GEG WP 2016/121 “Countries Don’t Go Bankrupt”: Sovereign Debt Crises and Perceptions of Sovereignty in an Era of Globalisation

Abstract
This paper seeks to contribute to the debate on the impact of globalisation on sovereignty by analysing how sovereign debt crises affect perceptions of sovereignty in the countries where they occur. I argue that sovereign debt crises are perceived as threats to sovereignty by citizens and politicians due to the debtor government's inability to simultaneously meet expectations of internal and external sovereignty. I study changes in perceptions of sovereignty rather than using more conventional means of analysing sovereignty in order to take into account sovereignty’s social context. The perceived loss of sovereignty in sovereign debt crises is important as it can undermine the legitimacy of the debtor government and of the international lenders involved in the crisis. I test this argument in three case studies ‒ sovereign debt crises in South Korea, Argentina and Greece ‒ using media analysis to gauge perceptions of sovereignty. In tracking changes in the discourse on sovereignty throughout the crises, I find support for my argument in all three cases. Finally, I explore the implications of my argument for proposed alternative mechanisms of managing sovereign debt at the international level.