Iraq's Odious Debts

Iraq says UN must reduce reparations paid from oil

Khaled Yacoub Oweis
May 18, 2004

Baghdad: An Iraqi delegation will travel to the United Nations on Wednesday to demand full control of the country’s oil revenues and a cut in war reparations.

“Iraq must have a say in the next U.N. resolution,” Deputy Foreign Minister Hamid Bayati told Reuters on Tuesday.

“We will negotiate on the basis that Iraq must be fully in charge of its resource wealth and the five percent of oil revenues we pay must be reduced further,” he said in reference to reparations for the 1990 invasion of Kuwait.

Iraqi political leaders, including candidates to head the government due to take power at the end of June, say Iraq should not be liable to pay an estimated $300 billion of reparations for the 1990 Gulf War Saddam Hussein started.

They say the advent of an interim government when the U.S.-led occupiers hand over formal sovereignty on June 30 will give them political momentum to push their case internationally and respond to a population unhappy about seeing $20 billion of the country’s oil revenue paid as reparations already.

A U.N. resolution a year ago reduced war reparations from 25 percent of oil proceeds to five percent. A new resolution is expected to set terms applying after handover of sovereignty.

Bayati said Iraq should not be held accountable now for wars waged by Saddam Hussein in which the people had no say and for which they suffered and had paid enough already.

“Iraq seeks to cancel debt and reparations incurred by Saddam. The next sovereign government will be under domestic pressure to do the same,” Bayati said.

Government review

Planning minister Mehdi al-Hafedh, a candidate for the prime minister’s post in an interim government to lead Iraq to elections scheduled for January, said the government would review the debt and reparations.

Iraq had no say in calculating them and Iraqi officials had not seen documents proving the claims, he said.

“Legitimate demands have to be respected, but it is unjust for Iraq to pay for the crimes of Saddam with its future,” Hafedh said.

“Iraq has a serious challenge ahead as far as unemployment and the economy are concerned. The international community must be mindful of the immense problems were are facing,” he added.

The sentiment is echoed across the ethnic and political divides that mark postwar Iraq.

Governing Council member Ahmad Chalabi says a council which includes former opposition figures should be formed by July to decide policy on reparations and another $120 billion of debt.

Chalabi and other officials say the reparations, estimated to be largely owed to Kuwait and Saudi Arabia, are unfair.

They say these countries benefited by producing more oil when Iraq was prohibited from exporting any from 1990 to 1996 under an economic embargo.

Iraq exported 3.2 million barrels per day before the 1990 Gulf War, but exports are now down to 1.8 million bpd as the crippling embargo limited ability to maintain infrastructure.

Under last year’s U.N resolution, Iraq’s oil revenues are deposited in a Federal Reserve Bank of New York account controlled by the United States.

The next Iraqi government is expected to have control of expenditures, but U.S. officials want an international board monitoring the accounts to remain in place.

Iraqi crude oil sales since last year’s U.S.-led invasion reached more than $9 billion, which was deposited in the Development Fund for Iraq.

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