Jihad Al Khazen
Dar Al-Hayat (Lebanon)
January 15, 2004

After his tour of Europe and Asia, U.S. envoy James Baker is supposed to visit Arab countries this month, in an attempt to convince them of lowering Iraq’s debts owed to them. Baker, a former Secretary of State, is expected to succeed with Arabs, as he did with Europeans and Asians.

But what is the size of Iraq’s debts? Is it forced to reimburse them entirely, or partially?

Concerning the first part of the question, I read all possible numbers, but the difference between an estimation and another, was so large that it questions the validity of all numbers.

The International Monetary Fund estimated Iraq’s debts at around $120 billion, of which around $40 billion for the 19 members of the ‘Paris Club.’ Reuters relied on this number in presenting details stating that Iraq owes Germany between $2 and $8 billion, France between $3 and $8 billion, Russia between $8 and $12 billion, and so on. As a reader, the difference between one number and another makes me suspicious of all numbers.

A famous British money house estimated Iraq’s debts at around $116 billion, saying that $41.5 billion goes to the Paris Club, and $45.5 to Middle Eastern countries, with specific details concerning the remaining debts.

In contrast, The Center for Strategic & International Studies at Johns Hopkins University estimated Iraq’s debts at $383,196,000,000. The detailed list of all debts ended with this massive number, and the study said that UN Compensation Commission received compensation requests at around $320 billion, in relation to Kuwait’s invasion by individuals, companies, governments, and international institutions. From a total of $148 billion of individuals and families requests for compensations, the commission agreed on paying $43 billion, of which it has already paid $16 billion.

These numbers are all scary, which brings to the second part of the question; the degree of Iraq’s commitment to pay back.

Most of Iraq’s debts fall under what is called “The Doctrine of Odious Debts,” which means illegal, and the opinion is legal in them, which is a debatable opinion, which states that the debts that have been accumulated by an illegitimate regime in a state, without consent and satisfaction of its people, and for reasons other than spending over one’s need, are illegal debts, and the future legitimate government is not bound to pay it.

If this is true, or if the international tribunal accepts this as an example, the Iraqi government, which came after democratic elections, is not responsible for debts of Saddam Hussein’s regime. People with this theory cite South Africa as an example: the Apartheid regime in it was half democratic, because democracy was applied only on whites and not blacks, while Saddam’s Hussein’s regime was totally illegal, and all countries of the world now admit that he was not representing his people.

Lawyers in support of this theory said that accepting the principle of illegal debts, is in the best interest of the country in debt, since it forbids other countries from supplying its illegal regime with money, in fear of not getting repaid, if it would be considered illegal when a government representing people takes place. Forbidding an illegal government from having debts is a strategy more successful than sanctions, since it prevents it from using money in oppressing the citizens of the country, while sanctions are easily transgressed, and once again, Iraq is a clear example on the ability of an illegal regime to fool it.

Some legal events that occurred in the past support this idea.

• In 1898, the U.S. was in the lead. During the peace negotiations that followed the Spanish-American war, the U.S. government supported the refusal of Cuba’s government of paying debts for Spanish colonialism: first because debts were enforced on the Cubans, without their consent, second because it was not used for the best interest of the Cubans, and third because civilians were conscious right from the beginning, about the threat on their investment.
• In 1921, the Soviet regime refused to pay the Tsar’s Russia debts, saying that people are not obliged to reimburse debts that were similar to chains that were alienating them for centuries.
• In 1923, Costa Rica refused to pay a debt for the Royal Bank of Canada, which was accumulated due to the loans of President Federico Tinoco. The refusal of the indictment by Former Chief Justice Taft is a proof that Tinoco was not democratic, but he annihilated religion because the banker knew that the future President Tinoco would use money for his proper good, after having escaped to another country. Even more important is the U.S. stance in nationalizing the Suez Canal in 1956, as it had supported Egypt in not paying for the former colonial countries, Britain and France, but I want to pursue my research on this issue, before discussing it in this column.

The following is not part of an opinion; these are data that come from some of the best judicial minds in the world, with registered encounters that happened. I think that Iraq is as tough, or even tougher than Cuba, and way tougher from the stances of Soviets or Costa Ricans, is whether an elected government will refuse to pay the debts that have piled up on Saddam Hussein’s regime.

Asian and western countries must be aware of the weakness of their stance, in case they decide to start earning their debts; this is why there is a fast responsiveness if James Baker asks to lower Iraq’s debts. Perhaps Russia’s stance is the clearest, since it is the weakest in the debts issue, as most of Soviet debts to Iraq, goes to armament, which w

ere used in military adventures that have wasted the region, or the deep inside of the Iraqi people themselves. This is why Russia quickly offered to let go of its debts, in order to guarantee the ongoing oil spending, which was signed by Saddam Hussein’s regime. So it is certain that its experts have told the government that paying debts is difficult, and might face judicial objections that might lead to its abolition.

In the end, I am writing a column, and not a legal opinion; there is an Internet page that talks about illegal debts, which the interested reader could benefit from. He will find that Iraq’s debts are not of a single type only, as the UN defined some, others reimbursed; while there are debts we could not hold an Iraqi democratically elected government, responsible for.