Abstract

At the outbreak of the “international debt crisisµ in 1982, the Reagan administration reacted by preparing a “strategyµ that gave the IMF a central role in trying to prevent a chain of sovereign defaults which may have endangered big banks in the US and beyond. While most scholars have observed that Reagan’s policy was aimed at facilitating a “neoliberalµ turn in indebted countries, in the US the Reagan plan enraged a conservative front that interpreted it as a betrayal of laissez faire and, ultimately, of Reaganism itself. This essay examines the bitter battle that Reagan waged to have Congress and his own Republican Party accept his administration’s approach. The story shows how the Reagan response to the debt crisis came about as an attempt, in some ways improvised and pragmatic, to reach an uneasy synthesis between the administration’s idealistic predilections for the “minimal Stateµ and its need to rescue the U.S. (and international) banks.