In 1927 Russian-American legal theorist Alexander Sack introduced the doctrine of “odious debt.” Sack argued that a state’s debt is “odious” and should not be transferable to successor governments after a revolution, if it was incurred without the consent of the people; and not for their benefit.

This doctrine has largely been rejected, with a firm presumption of “sovereign continuity” emerging instead: post-revolutionary governments must repay sovereign debt even if it was incurred to cover the personal expenses of plutocrats. If they fail to do so, their credit reputation is harmed. As Odette Lienau explains in a striking line, “we can now imagine prosecuting the leaders of a fallen regime for crimes against a state’s population while simultaneously asking that population to acknowledge and repay the fallen regime’s debts.”

In Rethinking Sovereign Debt: Politics, Reputation, and Legitimacy in Modern Finance (Harvard University Press, 2014), Lienau unfolds the historical conditions from which this seeming inconsistency emerged. Seamlessly moving between case studies from the early 20th century to the present, Lienau discusses several different versions of this puzzle. Ultimately, Lienau ends up rejecting “sovereign continuity,” and arguing for the recognition of “principled default.”

With revolutions and uprisings across the Middle East, and in Ukraine, this book’s argument will likely provoke lively discussion among lawyers, economists, political theorists, and historians. But lay people should ideally engage with the ideas as well. The book gives an extraordinary point of access into what is at stake in the work of enormous international organizations, such as the World Bank.

*Photo by Frank DiMeo

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