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Title: The four faces of power in sovereign debt restructuring : explaining bargaining outcomes between debtor states and private creditors since 1870
Author: Kamlani, Deirdre Shay
ISNI:       0000 0004 2668 1190
Awarding Body: London School of Economics and Political Science
Current Institution: London School of Economics and Political Science (University of London)
Date of Award: 2008
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This thesis examines four discrete periods of sovereign default and restructuring over the past 135 years and seeks to explain the observed variation in aggregated bargaining outcomes between debtor states and private creditors. Utilizing a power-based analytical framework borrowed from Barnett and Duvall (2005), the study assesses the relative impact of four principal regime components on distributional results: the private creditor representative body (institutional power); the degree and orientation of creditor country government/IFI intervention (compulsory power); the structure and condition of the capital markets (structural power); and, the discursive practices surrounding sovereign default (productive power). The analysis suggests that the key private creditor institutions - the British Corporation of Foreign Bondholders, the American Foreign Bondholders Protective Council, and The London Club - have only marginally influenced results, and that outcomes were instead driven by the action (or inaction) of creditor governments, the structure of capital access (centralized or decentralized), and the relative condition of the private capital markets (robust or collapsed). The paper concludes that compulsory and structural regime elements are therefore more salient than institutional ones in the sovereign debt bargaining exercise. From a public policy perspective, this study cautions those who seek a newly-constituted, 21st-century bondholder council, since such an institution - like its historical predecessors - would find its impact on the sovereign debt management process highly circumscribed. The thesis also challenges economic theory on the matter of sovereign repayment incentives, arguing that the "either-or" nature of the reputation-sanctions debate (Eaton-Gersovitz (1981) vs. Bulow-Rogoff (1989)) distracts from the fact that these incentives have operated simultaneously over the past 135 years. More specifically, the evidence suggests that structural and compulsory regime elements - the equivalent of reputation and sanctions in the formal models - have largely reinforced one another in the sovereign debt restructuring process, thereby amplifying their impact on negotiating outcomes in each historical period.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available