Sovereign Debt Crises as Threats to the Peace: Restructuring Under Chapter VII of the UN Charter?
Goettingen Journal of International Law, 2012, vol. 4, pp. 153-175
23 Pages Posted: 8 Nov 2011 Last revised: 6 May 2012
Date Written: March 18, 2012
Recently, a growing amount of data suggests that there is an intricate relationship between sovereign debt and civil unrest. This article proposes that the powers of the UN Security Council, and in particular its experience with the imposition of sanctions, should be used in order to restructure sovereign debt before a situation aggravates and leads to the outbreak of civil unrest or an armed conflict. The proposal entails some intricate legal questions. First, it requires a reconsideration of Article 39 of the UN Charter, the threshold for the power of the Security Council to adopt binding resolutions. Second, conflicts of competence might arise between the Security Council and the International Monetary Fund (IMF). Third, the rights of the holders of sovereign bonds need to be respected.
Keywords: Sovereign debt, armed conflict, restructuring, united nations security council, holdout, peace
JEL Classification: F53, H56, H63, H81, H87
Suggested Citation: Suggested Citation