Colin Donald
Scotsman.com
June 11, 2004

If this is the long-awaited Europe-US reconciliation on Iraq, it does not add up to much. While the Bush administration tried to build on the momentum offered by Wednesday’s UN vote by pressing ahead with measures to stabilise the new regime, his G8 guests in Georgia reached instinctively for the handbrake.

Buried as it was beneath the customary sonorous resolutions against generalised global ills, the failure to define the economic environment in which the new Iraqi government must operate counts as a significant failure.

The decision to fudge the question of how much of Saddam Hussein’s “odious debt” will be owed by the successor state may be of even greater long-term significance than Mr Chirac’s refusal to countenance a peace-keeping role for NATO. Along with neighbouring Gulf states, the French, the Germans, the Russians and the Japanese were especially generous in supplying credit and know-how to Saddam Hussein’s regime. The result is that Iraq’s debts are estimated between $90 billion and $120 billion.

What was reaffirmed at the Sea Island summit is that the most vocal creditors want at least half of their money back. Their argument is that as a potentially oil-rich state, why should Iraq be excused its obligations?

There are two answers to that; one is simply humanitarian and the other political and humanitarian. However much oil may lie under its sands, Iraq faces years of poverty and factional strife in its quest for a civil society. Struggling to provide basic services, the new government does not need a harsh repayment programme to intensify its problems. Repaying, say, the $5 billion that Saddam borrowed from the French government for the construction of palaces and nuclear power stations would handicap a weak player.

Admittedly, it is easy for the US and those who support its democratic aspirations for Iraq to make high-handed statements about the optimum fate of other people’s cash. For complicated, not necessarily honourable reasons, the US was owed relatively little by Saddam. President Bush’s attempt to bolster his troubled reconstruction effort by making Baghdad’s legal obligation to repay its debts disappear strikes some of his G8 partners as typically arrogant, unilateralist and hypocritical.

But not for the first time, European pique and strategic unwillingness to let the US have its own way in Iraq is blinding President Chirac and his sympathisers to a far greater good, with implications reaching beyond the Middle East. If the knee-jerk anti-Bush lobby see debt disagreement as just another episode in the knockabout transatlantic power game, then they are really descending into political decadence. They are letting slip a rare chance to have a conservative administration in Washington commit itself publicly to the principle of debt forgiveness, a shift with massive implications throughout the developing world.

With the mixed fortunes of their Iraq plan, and with their need for a successful aftermath verging on desperate, the Americans are for the first time showing themselves receptive to an idea that has existed only in the wilder fantasies of aid charities. Where once it would have bracketed it with the Kyoto Agreement and the International Criminal Court initiative, the Bush administration has suddenly found the movement to relieve the Heavily Indebted Poor Countries (HIPC) worthy of serious attention.

Led by the “Paris club” of creditor nations, HIPC advocates creating a timetable for the complete write-off of unpayable debts and is supported by the World Bank as well as virtually every NGO concerned with alleviating global suffering. It would improve the lot of 42 of the world’s poorest nations, many of them in sub-Saharan Africa. Many of these countries can use the argument, proposed by Washington’s Iraq hawks, that the debt was incurred by unlawful dictatorial regimes and thus counts as “odious”.

The second Gulf war and its aftermath are already being seen as a watershed in international relations, but so far not in any way universally agreed to be positive. If Iraq’s precarious post-war straits were to forge common cause between American power and the idealistic fervour of rock stars and activists in groups such as Jubilee 2000, then the Iraq story would have at least one indisputable happy ending.