France's Debt Holders, A Telling Indicator

France does not disclose which countries hold its public debt, unlike the United States for example, which publishes precise figures. We do know, however, that France — through its banks and financial institutions — holds $283 billion in U.S. federal debt, which is not insignificant. The Ministry of Finance claims this information is public, as Bruno Le Maire recently insisted once again. That is false. The Agence France Trésor (AFT), the branch of Bercy in charge of issuing and managing state debt, does not provide any figures. And yet, this information is crucial from a geopolitical standpoint!

According to AFT’s latest monthly bulletin, 54% of the State’s debt is held by “non-resident” investors, in their terminology — that is, foreigners (page 3). This amounted to €2.429 billion as of December 31, 2023. This refers strictly to the State’s debt. Public debt in the broader sense, the so-called “Maastricht debt” (including social security, local governments, and public institutions), as calculated by INSEE, reached €3.159 billion in March 2024. For reference, the “Other” category (27.2%) corresponds to the Banque de France, as part of the sovereign debt purchases initiated by the ECB during the Covid crisis (in practice, the printing press was switched on to create the money needed to buy Treasury bonds.

The Agence France Trésor has just released its 2023 annual report (if you’re looking for some summer reading, though there are more exciting options), but there is no trace of which countries actually hold French debt… However — and this is a crucial clue — the report does provide a list of countries visited: “In 2023, the AFT met investors from 20 countries in 2023 to promote French Treasury securities and France's credit” (page 14). These are, in all likelihood, the main buyers or prospects. We’ve regrouped them by continent:

• Asia: Australia, Cambodia, China, South Korea, India, Japan
• Middle East: United Arab Emirates, Qatar
• Europe: Austria, Spain, Italy, Luxembourg, Netherlands, Portugal, United Kingdom, Romania, Switzerland
• Americas: United States, Mexico
• Africa: Morocco

This is quite interesting. Europe dominates in terms of number of nations, which is logical since eurozone countries naturally lean toward euro-denominated debt, avoiding currency risk. But the presence of the United Kingdom and Switzerland is noteworthy, as both benefit from having their own currencies. Why would Spanish and Italian banks buy French debt when their own countries’ debt is plentiful and yields more? Some clarification from AFT would be welcome here. Let’s assume it’s a matter of diversification. Note also that Bercy does not shy away from promoting itself in a tax haven (Luxembourg), which shows an undeniable open-mindedness.

The major Asian economies are present (with Cambodia clearly just a prospect). These countries — especially China — run trade surpluses with France. They therefore accumulate euros, which they reinvest in our debt. Logical enough. This gives Beijing a potential lever it can use at will…

From PSG to real estate to the CAC 40, Qatar’s interest in France is well-known. This adds yet another layer to that interest. Truly an ongoing romance. Little known fact: France has a permanent military base outside the African continent, located in Abu Dhabi, in the United Arab Emirates. Ties are therefore very close indeed.

As the world’s leading financial hub, the United States is of course on the list, along with Mexico… Narcos may be looking to diversify their holdings so as not to depend solely on the dollar.

The world’s top producer of cannabis resin, Morocco generates $12 billion in annual revenue according to Wikipédia — or rather euros, since the destination market is Europe — and naturally some of it needs to be invested somewhere.

In short, this list sketches out a geopolitical landscape that already reveals a lot, highlighting certain weaknesses or dependencies, even without knowing the exact amounts…

Let’s draw a discreet veil over it.