Preemptive Contract Sanctions

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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.