Credit Lending as Two-Level Game: Troika-Debtor Negotiations in the Eurozone

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The European financial and debt crisis has led to new patterns of coordination and cooperation between international financial institutions such as the International Monetary Fund (IMF), supranational organizations like the European Commission and the European Central Bank, private and public creditors and a number of European crisis countries. Coordination focuses on the negotiation of lending programs which tie the disbursement of loans to compliance with restrictive program conditionalities. So far, the dynamics of interaction between creditor coalition and debtor state have been studied for IMF lending to developmental and transformation countries in the Latin American debt crisis, the Asian crisis and the transformation of Eastern Europe. This project seeks to analyze the process of implementation of lending programs in four European countries (Greece, Portugal, Ireland, Cyprus) from the viewpoint of the debtor government. Drawing on the “Two-Level Game” approach we develop a model to study the discretion of the debtor in a negotiation shaped by power asymmetry.