Odious Debt

Abstract This book is the first history of odious debt. This five-hundred-year history shows that the origins of debates on legitimate and illegitimate state debts date back to Hugo Grotius’ moral critique of the Spanish Empire. Latin American rebels and rulers harnessed these ideas as they sought to establish what their nations owed the Spanish Crown. Commutative debt continued to shape relations in the Catholic Spanish Empire while contracts became the law of the land in Protestant Europe and North America. With a focus on Mexico, Colombia, and Argentina, this book draws on archival sources in seven countries, overlooked congressional debates, and understudied thinkers. It analyses how officials who drafted Latin America’s first constitutions reconciled Catholic ideas of moral economy with visions of justice embedded in the Protestant law of nations. Debates over slavery, reprisal, and property rights shaped the creation of the new Latin American states. When constitutions failed and interventions over unpaid debts increased, Latin Americans sought to turn the law of nations into a code for a global moral economy. The sanctity of contracts was used to legitimate interventions and yet, as Latin American thinkers countered, the use of violence undermined the sacred purpose of debt: to fulfil the state’s obligations to the community. Today, as China’s global financial expansion grows by the day and international politics are increasingly dominated by debates on reparations, Latin America can reframe what it owes to the world and what the West owes to the rest.