves clearly wouldn't be acceptable. Yeah, maybe just
Speaker 1: a mol anecdote that for the first fifteen years after independence,
Speaker 1: Haiti was actually split in two countries, with the with
Speaker 1: the president in the south and the king in the north.
Speaker 1: So the president was which was called the Pekion, was
Speaker 1: the first one to sort of propose paying some inmdernity,
Speaker 1: but again, as me too said, he had in mind
Speaker 1: a much smaller amount, while the king in the north
Speaker 1: was always opposed to it. So the idea that a
Speaker 1: country would have to pay uh It's former colonial master
Speaker 1: for recognition, to pay this extraordinary sum to essentially escape,
Speaker 1: you know, depart from slavery. Obviously, it's you know, it's grotesque,
Speaker 1: it's awful. Why is it important, or you know, at
Speaker 1: least intuitively it is. Why is it important to fold
Speaker 1: it into the odious debt literature because obviously the contours
Speaker 1: of it, well being I guess objectively and were morally odious,
Speaker 1: are different than the sort of conception of the conception
Speaker 1: that we talked about in the beginning of a Despot.
Speaker 1: Why is it important today in sort of the establishment
Speaker 1: of the study of odious debt to weave that in
Speaker 1: as opposed to thinking of it as its own distinct concept.
Speaker 1: What does that get? What does that accomplish? So again
Speaker 1: you're asking an extreme, the good question and a tough one.
Speaker 1: Here's my take on this. The the odious debt movement
Speaker 1: is a powerful one. Just the rhetoric of that movement
Speaker 1: has a has had a lot of sway with NGOs,
Speaker 1: with academics in the popular press. So to get this
Speaker 1: debt that has really not gotten much attention, the Haitian
Speaker 1: independence debt of you ask anybody in Haiti, they know
Speaker 1: about it, they think about how many billions they are owed.
Speaker 1: But ask people outside of Haiti, scholars who study this,
Speaker 1: ask people in France, anywhere else in the world, they
Speaker 1: have no idea about this. To bring it into the
Speaker 1: odious debt framework, and and this is as odious of
Speaker 1: a debt that we've ever had in history, I think
Speaker 1: could give power, rhetorical power to the movement to get
Speaker 1: some kind of compensation paid, but also would open the
Speaker 1: door to other similar colonial debts that have not been
Speaker 1: included in the odious debt discussions. So that, I mean,
Speaker 1: this goes back to the question that Tracy started with,
Speaker 1: which is, you know, how is it that the odious
Speaker 1: debt discussions really have been very limited to these despotic
Speaker 1: leaders and whether or not sort of Western creditors will
Speaker 1: get paid back on their bonds when there are all
Speaker 1: sorts of other stinky debts around the world, particularly colonial debts.
Speaker 1: I mean, think of King Leopold of Congo. He borrowed
Speaker 1: heavily on the international debt markets and then you know,
Speaker 1: basically committed genocide in the Congo. There's no discussion of
Speaker 1: you know, those debts. But but this one is is
Speaker 1: a this one is among the really just the stinkiest
Speaker 1: of those to my mind me too. You mentioned, um
Speaker 1: the rhetoric of odious debt being a powerful influence, and
Speaker 1: I think here it's really important that we mentioned that
Speaker 1: even though there's been a lot of talk about Odia's debt,
Speaker 1: it hasn't actually been um, sort of acted upon in
Speaker 1: any real way. So the Iraqi debt that you mentioned earlier,
Speaker 1: and we actually recorded an episode a while back with
Speaker 1: Simon Hendrickson, who did some really great work on this.
Speaker 1: The Iraqi debt situation was basically the closest the world
Speaker 1: ever got to actually acting on the principle of odious
Speaker 1: debt and negating some borrowings under Saddam Hussein, But it
Speaker 1: didn't actually happen. So I guess two questions, Why hasn't
Speaker 1: it happened yet if everyone's talking about it so much?
Speaker 1: And then secondly, what good is talking about odious debt
Speaker 1: if it never actually comes to fruition. So I'll use
Speaker 1: the Iraqi example. You guys had a great episode with Simon,
Speaker 1: and just drawing from Simon's work, discussing the Iraqi debt
Speaker 1: in terms of its odious nous was part of the
Speaker 1: strategy of the legal team there, and they knew they
Speaker 1: didn't have a leg to stand on if they actually
Speaker 1: had to go to court and try to argue that
Speaker 1: this doctrine existed. Now, there are legal scholars who argue
Speaker 1: that as a matter of customary international law, such a
Speaker 1: doctrine has evolved. Alved I am skeptical that you could
Speaker 1: actually persuade a court to do that, but the rhetoric
Speaker 1: of odious debt was powerful enough that the negotiators for
Speaker 1: Iraq were able to get in the Paris Club the
Speaker 1: biggest write down of debt ever in history. I mean
Speaker 1: it was something like a right down of debt. And
Speaker 1: it was because at least in part, that they clothed
Speaker 1: it in the rhetoric of odious debt. I mean, now,
Speaker 1: they did it brilliantly. I mean they got everyone basically
Speaker 1: to agree to take this massive write down because nobody
Speaker 1: wanted exposure of what had actually happened. And if we
Speaker 1: go back in time to the strategy that the lawyers
Speaker 1: for Haiti had planned in two thousand, between two thousand
Speaker 1: two and two thousand four, this was exactly what they
Speaker 1: had in mind. They I don't think they thought they
Speaker 1: really had much of a chance of sort of winning
Speaker 1: a legal case, but they wanted to get into court.
Speaker 1: And once they got into any kind of international jurisdiction
Speaker 1: and they got a hearing, then the atmospherics of how
Speaker 1: bad this was was going to be on their side.
Speaker 1: So that's a long winded answer to why this could
Speaker 1: have really practical consequences. Can I add something crazy? I'm
Speaker 1: you know, I'm by nature optimistic, and I remember one
Speaker 1: episode and so if you remember around the in the nineties,
Speaker 1: there were people campaigning for for multilateral debt relief, and
Speaker 1: basically the position of the you know, US administration and
Speaker 1: that ate at that point was that this is never
Speaker 1: going to happen. And then at some point it just
Speaker 1: happened it and the you know, the White House was
Speaker 1: on board, and the people who were on board were
Speaker 1: exactly the same people who two or three years before
Speaker 1: I said this is never gonna happen. The you know,
Speaker 1: the the World Bank is never going to cancel that
Speaker 1: or by lo income countries. So in a sense, maybe
Speaker 1: you know, preparing the ground, the sort of building a
Speaker 1: case for something that you think is right, maybe at
Speaker 1: some point things can change. So I also see it
Speaker 1: is in this sense. But but but met always thinks
Speaker 1: that I'm I'm a dreamer. Can we go if we
Speaker 1: go back to the details of Haiti. I mean, you
Speaker 1: mentioned the stats are not particularly reliable from that time,
Speaker 1: but maybe the debt was years worth of total total
Speaker 1: revenue for the country at the time. And as you mentioned,
Speaker 1: it's still talked about today and we taught and as
Speaker 1: Tracy and I discussed in the intro, Haiti is obviously
Speaker 1: one of the poorest countries is known and under you know,
Speaker 1: people think of it as one of the poorest countries
Speaker 1: in the region. How much did that debt contribute to
Speaker 1: the economic trajectory, the poor economic trajectory of Haiti some
Speaker 1: nearly two hundred years ago, or about two hundred years ago,
Speaker 1: how much did that contribute to the economic and sort
Speaker 1: of disaster that Haiti is known to be all these
Speaker 1: years later. So so we did a bunch of backup
Speaker 1: of the envelope exercises. Some exercises are trying aimed at
Speaker 1: trying to estimate how much this money would be worth today.
Speaker 1: And another exercise is exactly focused on your question, Joe,
Speaker 1: how much of the audible growth performance of of a
Speaker 1: height year over the past to two years can be
Speaker 1: attributed to this death. I'll tell you about the numbers.
Speaker 1: But before that, there is a document in in in
Speaker 1: a the classified document in the archives of the i
Speaker 1: m F. And this is a report about of a
Speaker 1: mission to a hitty in So the IMF must have
Speaker 1: been one or two year old. And let me use
Speaker 1: this to just give a big thank you whoever manages
Speaker 1: the archives of the IMF, because they did an amazing service.
Speaker 1: They put everything online, all these classified documents, and now
Speaker 1: I can kind of read this stuff from my bedroom
Speaker 1: and it's it's fantastic. So anyway, this I m F
Speaker 1: document starts by saying fiscal policy in Haiti in general
Speaker 1: has not been development promoting because it has priviolely been
Speaker 1: primarily motivated by revenue els and basically to service the debt.
Speaker 1: And this has taken priority on any other type of
Speaker 1: investment that promoted economic development. So without running any let's
Speaker 1: say statistical analysis, there is this, you know, report from
Speaker 1: the fund from seven years ago that basically says there
Speaker 1: is some problem linked to the death. Having said this,
Speaker 1: there are some econometric estimates on how that affects GDP growth,
Speaker 1: And there is a famous paper by three I m
Speaker 1: F economists again Katy Pattillo and the Poisson and and
Speaker 1: Luca Ricci, which suggests ballpark estimates the high level of
Speaker 1: that reduced growth between one uh and two percentage point
Speaker 1: per year. Now, if we apply the lower this estimated
Speaker 1: to this, just we applied the one percent growth reducing effect,
Speaker 1: we find that gdpeper carpet and heating now should be
Speaker 1: about eight THO dollar, which is much higher than than
Speaker 1: than what is today, and in fact, it would put
Speaker 1: it basically at the same level of income per capita
Speaker 1: of of the Dominican Republic. Now it's hard to say that,
Speaker 1: you know, without the death, would be the Dominican Republic,
Speaker 1: But that's what you get from doing this calculation. And
Speaker 1: then if you compute the present value of this differentially
Speaker 1: income per capita, you get, you know, a ridiculously high number.
Speaker 1: You get something like, you know, one trillion dollars, which is,
Speaker 1: you know, which is really a huge number. But even
Speaker 1: if you get that the growth effect of the death,
Speaker 1: it's only one fifth of the lower bound estimate of
Speaker 1: patio and quotas, you still get that the present value
Speaker 1: of the growth effect of this death is about fifty
Speaker 1: one billion of two day's dollar, which is three times
Speaker 1: of HIGHTUS GDP. Which interesting was that debtojpratio when the
Speaker 1: debt was creative? Um? Quite a coincidence? Um? Okay. So
Speaker 1: so here we have this debt burden, which Mittwo has
Speaker 1: described as like the stinkiest of all odious debt. We
Speaker 1: have something that, as Ugo just laid out, basically contributed
Speaker 1: to the long term poverty arc of Haiti. You can
Speaker 1: trace the impact of the debt on Haiti's current debt situation,
Speaker 1: you know, two hundred years later, which is pretty amazing.
Speaker 1: What are the chances that odious debt actually comes into
Speaker 1: play and that we get some sort of legal process
Speaker 1: exploring this option. I guess that's another way of saying,
Speaker 1: what would illegal claim on this issue actually look like?
Speaker 1: And is it more likely that we get a situation
Speaker 1: similar to the Iraqi debt where the odious that is
Speaker 1: used as an argument for some sort of additional financial
Speaker 1: aid rather than total reparations, you know, fifty billion dollars
Speaker 1: or whatever, based on the economic impact of the original bonds.
Speaker 1: This in a sense brings us full circle to the
Speaker 1: question that you have asked Tracy about the existence of
Speaker 1: an odious debt doctrine. If you if we were really
Speaker 1: litigating this, so somehow we could get a jurisdiction like
Speaker 1: the International Court of Justice to hear this, and that
Speaker 1: would be hard because France would have to agree to
Speaker 1: show up. Then I think it's a fairly straightforward legal
Speaker 1: claim under international law. Even if you don't want to
Speaker 1: use the odious debt doctrine here, you would just make
Speaker 1: the argument that this was an unjust illegal debt was
Speaker 1: imposed in eighteen twenty five and the money needs to
Speaker 1: be returned, so we would call it just give us restitution.
Speaker 1: You were not entitled to take our money. Give it
Speaker 1: back to us. And the way you would calculate damages
Speaker 1: for them having unjustly taken your money and not even
Speaker 1: imposing punitive damages would be said would be to ask,
Speaker 1: what are the opportunity costs of your having taken between
Speaker 1: ninety million francs and a hundred and fifty million banks
Speaker 1: depending on how you make the calculation back in eighteen
Speaker 1: twenty five or over this lengthy period. So that's if
Speaker 1: you get in to some kind of tribunal. Now, the
Speaker 1: lawyers in two thousand four, under President Aristide, we're just
Speaker 1: about to file a claim. There was this dream team
Speaker 1: of lawyers from around the world who were working pro
Speaker 1: bono for the Haitians, and they thought they had a
Speaker 1: good chance of getting into a tribunal. And then President
Speaker 1: Aristide is overthrown and the new government decides that, uh,
Speaker 1: you know, it does not want to anger the French
Speaker 1: who are supporting it in bringing such a claim, and
Speaker 1: the whole thing disappears. But this is not as implausible
Speaker 1: of a claim as I would have thought. Legally, the
Speaker 1: Iraqi argument was this is um much more potent. But
Speaker 1: you have to get to some tribunal. And you know,
Speaker 1: Ugo and I have presented our work in front of
Speaker 1: a few audiences, and often we are faced with our
Speaker 1: friends who are French economists who have never heard of this,
Speaker 1: and they are completely outraged that that that France did this.
Speaker 1: I mean that their reaction is uh. I have not
Speaker 1: found their reaction to be defensive. Instead, it's why didn't
Speaker 1: I know about this? And what can we do to
Speaker 1: fix it? I do think that this is a matter
Speaker 1: of public discussion and that will result in something positive,
Speaker 1: particularly given the horrible state that hades in now. Tragy,
Speaker 1: I think that's a good place to leave it for me,
Speaker 1: unless you have anything further that works for me. Yeah,
Speaker 1: I think you you both laid it out the issue
Speaker 1: UM wonderfully. So thank you so much for coming on
Speaker 1: all thoughts and walking us through how two hundred year
Speaker 1: old debt could still be relevant to today. Thanks for
Speaker 1: having us, Thank you so much. Thank you that would
Speaker 1: frantaic that really I really appreciate it. So, Joe, this is,
Speaker 1: as you can probably tell, a topic that I find
Speaker 1: endlessly fascinating, partly because I think it says something wider
Speaker 1: about financial debt. And I don't think we think about
Speaker 1: this often enough. But debt is almost exclusively about morality
Speaker 1: and fairness in the sense that in order for debt
Speaker 1: to exist, you know, someone has to borrow and another
Speaker 1: person has to lend, and someone ends up owing someone something.
Speaker 1: So yeah, and so there are so many judgments and
Speaker 1: norms that go into how that story is told of
Speaker 1: who owes what to whom and why. And I don't
Speaker 1: think we step back and sort of consider those norms
Speaker 1: enough and the judgments that are shaped thing how debt
Speaker 1: actually functions and how we think about it. Yeah, you know.
Speaker 1: The other thing I completely agree. You know. The other
Speaker 1: thing that's interesting is, you know, finance in general is
Speaker 1: like a kind of uh. I sometimes think of finance
Speaker 1: as a time machine because you're essentially uh, you know,
Speaker 1: you you can you can have cash right now that
Speaker 1: would otherwise say, like if you borrow money, you can
Speaker 1: have cash right now, that would otherwise take several years
Speaker 1: worth of work. So you know, you're sort of transferring.
Speaker 1: It's transferring of value, transferring of money across time, and
Speaker 1: you go and me to discusses like essentially an extremely
Speaker 1: long version of that, and so you know, it's one thing.
Speaker 1: It's like we could all wrap in our heads very concretely,
Speaker 1: how I say, debt that was taken out ten years
Speaker 1: ago may affect us today. But there's no particular reason
Speaker 1: to think that a debt that's two years old that
Speaker 1: people have forgotten about, the people around the world don't
Speaker 1: even know about or had never thought about before might
Speaker 1: still be relevant today. It's kind of an extreme outlier,
Speaker 1: but fundamentally, as you say, it's all part of the
Speaker 1: same question. But I guess that's what makes this particular
Speaker 1: case extremely interesting and me to point it out sort
Speaker 1: of like worth folding into the odious debt literature totally.
Speaker 1: And the other thing that I was thinking, and we've
Speaker 1: been talking a lot about this on all thoughts for
Speaker 1: the past year now, but whether or not the extraordinary
Speaker 1: circumstances of one spark a wider reckoning on some of
Speaker 1: these complicated issues. And I think, you know, we've spoken
Speaker 1: about attitudes towards debt shifting in the context of modern
Speaker 1: monetary theory and MMT. And I do wonder if given
Speaker 1: the terrible humanitarian situation unfolding in Haiti, you know, you
Speaker 1: have COVID, you have the president getting assassinated, now you
Speaker 1: have another catastrophic earthquake. I do wonder if if you
Speaker 1: could see a big shift in the narrative around something
Speaker 1: like colonial era debt. Well that's interesting because me too
Speaker 1: made this point that even prior so you know, it's like, okay,
Speaker 1: why is this an important thing to classify as odious debt?
Speaker 1: And as he pointed out, yes, there is the legal dimension,
Speaker 1: but there's also the activist dimension. There's the NGO dimension,
Speaker 1: there's the kill the Debt movement, and so much like
Speaker 1: m m T, which is sort of this hybrid between
Speaker 1: I would you know, I describe it as like a
Speaker 1: hybrid between sort of like pure economics and political activism.
Speaker 1: It kind of feels like situations like this end up
Speaker 1: being this hybrid between what's in the law, what's in
Speaker 1: the sort of legal text, and also the general public
Speaker 1: and the activism around these things. And so I think
Speaker 1: you make a really apt point here that you know,
Speaker 1: we could be in a moment where there's just sort
Speaker 1: of like more public awareness and then that has this
Speaker 1: sort of like feed through effect to what happens in
Speaker 1: various courts of law and marketplace totally. And I would
Speaker 1: say that gets back to the sort of um morality
Speaker 1: of bonds more widely, and this idea that you know,
Speaker 1: ultimately a debt is about fairness um and achieving fairness
Speaker 1: in the outcome. And so in many ways it's sort
Speaker 1: of the perfect instrument through which to discuss the injustice
Speaker 1: of um the past. Like it fits very nicely into
Speaker 1: arguments because you can suddenly say, well, you owe us
Speaker 1: x amount for damages inflicted you know, two hundred years ago,
Speaker 1: and we can put some sort of quantity on them,
Speaker 1: and we can talk about what the economic impact is.
Speaker 1: All right, Well, Joe, I could keep talking about this forever,
Speaker 1: but we should probably go um, should we leave it there?
Speaker 1: Let's leave it there? Okay. This has been another episode
Speaker 1: of the All Thoughts podcast. I'm Tracy Alloway. You can
Speaker 1: follow me on Twitter at Tracy Alloway and I'm Joe
Speaker 1: wi Isn't Thal. You can follow me on Twitter at
Speaker 1: the Stalwart. Follow our guests on Twitter. Ugo Panitza, He's
Speaker 1: at Panizza. Follow our producer on Twitter. Laura Carlson. She's
Speaker 1: at Laura M. Carlson. Follow the Bloomberg head of podcast,
Speaker 1: Francesca Levi at Francesca Today, and check out all of
Speaker 1: our podcast at Bloomberg under the handle at podcasts. Thanks
Speaker 1: for listening.