Iraq's Odious Debts

Russia will gain nothing from writing off Iraq’s debt

RIA Novosti
November 23, 2004

Moscow: By agreeing to forgive 80% of Iraq’s debt, Russia has gained nothing. Its losses will be $6.5 billion (the total debt is $10 billion, with $8.5 billion in state debts and $1.5 billion in debts on commercial loans). Russia’s chances of securing an access to Iraq’s mineral wealth look very bleak, experts told Nezavisimaya Gazeta.

“Iraq has substantial mineral resources,” says Andrei Cherepanov, the chairman of the Council of the Moscow International Currency Association. “Last year, Iraq cleared its debts using oil without any delays.”

According to Boris Heifets, a senior expert at the Institute of Economic and Political Studies, “One of the main compensatory pledges in exchange for the written off debt was Russian companies’ access to Iraq’s economic restoration. But we never received solid guarantees.” So far, no specific agreements have been reached with Iraq or the U.S. that Russian companies will be able to resume work in Iraq (above all, Lukoil on the Western Qurna oil field). We should have sought more specific forms of compensation, the expert said.

Russian observers also note that the debt is being written off despite the lack of a legitimate government in Iraq. “It is not a good idea to consider writing off the debt before a legitimate government is formed in Iraq,” said Vladimir Nikitin, the deputy chairman of the State Duma budget committee and a member of the Motherland faction. “Russia has a responsibility to its own people, and forgiving other countries’ debts is not practical.”

Experts are convinced that the U.S. pressed Russia into writing off the Iraq’s debt.

Earlier, Moscow was ready to forgive only 50% of the debt, and France and Germany supported its intention. However, after these countries agreed to write off 80%, Russia fell into line with the Paris Club’s common position.

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