Unpaid Debts: Rethinking the Causes and Consequences of Sovereign Default

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Countries have failed to repay their debts on time or in full throughout history. Existing research concerning such 'sovereign defaults' is typically based on quantitative data, however, which assumes short-term causes and consequences based on rational calculations of states' economic interests. Curiously, scholars and policymakers have not adopted qualitative methods to analyse such events in detail or context. As such, the longer-term and wider-ranging causes and consequences of sovereign default remain neglected, which distorts academic analysis and misleads governments seeking to avoid unpaid debts. My project adopts historical and case study methods to answer two questions. First, what are the longer-term and wider-ranging causes and consequences of sovereign default? Second, to what extent is it possible to generalize the non-economic causes of unpaid debts across history?The research project consequently divides into two parts. First, I will produce a book that presents the first historical analysis of one sovereign default--namely, the UK's failure to repay $4.2bn of war loans from America after 1933--to provide the most nuanced account of any unpaid debt to date. Drawing on six decades of archival material in both countries, and building on an earlier pilot-study, I will analyse the period from the end of World War I to the UK's return to the New York bond market in 1978. I will pay particular attention to political, diplomatic and social variables, in an effort to show that a focus on short-term economic measurements provides an incomplete and sometimes misleading account of default. I will document the default for both states by focusing on institutional changes concerning national finances, variations in key areas of transatlantic relations, and shifting national attitudes towards debt.Second, I will build on my archival research to produce an article in a leading journal that establishes and tests two novel and generalizable explanations for sovereign default by major economic powers. The consensus view within the International Relations and Economics literatures, which focus on rational calculations of a state's economic interests, is incomplete because default can serve other objectives. Defaults sometimes reflect domestic-political interests or shifts in national identities. Using secondary sources and published data to examine decision-making at the time, I will test my claims by examining case studies across the twentieth century where major economic powers failed to pay their debts. These case studies will also test my assumption that states tend to downplay the longer and wider consequences of default.It is an opportune time to conduct such research for two reasons. First, it is highly relevant to contemporary debates about debt. My work will inform the cost-benefit calculations of policymakers, whether they are considering lending, borrowing or defaulting. I plan to share key archival data in online and searchable data repositories to ensure that financial analysts have easy access to raw data to inform their own work. Second, the project coincides with the centenary of the end of WW1, thereby benefiting from growing interest in the consequences of the Great War and war debts more broadly. Building on this rising interest, I will encourage policymakers, scholars, and the public to rethink the orthodoxies of sovereign default. My research project will connect scholars in the humanities and social sciences, establishing me as a leader in the interdisciplinary study of sovereign default. I will then seek to reset the international research agenda by guiding research towards a wider range of variables and multiple methodologies. An AHRC fellowship would develop my leadership skills by allowing me to organise international events, gain project management experience, and expand my professional network. The fellowship would thus amplify the project's impact and support my career development.