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When an illegitimate regime contracts with foreign actors and, in essence, mortgages its country’s future, successor regimes and innocent citizens are expected to pay back that mortgage. This all-too-common occurrence saddles citizens with unjust contracts from which they did not benefit and burdens legitimate successor governments with repayment. A declaration of contract non-transferability would put creditors and investors on notice that any future contracts to a regime would not be considered binding on successor governments. In 2012, CGD explored how this approach could be applied in Syria and other fragile states. Successive US administrations have considered the idea.
The controversy surrounding the recent purchase of Venezuelan government bonds by Goldman Sachs is a great reminder of the role that “preemptive contract sanctions” could play in the struggle against odious regimes like that of Nicolas Maduro. In 2010, CGD released a working group report explaining in detail how this new sanctions tool could work. The Maduro regime in Venezuela could be the perfect candidate.
International norms matter. Citizens of the more than 80 nations where polls have been conducted do, think, and act taking into account global realities and norms. Most could be called “global citizens”, not in opposition to, but along with their self-identity as citizens of their own country.
During his first overseas trip as the United States’ top diplomat, and in advance of this week’s Friends of Syria meeting in Rome, Secretary of State John Kerry spoke forcefully in response to concerns from the Syrian Opposition Coalition that the United States is not providing sufficient support to the opposition:
With relentlessly bad news out of Syria, the search continues for what the world can do to put pressure on Assad’s regime and to lay the groundwork for a future, legitimate Syrian government. The case for preemptive contract sanctions is becoming ever more compelling. Under this approach, the United States, United Kingdom, and other members of the Friends of Syria, would declare that new contracts with the Assad regime are illegitimate and that our courts should not enforce them if a legitimate successor government in Syria repudiates them. This could deter new loans and investments in Syria’s oil or other sectors and send a signal to the Assad regime that the economic pressure will not loosen.