Odious Debts

International law supports Iraqi debt challenge

Patricia Adams
CBC
February 11, 2005
Saddam Hussein used money western countries lent him mainly to arm himself, oppress his people, and build opulent palaces. So should his victims have to pay it back without knowing who lent the money and what the money financed?

‘Yes,’ say Western lenders. Contracts must be honoured. There’s no difference between loans for oppression and loans for food. The only question is how much mercy to show to a country devastated by oppression and war . . . how much to forgive. So last November, the Paris Club ‚Äì a closed door informal group of state creditors including Russia, France, Germany, Canada, and the United States ‚Äì offered to forgive 80% of Iraq’s debt.

How generous. How convenient for the West. No muss, no fuss, no embarrassment. But it’s wrong.

And that’s how the interim Iraqi National Assembly felt when it voted unanimously to reject the offer.

This is the wrong way to deal with Iraq’s debts, it said. Iraqis should be free to review and challenge debts accumulated under Saddam. We’ll take responsibility for the legitimate loans, maybe 5% of the total for food or housing. But not loans for the chemicals used to gas us, or to build torture chambers.

And international law supports them. A century ago, the United States liberated the Cuban people in the Spanish-American War and repudiated Spanish debts used to oppress them. So evolved the Doctrine of Odious Debts. That doctrine has it that debt incurred by despots to benefit their regimes, but not their people, don’t need repaying. The creditors, the doctrine says, have committed a hostile act against the people: they can’t therefore expect that a nation freed from a despotic power assume the odious debts, ‘which are personal debts of that power.’

The French and the Russians, in particular, don’t like that doctrine. The Iraqis do: they say let’s have a public process under international arbitration in which the burden of proof will be on creditors to demonstrate that they acted responsibly in financing Saddam. They have a strong case, I’m sure most of the creditors’ claims would fail.

Closed-door meetings to determine how much the West can forgive and how much it can squeeze out of Iraqis amount to a cover-up Iraqis deeply resent. We should support the public airing of these disputed loans under rules established long ago by the United Nations. It would expose what Iraqis are yearning to know: who lent Saddam Hussein money, for what purposes, and where did the money go?

What better way to demonstrate the power of democracy and the rule of law than to establish a precedent telling unscrupulous financiers and governments everywhere their money isn’t safe when they bankroll tyrants against their own people.

For Commentary, I’m Patricia Adams in Toronto.”

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