11:00 - 13:15
Thursday-Panel
Chair/s:
Jonas Bunte
Discussant/s:
Thomas Sattler
Meeting Room G

Matthew Digiuseppe, Alexander Slaski, Patrick Shea
Discounting Government Debt: Individual attitudes towards debt reduction in Brazil

Kathleen Brown
Determinants of China’s Hidden Overseas Lending

Jonas Bunte, Burak Giray, Patrick Shea
Selling Sovereignty: International Coercion, Debt Diplomacy, and Land Transactions

Barry Maydom, Ana Isabel Lopez Garcia
Migration, Remittances and the Fiscal Contract
Selling Sovereignty: International Coercion, Debt Diplomacy, and Land Transactions
Jonas Bunte 1, Burak Giray 2, Patrick Shea 2
1 University of Texas at Dallas / Vienna University of Economics and Business
2 University of Houston

What if countries cannot repay their loans to other countries? Existing research concentrates on the decision to default or not. In addition, much work has examined how states restructure debt or seek debt relief. We consider an additional debt management strategy: repaying loans with land. When Sri Lanka found itself unable to repay a loan in 2015, it granted China a 99-year lease for a deep-sea port in return for a significant debt reduction. We examine the political dynamics that lead to such debt-for-land deals. We focus on the trade-offs implicit in the various policy options available. Our theory concerning debtor countries predicts that the political strength of interest groups shape the likelihood that governments consider selling land. Our statistical analysis suggests that an increase in political influence by Finance is associated with an increase likelihood of austerity measures and land deals but reduces the likelihood of default. In contrast, an increase in political influence by Labor lowers the likelihood of austerity measures and land deals, while default becomes more likely. We make three contributions. First, we develop a novel theoretical framework to simultaneously analyze governments' choice among four interdependent debt management strategies (repayment, default, debt relief, and land deals). Second, we assembled a new dataset capturing instances in which governments voluntarily ceded control over land to other countries, totaling over 1,500 of transactions. Third, our study sheds light on how debtor governments attempt to protect political sovereignty in a context of economic pressures.