Sovereignty and economy: autarchy [part 2 of 2]

We started this series of posts related to State sovereignty with a sketch [link to article], some conceptual issues [link to article], and now we focus on an element that could go against the institution itself, maybe not at theoretical level but in realpolitik.  Las week we dealt with autarchy, and what it means for a State to be in serious international debt in terms of its sovereignty [link to article].

The key factor that makes these cases diverse is not the fact that the subjects that are part of the agreement are Sates but that the lender and the borrower are usually in very different circumstances. If the agreed conditions are met on time, the lender should expect to receive the “money” centre of the transaction and the respective interest. The situation varies when the borrower is not able to repay the debt.

In national private law there are legal ways so as to constrict the individual, group or company to repay the debt. Even a sanction through criminal law is plausible in extreme circumstances. The law establishes beforehand the consequences of an omission. In International Law the legal scenario is completely different. Although there are some supra-States structures in place in most of the cases their decisions are not compulsory. War and reprisals have been seen for many years in the reality and by legal theorists as a feasible solution when a treaty or agreement is broken. But the current international theatre would not consider reasonable and humanitarian to start a war or execute reprisals against a State and its population. It would not be either considered of etiquette or good practice within the international society that a powerful and wealthy State invaded or attacked a poor and weak pair.

In consequence, it is more than common that due to internal circumstances the third world or non-central State is not be able to repay in full the loan so the first world or central State is granted some concessions such as priority in agreements, areas of exclusive use, exclusivity in exploitation of certain resources, etc. The phenomenon is quite well known in America, especially between the United States of America and the richest States in Central and South America in what has to do with natural resources.

We have said that in order for a State to be sovereign it has to be autonomous. By applying for loans, any given State is trying to reach a balance on its accounts due to internal and/or external deficit. This fact does not alter anything in regards to its sovereignty.

The issue arises when the loan cannot be repaid or in order to do so the lender intends to be repaid in a different way that may potentially mean granting that State with prerogatives over certain part of the territory, population, resources, etc. of its peer.

In this specific situation the “weak” State is “loosing” part of its sovereignty by letting an external authority decide and rule over internal matters. We shall not discuss here why the authorities of the “weak” State follow this course of action (simply because the State cannot repay, corruption, business interest, etc.). The intention here is to highlight that there are international rules that allow States to borrow money in different ways when necessary but the facts can sometimes attempt against the integrity of the concept of sovereignty depending on the form the debt is cancelled.

Is it necessary for a State to be sovereign to have autarchy?

It is indispensable in our opinion. As leading cases, Central and South America have regular instances in which the United States of America act directly within their borders since they are the main lenders in the region. Natural resources exploitation and use of territory for training their army are the most commons “ways of repayment”.

Without intending to make a value judgement with regards the correctness or not of these actions, we want to remind that the focal point here is that one State is letting another State interfere in its sphere of sovereignty simply because it is not autarchic. We leave the political and philosophical debate aside as they are not the reason for this analysis.

For a State to be sovereign is indispensable that the creation and interpretation of law happen in an independent atmosphere free of third party interests.

Last words on the topic.

As agreed, the first part of the definition of sovereignty reads that it is a right to be exercised with autonomy and autarchy.

As a right or prerogative it is part of a subject of law and its personality. In the case of study, it is a prerogative within a State and it is executed by the representatives of such a State.

These representatives must have the independent power of law creation and application (of course, limited by the legal system). They are (and must be) the ultimate authority of this legal system. There should not be any other authority with such a prerogative above them (legally speaking).

Consequently, their actions must not be interfered by internal or external interests, actions and/or omissions.

A State can apply for loans when necessary. Its authorities are able to follow the internal and international procedures to do so. If the loan was repaid, there would not be any concern or issue. On the contrary, if there were problems to repay the loan, the international legal system should be ready to put a procedure in place to guarantee both, the repayment of the loan and the statu quo of the State’s sovereignty.

We shall not discuss in this investigation a method, procedure or institution to achieve this goal as it is not the aim of the project. However, we want to underline the importance a factor as the economy can have (and actually has) in the normative and real independence of a State. Ergo, the implications it has on its sovereignty.