Do separatist nations inherit any national debt?

  • Do separatist nations inherit any national debt?

    For example, given Spain has a debt level of £1.1 trillion at the time of writing, if Catalonia becomes an independent nation is there any legal burden of responsibility upon them to repay any of this debt themselves or does all the debt remain with "Spain"?

  • If the debt were to be transferred, it would be because of negotiations between Catalonia and Spain for Catalonia to take that debt on and at what level. It would seem reasonable to me for negotiators from Spain to ask for it, since supposedly the people of Catalonia might have contributed to it and since the Catalans are in essence asking Spain for something (to become independent and renounce their territorial claims).

    This all assumes, of course, that Spain would ever agree to sit down and negotiate such a break which seems highly doubtful.

    When the U.S. broke away from Britain much of the reasoning was because of Britain's war debt from the French and Indian War and how the Crown decided to pay for it (by taxing the Yankees). The colonies revolted, and the Treaty of Paris finalized American secession from her parent. There were provisions in the treaty related to recognizing lawful contracted (private) debts that were, in general, ignored.

    But the key point is that none of the debt the British government incurred was transferred to the former colonies because the Americans would not have agreed to it. So the general answer to your question is that no, debt does not transfer automatically when a state becomes independent. But whatever debt there may be would probably be a pretty contentious topic while negotiating independence, whether it occurs with or without a civil war.

    As a side note when Haiti declared independence from France, France declared Haiti owed 150 million francs for its loss of slaves. The modern equivalent of $21 billion was paid from Haiti to France.

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Content dated before 7/24/2021 11:53 AM