SOAS Research Online

Abstract

Assuming creditor countries that engage in debt diplomacy are seeking to reestablish equilibrium in a debtor country’s balance of payments via debt diplomacy, this paper seeks to understand the independent variables and conditions against which Western debt diplomacy would be more effective. To do so, the thesis adopts a qualitative case study approach, which is applied to case studies of the European Recovery Plan, Greece (2010-2015), and Lebanon (2015-2020). Drawing lessons from the European Recovery Plan as a form of successful debt relief, we conclude that strong internal and external trust relations are a necessary condition for successful debt diplomacy, and that deployment of a wide range of input variables—including certain diplomatic practices such as intellectual generalism, shared responsibility, and transnational polylateralism—can be highly effective at restoring equilibrium in the balance of payments. By contrast, the debt diplomacy deployed in the cases of Greece and Lebanon demonstrate how weak trust relations and a narrow set of independent variables can result in an unsuccessful outcome (i.e., a failure to reestablish equilibrium in the balance of payments). The thesis thus draws conclusions on the importance of strong trust relations and the use of a wider range of diplomatic practices as a means of improving the effectiveness of the debt diplomacy system.