A Debtor Countries Club? The Cartagena Consensus reloaded

Abstract

This article addresses both the need for and the complexities involved in the organization of a club of debtor countries in Latin America and the Caribbean. It begins by explaining that sovereign debt crises are originated and managed in an asymmetric international scenario, which helps understand the scant progress that has been made in terms of coordination among debtor countries. This is followed by a description of the collective action problems that a possible coordination of sovereign debtors would entail, and then a description of the historical experiences of coordinated debtor countries -and possible lessons to be learned-, focusing on the efforts made with the so-called Cartagena Consensus. Some coordination efforts made in Africa are also presented. The article describes the current debt situation in the region and postulates that higher levels of coordination among debtor States would be conducive to facilitating the conditions for their development. Finally, it explains why concerted debtor States’ efforts to negotiate with their creditors would challenge neo-liberal paradigms, based on a remarkable asymmetry between sovereigns deeply indebted and going through financial turbulences, and their creditors; as well as on an absolutist view of the principle pacta sunt servanda (“agreements must be kept”) in financial affairs.