Gambia’s Transition & Odious Debt: International Law Defences for Repudiation

Matsiko Samuel*

 Gambia’s Transition

It is now four days since former Gambian president Yahya Jammeh fled into political exile to Malabo, Equatorial Guinea after 22 years in power. The departure of Yahya Jammeh ignited by regional military intervention created an opportunity for the Gambian people to enjoy the first constitutional transfer of power since 1965.

This was followed by reports from various news agencies that Gambia’s ex-ruler Yahya Jammeh stands accused of stealing more than 11 million dollars in cash from state coffers before flying into exile. One of the news agencies reported that an adviser to new President Adama Barrow was quoted to have said that approximately 500 million dalasi ($11.45 million) had been withdrawn by Jammeh in the past two weeks alone. Although the central bank came out to state that the treasury was intact probably to deter public outrage and protect investor confidence, there is no doubt that the Jammeh regime had plundered this enclave economy.

These events made me question Jammeh,s 22 years of schoolboy economics. Did the money allegedly plundered belong to him as an individual? OR was it money borrowed for international creditors like the Brentwood Institutions? Who bears the consequences of paying back this money to these lending institutions? There is no doubt that the money plundered during his 22 year rule was money borrowed from the international financial community.

Jammeh, s School Boy Economics

The Jammeh regime reduced Gambia into a heavily indebted poor country with a per capita income of between US$543 to US$1101 per annum in contrast to Singapore with a per capita income of US$78000. Jammeh and his government failed to increase the Gambia’s domestic exports or transform the country into a middle income nation making Gambia a heavily indebted economy with a massive trade deficit. In 2013, Gambia’s domestic exports amounted to D415 million while its imports stood at D12.7 billion and the trade deficit increased to D10 billion in 2014.

Most of the paved roads in the Gambia, including, Madinaba to Seleti, Soma to Basse, Barra to Amdalaye Sofanyama, Trans Gambia Highway Bridge and the Basse to Wellingara were all funded by grants and external borrowing from the European Union. The issue at hand is who gets to pay back these loans? Is it Jammeh or the Gambian people? In addressing these questions the Gambian people are more likely to pay these loans unless the new government calls for a repudiation of the odious debt.

The Odious debt norm and International Law

Odious debt is a legal term for money lent to an oppressive regime and used for purposes other than the “needs and interest” of the country. Under this definition, an odious debt is one that was contracted against the interests of the population of a State (Gambians), without their consent, and with full awareness of the creditor.

Alexander Nahun Sack, in his 1927 book The Effects of State Transformations on their Public Debts and Other Financial Obligations argues that if a despotic power incurs a debt not for the needs or in the interest of the State, but to strengthen its despotic regime, to repress its population that fights against it, etc., this debt is odious for the population of the State.

Therefore the debt is not an obligation for the nation (Gambia); it is a regime’s debt, a personal debt (Jammeh) of the power that has incurred it, consequently it falls within this power. The reason these ‘odious’ debts cannot be considered to encumber the territory of the State, is that such debts do not fulfill one of the conditions that determines the legality of the debts of the State. For a debt to meet the legality threshold it must have been employed for the needs and  interest of the people of the State. Although this definition mentions state and not government one would argue that a state must have some form of government or administration.

The norm of odious debt is not codified under international law. There was a proposal by the International Law Commission to include a chapter on odious debt in the 1977 draft convention on state succession unfortunately the International Law Commission finally decided not to include any such provision in the convention.  However, the legal basis for odious debt is article 38 of the Statute of the International Court of Justice that provides for sources of international law and general practice. There is also extensive state practice and cases to prove that odious debt now forms part of customary international law.

Unfortunately the World Bank claims that international law does not generally provide for the repudia­tion of debts on the grounds of them being odious. I would argue that these claims are subject to debate, baseless, hypocritical and unresearched considering the fact that World Bank is one of the lending institutions.

International Law Defences for Repudiation and Gambias Odious Debt

If i was to advise the new government of president Adama barrow and the department of foreign relations on how to challenge illegitimate debt incurred by Jammehs despotic regime under international law I would raise the following defences;

  • The Vienna Convention Defence

 

The 1969 Vienna Convention on the Law of Treaties (Vienna Convention) provides certain grounds for the invalidation of a treaty. Article 53 of the convention which forms part of customary international law provides that the violation of a peremptory norm of ius cogens invalidates a treaty. Therefore debts that are not contracted in conformity with international law should be considered odious and thus invalid. The test is to establish a causal link between the loan and the ius cogens violation at the time the loan was contracted. In Gambias situation the ius cogens violation includes numerous gross violations of human rights committed under Jammehs regime, murders, summary executions, torture, forced disappearances.

  • The Traditional Odious Debt defence

 

The traditional defence of odious debt is simple; debts that are incurred by an undemocratic regime, without the consent of the population, and against its interests cannot be reclaimed if the lender was aware of these deficiencies. This is even truer when the money borrowed was used to commit serious human rights violations. With this defence all is needed is to prove the mental element of the lender that the lender had  knowledge whether actual or constructive  of these deficiencies.

Regional Alternatives: Establish an ECOWAS Debt Audit Commission

ECOWAS and his Excellency president Adama can establish a regional debt audit commission for Gambia to classify legitimate and illegitimate debt. The commission can transplant the Ecuadorian model on audit commissions. Ecuador became the first government  in 2007 to launch a Debt Audit Commission in cooperation with civil society, and with the authority to undertake a complete audit of all the country’s debts. The commission brought together national and international experts in the fields of debt, economics, law and local social and environmental struggles as well as Ecuadorean government officials to conduct an audit of all of Ecuador’s debts. President Rafael Correa Delgado’s presidential decree establishing the commission called for the determi­nation of each debt’s “legitimacy, legality, transparency, quality, efficacy and efficiency, considering the legal and financial aspects, and the economic, social, regional, and environmental impacts, as well as the impact on all genders, nations, and peoples.”

Conclusion

Gambia is undergoing a critical transition and on various platforms his Excellency president Adama Barrow has called for a truth and reconciliation commission. A truth and reconciliation commission is one of the transitional justice mechanisms applied in transitional societies, however experience has shown that often transitional justice mechanisms often concentrate on addressing civil and political rights at the expense of economic and social considerations.

Gambians shud not be subjected to paying the debts incurred by Jammehs despotic regime. They may chose to use international law defences including the defence of validity of contracts considering the rules of agency and principal  or alternatively examine the actions of the international financial community in the context of a truth commission.

Gambia may also decide that repudiation of debt is not the only way of addressing its connection to a legacy of oppression. Gambia may  then request the international financial community to admit complicity in “odiousness” and to make amends through new lending arrangements that will benefit the Gambian people.

* Matsiko Samuel (LLM) is Uganda lawyer and academic with a keen interest in international law. He is an adjunct lecturer at the faculty of law Uganda Christian University and Vice president of the International Law Association Uganda Branch http://www.ila-hq.org/en/branches/index.cfm/bid/1026.