Iraq's Odious Debts

The West, quietly, is pillaging Iraq

Ed Kinane
December 10, 2005

When Saddam Hussein grabbed power in 1979, Iraq had no long-term foreign debt. Cash reserves were $36 billion. Iraq had high literacy and public universities; it had extensive socialized health care. It was becoming a “first world” nation. Soon, however, this violent,
cunning despot began squandering that wealth.

Borrowing tens of billions of dollars, he built up a vast military and security apparatus. In 1980 – with the United States’ blessing – Saddam invaded his neighbor, the Ayatollah Khomeini’s oil-rich Iran. To Saddam’s utter surprise, that war wasn’t over in a few weeks. It became an eight-year long quagmire. Hundreds of thousands on each side were maimed and killed. The Iran/Iraq war (1980-88) severely weakened these two nations. The world’s power brokers could endure the suffering. With their military aid (to both sides) they kept the pot boiling. And those power brokers could endure Saddam using their toxic chemicals and other weapons to terrorize “his own people.” Saddam’s regime extirpated domestic dissent, killing tens of thousands of Iraqis – mostly Kurds
and Shiites. In 1990, after his invasion of Kuwait, Saddam finally became an international pariah. That set the stage for the First Gulf War and for 13 years of murderous U.N./U.S. sanctions against the Iraqi people. By 2003 no one in the world owed more money than Saddam Hussein. Yet Saddam’s total debt is unknown. Jubilee Iraq cites, among others, the IMF’s estimate of $125 billion. Saddam’s creditors – the United States, France, Russia, England, Japan, Saudi Arabia, etc. – had no illusions. They knew how Saddam was using their money. After all, as with many international loans, much of the money was spent in the lender’s own country. In 2003, the United States invaded Iraq and deposed Saddam. Most Iraqis were greatly relieved. But even apart from the ensuing occupation, their ordeal – their captivity – was far from over. Saddam’s creditors, Saddam’s former allies, have forced Iraqis to pay billions annually in debt service. If the United States and other
world powers have their way, the Iraqis will keep being bled dry – and having their oil hijacked – paying off Saddam’s loans for decades to come. In an interesting wrinkle, the United States is simultaneously seeking to have some loans “forgiven.” The United States isn’t being altruistic; the price would be more IMF “reforms” and “privatization.”
“In exchange [for some debt forgiveness], Iraq will surrender its economic sovereignty to global financial institutions, provide foreign investors greater access to Iraqi natural resources, and increase investment opportunities for multinational corporations.” [Brian
Dominick, “New Standard”] But this all too familiar scenario isn’t inevitable. Grassroots activists and economists, especially in Canada and England, have a compelling tool: the doctrine of “odious debt.” This doctrine states that “when creditors lend to a dictatorial regime which they know is not using the loans to benefit the population, then debt payments cannot be demanded of those people once they are free.” [Justin Alexander, Jubilee Iraq] Odious debt is no novelty; it goes back to 1898. At the end of the Spanish-American War, the United States applied the doctrine by refusing to enforce payment of Cuba’s odious debt to its former colonial master, Spain. The ruling nations and their
international banks lend money to the tyrants (Mobutu of Zaire, Duvalier of Haiti, Marcos of the Philippines, and so on) who serve them well. Odious debt is not a doctrine these creditors want to hear. Exceedingly rare would be the Iraqi who felt obliged to take on Saddam’s debt. Nor do Iraqis want the IMF or the G-8/Paris Club creditor nations to sort out Saddam’s debts behind closed doors. What Iraqis want is a transparent, international tribunal – one the creditors don’t control. That tribunal would adjudicate every outstanding documentable loan.

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