Eric
Tousaint’s study of the odious debt doctrine
by
Eric Toussaint
Part
7 - The repudiation of the Tsarist debt in 1918
According to
Sack, the Tsarist State, regardless of its legitimacy or its
antidemocratic nature, was a regular government. The debts it had
contracted needed to be honoured despite the change of regime. In
February-March 1917 a revolution took place and brought a provisional
government to power. This provisional government fully recognized all
the debts accumulated by the Tsarist regime (p. 52), which Sack finds
perfectly normal.
In October
1917 a second revolution took place and the provisional government
was overthrown and replaced by a government led by the Bolshevik
Party, which was backed by the soviets (councils of soldiers, workers
and peasants). According to Sack, the Bolsheviks taking power
constitutes a coup, but he does not question the fact that theirs
constituted a new regular government which gradually extended its
control to the entire territory during the Civil War, which lasted
until 1920.
Sack feels
that the Bolsheviks themselves should have recognized the Tsarist
debts. But in January 1918, the revolutionary government repudiated
these debts, denouncing them as odious.
Sack also
considered that the Soviet government should have demanded of Poland,
freed from the Tsarist and German yoke after the First World War,
part of the debts of the Russian Empire it had belonged to. Sack
writes: “Under the terms of the final treaty signed by Poland
and the Soviets on 18 March 1921, not only did Poland not assume a
part of the debts of the Russian Empire nor pay for the assets it had
acquired, but on the contrary it was stipulated: Art. 13: ‘Russia
and Ukraine agree to pay to Poland within one year after ratification
of the present treaty the sum of 30 million gold roubles in specie
and in bars, based on the active participation of the territory of
Poland in the economic life of the former Russian state’”. To
Sack, this “gift” to Poland goes against the rules in force in
international relations.
Calling the
legitimacy of debt into question and denouncing it as odious have
been regular practices of government leaders who resorted to debt
repudiation during the 19th and early 20th centuries. These concrete
exceptions to the rule of continuity of contracts between a State and
its creditors led Sack to define the conditions for calling a debt
odious.
From Sack’s
point of view, the goal was to see to it that some order reigned with
regard to acts of repudiation and to warn creditors of the risks they
took in granting credits that might fall under the criteria for
odious debt.
Source
and references:
How did this impact investors of the Trotsky fraction such as Jacob Schiff? Did they loose money on this or where they positioned not to?
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