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RETHINKING SOVEREIGN DEBT
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Sovereign debt markets have demonstrated incredible resilience despite a century of dramatic political and economic upheaval. Among the most remarkable aspects of the contemporary debt
regime is the degree to which expectations of borrowers remain relatively uniform even in the face of such major shifts. These basic expectations resolve into one background rule: sovereign borrowers must repay, regardless of the circumstances of the initial debt contract, the actual use of loan proceeds, or the exigencies of any potential default. This is not to say that countries always pay; certainly, they do not. But the background rule remains, and it sets the standard by which creditors and others form their reputational judgments and against which sovereign borrowers are evaluated and chastised.
This repayment norm helps to immunize the debt regime from serious challenge and to stabilize the massive sums at stake. In particular, it buttresses our avoidance of prickly questions about fairness and appro- priateness in the international economic arena. Several troubling queries in recent decades include: Should a black-African-led South Africa really be expected to repay apartheid era debt? Or, given that Saddam Hussein was a dictator who used funds for the oppression of a majority of Iraq’s population, would it be appropriate to require future Iraqi generations to pay for his iniquity? More generally, who counts as the “sovereign” in these debt situations—is sovereignty just the legal shell for whoever happens to control a territory, or does it imply underlying principles of legitimate representation or public benefit? And how might all this fit into assessments of a country’s creditworthiness?
Odette Lienau - Personal Name
1st Edtion
978-0-674-72506-5
NONE
RETHINKING SOVEREIGN DEBT
Management
English
Harvard University Press
2014
England
1-342
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