More Detailed Description of My Main Present Research Focus: Sovereign Insolvency

Soon after August 1982 - which is traditionally considered the date when the debt crisis of the South started - the idea was advocated to use domestic insolvency as a model how to solve this problem. While economically feasible, however, international reorganisation pursuant to Chapter 11 of US Title 11 (Bankruptcy) or similar laws in other countries fails to address the important problem of sovereignty. As insolvency procedures for firms do, of course, not tackle the problem of governmental powers, it was rightly argued from a legalistic point of view that it cannot be applied to sovereign debtors. This argument is right as far as it goes, although emulating insolvency - as already suggested by Adam Smith - is economically feasible and indicated. In 1987 I therefore proposed to internationalise the basic features of the US Chapter 9. Designed and used for decades in the US to solve debt problems of municipalities, debtors vested with governmental powers, its essential points can be applied to sovereign borrowers immediately and without problems.

In 2001 the IMF's proposal of a model of sovereign insolvency - the so-called Sovereign Debt Restructuring Mechanism (SDRM) - stimulated discussion on sovereign insolvency, not least by breaking the taboo of considering insolvency for overindebted countries at the IMF. Unfortunately it is not going to work. Totally shaped by the IMF's narrow institutional self-interest it is simply a continuation of unsuccessful debt management since 1982. Strong reservations are therefore heard from creditors, including the US Treasury, debtors and NGOs. My most recent work thus focusses on showing why the SDRM - in marked contrast to my proposal - is unlikely to work. My publications can be found under "Selected Publications" on this homepage. Some (in English, French, Spanish, German) are downloadable via "Internet".

Co-operation: An affiliation with the New Economics Foundation, London, as a Senior Associate reflects my co-operation with its Jubilee Research programme. The NEF was named "Think Tank of the Year" in 2002 (our work on Chapter 9 was among the topics specifically mentioned in the application for this distinction). My Chapter 9 model and its effects were repeatedly discussed with the late Prof. Sir Hans Singer, with whom I co-operated for many years. Less formalised links exist with many universities and research institutions.

January 2007: invited by Prof. Joseph Stiglitz to participate in the “Shadow G8” project. 2008-2012: member of the Sovereign Insolvency Study Group of the Interna1tional Law Association; since 2012 member of the new Sovereign Bankruptcy Group of the International Law Association.

In 2010 I was awarded the title of Honorary Professor by the Universidad Nacional de Río Negro in Argentina because of my work on sovereign debts, and my insolcvency proposal in particular.

The Eurocrisis has refocused my attention on the necessity of a Sovereign Insolvency procedure for EU crisis countries.

31 August 2015: Great Distinction of the State of Carinthia (my homeland)

Selected Examples of Impact

a) Academic Literature

Among the publications discussing my model (mostly referring to my 1990 paper published in World Development) are:

Eichengreen, Barry (1999) Toward a New International Financial Architecture: A Practical Post-Asia Agenda, Institute for International Economics: Washington DC

Rogoff, Kenneth (1999) "Global Financial Instability: Framework, Events, Issues", The Journal of Economic Perspectives 13(4), pp.21ff

Dabrowski, Martin , Rolf Eschenburg & Karl Gabriel (Hg) (2000) Lösungsstrategien zur Überwindung der Internationalen Schuldenkrise (Volkswirtschaftliche Schriften, Heft 509), Duncker & Humblot: Berlin

Rogoff, Kenneth & Jeromin Zettelmeyer (2002) "Bankruptcy Procedures for Sovereigns: A History of Ideas, 1976–2001", IMF Staff Papers 49(3), pp.470ff

Martin Dabrowski, Andreas Fisch, Karl Gabriel & Christoph Lienkamp (Hg) (2003) Die Diskussion um ein Insolvenzrecht für Staaten, Bewertungen eines Lösungsvorschlages zur Überwindung der Internationalen Schuldenkrise, Duncker & Humblot, Berlin

P.K. Rao (2003) Development Finance, Springer, Berlin etc.

Brooks, Skylar, Martin Guzman, Domenico Lombardi & Joseph E. Stiglitz (2015) “Identifying and Resolving Inter-Creditor and Debtor-Creditor Equity Issues in Insolvency Debt Restructuring”, CIGI Policy Brief No.53 (January)

b) Parliaments:

In 1990 my proposal and a second (legal) expertise were submitted to the Bundesrat by Swiss NGOs. Switzerland tried to start a discussion with other governments. The matter has been taken up by MPs on later occasions. In 2002 I was invited by the Swiss Federal Ministry of Finance to discuss her and my models with A. Krueger in Geneva. On 21 January 2014 I was heard as an expert by the Foreign Policy Committee of the Swiss Upper House (Aussenpolitische Kommission des Ständerats) on the Government's Report replying to the Postulat Gutzwiller, which asked the Government to support a fair and independent international insolvency procedure.

The German Bundestag took it up repeatedly. In 2001 I was invited to the Hearing of its Committee of Finance on International Financial Markets, Debts, and International Insolvency Procedures on 14 March (my paper: An International Chapter 9 Insolvency for States). On 2 April 2003 I was again invited to the Public Hearing by the Committee on Finance and the Committee on Economic Co-operation on International Insolvency Laws and Preventive Policies against Financial Crises and in order to Stabilise the Financial System".

In 1997 my memorandum on the IMF and debt management submitted to the Treasury Committee of the House of Commons was published as Appendix 12 in its Fourth Report, International Monetary Fund. In two more recent submissions published as annexes and already available in the internet (links to the Parliament's website on my homepage) I also raised this issue.

I had the opportunity to discuss my ideas with Members of the European Parliament on 7 December 2005 as a guest speaker at the Workshop on the IMF in Brussels, and on 9 June 1992 at a Roundtable with MPs on international insolvency at Strasbourg.

In the US my proposal was incorporated into the "Global Development Resolution" initiated by Rep. B. Sanders ( for the 106th Congress, 1st Session).

On 14 March 2002 I was invited by an MP of the opposition party ARI to present my idea in the Auditorio Anexo Cámara de Diputados in the Argentine Parliament, Buenos Aires. The party drafted a bill demanding debt arbitration, and an Argentine NGO wrote a letter to the UN Secretary General asking him to help bring about an international Chapter 9. In September 2002 a Senate Resolution sponsored by Senator Raul Baglini and Senator Oscar Lamberto urging the government to propose a new mechanism for negotiating sovereign debts on the basis of Chapter 9 at the next Annual Meeting of the IMF was passed unanimously.

On 11 - 12 March 2003 I presented two papers on my model at an international Seminar Deuda externa: Propuestas para salir de la crisis in the Uruguayan Parliament (Palacio Legislativo). At this meeting an international initiative of Latin American MPs drafted the Montevideo Declaration calling for a fair and transparent arbitration procedure on debts. During its XXII Ordinary Session Period (31 March - 2 April 2003) in Bogota the Andean Parliament adopted Decision No. 1045 on the initiative of parliamentarian Freddy Ehlers from Ecuador, who had participated in the Montevideo Seminar. Its Article 1 demands renewed efforts for international debt arbitration.

20 September 2006: brief presentation and discussion on the topic IMF and Indonesia, invited by and with the Fraksi PDI Perjungan DPR RI, in the Indonesian Parliament, Jakarta.

c) UN/G7/EU

On 18 March 1999 I was invited to present my idea at a consultative meeting between the international Jubilee 2000 campaign, representatives of the G-7 governments and the Bretton Woods institutions on developing country debts in London.

I presented it at the Civil Society Hearings of the Initiative Financing for Development, UN, New York (6-7 November 2000; my statement can be downloaded from the UN-site via my homepage). In 2001 I presented Chapter 9 at the Workshop of the G24, New York. In January 2002 a paper of mine commenting on the SDRM and comparing it with my model was distributed by the G24 Secretariat to all Executive Directors of the IMF representing Developing Countries (links to both papers via "internet").

On 26 September 2002 I presented it at the Conference "Towards a Fair and Orderly Resolution to Debt Crises - A Conference to replace the Paris Club 'approach' with a formal mechanism for restructuring developing countries debt" in the IMF Center-Auditorium, Washington DC

On 11 November 2003 I was invited as a panel speaker on " Restructuring of Sovereign Debt – Where Does the Discussion Stand Today?", at UNCTAD's Fourth Inter-regional Debt Management Conference, Geneva; participant in the Roundtable "Debtor-Creditor Relations" of the UN's Multistakeholder Consultation on Sovereign Debt for Sustained Development: Isssues for Countries that Access Financial Markets, 7-8 March 2005, New York. Paper on "Delivering Greater Information and Transparency in Debt Management" presented at the Fifth UNCTAD Inter-regional Debt Management Conference, 20-24 June 2005, Geneva.

Paper “Structured International Debt Settlements (SIDS): Insolvency vs. Contested Claims” (reviewing recent evolutions regarding sovereign debts) presented at the Sixth UNCTAD Inter-Regional Debt Management Conference, Geneva 19-21 November 2007. UNDP Consultation Workshop on External Debt Avoiding the 2015 Debt Crisis, New York 29-30 May 2008 (Paper: “Proposals for Transparent Institutional Structures to Prevent and Resolve Future Debt Crises: The Potential of FTAP and Impediments”).

18 September 2008: speaker/discussant at the High Level Dialogue between the French Presidency of the European Union and European Civil Society to Prepare the Doha Conference on Financing for Development

30 September 2008: Panelist at the Side Event "Fair and Timely Sovereign Debt Workouts - Putting § 46 of the Doha Outcome Document into Practice" organised by Germany and the Government of Norway at the UN's Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus, Doha, Qatar

d) Courts of Law

My model was referred to in an amicus curiae brief submitted to the US Supreme Court in re Argentina v. NML Capital Ltd., et al, NO. 13-990, -991 on March 24, 2014 - Link to this document: please click

e) Civil Society

Many NGOs, especially the Jubilee movement (Erlaßjahr in Germany and Austria) have taken up my proposal. Quite often the formulation Fair and Transparent Process of Arbitration (FTAP) has been used recently to avoid the word insolvency, especially by Southern NGOs.

On 14 January 2002 I participated in a Round-Table on international insolvency organised by the Centre for the Studies of Financial Innovation (CSFI) and JubileePlus@NEF at the Corporation of London, Guildhall Complex. I presented a paper on my proposal at AFRODAD's (African Forum and Network on Debt and Development) Expert Meeting The Case for Establishing a Fair and Transparent Arbitration on Debt in Lusaka, Zambia (29 & 30 September 2004).

November 2014: Presenting the Raffer Proposal at the Conference Frameworks of Sovereign Debt Restructuring at Columbia University organised by Guzman, Ocampo & Stiglitz