It is reported that Ranil will announce his candidacy for the presidential election after completing the debt restructuring. He has high hopes for Sri Lanka’s debt restructuring. Foreign Minister Ali Sabri says that US Dollar17 billion debts can be cut by restructuring. Ranil will try to show this as his big win. However, debt restructuring is not easy to complete. Sri Lanka could not have come so far in terms of debt restructuring if the French President as a chief of the Paris Club did not support Sri Lanka’s debt restructuring.
US State Department Assistant Secretary Donald Lu, who is visiting Sri Lanka, had previously said during his visit to the Maldives that Sri Lanka would not have been able to recover economically without the support of India and France. If America and France had not intervened in the Hamilton case of Hamilton reserve bank bondholders against Sri Lanka, Sri Lanka would have been stuck in the matter of debt restructuring. The Paris Club’s intervention in that case is a crucial moment in Sri Lanka’s debt restructuring. How France and Britain intervened in the Hamilton case through the Paris Club is stated in a National Law Review article.
“In support of Sri Lanka’s position, the United Kingdom and France, as members of the Paris Club (but who also happen to be creditors), filed an amicus curiae brief (“Paris Club Brief”). In the Paris Club Brief, the U.K. and France argued that a judgment in favour of Hamilton Bank before the completion of the restructuring process would jeopardize ongoing negotiations by creating an incentive for holdout creditors to not participate in those negotiations. They also acknowledged that Sri Lanka had consistently engaged in good faith to facilitate the restructuring process, including by facilitating the formation of a creditors’ committee and engaging early with creditors”.
Fortunately for Sri Lanka, the French president came forward to help countries that were bankrupt due to debt after COVID-19. He also called an international summit for that, and the President of Sri Lanka also participated in it. The friendship between the French president and China strengthened France’s ability to intervene in the debt crisis. When it was difficult for Sri Lanka to take IMF facility due to China’s position, on debt restructuring France gave Sri Lanka a helping hand to get an IMF facility.
China was also happy that France played an active role in Sri Lanka’s debt. China does not have good relations with Sri Lanka’s other creditors, India and Japan, as well as the United States, which is helping Sri Lanka to recover from the debt crisis. Because of this, China thought that intervening by France to find a solution to Sri Lanka debt crisis would bring change to the balance Indo-Pacific power game.
China, India and Japan are making decisions regarding Sri Lanka’s debt restructuring considering geopolitics. France has no such special geopolitical interest in Sri Lanka. This is why France can put conditions on Sri Lanka’s democratic rights, human rights and minority rights to complete the debt restructuring. America is also helping to restructure the debt with China in mind. Only France can put aside China and pressure Sri Lanka to stand up for democratic rights.
