Ideologies of Globalization and Sovereign Debt: Cuba and the IMF
67 Pages Posted: 7 Feb 2006
This paper examines two fundamentally different perspectives when nation-states participate as creditors and debtors. The issue of sovereign debt - its character and effect - is really part of the much larger battle between two fundamentally opposed visions of the nature and character of the nation-states in general, and debtor states in particular, and of the global system that maintains the market for such transactions. The dominant vision, firmly grounded in private law, posits that growth can occur only in a tightly integrated global economy founded on trade liberalization, privatization, and macrostability. When the state fails to pay its debts, it ought to be treated like any other failed corporate enterprise - a stay on debt collection efforts, broad enforcement of absolute priority, creditor approval of the proposed reorganization plan, and well protected new interim financing pending restructuring. Opposing the dominant vision is an anti-corporatist approach grounded in public law and the subordination of economics and markets to political control in the furtherance of deliberate state public policy and planning. States fail because it is in the interest of dominant states to use sovereign debt as a means of perpetuating subordination and a hierarchy of power among states. When a state fails to pay its debts, the focus ought to be on the creditor, and the fairness of the debt in terms of the larger public policy concerns - development, and the maximization of living standards for all individuals through state planning. The paper first explores the normative foundations of each vision and its consequences for dealing with the borrowings of nation-states. For this purpose the paper concentrates on two actors who most starkly highlight the opposing views. For the dominant vision is focus is on Anne Krueger, the First Deputy Managing Director of the International Monetary Fund, and specifically on her proposal to create a bankruptcy model for sovereign state debt restructuring. For the opposing vision the focus is on Fidel Castro Ruz, the President of the Republic of Cuba and specifically on his elaboration of a critique of the dominant vision of global economic development championed by the IMF. These actors nicely distill the positions subject to analysis in this paper. The implications of each for the shape and character of international regulation, and of the state as an actor in the context of the emerging global system of economic and political regulation, are then explored. In particular, the paper contextualizes the Castro vision within the developing positions of a number of public sector institutions, from Latin American opposition ot the Free Trade Area of the Americas, to its use by the United Nations Human Rights establishment in Geneva to regulate transnational corporations, to its use by non-state actors in the West, particularly the Roman Catholic Church, to challenge, from within the West, the market driven system elaborated through the IMF and well illustrated by Krueger's proposal for a corporate bankruptcy style state discipline overseen by international regulatory agencies.
Keywords: Sovereign debt, IMF, Cuba, globalization, neo-liberalism, labor policy, immigration, Free Trade Area of the Americas
JEL Classification: E11,E63,F01,F10,F15,H10,H63,J24,J40,K33,O11
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