Iraq's Odious Debts

Cancel Iraq’s odious debts first, donors conference told

Probe International and German Jubilee
PRESS Release
October 22, 2003

Prague: Debt relief groups have urged Iraq’s debtors to adhere to a 100-year-old legal principle to resolve Iraq’s debt crisis and assist reconstruction efforts when they meet tomorrow in Madrid.

Probe International of Canada and the German Jubilee campaign say that donors should abide by the doctrine of odious debts and accept that their loans to the regime of Saddam Hussein are likely not valid and that they cannot expect repayment from the Iraqi people. The best way for donors to help the Iraqi people rebuild their country – the purpose for which the Oct. 23 and 24 meeting in Madrid has been arranged – is to investigate those debts and write them off if they were used for weapons, instruments of repression, or for corrupt purposes, they say.

Should any of the debts prove to be valid because they benefited the people of Iraq, donors could consider relieving the Iraqi people of those claims on humanitarian grounds.

According to the best available data, Iraq is the most heavily indebted country in the world with total claims against it at US$383 billion. At 1200% of GDP, this makes Iraq 12 times more indebted than Argentina.

Groups concerned with Iraq’s debt issued a statement when they met last week at the Bridging Global Gaps Conference, organized by the Czech Republic’s former President Vaclav Havel. According to Patricia Adams, director of Probe International and author of Odious Debts, “In all likelihood, the bulk of Iraq’s debt complies with the legal criteria that constitute odious debts: it did not benefit the people; the people were never consulted when the debts were incurred; and the creditors knew well that they were lending to a dictator.”

Participants of the Prague Conference demanded forensic audits into the validity of Iraq’s debt. A debt conference was also called for at which stakeholders, and especially Iraq’s civil society, could make their case regarding repayment of the debts incurred by Saddam Hussein’s regime. Jürgen Kaiser, co-ordinator of the German Jubilee debt network erlassjahr.de, said, “Non-governmental organizations have demanded a fair and transparent arbitration process to solve Iraq’s [ADD debt] problem, leaving the decision in the hands of an impartial institution instead of those creditors who had extended the questionable loans. An Iraq debt conference would be the first step on that way.”

This view is echoed in Iraq, a recent consultative mission by Jubilee Iraq confirms. Iraqis interviewed by Justin Alexander of the London-based Jubilee Iraq in September and October – representatives from more than two dozen organizations, including political parties, Ministries of Finance, Oil, and the Central Bank, civic leaders, academics, and religious leaders – expressed the view that most of Iraq’s $383 billion debt is odious and should not be repaid. They view the debt negotiation process, overseen by the Paris Club and IMF, with suspicion and do not believe that these institutions could produce a fair settlement of the debt. Most said they would like to see an arbitral process adjudicate on whether debts were odious or not, and to decide on repayment terms. Oil Minister Bahr Al-Uloum said he favours a case-by-case assessment of the legitimacy of each loan by a panel of judges.

According to the Iraqi Prospect Organisation, “When Saddam executed people, he used to charge their families for the bullets used – this is precisely what the creditor countries who financed Saddam are asking of Iraqis today.” Those interviewed by Jubilee Iraq felt that Saddam’s debts posed one of the most critical issues for their country and failure on the part of creditors to find a fair solution would threaten their country’s political stability and prevent their economic revival.

FOR MORE INFORMATION:

Torsten Esser, erlassjahr.de media desk, Tel. 49-221-4693196
Jürgen Kaiser, erlassjahr.de, Tel. 49-173-2919374
Patricia Adams, Probe International, Tel. 1-416-964-9223 (ext. 227)
Also see: https://journal.probeinternational.org/odious-debts/

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