The Dynamics of the Two-Level Bargaining Game: The 1988 Brazilian Debt Negotiations

Abstract

This study examines the case of the Brazilian debt rescheduling agreement of 1988 as a two-level game in which each of the two main negotiators—the Brazilian state and the international bank advisory committee—must satisfy its own constituents while trying to negotiate an international agreement. It is argued that the interaction between the domestic and international levels must be understood in order to explain the outcomes of international debt negotiations. This article draws on Robert Putnam's concept of the two-level game in international politics and on a wider literature concerning the influence of domestic political considerations in international negotiations to demonstrate that such an analysis can explain the process and outcome of the 1988 agreement, where a unitary negotiating level fails to predict the final result. The two-level model explains how domestic constraints and opportunities affect international outcomes, and it highlights the importance of the ratification process.