Sovereign Debt and International Financial Control: The Middle East and the Balkans, 18701914 (Palgrave Studies in the History of Finance)

This book revisits an important chapter of financial history in the Middle East and the Balkans from 1870 1914. During this period, capital flows in the form of sovereign debt increased rapidly throughout the region. The spiral of heavy government borrowing eventually culminated in defaults on foreign obligations in the Ottoman Empire (1875), Egypt (1876), Greece (1893) and Serbia (1895). In all four cases, introducing international financial control over the finances of the debtor states became the prevalent form of dealing with defaults. The different cases of international financial control became increasingly refined and they marked important milestones in the evolution of the global governance of sovereign debt before 1914. For the defaulting states however, the immediate impact of international financial control was infringement of sovereignty. The extent of international financial control and the borrowing capacity of debtor states varied in each case as well as the degree of resistance towards it. This book documents the characteristics of international financial control in a comparative perspective. It relates sovereign debt, default and international financial control to political and fiscal systems, and raises questions about the tension between national sovereignty and global capital. It sheds light on the impact of international financial control on the long-term credibility and fiscal capacity of the debtor states in question. The author demonstrates that the governments' decisions to borrow internationally, and their attitudes towards international financial control, were heavily influenced by domestic political and fiscal factors. 1 Introduction2 Governing Sovereign Debt: Defaults And Enforcement, 1870-1914 2.1 Origins Of Defaults: Financial And Monetary Constraints 2.2 Costs Of Defaults: Enforcement And Conditionality 2.2.1 Direct Sanctions And Preventing Access To Future Credit 2.2.2 Protective Clauses And Bondholder Committees 2.2.3 Assignment And Control Of Future Revenues 2.3 Summary And Conclusions 3 From Financial Control To Colonisation: Egypt, 1862-19143.1 Khedives As Borrowers: Crisis, Default And Punishment 3.2 The Loss Of Political Sovereignty And Imperial Rivalry 3.3 Summary And Conclusions4 From 'Financial Barbarism' To Cooperation: The Ottoman Empire, 1854-19144.1 Lending To The Sick Man Of Bond Markets4.2 The Loss Of Fiscal Sovereignty And Cooperation4.3 Summary And Conclusions5 From Fiscal Control To Financial Supervision: Serbia, 1878-19145.1 A Newborn State Surrounded By Foreign Creditors5.2 Financial Control In A 'Land Of Monopolies'5.3 Summary And Conclusions6 From Financial Supervision To Political Resistance: Greece, 1879-19146.1 Financial Isolation And Settlement: A History Of Defaults6.2 Refining The Control And 'Mistrust' To Creditors6.3 Summary And Conclusions7 International Financial Control And Sovereign Risk7.1 Determinants Of Sovereign Risk Before 1914: A Critical Review7.2 Measuring Sovereign Risk: Sources And Methodology7.3 Structural Breaks In Spread: The Bai-Perron Test7.4 Summary And Conclusions8 Debt, Default And Resistance: Political Economy Of Ifcs8.1 Fiscal Capacity, Political Regimes And Tax Systems: A Review8.1.1 Taxation Vs Representation8.1.2 Direct Vs Indirect Taxes8.1.3 Political Regime Type And Public Debt8.1.4 Foreign Rule: Resistance Vs Cooperation8.1.5 Conclusion8.2 Varying Degrees Of Success And The Extent Of Control8.3 Political Institutions And Tax Systems In The Middle East And The Balkans8.4 Summary And Conclusions9 Conclusion Bibliography Data Appendix Front Matter....Pages i-xvii Introduction....Pages 1-8 Governing Sovereign Debt: Defaults and Enforcement, 1870–1914....Pages 9-28 Political Control and Military Conquest: Egypt, 1862–1914....Pages 29-52 Fiscal Control and Political Cooperation: The Ottoman Empire, 1854–1914....Pages 53-78 Control, Reform and Political Competition: Serbia, 1878–1914....Pages 79-99 Financial Supervision and Political Resistance: Greece, 1879–1914....Pages 100-122 International Financial Control and Sovereign Risk....Pages 123-151 Resistance vs Cooperation: Political Economy of International Financial Control....Pages 152-180 Conclusion....Pages 181-186 Back Matter....Pages 187-243 This book provides a history of sovereign debt, defaults and international financial control in the Middle East and the Balkans between 1870 and 1914