Embargoed lucre

Spread freedom and democracy - that is the US line of the moment. If you put cynicism on one side, it does have a nice ring to it and would actually be welcome in many places. But doing it at the point of the gun is clearly fake and other beligerant policies have little credibility. Is there any other approach that could make a difference?

One lever that is rarely used is finance. It is not always true, but there are many places where a corrupt tyrant has ruled for a while, padded some foreign accounts, and escaped to retire in luxury and usually a new head of state keen to repeat and improve upon the avarice of the predecessor.

Often what is happening is perfectly obvious, documented, and beyond dispute. However since we have the fiction of sovereignty we find our hands tied while a dictator is in power, then when they disappear to some (equally sovereign) refuge the victimized nation finds itself obliged to pay the debts lest it be a stain on its credit rating.

So, what would happen if that credit link was repudiated, in advance? Suppose the USA and Europe, together or separately, were to take issue with regimes of obvious corruption and oppression (consider North Korea and Burma as current examples) and simply say: any debts incurred by those regimes (including all its agents) shall be considered to be the personal debts of the dictator, without legal recourse to any successor regime.

This is in effect an economic embargo not needing military force. At that point, anyone extending credit (which is pretty much anyone trading goods or armaments) has to consider that they have no recourse when the regime ends. It is not as simple as getting cash payment on the spot, since that cash is generally financed by external loans (written of course to have nothing to do with arms or whatever is in trade, but mortgaged against the assets of the country) which would at that point suddenly be very bad business deals.

For good measure make any transfers from that government to any external account (named or numbered) subject to repudiation by a successor regime ("We would like our money back, please"). This makes it more complex to plan for that retirement haven.

Of course this idea has some holes. The financial centers of the USA and Europe would be displaced for shady dealing by other finance centers with less scruples. Still, it would not be long before they realize that the twin problems of picking up some of the worst credit risks along with being tarred with some of the worst political liabilities is not worth it. It only works today because everyone has allowed it to. It is based on international laws that are rooted in centuries ago when it was the norm for countries to be ruled by thugs who affected manners (known as "royalty") and such things need uprooting from time to time.

As soon as some major players change their rules the old system will seem untenable and even ridiculous - as it has been for a long, long time. There clearly is no ethical or practical reason for the current system where a nation is held responsible for the debts racked up by thugs who are supported by the arms and corruption which were financed by those debts. We could change this, we certainly have no need to keep such rules.

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