The Paris Club handbook provides information and analysis needed to better understand the Paris Club
Plateforme Dette et Développement’s new Paris Club handbook provides information and analysis needed to better understand the Paris Club – how it operates and what its role is in the landscape of sovereign debt restructuring. The handbook’s goal is to encourage involvement by civil society organisations in monitoring this forum, which is crucial in the current discussions on debt crisis resolution.
The first part of the handbook explains the background of the Club – notably the way in which it has established itself as an inescapable player in debt restructuring – and presents its guiding principles. It sums up the different stages of a negotiation and presents a synthesis of the range of forms for treating debt (the ‘terms’) that may apply to the claims of a State requesting its intervention.
The second part takes a more critical look at the Paris Club. Indeed, underlying the promises of ‘coordinated and sustainable solutions’ to debt distress, we can see that the conditions inevitably imposed on the debtor countries in fact defend the specific interests of the creditors. The Paris Club acts as a judge in its own case. It operates in utmost opacity, and its members deny that they share responsibility with the debtors in the process of debt accumulation. Over the past four decades, the members have failed to resolve debt distress, and done even worse to prevent crises. Despite mobilisation by civil society and appeals by many United Nations bodies, the Paris Club and the international financial institutions still refuse to put human rights above the rights of creditors.
The third part raises the question of the future of the Paris Club, in a new context of international debt. Indeed, its ability to coordinate major creditors is being undermined by the emergence of new bilateral lenders which are not members of the Club, as well as by an unprecedented increase in bond indebtedness on the capital markets. The Paris Club is multiplying initiatives to maintain its influence, while the risks of a new debt crisis in developing countries increase bit by bit each day.
Through this handbook, the French Debt and Development Platform shows that the Paris Club is definitely not the right body to deal with this new situation. The creation of a multilateral mechanism for sovereign debt restructuring is more necessary than ever.