Gulf News Opinion Editorial
March 31, 2004

There is something deeply unsettling about the issue of Iraq’s debt. The country owes about $42 billion to the Paris Club, a group of 19 creditor nations. But that is not the full story. Estimates of Iraq’s indebtedness vary greatly, from $60 billion to several hundred billion dollars. The most comprehensive study of Iraqi debts, by the Centre for Strategic and International Studies, calculates Iraq’s total debt to be $127 billion.

If these figures are correct then Iraq’s financial obligations are 14 times its estimated annual gross domestic product of $27 billion – $16,000 per person. This in a country that currently experiences 50 per cent unemployment. Iraq’s financial burden is over 20 times greater than Brazil’s or Argentina’s, in a debt to GDP ratio, making it the developing world’s most indebted nation.

And it is known from bitter experience, democracy was strangled in Germany in no small part due to the massive debt the country had to pay off after 1918. Unless this debt burden is significantly reduced or better still eliminated, Iraq will find it impossible to undertake its responsibilities to its own citizens and the international community. The region and the world will have nothing to gain by impoverishing the Iraqi people at the very moment they expect and deserve their fortunes to improve.