ISSN: 2241-6692

BLOG - May 2016

Tom, though depressed and strongly repelled by his father's sullenness, and the dreariness of home, entered thoroughly into his father's feelings about paying the creditors; and the poor lad brought his first quarter's money, with a delicious sense of achievement, and gave it to his father to put into the tin box which held the savings.

George Eliot, The Mill on the Floss

It is a moral truism that debt must be repaid. In George Eliot’s The Mill on the Floss, the son of the main character considers it his personal duty to bail out his bankrupt father. The shame of the financial loss would have ruined the moral standing of the whole family. When the crisis broke out in 2008, Europe started to impose this logic on its communities. Greece had to repay its debt, regardless of whether its citizens voted for the governments that indebted them, whether they ever profited from the debt, or whether they even knew that their government was in debt.

Under international law this moral truism does not hold sway. Sovereign states are not like Victorian families. They are allowed to cancel their debt. This law is guided by the principle that countries are first and foremost responsible for their citizens and only then to other countries or credit markets. To protect the interests of the financial industry and the governments of lender countries, the moral rhetoric of the European sovereign debt crisis has neglected this fundamental right. Banks, international organizations and economically more powerful nation-states have reinterpreted debt in a way that makes citizens accountable for the budget deficits of their past governments. ... More