In international law, an “odious debt” is an illegal debt that hurts an entire nation…and therefore does not have to be repaid.
Many legal scholars have written that Puerto Rico’s $72 billion debt is “illegal and odious” and therefore should not be paid. But yesterday – on June 2, 2016 – this became more than a “legal theory,” when Gov. Garcia Padilla announced that much of Puerto Rico’s debt is “odious” and, quite possibly, will not be repaid.
In a wild and heated press conference, the Governor unveiled a 43-page audit report from the island’s Public Credit Comprehensive Audit Commission. (PCCAC)
The PCCAC report found that $4.4 billion of the current debt violated the debt limitations of Article VI, Section 2 of the Puerto Rico Constitution, and therefore qualifies as “odious debt.”
In addition, many other portions of the $72 billion debt may have:
This “Ponzi scheme” was also exposed in a 23-page report from the Senate of Puerto Rico:
The PCCAC report examined $3 billion in PREPA bonds issued between 2009 and 2012, and found that 82% of the funds were used to merely make interest payments on prior PREPA bonds….even as electricity and water rates rose by 60% throughout the island.
Here is another shocking figure: according to the PCCAC report, the odious debt of Puerto Rico may be as high as $30 billion…nearly 42% of Puerto Rico’s public debt!
MANY COUNTRIES DECLARE “ODIOUS DEBT,” INCLUDING THE US
The odious debt doctrine has been applied in Iraq, Ireland, Ecuador and Greece.
Russia, Poland, Austria, Ethiopia, and Costa Rica successfully invoked it, as well.
After the Spanish-American War, even the United States declared that Cuba’s debt to Spain was “odious and abusive” …and therefore Cuba did not have to pay it, and the US did not indemnify Spain for the non-payment.
In 2006, in the US Congress, Rep. Maxine Waters introduced a bill declaring Haiti’s debt to the IMF as “odious,” and received 66 congressional co-sponsors for the bill.
Here are some of the petitions circulated in the US Congress on behalf of Haiti:
Recently in the US, in 2013, Forbes Magazine wrote the following in regard to the debt of Detroit:
“A lot of municipal debt could be considered what is known in international law as ‘odious debt.’ An illegitimate debt incurred for purposes that do not serve the best interests of the nation, should not be enforceable.”
With all this international precedent for “odious debt,” including precedents set by our own government for Cuba, our Congress for Haiti, and our financial press for Detroit, there is no reason (other than racism and / or colonialism) for denying it to Puerto Rico.
DETERMINE THIS ODIOUS DEBT BEFORE SENDING DOWN A FINANCIAL CONTROL BOARD
Now that the PCCAC report has been released, the analysis and judicial review of Puerto Rico’s “odious debt” conditions should proceed with great urgency.
They should occur before a Financial Control Board assumes complete and exclusive jurisdiction over the debt resolution process for the entire island.
Congressman Luís Gutierrez should use the PCCAC report to introduce an immediate amendment to the PROMESA bill (HR 5278), which would enjoin the debt resolution process for any bonds that show “odious debt” characteristics…until the odious debt determination can be made, by a court of competent international jurisdiction.
If this is not done immediately and the Control Board assumes exclusive and binding jurisdiction, then Puerto Rico may lose a powerful tool for annulling illegal debts which are crushing the island, and endangering its residents.
These odious debts may comprise up to $30 billion of the island’s debt. This figure is too large to ignore, but action must be taken very quickly…immediately.
For a history of the War Against All Puerto Ricans, read the book…
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