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Could Giving the Rohingya Refugees a Debt Claim Ameliorate the Current Crisis?

posted by Mitu Gulati

From Joseph Blocher & Mitu Gulati

Just a couple of weeks ago, the plight of the Rohingya, a muslim minority group in Myanmar, who are being oppressed (to put it mildly–they have been called “the most friendless people in the world”) was front page news. But, as has often been the case with the plight of the Rohingya over the years, news of their plight quickly receded as other human drama and tragedy took over (hurricane in Puerto Rico, Las Vegas shooting, Catalan secession vote/violence, North Korean craziness etc.)

We realize that we are likely engaged in a pointless task.  But we want to plead for the condition of the Rohingya, and indeed other refugees, not to be forgotten so quickly. As a threshold matter, we recognize that our government cannot be depended on to care much (if at all) about the plight of oppressed groups that are as far away, foreign and poor as the Rohingya. In other words, the top down mechanism isn’t going to work. The question then is whether, assuming that the oppression in question is clear and cognizable, there is some other solution—something bottom up--that the international legal system could provide to oppressed groups who are forced into refugee status that does not depend on other governments, such as the U.S., having a self interest in intervening.

In that context, it is worth reminding ourselves of the starkly different responses we have seen from the U.S. government to the situations in Venezuela and Myanmar, both situations in which there have been obvious violations of the rule of law.

The Government of Venezuela, as readers of this blog are aware, is currently under sanctions because, as Treasury Secretary Steven Mnuchin said at a briefing, “The Maduro regime has consistently shown hostility to the rule of law, democratic institutions and the Venezuelan people.”Among the most significant of the sanctions that have been imposed  are constraints on US persons doing business with the Venezuelan government in any fashion that would enable the current Maduro government stay in power.

Meanwhile, in Myanmar, the world is being forced to confront what the UN High Commissioner for Refugees has called “a textbook example of ethnic cleansing.”

The persecution of Myanmar’s Rohingya, a Muslim minority, has brought widespread condemnation of the Myanmar government from the NGO community, and tough questions about where Ang San Suu Kyi and her Nobel Peace Prize are hiding. 

But not a single western power has described the Myanmar government as illegitimate, and there has been not even a whisper of the possibility of reinstatement of the US sanctions that were lifted in October 2016. So, to reiterate our basic query, can international law provide a bottom up solution to help remedy this inequity?

We begin with a straightforward proposition: Countries that create refugees (as Myanmar is doing) can and should pay a price for it, countries that take them in can and should be paid for it, and refugees should have a say in where they go.

International law can help make that principle a reality. It already forbids the kind of oppression that creates refugees, and it also already requires nations not to return refugees to dangerous situations (which, perversely, is why some countries try so hard to prevent refugees from reaching their soil). But these rights lack remedies, because refugees rarely have a meaningful way of pursuing a claim against a sovereign.

Imagine instead a scenario where refugees have an enforceable financial claim against the governments that persecuted them. The amount of the debt could be fixed by an international institution—an international tribunal, for example, or the UNHCR—based on the size of the group, the harm it has suffered, and the prospects for its repatriation.

The refugees could then trade that claim to a host nation, thereby lessening the economic resistance and giving them some control over their own fates. But if the harm they have suffered can be converted into a financial asset, it will help give them some agency—to be actors in the market, not the subjects of it.

Allowing refugees to transfer their claim to a host country would facilitate enforcement, because sovereigns are in a much better position to collect the debt than the refugees themselves. For example, countries that trade with each other could use these claims as offsets against other sovereign debts. Thailand imports billions of dollars worth of goods from Myanmar, and in recent years has also been receiving flows of Rohingya refugees. Under our plan, Thailand could offset the cost of the latter against the former.

There is also another, more radical possibility: Allow the much vilified “vulture funds,” particularly the ones who specialize in pursuing unpaid sovereign debt, take on the refugees’ claim. These funds are battle-tested, and ruthless. If they could get a percentage on a refugee debt claim, they would surely pursue it to the ends of the earth.

We are not the first to suggest that market principles like burden sharing, collective protection, tradable quotas and matching might be brought to bear on the refugee tragedy in places like Myanmar. But prior proposals have struggled in part because they require states to take on the burden of protection.  And states, as we have seen, are rarely willing to take action except in circumstances where they are directly impacted.

Our idea of imposing a debt for refugee-creation is also imperferct.  In theory, it could give oppressive nations more reason to forbid would-be refugees from leaving, so traditional humanitarian protections and aid remain critically important. It will not be easy to define the refugee group or calculate the value of the debt, and our mechanism would not necessarily help refugees fleeing non-oppressive states, oppressive non-states, or bankrupt states.

But even bankrupt states have to buy and sell food, oil, and arms on the international market, and their trading partners would risk having their own payment or products seized to pay the refugee debt—a technique perfected by the aforementioned vulture funds. And if hedge funds in Connecticut can make financial claims against the remaining assets of a failed foreign state, why not the actual victims of the state’s oppression?

Perhaps also, setting the debt value too high could further destabilize the country of origin. But that is true of any sanction—indeed, the sanctions being imposed on Venezuela are explicitly intended to topple the current government because of its anti-democractic behavior and human rights abuses.

Imposing a cost on the refugee-creating nations has its downsides. But, so do the alternatives. The cost of the refugee crisis already exists; the question is who should pay it. In the current system, that is mostly the refugees themselves.

A debt of the kind we propose would not solve the refugee crisis. But it would give countries of origin more reason not to create refugees, host nations more reason to accept them, and the refugees themselves some small degree of choice.

If you have read this far, and have been persuaded that more needs to be done in this vein, we have explicated these ideas further in a piece we published some months prior prior to the current escalation in the plight of the Rohingya, titled “Competing for Refugees: A Debt-Based Solution to a Humanitarian Crisis”.

Peter Schuck (Yale) and Tendayi Achiume (UCLA) were generous enough to write extremely thoughtful critiques of our endeavor, suggesting other (and perhaps better) ways to think about and handle the horrific situations that many of today’s refugees face.

We have been told by many that we are delusional to hope for progress in this area; that there are too many other pressing questions facing the international community currently. We are going to keep tilting at that windmill though.

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