For some, such as the NAFTA (North American Free Trade Area), regional integration is based on establishing free trade zones. For others, such as the AU (African Union) and the EU (European Union), regional integration is based on political and economic cooperation (Sore, 2010).
With the trend of regional and global integration, one of the emerging concepts is sovereign debt borrowing. Under this concept, a country can borrow a loan from another country or institutions. For example, a country that is experiencing financial problems such as growing budget deficits has the option of sovereign debt to address the problem. Some of these institutions include the World Bank, EU, and IMF (International Monetary Fund). Foreign debts are supposed to be paid as per the agreement. However, there have been cases of defaults in repayment. Usually, a country that is unable to repay its foreign debts on the agreed date can renegotiate the deal for an extension. The renegotiation option is not always a guarantee. A foreign debt default can cause adverse implications for the affected countries. In the past, such defaults have resulted in military invasions such as when the US occupied Haiti in 1915 (Huang, 2014). There have various foreign debt defaults since 2000. Some of these include:
Apart from these cases, one of the largest and most recent foreign debt default occurred in 2012. Greece defaulted on its $138 billion foreign debt, which became the all-time biggest foreign debt default (Huang, 2014). The purpose of this paper is to present an in-depth analysis of the Greece sovereign default. The paper will present a detailed discussion of how the default came to be, what factors and actors contributed to it, the reactions of different stakeholders, the lessons drawn, and the way forward. The paper will present a background of the Greek debt crisis,