Abstract
<jats:title>Abstract</jats:title> <jats:p>Peru was a strange case of two semi-successful agreements in 1968 and 1969 and one failed one in 1971. Refusing a German suggestion to use the Paris Club, the Peruvians first conducted a pseudo-London Club process run largely by themselves. With an initial legitimate crisis and government degree powers, Peru obtained a hardline agreement. A new military government then demanded debt finance for development but had a weak BOP case and was aggressive and in a hurry, to the extreme irritation of the creditors. A second round included an odd meeting in Lima that was deadlocked until the head of the IMF delegation made a private proposal of his own. On sovereignty grounds, Peru rejected having an on-track IMF stand-by agreement before a completed debt deal, and the creditors failed in their efforts to strengthen this central norm. Eventually, a second agreement was obtained in a Brussels meeting, hosted by Belgium, but again without an IMF program. No agreed minute was achieved, only a summary of the meeting, which was used for negotiating bilateral agreements. The French strenuously objected to everything until a third round quietly ended up in the Paris Club. The French set out to use Peru’s weak case to have the process fail in order to send a message to other debtors. Private banks played an important role in Peru’s case. Germany was the largest participating creditor, and the United States did not participate due to expropriation issues.</jats:p>