Sovereign Debt and Self-Determination

In this chapter we make use of the word ‘effective’ in order to test whether a particular action, contractual clause or other measures produce an outcome that is otherwise offensive to self-determination. This is not always easy because economic self-determination is sparse in the human rights literature. In this chapter we put forward the proposition that a state is sovereign where it is effectively empowered, without pressure or coercion, to make all policy decisions required to run the state machinery and satisfy the fundamental needs of all its people (at the very least), both individual and collective. A state’s effective policy and decision-making power is effectively curtailed where: a) it has been substituted in these functions by a third state or an organ of that state; b) where it is prevented from taking a particular action, such as unilateral default; c) where it is forced to violate fundamental domestic laws, including its constitution or the result of a referendum or; d) where external pressure is exerted against its government and institutions with the aim of creating volatility and uncertainty concerning its finances so that it succumbs to such pressure.