Ethical and Practical Desirability of Existing Proposals for Dealing with Debt

How should sovereign debt negotiations be structured so that we can help to prevent countries from falling into financial crises and indebtedness, and to enable those that do to escape more easily without imposing unacceptable costs on other parties? The different actors involved in international lending—creditor and borrowing governments, private market lenders, and multilateral banks—differ sharply in their diagnoses of the causes of severe debt, the agents who are primarily responsible for bringing it about, and the extent to which remedying this problem will require deep reforms to the global financial system. Yet each of these actors has advanced its own concrete proposals that, they argue, can improve the fairness of processes for dealing with sovereign debt.

Our resources in this area seek to illuminate the value disagreements and resulting conflicting priorities among actors that underlie the debate about what specific policies would constitute fairness in international lending.

Dealing Justly with Debt Roundtable

Christian Barry

Resolving International Debt Crises Fairly
Ann Pettifor

Reviving Troubled Economies
Jack Boorman

The Constructive Role of Private Creditors
Arturo Porzecanski

Sovereign Debt Restructuring Proposals:
A Comparative Look

Thomas I. Palley

Feasible Additional Sources of Financing for Development (Report)

Even in the cases for which political actors agree on the ethical and practical necessity not to demand the repayment of debts, many are concerned that halting repayment of debt would deplete the resources of international financial institutions and thus undermine their capacity to maintain stability in the global economy. This report presents specific proposals for financing policies that are necessary for development, including debt, while avoiding this danger.

The Justice of the International Financial System: Rules and Institutions for Dealing with Debt

In order to identify correctly the causes of sovereign indebtedness, it is necessary to consider the systemic context in which international lending and borrowing decisions are made. Why is it practically permissible to lend to rulers and regimes that are widely recognized as dictatorial, such as Saddam Hussein, Mobutu Sese Seko, South Africa’s apartheid government, or Argentina’s military junta, and then demand that people repay these debts? What are the consequences for debt of the ways in which international financial institutions—the IMF, World Bank, regional multilateral banks—are set up and operate?

Our resources in this area seek to advance understanding on such questions and to propose feasible reforms that can justly and effectively eliminate structural and institutional reasons in the global economy that result in unjust lending practices.

Developing Just Monetary Arrangements
Sanjay G. Reddy

Achieving Democracy
Thomas Pogge

Holding Intergovernmental Institutions to Account
Ngaire Woods

International Financial Institutions and Financial Accountability
Kunibert Raffer

Assistance with Fewer Strings Attached
Vivien Collingwood

Work in Progress

Sovereign Debt as an Ethical Problem:
Some Preliminary Considerations
Christian Barry

Also available in Portuguese:
A dívida soberana como roblema ético: algumas considerações preliminares

This note proceeds in five stages: (1) it tries to clarify what sovereign debt is, and the different ethical statuses that sovereign debts can have; (2) it briefly describes some of the main features of the present rules governing sovereign debt—including the background norm of pacta sunt servanda; (3) it describes a picture of creditor/debtor relations—which is referred to as the ‘ideal picture’—that seems to lie behind and offer support for present practices and norms; (4) it argues that the ideal picture is so far removed from the actual nature of creditor/debtor relations that it provides very little support for present practices; finally, (5) it tries to identify some principles that seem more adequate to evaluating sovereign debt given the real circumstances of sovereigns debtors and creditors, and the modifications of present practices that such principles would very likely demand.