September 4th, 2021

Red Coyote

ODIOUS DEBT

Haiti won independence from France in 1804, but in return for recognizing its formerly enslaved colony, France later forced Haiti to pay an indemnity of 150 million francs and give preferential treatment to French exports. The debt was equivalent to 270 percent of GDP—Haiti only paid off its debt in 1950.

Considering the absence of Haiti in larger conversations around sovereign debt, a new paper by Kim Oosterlinck, Ugo Panizza, Mark C. Weidemaier, and Mitu Gulati argues that Haiti’s debt should be seen as odious. The authors make the case that Haiti paid an exorbitant cost on an illegitimate debt, and that the nation is entitled to reparations.

From the paper:

"By any reasonable definition, the Haitian Independence Debt would seem to be odious. The circumstances suggest coercion, as does the fact that the agreement obliged Haitians to pay compensation for the freedom they had already won. The amount has been reported at around 300% of Haitian GDP (270% in our estimates), and it was understood that Haiti could pay only by borrowing vast sums from French banks, thus transforming the indemnity into a debt burden that would persist for generations. The debt cannot reasonably be characterized as in the best interest of the Haitian people. Yet we see little mention of it in the literature on odious debt or, indeed, in the larger literatures on sovereign debt or debt and development. To be sure, authors writing in French examine the intertwined history of Haiti and France and often discuss the Haitian Independence Debt. Likewise, articles in the popular press occasionally ask whether France owes compensation to Haiti for the episode. But these discussions have not yet made their way to the general sovereign debt literature or into the sub-field examining the doctrine of odious sovereign debt. Nor have they prompted a deeper examination of whether that doctrine should extend to debts imposed by former imperial powers in the context of independence and decolonization.

 Full Article