The US Justice Department has asked a judge to throw out a $959 million judgment levied against Iraq for Saddam's regime's torture of American prisoners of war in 1991, arguing that President Bush has granted the country sovereign immunity from actions committed by the Saddam Hussein regime.

"Among the sanctions that were removed by the President [on 7th May] on national security grounds is the provision that lifted Iraq's immunity from suit in U.S. courts for certain tort claims, thereby restoring to a liberated Iraq a sovereign immunity afforded by United States law to virtually every other foreign country," DOJ lawyer Joseph Hunt wrote in the brief.

Last Wednesday, Paul Bremer, Bush's envoy to Iraq, claimed in a declaration filed in the case that paying the POW victims out of the funds held in the Federal Reserve would hamper his ability to rebuild Iraq -- noting that funding has almost run out already. On 7th May a phrase was tucked into the Emergency Wartime Supplemental Appropriations Act of 2003, which DOJ lawyers claim gave Bush the authority to wipe out the pending civil actions against Iraq.

Jubilee Iraq argues that it would be deeply inconsistent for the US to recognise that Iraq is not resposible for US civil claims against Saddam's regime (as it has just done) while continuing to require that the Iraqi people pay governmental reparations through the UNCC for Saddam's invasion of Kuwait.

Maher Othman, notes in Saudi paper Dar Al-Hayat that "Iraq's debts... [leave] it to the mercy of the World Bank and the IMF, which both serve America's interests." Jubilee Iraq has long warned that Saddam's debt threatens to rob Iraq of economic independance, whatever happens politically in terms of democratic elections and the end of direct Coalition control.

The new CSIS assessment repot, following a visit of reconstruction experts to Iraq, advises: "The United States needs to ensure that Iraq's revenues are not encumbered by past or future obligations. This will require resolving the debt issue within the US government, and pushing Iraq's creditors to forgive or significantly reduce Iraq's outstanding debt burden. The United States should also avoid encumbering future oil revenues to generate immediate income. (It will be critical that the CPA handle oil revenues as transparently as possible. Iraqis we met with spoke of continuing suspicions about U.S. intentions with respect to their oil industry)"

The Bush administration asked lawmakers for $300 million to write off debt Congo owes to the United States. But this month a House of Representatives committee assigned no money for Congo debt relief in its proposed foreign aid bill, and a Senate committee included only $100 million. Marie Clarke, national coordinator for Jubilee USA, told Reuters: "Not being able to provide funding for Congo will weaken their position in negotiating deeper debt cancellation for Iraq."

This underlines the importance of Jubilee Iraq's contention that debt claims against Iraq should not primarily be reduced by debt "relief" which requires altruistic funding from governments which may not be forthcoming, but by a legal tribunal which determines which of the debt claims legitimately transfer to the Iraqi people (basically those loans which gave them real benefit) and which were personal ("odious") debts of the regime which have been lost with the fall of the regime, just as personal or corporate debts are lost when a person dies or a company dissolves.

US Deputy Secretary of Commerce Samuel Bodman led a trade delegation to Bulgaria yestarday. When asked whether Iraq would pay Saddam's debt to Bulgaria, Bodman said that it was too early to discuss Iraq's debts not only to Bulgaria but also to all other countries. But, "these debts might be repaid following the revival of the Iraqi economy."

Rick Barton, one of the experts on reconstruction at the think-tank CSIS, briefed the Department of Defence on their latest report. Jubilee Iraq has been in touch with CSIS since April and welcomes the work they are doing.

Barton emphasised "it's important that we all recognize that for the time being, Iraq is not a wealthy country, and that the citizens have really spent whatever resources they might have had." On the issue of national finances and funding reconstruction, Barton said that the cash found in Iraq had been an unusual boost which made the first few months easy to fund, however going forward "we're concerned that within the United States government there may still be a debate on what to do with the international debt and the reparations claims that are outstanding against Iraq. And we think that those need to be freed up."

This concurs with Jubilee Iraq's long standing analysis that the US government is divided and undecided about the debt, possibly along Defence Department / State Department lines. Any US officials who want to see an Iraq which is stable, free and prosperous must join the movement to have Saddam's debts accessed in a fair tribunal so that those which are odious do not pass on to the Iraqi people.

Indonesia inherited huge debts from the dictator Suharto who, like Saddam, was financed by many foreign creditors. The debt, and IMF "structural adjustment" that goes with it, has crippled Indonesia's economy. Saddam's debt is twice Suharto's, though Iraqi has only a tenth the population of Indonesia. If Iraq inherits a large part of Saddam's debt, the damage to the country is likely to be even greater than that caused to Indonesia.

Kwik Kian Gie (Indonesia's Minister of National Development Planning) attacked creditors for plunging Indonesia into a debt trap. He accused the creditors of ganging up to make "us a beggar nation that is now being forced to sell our assets at throw-away prices... It is high time that we stand up and say enough is enough and unilaterally declare a moratorium on our foreign debts even at the risk of being isolated by international creditors. The government is now flat broke with over $75bn in foreign debts and Rp 600tr in domestic debts. It is now unable to adequately provide public services and has to succumb to policies dictated by international creditors." He reiterated his demand that Indonesia totally disengage itself from any arrangement with the IMF so that the government can act as a truly sovereign entity. "We should have the courage to regain our national dignity even at the risk of being isolated by international creditors. After all, the majority of our people in the rural areas do not gain any benefit from foreign capital and remain untouched by the globalization process." Kwik blamed much of the economic debacle Indonesia is now mired in on the erroneous policies international creditors and the IMF have dictated to the government.

Jordan has siezed Iraqi assets as security for debt payment. Jordan's minister of finance, Michael Marto, said that "these assets will not be transferred to any side before guaranteeing the rights of Jordan especially in regard to Iraqi debts owed to Jordan." He indicated that the debts are estimated at $1.3 billion, this is considerably higher than the $295m which was the figure estimated by CSIS in February (admittedly as principle debt in 1991 without interest and arrears).

UN representative Sergio Vieira de Mello met with the newly appointed Iraqi Governing Council. who told him that they would be looking for U.N. help on a number of problems, "notably the issues of refugee return and debt relief." The Council is sending a delegation, including Akila Hashami, Adnan Pachachi and Ahmed Chalabi, to the UN Security Council on 22 July.

Just a month after being introduced the Iraqi Freedom from Debt Bill has gathered 25 Cosponsors in the House of Representatives. The next stage is a public hearing, which will take place in early September when Congress returns from vacation (holiday begins at the end of this week). No Bill on debt has ever moved this quickly. Follow its progress here, and US citizens see Jubilee USA for info on taking action and lobbying your Representative.

The US plans to mortgage Iraq's future oil supplies to pay for expensive postwar reconstruction work. Much of the revenue will be securitised over at least a decade under the proposals being pushed by the US Export Import Bank, the Bush administration's trade promotion body, and a lobbying group that includes key American contractors Bechtel and Halliburton. Reports suggest that $30 billion of loans will be backed by Iraq's oil reserves.

Anne Pettifor, head of Jubilee Research, said 'It is outrageous that the poor people of Iraq will be lumbered with billions of dollars of debt that will be used to boost the share prices of Wall Street financiers and US construction giants.' She warned against the coalition 'using the instrument of debt to control Iraq', after it leaves. Such a motive was behind the way Germany was treated after 1918, provoking resentment that eventually encouraged the rise of Adolf Hitler.

However Democrat Congressman Henry Waxman has said: "We do not have the right, without additional authority, to impose financial obligations on the future government of Iraq."

Jubilee Iraq inists that the priority should be sorting out the existing $150bn or so in debt through an odious debt arbitration tribunal, before incurring new debt. Moreover it will be possible for the future Iraqi government to borrow on much more favourable terms if the existing debt overhang is dealt with.

The Times of India uses a powerful headline in it's coverage of the Paris Club's recent statement: "Iraq on debt row".

The Iraqi Freedom from Debt Bill (HR 2482) which was introduced to Congress last month and refered to the "Subcommittee on Domestic and International Monetary Policy, Trade, and Technology" with a brief statement in the House of Representatives by the sponsor. It now has 20 cosponsors. Jubilee USA have been doing a great job lobbying, and just mailed all the representatives about it. Please could everyone in the US ask their Representative to cosponsor. Once the number of cosponsors reaches 25 it will be eligible for a public hearing, something which could happen within a few weeks. There are a number of other Bills relating to Iraqi debt in Congress, although Jubilee Iraq is less enthusiastic on their wording. HR 198 (36 Cosponsors), HR 2338 (2 Cosponsors), HR 2080 (0 Cosponsors). Also Senator Joe Lieberman introduced a Bill back in February which included a call for a conference on the debt S.J.RES 6.

There is an unconfirmed rumour going about that the US has come to some agreement on commercial debt payment with banks such as JP Morgan, an agreement which may breach the debt payment moratorium in UN SC 1483.

Another rumour is that Aberdeen Asset Management has been denying to investors in it's funds that it holds Iraqi debt, in spite of the numerous reports in Bloomberg, IHT, New York Times etc. quoting it's fund manager Colm McDonagh refering to his holdings in the Aberdeen Exotic Debt Fund.

Marian Tupy, Assistant Director of the Project on Global Economic Libery at the influenctial US think-tank The Cato Institute, recommends that: "The US should make the sovereign credit system more efficient by expressing its support for the concept of "odious debt." Cancellation of debt acquired by corrupt dictatorships will both decrease the overall level of African debt and rationalize future lending. More circumspection on the part of the creditors in the future will help keep funds from African dictators." The Cato Institute recently held a conference on Iraq's economy at which Jubilee Iraq supporters spoke.

Yestarday, at their monthly meeting, the Paris Club reviewed Iraq and released a statement. The "preliminary estimate" of total debt claimed by Paris Club countries is $21.018bn this excludes interest, which "in principle calculated on the basis of the rates set in the original contracts, is currently estimated at an amount similar to the principal outstanding." Implying a total Paris Club claim of around $42bn. The statement said that the Club doesn't "expect Iraq to be in a position to resume payments to them before end 2004." Implying they do expect payments in 2005. Apart from data on some creditors - such as Spain and Canada, who were not mentioned in earlier PC data, there is nothing new in this statement.

Australia...........499.3
Austria..............813.1
Belgium.............184.5
Brazil................192.9
Canada............564.2
Denmark............30.8
Finland .............152.2
France............2,993.7
Germany.........2,403.9
Italy..................1,726
Japan.............4,108.6
Netherlands........96.7
Korea..................54.7
Russia...............3,450
Spain.................321.2
Sweden.............185.8
Switzerland.......117.5
UK.....................930.8
US.....................2,192
Total.............21,017.9

The World Council of Churches have just completed an ecumenical conference in Geneva on the subject of illegitimate debt and arbitration. The conference called for cancellation of odious debt being claimed of Iraq.

Over the last month Jubilee Iraq has been busy lobbying behind the scenes. In America the Iraqi Freedom from Debt Bill proposed by Jim Leach and Carolyne Maloney is building momentum, and we hope there will be a hearing in the House soon. In Britain the political system does not enable such rapid legislation, nevertheless support is growing among MPs. In Westminster 34 MPs across 5 parties so far have expressed support for our proposals, along with many MSPs in the Scottish Parliament. We have had 3 meetings very positive meetings so far with government (Labour) and opposition (Conservative and Liberal Democrat) Ministers, along with useful exchanges with civil servants in the Treasury and ECGD. We have some influencial supporters in the European Parliament, and are intending on stimulating debate when the new session opens after the summer. In the Middle East we have had some informal discussions with a number of representatives of Arab creditors, and are looking for further opportunities for dialogue.

Krassimir Katev, Bulgaria's Deputy Finance Minister, said Bulgaria will recieve payment from Iraq, but the timing will not be clear for 6-12 months. He said that the US administration will not buy out Bulgaria's debt (something which has been speculated), because he said that would counter its regulations. He recommended that Bulgaria should collects as much as it can of the debt before the Paris club come up with a decision on the issue (which tends to bind other creditors).