|
|
|
Map of South America Map of Middle East |
Email this citationCIAO DATE: 08/05
What Iraq and Argentina Might Learn from Each Other
Anna Gelpern
June 2005
Abstract
Financial collapse usually triggers a flurry of market, academic, and policy innovation.1 The Latin American debt crisis of the 1980s produced the Brady Bonds and led to the rise of today's emerging markets. In the late 1990s, crises in Pakistan, Ecuador, and Ukraine helped teach the markets how to restructure international sovereign bonds.2 Crises in Mexico, Russia, Brazil, Turkey, and throughout East Asia raised doubts about the international system's ability to manage vast and rapid capital flows, and prompted a big-picture reassessment under the rubric "international financial architecture." This included most famously the sovereign bankruptcy proposals discussed elsewhere in this volume.
The sovereign debt workouts now underway in Iraq and Argentina continue this trend. Each country is trying to restructure more than $100 billion in defaulted external debt this year-perhaps before this Essay goes to print. Each may fail, leaving the debts unresolved for years. A full study of the law emerging out of the two restructurings must await their completion, and will likely take volumes. This Essay focuses on several early data points that Iraq and Argentina offer for the law of sovereign debt, and suggests lessons that the two cases might hold for each other and for future restructurings.
