Argentina’s 2001 Default: Foreign Policy Considerations and Consequences

Joshua K. Alley '15, Gettysburg College

This paper was written for the International Bridge Course, Spring 2014, and was funded by the Mellon International Bridge Course Grant.


Argentina’s 2001 default was at the time the largest in history, as the Peronist government of Adolfo Rodriguez Saa declared a cessation of payments on over 80 billion dollars in government bonds. Historically, the political science and economics literatures have emphasized the economic considerations surrounding the decision to default. Recent literature has explored the political motivations for default, but there has been little scholarship on the possible political consequences of default. Some authors have emphasized that default can have important audience costs for leaders, but other issues have been left unexplored. This study argues that Argentina’s 2001 default had important consequences in the international political arena, as it departed from the international norms surrounding default and served as a clear signal of Argentina’s shifting international orientation.