Iraq's Odious Debts

Will the Iraqi people be allowed to rebuild their country?

Dr. Eric Herring
Bristol Evening Post
April 12, 2003

British soldiers in Iraq are distributing leaflets with this message from Tony Blair: “For the first time in 25 years you will be free from the shadow of Saddam. The money from Iraqi oil will be yours. It will no longer be used by Saddam Hussein for his own benefit and that of his regime. It will be used to build prosperity for you and your families.” The issue of whether Iraqis will be freed from Saddam’s debts is hotting up. There is now a group called Jubilee Iraq which seeks to unite people – whether they supported or opposed the US-British war – in campaigning to free Iraq from Saddam’s debts.

These debts certainly cast a long shadow over Iraq and will mean much of Iraq’s oil money will not go to Iraqis.

There are no precise figures available on Iraq’s debts. It appears that there is about $127 billion of loans made during the Iran-Iraq war in the 1980s (mainly Kuwait $17 billion, the Gulf states $30 billion and Russia $12 billion).

–à27 billion of compensation is owed to individuals for Iraq’s invasion of Kuwait, with further claims by corporations and governments and the issue of interest payments still to be decided by the UN.

Finally, Iraq has outstanding contractual obligations totalling $57 billion (mainly to Russia and the Netherlands).

In comparison, Iraq only managed to export about $11 billion worth of oil in

2002.

Although the US government has not made its position clear yet on Saddam’s debts, one of its spokesmen, Ari Fleischer, has said: “There are a number of nations that have money owed to them – owed by the state. The state will continue to exist.” This is the traditional legal view that, because debts are owed by states, changes of government do not matter.

However, at the end of the 19th century, Cuba gained independence from Spanish rule with US military support.

The US argued that newlyindependent Cuba should not have to repay money which they did not choose to borrow, which was not used to their benefit and which was even used to fund their oppression.

This kind of debt became known as “odious debt”.

Those who loaned the Iraqi dictator money gambled on getting it back at a profit.

Making them accept their losses would send an important message – fund dictators at your own risk, not at the risk of their oppressed citizens.

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