Africa

Resolution prepared for the Iraqi National Assembly

November 22, 2004

The Iraqi National Assembly has agreed to support a recommendation by its Economic and Financial Committee (EFC) to repudiate the odious debts incurred by Saddam Hussein.

“In the Name of God the most Merciful and most Gracious . . .”

Recommendation of the Economic and Financial Committee (EFC) to the Iraqi National Assembly (INA), the Interim Iraqi Government and to the Iraqi People on the External Odious Debts (OD) and Reparations inherited from the tyrannical Saddam Regime.

The EFC of the INA addresses this recommendation to the INA and to the Interim Iraqi Government and to all the Iraqi People. We request that the Assembly adopts this recommendation and makes a commitment to implement the points detailed in section four, in order to guarantee the strategic interests of Iraq and its future political and economic development.

This recommendation has been constructed with reference to the latest developments in the external debts of Saddam regime, following the review by the EFC of many documents. This National Assembly has a responsibility to the Iraqi People to protect their current and future interests. These interests are threatened by the Paris Club cartel of creditors which refuses to accept that any of the debts are illegitimate, and is attempting to get Iraq to sign, before the end of the year, an agreement to repay a significant portion of the odious debt.

First: Introduction

The previous regime accumulated a heavy burden of foreign debts to states which financed the tyrant’s wars against his people first, and then against our neighbors. The foreign loans helped him build a huge military apparatus and manufacture weapons of mass destruction, including chemical weapons which he used against the Iraqi people in Halabja. The loans supported his system of oppression and paid for his palaces and prisons during the war against Iran when Iraq’s oil revenue was extremely low. The debts are estimated to be around US$130 billion, of which US$45 billion is claimed by the governments that form the Paris Club, around $15 billion is claimed by foreign banks and corporations and about $70 billion is claimed by other governments. In addition to that, there are US$31 billion of unpaid reparations awarded by the UN Compensation Commisson to Kuwait and others and a further $71 billion of unassessed claims, mainly the Kuwaiti “environmental” claim. There are also reparations claims from Iran (which have no established legal status) of US$97 billion. Iraq has already paid $19 billion in reparations through the UNCC, including $2 billion since the fall of the Saddam regime, and under the current system will continue paying 5% of all oil revenue in reparations for decades.

Second:

There is a strong basis in international legal principle and precedent to define these debts as being “odious” and thus not legally enforceable. This legal doctrine of odious debt was formulated in the 1920s by Alexander Sack, a former Russian Minister working as a legal professor in the Sorbonne University in Paris. He published the most extensive and important works on the treatment of state debts in the event of regime change. He defined an odious debt this way: “if a despotic regime contracts a debt not for the needs or in the interest of the state, but rather to strengthen itself, to repress the population that fights against it, etc., this debt is odious for the population of the state,” and he continues: “The creditors have committed a hostile act against the people. They can’t therefore expect that a nation freed from a despotic power will assume these “odious” debts . . . the debt consequently . . . falls with the fall of this regime.”

Fourth:

There are many historical examples of odious debt repudiation, including Mexico in 1867 after a Habsburg attempt to rule Mexico, Russia after the Bolshevik revolution, Cuba after the Spanish-American war in 1898 and Britain after the Boer War. The clearest examples of legal precedent are firstly the Versailles Treaty of 1919, which ruled that Poland was not liable to repay German loans which financed the purchase of land in Poland by German colonialists. Secondly, Costa Rica passed a law repudiating the debts of the previous tyrant Federico Tinoco to the Royal Bank of Canada. Britain requested an arbitration by a US Supreme Court judge. His judgment read, “. . . the new government can not be held responsible for the funds spent by the tyrant for his personal purposes.” Other clear cases of odious debt in recent years include Rwanda, Congo, South Africa, Argentina, Nigeria and the Philippines.

Points of implementation as regards external debts:

(1) The EFC recommends that the INA declares a willingness to repudiate the odious debt, in accordance with international law, moral law and the views of many economists and legal experts around the world, including from the creditor countries, who support this just cause.

(2) The EFC recommends that the INA should not accept the Paris Club to be a legitimate body for making decisions on debt, because it merely represents the interests of creditors. If, however, the Paris Club and the other creditors commit to an unconditional and immediate cancellation of at least 95% of their current claims, we will consider this a satisfactory practical compromise, given that a tiny part of the debt might be considered non-odious and Iraq has many other pressing issues to tackle, and we will take no further action.

(3) If, however, creditors demand more than 5% of their claims and/or place any conditions on the cancellation, such as the requirement that Iraq implement certain economic and financial policies, then we will repudiate the debt immediately.

(4) In such circumstances, to demonstrate our continued respect for justice and due legal process and the international law, we will offer persistent creditors the opportunity of a fair and transparent arbitration process conducted in accordance with United Nations rules, and to which creditors will be invited to appoint a fair portion of arbitrators.

(5) Because the Hussein regime was notorious for its corruption and oppression of the Iraqi people, the burden of proof during arbitral proceedings will be on creditors to demonstrate that they took diligent steps to ensure that their loans were beneficial to the Iraqi people and free from corruption.

(6) When the tribunal has decided which claims are legitimate then Iraq will agree on the appropriate repayment amounts and schedules for all legitimate debts, balanced with the needs of the Iraqi people.

(7) The EFC requests that priority be given in reconstruction contracts to companies from creditor countries that agree to comply with these recommendations on odious debt. Conversely companies from countries that refuse to accept our recommendations should be barred from any reconstruction contracts.

(8) The EFC call for the creation of a “Higher National Committee on Debts and Reparations,” including representatives from the primary relevant ministries and the National Assembly, working together with a team of economists and legal experts to gather relevant data and facilitate decision-making on Iraq’s debt and reparations case in the arbitration tribunal and in other ways, and to report progress to the National Assembly as requested thereby; we call further for a Chairperson to be appointed to this Committee.

Points of implementation as regards reparations:

(1) The EFC recommends that the INA expresses it’s sadness that many foreign people, including Kuwaitis and Iranians, suffered as a result of Saddam’s regime. However, it is also clear to the world that the Iraqi people suffered to the greatest extent. It is abhorrent to any notion of justice that reparations should be paid by innocent fellow victims.

(2) According to available evidence, many of the reparations claims and awards were fraudulent or excessive, although we do recognize that some represent genuine loss. The Iraqi people could also justifiably file millions of claims for genuine loss.

(3) The EFC recommends that the INA request from UN an immediate moratorium on reparations payments. Both a moratorium on the 5% of Iraqi revenues being paid to the UNCC fund, a moratorium on payments from the fund to claimants and a moratorium on awards decisions by the UNCC.

(4) We declare that the guilty party is not the oppressed Iraqi people but the many countries that supported and financed Saddam. If anyone should pay reparations, to Kuwait, Iran and Iraq, it is these countries.

(5) The EFC recommends that the INA call for a reassessment of the reparations by the UN. If there is to be an acceptable system of reparations, it must cover all the victims, including Iraqis, and draw the compensation payments from all the perpetrators along with their financiers and supporters.

Saad Salih Jabr
Chairman of EFC
Iraqi National Assembly


The Resolution as read to the Iraqi National Assembly:

“In the Name of God the most Merciful and most Gracious . . .”

Recommendation of the Economic and Financial Committee (EFC) to the Iraqi National Assembly (INA), the Interim Iraqi Government and to the Iraqi People on the External Odious Debts (OD) and Reparations inherited from the tyrannical Saddam Regime.

1. This recommendation has been constructed with reference to the latest developments in the external debts of Saddam regime, following the review by the EFC of many documents. This National Assembly has a responsibility to the Iraqi People to protect their current and future interests. The previous regime accumulated a heavy burden of foreign debts to states which financed the tyrant’s wars against his people first, and then against our neighbors. The foreign loans helped him build a huge military apparatus and manufacture weapons of mass destruction, including chemical weapons which he used against the Iraqi people in Halabja. The loans supported his system of oppression and paid for his palaces and prisons.

2. The EFC of the INA addresses this recommendation to the INA and to the Interim Iraqi Government and to all the Iraqi People. We request that the Assembly adopts this recommendation and makes a commitment to implement it; in order to guarantee the strategic interests of Iraq and its future political and economic development. These interests are threatened by the Paris Club cartel of creditors which refuses to accept that any of the debts are illegitimate, and is attempting to get Iraq to sign, before the end of the year, an agreement to repay a significant portion of the odious debt, There is a strong basis in international legal principle and precedent to define these debts as beinG “odious” and thus not legally enforceable

3. The debts are estimated to be around US$130 billion, of which US$45 billion is claimed by the governments that form the Paris Club, around $15 billion is claimed by foreign banks and corporations and about $70 billion is claimed by other governments. In addition to that, there are US$31 billion of unpaid reparations awarded by the UN Compensation Commisson to Kuwait and others and a further $71 billion of unassessed claims, mainly the Kuwaiti “environmental” claim. There are also reparations claims from Iran (which have no established legal status) of US$97 billion. Iraq has already paid $19 billion in reparations through the UNCC, including $2 billion since the fall of the Saddam regime, and under the current system will continue paying 5% of all oil revenue in reparations for decades.

You heard yesterday news from the Paris Club, they have offered us a deal that will cancel part of the odious debts in stages; 30% now; another 30% conditional on our accepting an IMF economic program; than a final 20% if Iraq passes the IMF test. The world media is marketing this as the deal of a lifetime. It is not. The debts are odious and this is new crime committed by the creditors who financed Saddam’s oppression. Iraq will still be shackled with over $25 billion. This is on top of the new loans being peddled by the IMF and WB and the $31 billion war reparations awarded so far.

This debt is odious and is not the Iraqi people’s debt. It must be cancelled immediately, completely and unconditionally.

4a. Points of implementation as regards external debts:

(1) The EFC recommends that the INA declares a willingness to repudiate the odious debt, in accordance with international law, moral law and the views of many economists and legal experts around the world, including from the creditor countries, who support this just cause.

(2) The EFC recommends that the INA should not accept the Paris Club to be a legitimate body for making decisions on debt, because it merely represents the interests of creditors. If, however, the Paris Club and the other creditors commit to an unconditional and immediate cancellation of at least 95% of their current claims, we will consider this a satisfactory practical compromise.

(3) If, however, creditors demand more than 5% of their claims and/or place any conditions on the cancellation, such as the requirement that Iraq implement certain economic and financial policies, then we will repudiate the debt immediately.

(4) In such circumstances, to demonstrate our continued respect for justice and due legal process and the international law, we will offer persistent creditors the opportunity of a fair and transparent arbitration process conducted in accordance with United Nations rules, and to which creditors will be invited to appoint a fair portion of arbitrators.

(5) Because the Hussein regime was notorious for its corruption and oppression of the Iraqi people, the burden of proof during arbitral proceedings will be on creditors to demonstrate that they took diligent steps to ensure that their loans were beneficial to the Iraqi people and free from corruption.

(6) The EFC requests that priority be given in reconstruction contracts to companies from creditor countries that agree to comply with these recommendations on odious debt. Conversely companies from countries that refuse to accept our recommendations should be barred from any reconstruction contracts.

(7) The EFC call for the creation of a “Higher National Committee on Debts and Reparations,” immediately, including representatives from the primary relevant ministries and the National Assembly, working together with a team of economists and legal experts to gather relevant data and facilitate decision-making on Iraq’s debt and reparations case in the arbitration tribunal and in other ways, and to report progress to the National Assembly as requested thereby; we call further for a Chairperson to be appointed to this Committee.

4b. Points of implementation as regards reparations:

(1) The EFC recommends that the INA expresses it’s sadness that many foreign people, including Kuwaitis and Iranians, suffered as a result of Saddam’s regime. However, it is also clear to the world that the Iraqi people suffered to the greatest extent. It is abhorrent to any notion of justice that reparations should be paid by innocent fellow victims.

(2) According to available evidence, many of the reparations claims and awards were fraudulent or excessive, although we do recognize that some represent genuine loss. The Iraqi people could also justifiably file millions of claims for genuine loss.

(3) The EFC recommends that the INA request from UN an immediate moratorium on reparations payments. Both a moratorium on the 5% of Iraqi revenues being paid to the UNCC fund, a moratorium on payments from the fund to claimants and a moratorium on awards decisions by the UNCC.

(4) We declare that the guilty party is not the oppressed Iraqi people but the many countries that supported and financed Saddam. If anyone should pay reparations, to Kuwait, Iran and Iraq, it is these countries. If there is to be an acceptable system of reparations, it must cover all the victims, including Iraqis, and draw the compensation payments from all the perpetrators along with their financiers and supporters.

Saad Salih Jabr
Chairman of EFC
Iraqi National Assembly


To read the Iraqi National Assembly resolution in Arab

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