TOO LITTLE, TOO LATE INITIATIVE FOR POLICY DIALOGUE AT COLUMBIA CHALLENGES IN DEVELOPMENT AND GLOBALIZATION INITIATIVE FOR POLICY DIALOGUE AT COLUMBIA CHALLENGES IN DEVELOPMENT AND GLOBALIZATION JOSÉ ANTONIO OCAMPO AND JOSEPH E STIGLITZ, SERIES EDITORS Escaping the Resource Curse, Macartan Humphreys, Jeffrey D Sachs, and Joseph E Stiglitz, eds The Right to Know, Ann Florini, ed Privatization: Successes and Failures, Gérard Roland, ed Growth and Policy in Developing Countries: A Structuralist Approach, José Antonio Ocampo, Codrina Rada, and Lance Taylor Taxation in Developing Countries, Roger Gordon, ed Reforming the International Financial System for Development, Jomo Kwame Sundaram, ed Development Cooperation in Times of Crisis, José Antonio Ocampo and José Antonio Alonso New Perspectives on International Migration and Development, Jeronimo Cortina and Enrique Ochoa-Reza, eds Industrial Policy and Economic Transformation in Africa, akbar Noman and Joseph E Stiglitz, eds Macroeconomics and Development: Roberto Frenkel and the Economics of Latin America, Mario Damill, Martín Rapetti, and Guillermo Rozenwurcell, eds TOO LITTLE, TOO LATE The Quest to Resolve Sovereign Debt Crises Martin Guzman, José Antonio Ocampo, and Joseph E Stiglitz, eds COLUMBIA UNIVERSITY PRESS NEW YORK Columbia University Press Publishers Since 1893 New York Chichester, West Sussex cup.columbia.edu Copyright © 2016 Columbia University Press All rights reserved E-ISBN 978-0-231-54202-9 Library of Congress Cataloging-in-Publication Data Names: Guzman, Martin, editor | Ocampo, José Antonio, editor | Stiglitz, Joseph E., editor Title: Too little, too late : the quest to resolve sovereign debt crises / Martin Guzman, Jose Antonio Ocampo, and Joseph E Stiglitz, eds Description: New York City : Columbia University Press, 2016 | Series: initiative for policy dialogue at Columbia: challenges in development and globalization | includes bibliographical references and index Identifiers: LCCN 2015048091 | ISBN 9780231179263 (cloth : alk paper) Subjects: LCSH: Debts, Public | Financial crises | Monetary policy | International Law Classification: LCC HJ8017 T66 2016 | DDC 336.3—dc23 LC record available at http://lccn.loc.gov/2015048091 A Columbia University Press E-book CUP would be pleased to hear about your reading experience with this e-book at cup-ebook@columbia.edu Cover design: Jordan Wannemacher References to websites (URLs) were accurate at the time of writing Neither the author nor Columbia University Press is responsible for URLs that may have expired or changed since the manuscript was prepared INITIATIVE FOR POLICY DIALOGUE AT COLUMBIA CHALLENGES IN DEVELOPMENT AND GLOBALIZATION JOSÉ ANTONIO OCAMPO AND JOSEPH E STIGLITZ, SERIES EDITORS The Initiative for Policy Dialogue (IPD) at Columbia University brings together academics, policymakers, and practitioners from developed and developing countries to address the most pressing issues in economic policy today IPD is an important part of Columbia’s broad program on development and globalization The Initiative for Policy Dialogue at Columbia: Challenges in Development and Globalization book series presents the latest academic thinking on a wide range of development topics and lays out alternative policy options and trade-offs Written in a language accessible to policymakers and students alike, this series is unique in that it both shapes the academic research agenda and furthers the economic policy debate, facilitating a more democratic discussion of development policies The current non-system for resolving sovereign debt crises does not work Sovereign debt restructurings come too late and too little This imposes enormous costs on societies: restructurings are often not deep enough to provide the conditions for economic recovery, as the Greek debt restructuring of 2012 illustrates, impeding debtors in distress from escaping from recessions or depressions Furthermore, if the debtor decides to play hardball and not to accept the terms demanded by the creditors, finalizing a restructuring can take a long time and, as the case of Argentina illustrates, be beset with legal challenges, especially from a small group of non-cooperative agents that have earned the epithet “vulture funds.” A fresh start for distressed debtors is a basic principle of a well functioning market economy The absence of a fresh start may lead to large inefficiencies, where both the debtor and the creditors lose This principle is well recognized in domestic bankruptcy laws But there is no international bankruptcy framework that similarly governs sovereign debts These problems are not new They have been plaguing the functioning of sovereign debt markets for decades This book provides a thorough analysis of the main deficiencies of the current nonsystem for sovereign debt restructuring and of possible solutions It includes fifteen chapters by world-leading academics and practitioners Overall, the chapters in this book depict an overwhelming consensus on the need to reform the non-system that governs sovereign debt restructuring And as this book emphasizes, if there is a better framework for debt restructuring, debt markets will function better, and societies will better For more information about IPD and its upcoming books, visit www.policydialogue.org CONTENTS Acknowledgments Introduction Martin Guzman, José Antonio Ocampo, and Joseph E Stiglitz PART General Issues of Sovereign Debt Restructuring Creating a Framework for Sovereign Debt Restructuring That Works Martin Guzman and Joseph E Stiglitz Sovereign Debt of Developing Countries: Overview of Trends and Policy Perspectives Marilou Uy and Shichao Zhou Private Creditor Power and the Politics of Sovereign Debt Governance Skylar Brooks and Domenico Lombardi PART Two Case Studies: Argentina and Greece From the Pari Passu Discussion to the “Illegality” of Making Payments: The Case of Argentina Sergio Chodos Greek Debt Denial: A Modest Debt Restructuring Proposal and Why It Was Ignored 84 Yanis Varoufakis PART Improvements to the Contractual Approach Count the Limbs: Designing Robust Aggregation Clauses in Sovereign Bonds Anna Gelpern, Ben Heller, and Brad Setser Contractual and Voluntary Approaches to Sovereign Debt Restructuring: There Is Still More to Do Richard Gitlin and Brett House Sovereign Debt Restructuring: A Coasean Perspective James A Haley Creditor Committees in Sovereign Debt Restructurings: Understanding the Benefits and Addressing Concerns Timothy B DeSieno PART Proposals for a Multinational Framework for Sovereign Debt Restructuring: Principles, Elements, and Institutionalization 10 A Brief History of Sovereign Debt Resolution and a Proposal for a Multilateral Instrument José Antonio Ocampo 11 Toward a Multilateral Framework for Recovery from Sovereign Insolvency Barry Herman 12 Making a Legal Framework for Sovereign Debt Restructuring Operational: The Case for a Sovereign Debt Workout Institution Jürgen Kaiser 13 Perspectives on a Sovereign Debt Restructuring Framework: Less Is More Richard A Conn Jr 14 Toward a Framework for Sovereign Debt Restructuring: What Can Public International Law Contribute? Robert Howse 15 Debts, Human Rights, and the Rule of Law: Advocating a Fair and Efficient Sovereign Insolvency Model Kunibert Raffer Contributors Index ACKNOWLEDGMENTS Most of the chapters in this volume were presented at a conference on Frameworks for Sovereign Debt Restructuring jointly organized by Columbia University Initiative for Policy Dialogue (IPD), the Centre for International Governance Innovation (CIGI), the Center of Global Economic Governance (CGEG) at Columbia University, and the United Nations Department of Economics and Social Affairs (UNDESA), held at Columbia University, New York, on November 17, 2014 We are thankful to all those institutions as well as Domenico Lombardi, Benu Schneider, and Jan Svejnar for their support, and to the participants for the excellent discussions We are also thankful to the Institute for New Economic Thinking and its president, Rob Johnson, for hosting a panel on Sovereign Debt Restructuring in its annual conference at the OECD, Paris, April 2015 Some of the chapters of this book were presented in that panel, and the excellent discussions therein contributed to improve them Several of the chapters of this book were also presented at the different meetings of the United Nations General Assembly Ad Hoc Committee on Sovereign Debt Restructuring Processes The discussions during those meetings have also greatly contributed to the quality of this volume Some of the chapters were presented at a follow-up conference on Sovereign Debt Restructuring jointly organized by Columbia University IPD and the CIGI, held at Columbia University on September 22, 2015 We are also grateful to CIGI for the financial support for that conference, and to the participants for the excellent discussions Finally, we are thankful to all the authors of this volume for their efforts to turn this volume into an enriching and timely contribution INTRODUCTION Martin Guzman, José Antonio Ocampo, and Joseph E Stiglitz Sovereign debt crises are becoming, once again, frequent In some cases, the costs to the citizens of those countries facing such crises have been enormous Deficiencies in the mechanisms for resolving such crises cast a pallor over countries that are not yet in a crisis but worry that they might become so; and indeed, the high costs and uncertainties associated with debt restructuring dampen cross-border capital flows and force especially developing countries and emerging markets to pay higher interest rates than might be the case if there were better ways of resolving these debt problems A fresh start for distressed debtors is a basic principle of a well-functioning market economy The absence of a fresh start may lead to large inefficiencies, wherein both the debtor and the creditors lose This principle is well recognized in domestic bankruptcy laws But there is no international bankruptcy framework that similarly governs sovereign debts We refer to such a broad framework as a “framework for sovereign debt restructuring.” This lacuna is creating serious problems for nations facing sovereign debt crises The issue has been brought to the fore especially by the difficulties recently faced by several countries attempting reasonable debt restructurings—most notably Argentina and Greece Sovereign debt restructuring has suffered from “too little, too late.” The current system discourages incumbent governments from initiating debt restructurings And when a restructuring is undertaken, it is often not deep enough to provide the conditions for an economic recovery, as the Greek debt restructuring of 2012 illustrates And if the debtor decides to play hardball and not accept the terms demanded by the creditors, finalizing a restructuring can take a long time and, as the case of Argentina illustrates, be beset with legal challenges, especially from small groups of noncooperative agents (holdout creditors) that have earned the epithet “vulture funds.” Under the current non-system, the gaps in the international legal architecture make possible the emergence of these vulture funds, who buy defaulted debt in secondary markets at very low prices and then litigate against the issuer for the payment of the full amount of the liabilities This destabilizing speculative behavior, together with the favorable treatment these agents have been receiving from the U.S courts, creates serious problems, as it encourages all creditors to hold out in debt restructuring negotiations—making debt restructurings de facto impossible Delays in debt restructurings have been costly for sovereigns and for good faith investors These dysfunctions have ramifications for the entire sovereign debt market They may lead to a reluctance on the part of countries to borrow, even when doing so might make sense; and they may lead to higher interest rates in sovereign debt markets These problems are not new They have been plaguing the functioning of sovereign debt markets for decades Over the past fifteen years discussions have explored many alternative ways of dealing with both situations in which sovereigns have difficulties in meeting their debt obligations and the subsequent economic, political, and social www.attac.at/fileadmin/_migrated/content_uploads/backgroundmaterial_bailout_english.pdf Bohoslavsky, Juan Pablo 2014 “End-of-Mission Statement by Mr Juan Pablo Bohoslavsky, United Nations Independent Expert on the Effects of Foreign Debt and Other Related International Financial Obligations of States on the Full Enjoyment of all Human Rights, Particularly Economic, Social and Cultural Rights Mission to Iceland, 8–15 December 2014.” www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=15420&LangID=E Broad, Robin 2014 “Corporate Bias at the World Bank Group—The World Bank Group’s International Centre for Settlement of Investment Disputes.” www.brettonwoodsproject.org/2015/09/corporate-bias-at-the-world-bank-group Brooks, Skylar, and Domenico Lombardi 2016 “Private Creditor Power and the Politics of Sovereign Debt Governance.” In Too Little, Too Late: The Quest to Resolve Sovereign Debt Crises , ed Martin Guzman, José Antonio Ocampo, and Joseph E Stiglitz, chapter New York: Columbia University Press Chodos, Sergio 2016 “From the Pari Passu Discussion to the ‘Illegality’ of Making Payments.” In Too Little, Too Late: The Quest to Resolve Sovereign Debt Crises, ed Martin Guzman, José Antonio Ocampo, and Joseph E Stiglitz, chapter New York: Columbia University Press Erce, Aitor 2014 “Banking on Seniority: The IMF and the Sovereign’s Creditors.” Working Paper 175, Federal Reserve Bank of Dallas, Globalization and Monetary Policy Institute www.dallasfed.org/assets/documents/institute/wpapers/2014/0175.pdf Gupta, Sanjeev 2014 “IMF Response to The Lancet article on ‘The International Monetary Fund and the Ebola Outbreak.’” www.imf.org/external/np/vc/2014/122214.htm Guzman, Martin 2014 “Understanding the Relationship Between Output Growth Expectations and Financial Crises.” Initiative for Policy Dialogue Working Papers Series Columbia University, New York Guzman, Martin and Joseph E Stiglitz 2016 “Creating a Framework for Sovereign Debt Restructuring That Works,” in Too Little, Too Late: The Quest for Resolving Sovereign Debt Crises, chapter New York: Columbia University Press International Monetary Fund 2002, November 27 “The Design of the Sovereign Debt Restructuring Mechanism—Further Considerations.” www.imf.org/external/np/pdr/sdrm/2002/112702.pdf —— 2011 “Iceland’s Unorthodox Policies Suggest Alternative Way Out of Crisis.” IMF Survey Online, November www.imf.org/external/pubs/ft/survey/so/2011/car110311a.htm —— 2012 “Euro Area Policies: 2012 Article IV Consultation—Selected Issues Paper.” Country Report No 12/182 https://www.imf.org/external/pubs/ft/scr/2012/cr12182.pdf Kentikelenis, A., L King, M McKee, and D Stuckler 2014 “The International Monetary Fund and the Ebola Outbreak.” Lancet (no 2) www.thelancet.com/journals/langlo/article/PIIS2214–109X%2814%2970377–8/fulltext Krueger, Anne 2001 “International Financial Architecture for 2002: A New Approach to Sovereign Debt Restructuring.” www.imf.org/external/np/speeches/2001/112601.htm —— 2002 “Sovereign Debt Restructuring and Dispute Resolution.” www.imf.org/external/np/speeches/2002/060602.htm Raffer Kunibert 1989 “International Debts: A Crisis for Whom?” In Economic Development and World Debt, ed H W Singer and S Sharma, 51–63 London: Macmillan (Papers of a conference at the University of Zagreb 1987.) —— 1990 “Applying Chapter Insolvency to International Debts: An Economically Efficient Solution with a Human Face.” World Development 18 (no 2): 301–313 —— 2005 “Internationalizing US Municipal Insolvency: A Fair, Equitable, and Efficient Way to Overcome a Debt Overhang.” Chicago Journal of International Law (no 1): 361–380 —— 2010 Debt Management for Development—Protection of the Poor and the Millennium Development Goals Cheltenham, U.K.: Elgar Richards, Mark B 2010 “The Republic of Congo’s Debt Restructuring: Are Sovereign Creditors Getting Their Voice Back?” Law and Contemporary Problems 73 (no 4): 273–299 Rogoff, K., and J Zettelmeyer 2002 “Bankruptcy Procedures for Sovereigns: A History of Ideas, 1976–2001.” IMF Staff Papers 49 (no 3): 470–508 Smith, Adam [1776] 1979 An Inquiry into the Nature and Causes of the Wealth of Nations, vol 2, Glasgow ed., Oxford: Oxford University Press Stiglitz, Joseph 2000 “Democratic Development as the Fruits of Labor.” Keynote address at the Industrial Relations Research Association, Boston, Mass Mimeo Stiglitz, J., M Guzman, D Lombardi, J A Ocampo, and J Svejnar 2015 “Frameworks for Sovereign Debt Restructuring.” IPD-CIGI-CGEG Policy Brief http://policydialogue.org/files/publications/IPD-CIGI-CGEG_Report FSDR_Conference_R.pdf United Nations General Assembly 2014 “Towards the Establishment of a Multilateral Legal Framework for Sovereign Debt Restructuring Processes” (A/68/L.57/Rev.2) United Nations Human Rights Council 2014 “Effects of Foreign Debt and Other Related International Financial Obligations of States on the Full Enjoyment of All Human Rights, Particularly Economic, Social and Cultural Rights: The Activities of Vulture Funds” (A/HRC/27/L.26) CONTRIBUTORS Skylar Brooks is a PhD candidate at the Balsillie School of International Affairs, University of Waterloo His research focuses on the global politics of money and finance, with particular emphasis on the international monetary system and sovereign debt governance Sergio Chodos, currently executive director for the Southern Cone countries at the International Monetary Fund Previously, he held positions in Argentina, including secretary of finance, board member of the Central Bank of Argentina, and vice superintendent of Financial Entities He holds a law degree from the University of Buenos Aires and an LLM from Columbia University He was admitted to practice in Buenos Aires and in New York Richard A Conn Jr serves as managing partner of Eurasia Advisors LLC (www.eurasiadvisors.com), an advisory firm specializing in problem solving and deal making in Russia and other CIS nations, and as managing partner of Innovate Partners LLC (www.innovatepartners.com), a private investment fund He delivered the keynote address before the UN General Assembly Ad Hoc Committee on Sovereign Debt Restructuring in April 2015 Timothy B DeSieno is a New York–based partner in the global financial restructuring practice of Morgan, Lewis & Bockius LLP DeSieno advises institutional investors in protecting and restructuring their investments globally in cases of economic, political, financial, or other stress He frequently represents creditors of sovereign states in connection with debt restructurings Anna Gelpern is a law professor at Georgetown and a fellow at the Peterson Institute for International Economics She has published many articles on financial integration and debt and has coauthored a law textbook on international finance Earlier he practiced law in New York and served in legal and policy positions at the U.S Treasury Richard Gitlin is chair of Gitlin & Company, LLC and a senior fellow at the Centre for International Governance Innovation (CIGI) For many years he has been actively involved in efforts to improve systems for both sovereign and corporate cross-border debt restructurings Martin Guzman is a postdoctoral research fellow at Columbia University GSB (Department of Economics and Finance), an associate professor at the University of Buenos Aires, and a senior fellow at the Centre for International Governance Innovation He is a cochair of Columbia University IPD Taskforce on Debt Restructuring and Sovereign Bankruptcy, and a member of the Institute for New Economic Thinking Group on Macroeconomic Externalities He is also the editor of the Journal of Globalization and Development James A Haley is an adjunct professor at McCourt School of Public Policy, Georgetown University, Washington, D.C He previously served as executive director for Canada at the Inter-American Development Bank and led the Global Economy program at the Centre for International Governance Innovation (CIGI) He has held a number of senior positions in the Canadian Treasury and was research director at the International Department of the Bank of Canada He also served on the staff of the Research Department of the International Monetary Fund and has lectured on international finance at the Norman Paterson School of International Affairs, Carleton University Ben Heller is a fund manager at Hutchin Hill Barry Herman After almost thirty years of service, Dr Herman retired from the United Nations Secretariat in December 2005 and now teaches part-time in the Julien J Studley Graduate Program in International Affairs in the Milano School of International Affairs, Management and Urban Policy of The New School, New York Brett House is chief economist at Alignvest Investment Management in Toronto, senior fellow at the Jeanne Sauvé Foundation, and visiting scholar at Massey College in the University of Toronto Previously, he worked on sovereign debt– related issues as senior fellow at the Centre for International Governance Innovation (CIGI), global strategist at New York– based hedge fund Woodbine Capital Advisors, principal advisor in the executive office of the United Nations’ SecretaryGeneral, and economist at the International Monetary Fund Robert Howse is Lloyd C Nelson Professor of International Law at NYU Law School He was a member of the UNCTAD Working Group on Sovereign Debt Workouts and is the author of the UNCTAD study “The Concept of Odious Debt in Public International Law,” among many other works Jürgen Kaiser is the coordinator of erlassjahr.de (Jubilee Germany) Born in 1954, he studied geography and regional planning in Berlin and Karlsruhe; worked for ten years in development education for the Protestant Churches in Germany, working for the German debt crisis network from 1995 to 1997, then cofounder of Jubilee Germany; in 2005/6 debt relief and financial flows adviser for UNDP (New York) Domenico Lombardi is director of the Global Economy Program at the Centre for International Governance Innovation (CIGI), Canada He serves on the advisory boards of the Peterson Institute for International Economics and the Bretton Woods Committee in Washington Earlier in his career, Lombardi was a senior fellow at the Brookings Institution and had positions on the executive boards of the International Monetary Fund and the World Bank He has an undergraduate degree summa cum laude from Bocconi University, Milan, and a PhD in economics from Oxford University (Nuffield College) More information is available at www.domenicolombardi.org José Antonio Ocampo is professor at the School of International and Public Affairs and co-president of the Initiative for Policy Dialogue at Columbia University, and chair of the UN Committee for Development Policy He hasbeen UN undersecretary-general for economic and social affairs, executive secretary of the UN Economic Commission for Latin America and the Caribbean (ECLAC), and minister of finance, minister of agriculture, and director of the National Planning Office of Colombia Kunibert Raffer is associate professor in the Department of Economics, University of Vienna, and honorary professor at the Universidad Nacional de Rio Negro (Argentina) He serves as a member of the Study Group on Sovereign Insolvency of the International Law Association Brad Setser is the deputy assistant secretary for international economic analysis at the U.S Treasury Joseph E Stiglitz is an American economist and a professor at Columbia University He is also the cochair of the HighLevel Expert Group on the Measurement of Economic Performance and Social Progress at the OECD, the chief economist of the Roosevelt Institute and cofounder and co-president of the Initiative for Policy Dialogue A recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979), he is a former senior vice president and chief economist of the World Bank and a former member and chairman of the (U.S president’s) Council of Economic Advisers Marilou Uy is director of the Secretariat of the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development (G-24) Previously, Uy worked at the World Bank, where she was director of Financial and Private Sector Development in various regional departments Yanis Varoufakis is professor of economic theory at the University of Athens and a former finance minister who led his government’s negotiations on debt relief with the International Monetary Fund, the European Commission, and the European Central Bank His latest book is entitled And the Weak Suffer What They Must? Europe’s Crisis, America’s Economic Future (New York: Nation Books) Shichao Zhou is research associate at the G-24 Secretariat Previously, he worked on country economic analysis as an intern at the Institute of International Finance Mr Zhou graduated from the Paul H Nitze School of Advanced International Studies at Johns Hopkins University INDEX Page numbers refer to the print edition but are hyperlinked to the appropriate location in the e-book Abaclat v Argentina, 243 Abi-Saab, George, 243 Abs, Hermann Josef, 224–26 abuse, 120 Addis Ababa Action Agenda, 219 ad hoc awards, 228 Africa, 214; China and, 41, 42; Ebola in, 212, 261; GDP of, 35; international bond issues in, 43; Zaire, 220n4 agency, 62; Fiscal Agency Agreement, 78–79, 82n4, 164 aggregation, 131–32, 135; foreign-law bonds and, 134; SDRM and, 198–99, 203nn4–5; single-limb aggregation, 109, 124– 27, 165–66; two-limb aggregations, 111, 123–24, 165–66 aggregation clauses, 109, 198–200, 203nn4–5 Agreed Minute, 211 agreements must be honored (pacta sunt servanda), 206–7, 242–43 AIIB See Asian Infrastructure Investment Bank American courts, 25n6; Griesa of, 15, 26n16, 27n17, 265 See also Argentine restructuring April 2015 proposal See Greek debt April 2015 proposal Arab Coordination Group, 42 arbitration, 249; in PCA, xx, 218–19, 227; from UNCITRAL, 227 See also Fair Transparent Arbitration Process Argentine restructuring, 56, 81n1; Abaclat v Argentina in, 243; Comisión Representativa del Estado Nacional for, 262; consequences in, 28n32, 80–81, 111, 179; equilibrium and, 79, 81; GDP-linked bonds in, 26n9; holdout creditors in, 164, 171n5, 239; in ICMA CACs evolution, 117–18; ICMA CACs new model in, 121; NML Capital, Ltd v Republic of Argentina, 11, 44, 157; pari passu clause and, 11, 15, 26n16, 27n17, 77–80, 82n4, 83nn6–7, 117, 148–49, 164, 198, 203nn3–4; remedy in, 79–81, 254; SDR framework and, 232–33; sovereign immunity and, 244–45; U.S on, 25n6, 51n24, 77, 213– 14; vulture funds and, xvi–xvii, 11, 26n16, 77 Arrow, Kenneth J., 28n31, 168 Article 38, 241, 251n3 Articles of Agreement, 242 Articles of State Responsibility, 243 Asbury Park, 256 Asia: China, 41, 42, 233; GDP in, 35, 38; international bond issues in, 43; Japan, 51n25, 145, 233 Asian financial crisis: governments in, 210; local currency bonds after, 38; proposals after, 195; voluntary reschedulings after, 191 Asian Infrastructure Investment Bank (AIIB), 233 attachment, 150, 157, 244 austerity, 8; in Greek debt analysis, 88, 88–89, 89; in Greek debt history, 86, 104n8 Australia, 51n25 authority, 208, 214–15, 255 autonomy of decision, 131 background, unbalanced, 13, 23 bad lending, 14, 23 bailouts, 9, 13, 20, 23, 25nn2–3; in Greek debt denial, 85–86, 100; private sector debts and, 202; systemic stability and, 60 See also International Monetary Fund Baker Plan, 191, 264 Bankers’ Committees, 63 Bank of International Settlements, 50n13 bankruptcy, 8, 26n13, 27n20, 237–39 Bankruptcy Code, U.S., 238; Chapter of, 4, 9, 20, 237, 256–57, 260–63; Chapter 11 of, 20, 237, 255–56 bankruptcy laws, 3–4, 8, 12, 171n11; international, 237–38 banks, 50n13, 201, 209–10, 233; ECB, 86, 104n6, 122–23, 263 Barr, David, 28n35 Belgium, 48, 157 Berra, Yogi, 163 Bilateral Investment Treaties (BITs), 245, 258 Bohoslavsky, Juan-Pablo, 241 Bolton, Patrick, 172n17 bond-by-bond vote, 124 bond contracts, 109, 212–13 bond offers, 132 bonds, 43, 122; English-law, 113, 130, 134–35, 136n4, 195–96; foreign-law, 111, 115–16, 134, 158n2, 171n9; GDP-indexed, 19–20, 28n35, 95–96, 154–55; in Greek debt history, 85–86, 104n6; market to market, 14, 27n22; SMP, 93–94; sovereign, 14, 27n27, 38, 50nn9–10, 72n4, 109, 158n2; zero-coupon, 128, 129, 131, 133 See also New York-law bonds Boughton, James, 220n8 Brady bonds, 113, 154 Brady Plan, 190–91, 210 Brooke, Martin, 154–55 Buchheit, Lee, 78–79, 180–81, 194 Bush, Oliver, 28n35 CACs See collective action clauses Cafiero, Mario, 262 calculation agent, 133 capital markets, 6, See also International Capital Markets Association Caribbean countries, 41–44; GDP of, 35 Carstens, Augustin, 68 Catastrophe Containment and Relief Trust, 212 CCL See Contingent Credit Line CDSs See credit default swaps challenges: in developing country sovereign debt, 33–34; to ICMA CACs new model, 166–67, 171n16, 172n17, 199–200 champerty defense, 12; contractual approach and, 19, 28n34 Chapter 9, 4, 9, 20, 237; FTAP and, 256–57, 260–63 Chapter 11, 20, 237, 255–56 China: Africa and, 41, 42; AIIB from, 233 City of Asbury Park, 256 Coase, Ronald, 168–70 Coasean World: SDF and, 170, 173n28; soft law and, 169 Coase theorem, 168–69 cocos See contingent convertibles collateral, 14 collective action clauses (CACs), 5, 11, 27nn18–19, 158n2, 164; Argentine restructuring and, 80–81; for developing country sovereign debt, 45–46, 50n21; in Mexico, 109–10, 114, 163–64, 197–99; New York-law bonds and, 113–15, 136n4, 137n5, 137n13, 149, 198; in SDR history, 195–96; SDRM and, 67–68, 70–71, 72nn11–14 See also ICMA CACs collective action problems, 247 Comisión Representativa del Estado Nacional, 262 competition, 61 compliance, 242 confidentiality, 177, 181, 184, 186n5 Congo, 254 consensual deals, 177–78 consensus, 199, 206, 236; for ICMA CACs new model, 121; in multilateral framework process, 216 contingent convertibles (cocos), xviii, 154–55 Contingent Credit Line (CCL), 153 Contingent Reserve Agreement, 148 contracts, xvii–xxi, 11, 15–16, 109; debt, 6, 26n9; risk-sharing, 6–7; sanctity of, 171n16; in SDR, 193–94, 231 contractual and voluntary approaches, 145, 165, 247; ex ante and, 152–54; ex post and, 156–57; in medias res and, 154–56; recent developments and, 146–49, 150, 151–52 contractual approach, xv, 170, 240; champerty defense and, 19, 28n34; GDP-indexed bonds and, 19–20, 28n35; SCDSS and, 18–19; standstills and, 171n12, 239 See also ICMA CACs “Convention Respecting the Limitation of the Employment of Force for the Recovery of Contract Debts,” 202n1 cooperative behavior, 168, 172n20, 238 corporate cocos, 154 corporate debt, 40, 50n13 cost reductions, 149, 150, 151–52 costs: of creditor committees, 178–79, 183; ex ante, xvii, 150, 151–52 countercyclical fiscal policies, 20 counterframework, xxi, 247–50 courts, 51n25, 200, 241; American, 15, 25n6, 26n16, 27n17, 265; ICJ, 241, 251n3; PCA, xx, 218–19, 227; U.S District Court, 12; U.S Supreme Court, xvii, 77, 213–14, 256 Covenant on Economic, Social and Cultural Rights, 243 credit default swaps (CDSs), 6; distortion of, 13, 18–19, 28nn31–33 credit markets, creditor committees, xix, 182, 186n2, 186n8; benefits of, 176–78; confidentiality and, 177, 181, 184, 186n5; consensual deals and, 177–78; cost of, 178–79, 183; creditor power and, 179; divorce from, 180–81; documentation of, 185; drawbacks of, 178–81; guidelines for, 183–84; holdout creditors and, 175, 177–78; information imbalance and, 176, 186n4; responsibilities of, 184–85; streamline of, 176, 186n3; supervision of, 180, 183–85; timeliness of, 178; umbrella committees of, 181, 186n7 creditor equality, 263–64 creditor power, 179, 206, 215; 1930s proposal and, 63–64; 1970s proposal and, 64–65, 65; SDRM and, 62–70, 196 See also private creditor power creditor rights, 206–7 creditors, 9, 13, 17, 217, 255; bad lending by, 14, 23; GDP and, 8; SDR and, 57–58, 72nn5–6; senior, 16, 27nn27–28, 148 See also holdout creditors; private creditors creditworthiness: public policy and, 61; structural power and, 61–62 currencies, 82n4; in EMDCs, 38, 39, 50n10; exchange rate of, 17, 25n2, 27n25; in ICMA CACs evolution, 118 current problems: CDSs as, 13; champerty defense as, 12; political economy as, 13–14; sovereign immunity as, 12; unbalanced negotiation background as, 13, 23; of vulture funds, 10–12, 26n16, 27nn17–20 curve, 127 deadlines, 21 deadweight losses, 4, 167–68, 172n17 Debreu, 28n31 debt contracts, xviii–xix, 6, 15, 26n9 debt distress, xiii, 43–44; in restructuring objectives, 7, 26nn11–14; short-term lending and, 14 debtor-in-possession financing (DIP financing), 169, 172n27 debtor protection, 9, 259–63 debt overhang, 196, 209; in Greek debt April 2015 proposal, 90–91, 91, 92, 93 debt-sustainability analysis (DSA): in Greek debt April 2015 proposal, 91, 91, 92, 93, 97, 97; IMF and, 148, 158n3 debt-to-GDP ratio, 84–86, 104n2, 104n7 decentralization, 208–9 default, 7; CDSs, 6, 13, 18–19, 28nn31–33 deficiencies, 235–36 deficit, 90–91, 104nn10–11 delays, democracy, 262–64 democratic federalism, 101–2 denial See Greek debt denial DeSieno, Timothy, 149, 152 developing country sovereign debt, xvi, 50n9; CACs for, 45–46, 50n21; challenges in, 33–34; G-20 and, 45–46; IMF and, 46; jurisdictions and, 46–47; market-based contractual approaches for, 44–46; risk in, 33; SDF and, 47–48, 51n30; SDR and, 44–49; soft law and, 47–48; UN and, 46, 48, 51n28 See also emerging markets and developing countries DIP financing See debtor-in-possession financing disenfranchisement, 130–31 District Court, U.S., 12 diversity, 38, 40, 213 divorce, 180–81 documentation, 133–34, 185 domestic debt, 27n23, 82n4, 134, 196, 199 Draft Articles on Jurisdictional Immunities of States and Their Property, 244 DSA See debt-sustainability analysis due diligence, Ebola, 212, 261 ECB See European Central Bank economic efficiency, 7–8 economic “extortion,” 10 efficiency issues: of delays, 7; due diligence and, 8; ex ante efficiency as, 8; resource underutilization as, 8; for SDR, 7–9, 192–93 Eichengreen, Barry, 195 Elliot Management, 28n32 Elliott Associates, LP v Republic of Peru, 12, 27n21 embedded options, 128–29 EMDCs See emerging markets and developing countries emergency lending, 189 emerging-market foreign-law sovereign bond issues, 158n2 emerging markets and developing countries (EMDCs): corporate debt and, 40, 50n13; currency in, 38, 39, 50n10; GDP of, 35; HIPCs and, 34–35, 35, 36, 37, 50nn2–4; investor diversity and, 38, 40; LICs in, 34, 40–41, 43, 43, 50n2, 50nn15–16; long-term debt in, 36, 37, 50n7; NBFI in, 38, 50n11–13; sovereign bonds in, 38, 50nn9–10 enforcement, 167; of international law, 241–45, 247; in legal framework, 228 engagement, 134–35 English-law bonds, 134; engagement and, 135; New York-law bonds compared to, 113, 130, 136n4, 195–96 equality, xxi, 13, 23, 255, 263–64 equilibrium, 24n1; Argentine restructuring and, 79, 81 equilibrium signaling, 17–18, 28n30 equity issues: informal creditors and, 9; for SDR, 9, 193, 250n1 Erce, Aitor, 263 ESM See European stability mechanism Eurobonds, 122 European Central Bank (ECB), 86, 104n6, 122–23, 263 European Financial Stability Facility (EFSF), 253; in Greek debt April 2015 proposal, 93–94, 96–97 European stability mechanism (ESM), xvi, 9; in Greek debt, 13, 86, 104n8 Euro Summit agreement (2015), 99–100 eurozone, 86, 94, 99, 101–3, 104n8 ex ante, 8; contractual and voluntary approaches and, 152–54; guidelines for, 153–54; SDF and, 152–53 ex ante costs, xvii, 150, 151–52 exchange rate, 17, 25n2, 27n25 existing contracts problem, 16 exit consents, 115–16, 137n5, 172n18 expansionary policies, 3, 24n1 ex post, 173n30; SDR and, xiv, 4, 7–8, 156–57 external creditor banks, 209 external indebtedness, 15, 82n4 fairness, 16–17, 233–34 Fair Transparent Arbitration Process (FTAP): arbitration in, 256–57; Chapter and, 256–57, 260–63; creditor equality in, 263–64; debtor protection in, 259–63; democracy in, 262–64; HIPC II and, 259–62, 266; ISDS in, 258–59; MDGs in, 259– 60, 266; progress and, 264–66; sovereignty in, 255–56 FCL See Flexible Credit Line finance, 61; IIF and, 122–23, 153–54, 156, 219 finance ministry’s analysis, 87–89, 88, 89 Firebird Global Master Fund II Ltd v Republic of Nauru, 45, 51n25 Fiscal Agency Agreement, 78–79, 82n4, 164 Flexible Credit Line (FCL), 153 foreign-law bonds, 111, 115–16, 158n2; aggregation and, 134; in Greek debt, 171n9 Foreign Sovereign Immunity Act, 12, 51n25 formal creditors, Franklin Templeton, 122, 137n9 free riders, 125, 165, 193; in ICMA CACs evolution, 166, 171n14 FTAP See Fair Transparent Arbitration Process funding needs, 98–99 G7 countries, 66–67 G10, 115, 130, 195 G20, xv, 158; developing country sovereign debt and, 45–46; policies from, 48 G-24 See Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development G-77, 46, 226; international debt commission and, 64–65, 70 games, cooperative, 168, 172n20 GDP See gross domestic product GDP-indexed bonds, 154–55; contractual approach and, 19–20, 28n35; GLF and, 95–96 GDP securities, 95–96 Gelpern, Anna, 66–69, 158n1, 164 general equilibrium theory, 24n1 General Motors, 84 Germany v Italy, 244 gerrymandering, 131–32 Gitlin, R., 47, 152, 225 GLF See Greek loan facility globalization, 61 Goldmann, Matthias, 241 governments: in Asian financial crisis, 210; change of, 209, 220n4 Gray, Robert, 68 Great Depression, 190, 256 Greek debt, xviii, 4–5, 25n5, 111; CAC in, 164; ESM in, 13, 86, 104n8; foreign-law bonds in, 171n9; haircuts for, 85–86, 104n5, 253–54; ICMA CACs new model in, 121–23, 137n10; Postova Banka v Greece and, 243; troika program for, xvii, 86–88, 101, 104n9 Greek debt analysis, 214, 260–61; austerity in, 88, 88–89, 89; illogic of, 87–88, 88; target in, 87 Greek debt April 2015 proposal, 89, 104n9; debt overhang in, 90–91, 91, 92, 93; deficit in, 90–91, 104nn10–11; DSA in, 91, 91, 92, 93, 97, 97; EFSF in, 93–94, 96–97; funding needs in, 98–99; GDP securities in, 95–96; GLF in, 94–97; liability management in, 93–95; NPV in, 93, 96–97; SMP bonds in, 93–94 Greek debt denial, 105n16; bailouts in, 85–86, 100; as rejection, 99–100, 104nn12–13; Schäuble-Lamers plan and, 101–3 Greek debt history, 104n4, 195; austerity in, 86, 104n8; bonds in, 85–86, 104n6; debt-to-GDP ratio in, 84–86, 104n2, 104n7; GDP in, 84–86; in ICMA CACs evolution, 118–19; ICMA CACs new model in, 122–23; IMF and, 85, 104n3; proposals in, 86–87; PSI and, 85, 104n5 Greek loan facility (GLF), 94, 97; GDP-indexed bonds and, 95–96 Grenada, 229 Grexit, 102–3 Griesa, Thomas, 15, 26n16, 27n17, 265; ratable payments and, 164, 166, 171n5, 203nn3–4, 232 See also Argentine restructuring gross domestic product (GDP), 26n9, 104n2, 104n7; in Asia, 35, 38; creditors and, 8; of EMDCs, 35; GDP-indexed bonds, 19–20, 28n35, 95–96, 154–55; in Greek debt history, 84–86 guidelines, 20–22, 28n36; for creditor committees, 183–84; for ex ante, 153–54 Gulati, Mitu, 66–69, 79 Hagan, Sean, 67, 69, 203n2 Hague Convention on the Recognition and Enforcement of Foreign Judgments, 245, 247 haircuts, 193, 263–65; for Greek debt, 85–86, 104n5, 253–54 Halonen-Akatwijuka, Maija, 172n17 hard law versus soft law, 21–22, 24 Hart, Oliver D., 172n17 heavily indebted poor countries (HIPCs), 229, 266; EMDCs and, 34–35, 35, 36, 37, 50nn2–4; IFIs and, 209; political framework for, 211–12; in SDR history, 192; United Kingdom and, 48 Heavily Indebted Poor Countries Initiative (HIPC II), 259–62, 266 Helleiner, Eric, 64–65, 72n14 Herman, Barry, 158 HIPC II See Heavily Indebted Poor Countries Initiative HIPCs See heavily indebted poor countries history: of legal framework, 224–25 See also Greek debt history; SDR history holdout creditors, 117, 123–24, 157, 165, 197; in Argentine restructuring, 164, 171n5, 239; creditor committees and, 175, 177–78 See also vulture funds “honest broker,” 201 House, Brett, 47, 152, 225 human rights, 216, 220n11, 253 See also Fair Transparent Arbitration Process ICJ See International Court of Justice ICMA See International Capital Markets Association ICMA CACs, 136n1; impact of, 110–11, 165–66, 171n9, 171n11, 199; learning about, 111–12, 136n2; Mexico and, 163, 198– 99; model language of, 144, 148–49; New York-law bonds and, 113–15, 136n4, 137n5, 137n13; origins of, 112, 136n3; resistance before, 110; supermajority and, 109–10 ICMA CACs design, 112, 167; calculation agent in, 133; disenfranchisement in, 130–31; engagement in, 134–35; information disclosure in, 132–33; jurisdictions aggregation in, 134; offer terms in, 126–29, 129; pooling in, 131–32; subaggregation in, 131–32; voting options in, 123–25; voting thresholds in, 130 ICMA CACs evolution, 137n7, 171n12; Argentine restructuring in, 117–18; currencies in, 118; free riders in, 166, 171n14; Greek debt history in, 118–19; litigation in, 116–17; in Uruguay, 116 ICMA CACs new model, 135–36, 170; abuse and, 120; in Argentine restructuring, 121; challenges to, 166–67, 171n16, 172n17, 199–200; consensus for, 121; in Greek debt, 121–23, 137n10; in Greek debt history, 122–23; IMF and, 120, 144; realism of, 119–20; series-by-series voting in, 120–22, 165–66 ICSID See International Centre for Settlement of Investment Disputes ideal framework, 214–15 identical offer, 126 IFIs See international financial institutions IIF See Institute of International Finance ILC See International Law Commission IMF See International Monetary Fund immunity See sovereign immunity impartiality, 250n1; neutral authority, 214–15, 255 implementation, 219–20 inclusiveness, 249, 250n1 independent institution, 249 Indonesia, xx, 224–25 informal awards, 228 informal claimants, 17 informal creditors: equity issues and, 9; long-term creditors as, 13 informal norms, 245–46 information disclosure: of bond offers, 132; in ICMA CACs design, 132–33; of issuer’s documentation, 133; of issuer’s intentions, 132–33 information imbalance, 6, 176, 186n4 Infrastructure Consortium of Africa, 42 injunction, 11, 26n16, 27n17 in medias res, 149, 150; cocos and, 154–55; contractual and voluntary approaches and, 154–56; LIA and, 156; standstill and, 155 innovations, 167–68, 172n18 insolvency procedures, 253–55 See also Fair Transparent Arbitration Process insolvency trigger, 249 Institute of International Finance (IIF), 122–23, 153–54, 156, 219 institution, 226 institutionalization, xx; in legal framework, 223–25, 227–28 intercreditor fairness, 16–17 interdebtor inequities, Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development (G-24), 34, 44–46, 48, 49n1 international authority, 208 international bankruptcy law, 237–38 international bankruptcy tribunal, 237–39 international bond issues, 43 International Capital Markets Association (ICMA), xviii, 5–6, 11, 15, 109 See also ICMA CACs International Centre for Settlement of Investment Disputes (ICSID), 157, 257–58 International Commission of Experts of the International Monetary and Financial System, 25n7 International Court of Justice (ICJ), 241, 251n3 international debt commission, 64–65, 70 international debt court, 200 international financial institutions (IFIs), 208–10 international investment law, 241–44 international law, xxi, 250; enforcement of, 241–45, 247; landscape of, 242–46; resolution 69/304 and, 246–49; treaties in, 157, 242–43, 245–47, 258 International Law Commission (ILC), 248; Articles of State Responsibility, 243; Draft Articles on Jurisdictional Immunities of States and Their Property, 244 International Monetary Fund (IMF), 5, 20, 23, 25n2, 25n7, 81n1; Articles of Agreement from, 242; developing country sovereign debt and, 46; DSA and, 148, 158n3; Greek debt history and, 85, 104n3; ICMA CACs new model and, 120, 144; plan of, 146–47; role of, 208–9; SDRM and, 65–67, 72n8, 72nn13–14, 196–97; staff papers from, 147–49; “too little, too late” from, 146, 151; U.S and, 57, 66–67, 70, 145 See also Sovereign Debt Restructuring Mechanism international registry of debt, 202 International Swaps and Derivatives Association (ISDA), 28n32 interpretation uncertainty, 167 investor diversity, 38, 40 investor-state dispute settlement (ISDS), 258–59 ISDA See International Swaps and Derivatives Association ISDS See investor-state dispute settlement issuer’s documentation, 133 issuer’s intentions, 132–33 Italy, 243–44 Jamaica, 214 Japan, 233; courts in, 51n25; against resolutions, 145 Jeanne, Olivier, 172n17 junior creditors, 16 jurisdictions, 5, 16–18, 25n6, 28n29, 244; developing country sovereign debt and, 46–47 jurisdictions aggregation, 134 Kaiser, Jürgen, 153, 158 Kazakhstan, 109, 136n1, 171n1, 198 Kentikelenis, A., 261 Krueger, Anne, 56, 66, 110, 171n2, 196, 265 Lamers, Karl, 101–3 language, 144, 148–49 Latin America, 42; GDP of, 35; international bond issues in, 43; Peruvian debt in, 12, 27n21; SDR history in, 190–91 See also Argentine restructuring learning, 111–12, 136n2 “legal arbitrage,” 10 legal framework, 20–22, 28n36, 212–14; additions in, 229; enforcement in, 228; history of, 224–25; institutionalization in, 223–25, 227–28; institution in, 226; lessons for, 225; mandate in, 226–27; politics and, 225–26; of sovereign immunity, 12; substance of, 223–24; UN and, 225–26, 228; urgency of, 229 See also private credit legal framework legal identity, 51n30 legitimacy, 249, 250n1 lenders, 7, 26n10 See also creditor committees lending into arrears (LIA), 21, 156, 169, 183, 191, 201 liability management, 93–95 liaison office, xx, 226–28 LICs See low-income countries liquidity financing, 189 litigation, 21; in ICMA CACs evolution, 116–17 lobbying, 59, 59; against SDRM, 67–68, 72n10 local currency bonds, 38 local-law bonds, 134 Lock Law, 79, 82n7 London, 115 London Clubs, 41, 209; legal identity of, 51n30; in SDR history, 190–91 long-term creditors, 13 long-term debt, 36, 37, 50n7 low-income countries (LICs), 34, 50n2; MDRI and, 40–41, 50nn15–16; middle-income Caribbean countries compared to, 43; nonconcessional debt in, 41, 43 Maastricht Treaty, 101, 104n11 mandate, 226–27 Manuel Puig, José, 63 market-based approach response: equilibrium signaling and, 17–18, 28n30; existing contracts problem and, 16; intercreditor fairness and, 16–17; limitations of, 15–18; political economy and, 18 market-based contractual approaches, 44–46 markets, 6–8, 7, 26n9, 158n2; vulture funds and, 11–12 See also emerging markets and developing countries market to market bonds, 14, 27n22 McNamara, Robert, 224 MDBs See multilateral development banks MDGs See Millennium Development Goals MDRI See Multilateral Debt Relief Initiative mediation, 224 See also arbitration Mexican proposal, 63–64, 68–70 Mexico, 154; CACs in, 109–10, 114, 163–64, 197–99; New York-law bonds and, 137n13, 163 Middle East, 35 middle-income Caribbean countries, 44; LICS compared to, 43; vulnerability of, 41–42 military, 190, 202n1 Millennium Development Goals (MDGs), 259–60, 266 model language, 144, 148–49 model law, 217–18 “money center banks,” 210 Monterrey Consensus on Financing for Development, 199, 206 moral hazards, 66, 72n8; SDR and, 194–95; SDR framework and, 235; systemic stability and, 60–61 Multilateral Debt Relief Initiative (MDRI), 192, 212, 259, 266; LICs and, 40–41, 50nn15–16 multilateral development banks (MDBs), 201 multilateral framework: creditor rights and, 206–7; decentralization and, 208–9; ideal framework for, 214–15; implementation of, 219–20; international authority for, 208; political framework for, 210–12; private credit legal framework and, 212–14 multilateral framework process: consensus in, 216; PCA in and, 218–19; UN and, 215–16; UNCITRAL and, 217–18 multilateral treaty, 246–47 multinational legal framework guidelines, 20–22, 28n36 multiple jurisdictions, national legislation, 48 NBFI See non-bank financial institution negative real interest rate, 24n1 negative-sum games, Nesvetailova, Anastasia, 60 net present value (NPV): in Greek debt April 2015 proposal, 93, 96–97; in offer terms, 127, 224–25 neutral authority, 214–15, 255 New Development Bank, 233 New South Wales, 51n25 New York Convention on the Recognition of Foreign Arbitral Awards, 228 New York-law bonds, 134; Brady bonds and, 113; CACs and, 113–15, 136n4, 137n5, 137n13, 149, 198; engagement and, 135; English-law bonds compared to, 113, 130, 136n4, 195–96; ICMA CACs and, 113–15, 136n4, 137n5, 137n13; London and, 115; Mexico and, 137n13, 163; voting threshold and, 114–15 NGOs See nongovernmental organizations 1930s proposal, 63–64 1970s proposal, 64–65, 65 NML Capital, Ltd v Republic of Argentina, 11, 44, 157 non-bank financial institution (NBFI), 38, 50nn11–13 nongovernmental organizations (NGOs), 255, 259, 261–62 NPV See net present value Ocampo, José Antonio, 153, 158 offer terms: curve in, 127; embedded options in, 128–29; in ICMA CACs design, 126–29, 129; identical offer in, 126; NPV in, 127, 224–25; past-due interest in, 128; same offer/same instruments in, 126–28, 137n13; single-limb aggregation in, 126–27; voting no in, 128; zero-coupon bonds in, 128, 129 official credits, 133 O’Neill, Paul, 66, 196 optimism, 194, 264 options, 226–28, 231 Ortiz, Guillermo, 69, 72n14 overhang See debt overhang oversight commission, 22 pacta sunt servanda (agreements must be honored), 206–7, 242–43 Pagliari, Stefano, 59 Pam, Jeremiah, 78–79 Pan-American Conference, 63 Pareto optimality, 168, 172n20 pari passu clause, xvi–xvii, 5, 23, 45; Argentine restructuring and, 11, 15, 26n16, 27n17, 77–80, 82n4, 83nn6–7, 117, 148–49, 164, 198, 203nn3–4; ratable payments and, 164, 166, 171n5, 203nn3–4, 232 Paris Club, xix, 46, 51n30; emergency lending by, 189; LICs and, 40–41; mediation and, 224; official credits of, 133; in political framework, 211–12; role of, 50n16, 51n26, 209; SDF and, 47; in SDR history, 190, 192 Paris Forum of Sovereign Creditors and Debtors, 51n26 past-due interest, 117–18, 128 Paulus, Christoph, 208, 220n3 PCA See Permanent Court of Arbitration Permanent Court of Arbitration (PCA), xx, 218–19, 227 Peruvian debt, 12, 27n21 philosopher king, 214–15 Pienkowski, Alex, 28n35 Pitchford, Rohan, 171n14 PLL See Precautionary Liquidity Line Polanyi, Karl, 61 policies, 59, 61; countercyclical fiscal, 20; expansionary, 3, 24n1; from G20, 48 political economy, 24n1; as current problem, 13–14; market-based approach response and, 18 political framework: Asian financial crisis and, 210; Brady Plan in, 210; for HIPCs, 211–12; MDRI and, 212; for multilateral framework, 210–12; Paris Club in, 211–12 politics, 100–103; legal framework and, 225–26; SDR framework and, 235 pooling, 131–32 Portes, Richard, 195 Postova Banka v Greece, 243 poverty See Fair Transparent Arbitration Process; Heavily Indebted Poor Countries power, 59; structural, 58, 60–62, 72n7 See also creditor power; private creditor power power politics, 100–103 Precautionary Liquidity Line (PLL), 153 Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets, 45, 153–54, 198 Principles on Responsible Sovereign Lending and Borrowing, 153–54, 199, 215–16, 219, 246 private contractual approach, 16; sovereign debt contracts compared to, 15 private credit legal framework: bond contracts in, 212–13; diversity in, 213; multilateral framework and, 212–14; in U.S., 213– 14 private creditor power: relational power in, 58–59, 59, 72n7; structural power in, 58, 60–62, 72n7 private creditors, 57, 72nn5–6, 217, 255 private debt, private debt markets, 26n9 private party contracts, xx–xxi See also SDR framework private sector debts, 202 Private Sector Involvement (PSI), 85, 104n5, 263 Problem of Social Costs, The (Coase), 168 problems, 16, 234–36, 247 See also current problems progress, 264–66 property rights school, 168 proposals, 65, 65, 195, 255; in Greek debt history, 86–87; Mexican, 63–64, 68–70; for SDRM, 200–202, 203n8 See also Greek debt April 2015 proposal protection, 48 PSI See Private Sector Involvement public external indebtedness, 82n4 public international law See international law public policy: creditworthiness and, 61; relational power and, 59 Putin, Vladimir, 233 Raffer, Kunibert, 28n36, 158, 265 Raffer proposal, 255 rank, 78, 232 ratable payments: Griesa and, 164, 166, 171n5, 203nn3–4, 232; rank and, 78, 232 realism, 119–20 recent debate, 197–200 recent developments, 146–48; in cost reductions, 149, 150, 151–52; vulnerabilities and, 151–52 recessions, 3, 7, 22–23, 25n5, 85 reform, 6, 228 See also Fair Transparent Arbitration Process; ICMA CACs; proposals; Sovereign Debt Restructuring Mechanism Regling, Klaus, 93 rejection: Greek debt denial as, 99–100, 104nn12–14; of SDRM, 57, 68–71, 72n3, 72n14, 145, 197, 225–26, 234 relational power: in private creditor power, 58–59, 59, 72n7; public policy and, 59 remedy, 79–81, 254 reprofiling, 147, 157–58, 175 reputational theories, 62 resistance, 110 Resolution 69/304, xv, 5, 71n1, 233, 246–49 Resolution 69/319, 145 Resolution 69/L.84, xv, resource underutilization, restructuring objectives, 25n5; debt distress in, 7, 26nn11–14; default in, 6–7; efficiency issues in, 7–8, 26n15; equity issues in, 9; information imbalance in, retrofitting, 156–57 Richards, Mark B., 254 risk, 33 risk analysis, 14, 62, 229 risk-sharing contracts, 6–7 Rosenberg, Alex, 238 rule of law, 254, 257, 263 Russia, 233 Samaras, Antonis, 86 same offer/same instruments, 126–28, 137n13 SCDSS See sovereign credit default swaps Schadler, Susan, 148 Schäuble, Wolfgang, xvii–xviii, 101–3, 105n16 Schäuble-Lamers plan, 101–3 Schneider, Benu, 199–200 SDF See sovereign debt forum SDR See sovereign debt restructuring SDR framework, 231, 240; Argentine restructuring and, 232–33; context for, 233–34; moral hazards and, 235 SDR framework strategy: deficiencies and, 235–36; problems in, 234–36; solutions in, 236; substance in, 237–39 SDR history: CACs in, 195–96; HIPCs in, 192; in Latin America, 190–91; lending into arrears in, 191; London Clubs in, 190– 91; military in, 190, 202n1; Paris Club in, 190, 192; recent debate in, 197–200; SDRM in, 196–97, 203n2; voluntary reschedulings in, 191–92 See also Greek debt history SDRM See Sovereign Debt Restructuring Mechanism Second Circuit of Appeals, 12 Sen, Amartya, 100 senior creditors, 16, 27nn27–28, 148 series-by-series voting, xviii, 130; in ICMA CACs new model, 120–22, 165–66; in voting options, 124–25, 137n11 short-term lending, 14 single-limb aggregation, 109, 165–66; in offer terms, 126–27; in voting options, 124–25 See also two-limb aggregations Smith, Adam, 253, 265 SMP bonds, 93–94 Sobel, Mark, 112 social protection floor, 214, 216 Soederberg, Susanne, 67 soft law, xv, 216; Coasean World and, 169; compliance and, 242; developing country sovereign debt and, 47–48; hard law versus, 21–22, 24; informal norms as, 245–46; SDF and, 152–53 solutions, 236 See also proposals sovereign bond contracts, 109 sovereign bonds, 14, 27n27, 72n4, 109, 158n2; in EMDCs, 38, 50nn9–10; by sub-Saharan Africa, 41, 42 sovereign credit default swaps (SCDSS), 18–19 sovereign debt contracts, xviii–xix, 6; BITs and, 245; private contractual approach compared to, 15; sovereign immunity and, 244 sovereign debt crises, xiii sovereign debt forum (SDF), 202, 225; Coasean World and, 170, 173n28; developing country sovereign debt and, 47–48, 51n30; ex ante and, 152–53; Paris Club and, 47; soft law and, 152–53 sovereign debt markets, 26n9 sovereign debt restructuring (SDR), xiv–xv, 5, 25n4; contracts in, 193–94, 231; creditors and, 57–58, 72nn5–6; developing country sovereign debt and, 44–49; efficiency issues for, 7–9, 192–93; equity issues for, 9, 193, 250n1; ex post and, xiv, 4, 7–8, 156–57; framework lack for, xiii–xiv, 56–57, 71n2, 77, 189, 192; moral hazards and, 194–95; restructuring objectives for, 6–9, 25n5, 26nn11–15 See also private creditors; SDR history Sovereign Debt Restructuring Mechanism (SDRM), xvi, 56, 144, 171n2; aggregation and, 198–99, 203nn4–5; CACs and, 67–68, 70–71, 72nn11–14; case of, 65–69, 72nn8–14; creditor power and, 62–70, 196; IMF and, 65–67, 72n8, 72nn13– 14, 196–97; internalization and, 69–70, 70; lobbying against, 67–68, 72n10; proposal for, 200–202, 203n8; rejection of, 57, 68–71, 72n3, 72n14, 145, 197, 225–26, 234; in SDR history, 196–97, 203n2 See also SDR framework Sovereign Debt Workout Mechanism, 241 sovereign immunity, 63, 113, 203n3, 213; Argentine restructuring and, 244–45; hard law and, 21; legal framework of, 12; restoration of, 22–23 sovereignty, 255–56 Soviet Union, 224 Spiegel, Shari, 192 staff papers, 147–49 Standing Committee, 180, 185 standstills: contractual approach and, 171n12, 239; creditor committees and, 177; IMF and, 155, 169; independent institution and, 249; mandate and, 227; UNCITRAL and, 248 Statute of the International Court of Justice, 241 stays, 21, 265 See also standstills Stiglitz Commission, 199–200 Strange, Susan, 57, 60, 72n6 structural power: creditworthiness and, 61–62; in private creditor power, 58, 60–62, 72n7 subaggregation, 131–32 sub-Saharan Africa, 41, 42 subsidiarity, 214–15 substance: of legal framework, 223–24; in SDR framework strategy, 237–39 Sudreau, Marie, 241 supermajority, xviii; definition of, 15, 27n25; ICMA CACs and, 109–10; intercreditor fairness and, 16; voting thresholds and, 130 supervision, 180, 183–85 Supreme Court, U.S., xvii, 77, 213–14, 256 sustainability, 250n1 See also debtsustainability analysis systemic stability, 236; moral hazards and, 60–61 systemic waivers, 147–48 target, 87 tax revenues, 8, 256, 261; austerity and, 100; in EMDCs, 35; redemptions and, 104n4 Taylor, John, 110, 197 Teitel, Ruti, 242 temporary assistance See bailouts timeliness, 178, 229 “too little, too late,” 146, 151 trade and investment treaties, 157 transparency, 250n1 treaties, 157, 242–43; BITs, 245, 258; Maastricht, 101, 104n11; multilateral, 246–47 troika program, xvii, 86–88, 101, 104n9 See also Greek debt analysis Tsipras, Alexis, xvii, 100 two-limb aggregations, 111, 165–66; in voting options, 123–24 Ukraine, 122, 137n9 umbrella committees, 181, 186n7 UN See United Nations unanimity, 112–13, 115 unanimity rule, 11 unbalanced negotiation background, 13, 23 UN Basic Principles, 145, 153–54, 250n1 UN Commission on International Trade Law (UNCITRAL), xix–xxi, 230n3; arbitration from, 227; counterframework and, 247– 48; model law from, 217–18; multilateral framework process and, 215–16; standstills and, 248 UN Conference on Trade and Development (UNCTAD), xxi, 191; legitimacy of, 249; Principles on Responsible Sovereign Lending and Borrowing from, 153–54, 199, 215–16, 219, 246; Sovereign Debt Workout Mechanism from, 241 UNGA See United Nations General Assembly UN Human Rights Council (UNHRC), 220n11, 253 United Kingdom, 157, 172n18; American court and, 25n6; HIPCs and, 48; against resolutions, 145 See also London Club United Nations (UN), 199, 240; Basic Principles of, 145, 153–54, 250n1; developing country sovereign debt and, 46, 48, 51n28; legal framework and, 225–26, 228; multilateral framework process and, 215–16 United Nations Ad Hoc Committee on Sovereign Debt Restructuring Processes, 46 United Nations General Assembly (UNGA), 25n7, 111, 223; Resolution 68/304 from, 144–45; Resolution 69/304 from, xv, 5, 71n1, 233, 246–49; Resolution 69/319 from, 145; Resolution 69/L.84 from, xv, United States (U.S.), 12, 24n1; on Argentine restructuring, 25n6, 51n24, 77, 213–14; City of Asbury Park, 256; IMF and, 57, 66–67, 70, 145; private credit legal framework in, 213–14 See also Argentine restructuring; Bankruptcy Code, U.S.; Supreme Court, U.S urgency, 229 Uruguay, 116 Vietnam, 109, 171n1 Voltaire, 164 voluntary approaches See contractual and voluntary approaches voluntary reschedulings, 191–92 voting options, 128, 136, 235–36; bondby-bond vote in, 124; in ICMA CACs design, 123–25; series-by-series in, 124–25, 137n11; single-limb aggregation in, 124–25; two-limb aggregations in, 123–24 voting thresholds, 130; New York-law bonds and, 114–15 vulnerabilities: of middle-income Caribbean countries, 41–42; recent developments and, 151–52 vulture funds, 5, 27n25; Argentine restructuring and, xvi–xvii, 11, 26n16, 77; current problem of, 10–12, 26n16, 27nn17–20; description of, xiii–xiv; markets and, 11–12; protection from, 48; reform related to, 6, 228 Waibel, Michael, 242 warnings, early, 249 Wolfensohn, James, 266 World Trade Organization (WTO), 200–201, 203n8, 257 Wright, Mark L J., 171n14 write-offs, 14, 25n3, 27n22 Young, Kevin, 59 Zaire, 220n4 zero-coupon bonds, 131, 133; in offer terms, 128, 129 ... delays in the recognition of the problems It leads to the ? ?too little, too late” syndrome In some cases, there is too much lending—and too much suffering later on; in other cases, there may be too. .. 2016 “Private Creditor Power and the Politics of Sovereign Debt Governance.” In Too Little, Too Late: The Quest to Resolve Sovereign Debt Crises, ed Martin Guzman, José Antonio Ocampo, and Joseph... Robert “Toward a Framework for Sovereign Debt Restructuring: What Can Public International Law Contribute?” In Too Little, Too Late: The Quest to Resolve Sovereign Debt Crises , ed Martin Guzman,