Iraq's Odious Debts

Despite regime change, Iraq debts keep mounting

Haider Rizvi
Inter Press Service (IPS)
June 22, 2005

International social justice groups are calling on the United Nations to stop paying out millions of dollars in Iraqi oil revenues to Kuwaiti businesses and individuals as war reparations for Saddam Hussein’s invasion of that country 15 years ago.

“The citizens of Iraq should not be held responsible for the actions of Saddam and his regime,” says the U.S.-based group, Voices in the Wilderness.

“The continued claims of war reparations is another form of violence against Iraqis,” adds Jubilee Iraq, a Britain-based charity.

The joint statement by the antiwar U.S. and European groups comes ahead of a UN meeting in Geneva next week that will decide which claims for war reparations relating to the occupation of Kuwait in 1990-91 are to be paid by Iraq, and in what amounts.

So far, the UN Compensation Commission, a body created as a subsidiary organ of the 15-member Security Council in 1991, has awarded compensation of more than $52 billion to individuals and businesses who filed claims for losses during the war.

Despite the ongoing U.S.-led occupation of Iraq, the Commission has imposed another $33 billion in war reparations against that country, which are yet to be paid.

Groups monitoring the reparations say that the remaining claims imposed on Iraq – and those yet to be decided – are primarily related to the state-owned oil companies, multinational corporations, and governments.

Under pressure from the United States and other Western nations, the UN had imposed tough economic sanctions against Iraq soon after the end of the invasion of Kuwait. The sanctions continued for about 13 years until the U.S. invaded Iraq in March 2003.

Realizing the catastrophic effects of the sanctions on the Iraqi civilian population, the UN Security Council passed a resolution in April 1994, which established the oil-for-food program to allow Iraq to purchase humanitarian goods in return for its oil.

Under the program, the UN set aside about 25 percent of Iraq’s oil revenues toward war reparations. However, these payments did not cease with the end of the oil-for-food program itself. When the Security Council passed a resolution in May 2003 to dissolve the program, it still required that 5 percent of Iraq’s oil revenues be used to pay reparations.

Those critical of the UN compensation program are now calling for the world body to impose an immediate moratorium on all war payments against Iraq, while demanding measures to eliminate “odious debts” incurred by Saddam’s regime.

“At what point will the Iraqi people no longer be penalized for the unjust act of the Saddam regime?” asked the Jubilee activists, noting that in 1979 when Saddam Hussein seized power, Iraq not only had no long-term debt, but also held $36 billion in cash reserves.

However, by the eve of the U.S. invasion, Iraq owed about $125 billion to foreign creditors, including $42 billion to the so-called Paris Club of rich nations. Last November, the Paris Club agreed to reduce its claims by 80 percent, but not without imposing a number of conditions. Only 30 percent of the debt forgiveness came with no strings attached.

Another 30 percent will only materialize after Iraq agrees to implement significant structural changes to its economy. The International Monetary Fund (IMF) has made it clear that in the next three years, Iraq must demonstrate its compliance with the conditions attached to the final 20 percent reduction.

As for the remaining $83 billion of debt, more than $67 billion is claimed by countries that are not part of the Paris Club, and $15 billion dollars is owed to private creditors.

In response to the Paris Club’s meeting last year, the interim Iraqi leadership described most of the debt as “odious,” and demanded that it must be reduced by 95 percent, in addition to an end to war reparations.

This week, both the European Union and the United States are hosting a meeting in Brussels to discuss Iraq’s debt. The meeting is expected to draw foreign ministers from 80 nations, including U.S. Secretary of State Condoleezza Rice and UN Secretary-General Kofi Annan.

For their part, in order to build pressure on the Compensation Commission, a number of activists from the U.S., Britain, Iraq, and other countries are on their way to Geneva. Some of them have already started fasting outside the UN offices to draw attention to their protests.

“Taking Iraqi oil revenue and paying companies in Kuwait is an injustice,” said Kathy Kelly of the Voices in the Wilderness. “The people of Iraq have already suffered so much, from sanctions to bombardment to occupation.”

“The Commission has no legitimacy for one day longer,” said Hans von Sponeck, who quit as UN humanitarian coordinator in 2000, while joining protesters in Geneva last week. “It is not a colonial master.”

The Commission will start holding its three-day meetings on June 28.

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