Iraq's Odious Debts

Soros wants Iraq’s loans voided

May 13, 2003

Bank loans to Iraq and oilfield development contracts that were agreed to under the regime of deposed leader Saddam Hussein should be voided, billionaire US financier George Soros said.

“I personally would be very happy to see the old creditors of Iraq not getting paid,” Soros told a gathering at the Center for Strategic and International Studies here. “That would send a signal to the financial markets that it’s dangerous to deal with oppressive regimes.”

While there are no official figures, analysts estimate that the principal debt and interest owed by Iraq may add up to $US130 billion.

Speaking to reporters after his speech, Soros said he would extend any policy of not repaying loans to Russian and Chinese oil companies that signed multibillion dollar “sweetheart” contracts with Saddam to develop Iraq’s oil fields. Soros said those oil contracts should be reviewed and rebid if necessary.

United Nations sanctions imposed on Iraq after it invaded Kuwait, which led to the first Gulf War in 1991, restricted investment in Iraq’s oil sector. The United States now wants the UN to lift those sanctions.

Still, several oil companies from Russia and France signed oil field development contracts with Saddam, but the firms said they would not begin work until sanctions were lifted.

Russia, which is owed billions of dollars by Iraq for past arms deliveries, has a strong interest in Iraqi oil development. This includes a $US3.7 billion, 23-year deal to rehabilitate Iraqi oilfields, according to the US Energy Department.

Separately, Soros said the revenue earned from Iraq’s future oil exports should be managed by the United Nations. “Everybody has to be in favor of international, multinational supervision,” he said.

Iraq has the world’s second biggest oil reserves after Saudi Arabia.

Under a US proposal, Iraqi oil revenues would be deposited in a special fund at Iraq’s central bank. UN Secretary-General Kofi Annan would be a member of the fund’s advisory board, but the United States and Britain would, as “occupying powers” in Iraq, decide where to spend the money.

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