Norway's new government has become the first to actually use the phrase "illegitimate debt" and to argue that such debts should be cancelled. Illegitimate debt is a slightly broader category than "odious debt" and the Norwegian churches have been campaigning on this for more than five years.
The new government is a coalition of three parties and its formal coalition agreement is known as the "Soria Moria declaration" after the Oslo hotel where it was signed on 13 October 2005. It says:
"The UN must establish criteria for what can be characterised as illegitimate debt, and such debt must be cancelled."
"The Government will support the work to set up an international debt settlement court that will hear matters concerning illegitimate debt."
This is an important landmark on two grounds. First, it means that a major northern government has finally recognised that there is such a thing as illegitimate or odious debt, which is the liability of the lender and not the borrower. Second, it is important to remember that 25 years ago the Nordic countries (and Canada) took a lead on sanctions against apartheid South Africa – although they were economically small players, the fact that respected governments were prepared to take action was key in making it easier to bring pressure on the big players like the United States on sanctions. Thus a Norwegian statement on illegitimate debt could again be an important impetus to change.
The original research paper on illegitimate debt commissioned by Norwegian Church Aid five years ago is available at www.odiousdebts.org/odiousdebts/publications/DefiningIllegtimateDebt.pdf.
A paper on illegitimate debt will be published by the prestigious journal "Third World Quarterly" in March 2006. Copies are available from the author at j.hanlon@open.ac.uk.
