Information Minister Mohammed Abul Hassan told Al-Rai Al-Aam, in the first official response to Bremer's suggestion on Friday that Kuwait and Saudi Arabia drop the demands for compensation, that the it is a "non-negotiable" issue. "We cannot decide on dropping our demand for compensation because it was an international decision. The Security Council gave its final decision and referred the issue to the United Nations Compensation Commission which approved claims - not only for Kuwait but also 44 other countries harmed by the 1990-1991 Iraqi occupation of Kuwait."

Paul Bremer said at a Friday press briefing at the Pentagon."I have to say that it is curious to me to have a country whose per capita income GDP (gross domestic product) is about $800 -- that'll be Iraq (when oil begins to flow at pre-war levels) -- that a county that poor should be required to pay reparations to countries whose per capita GDP is a factor of 10 times that for a war which all of the Iraqis who are now in government opposed. So I think there needs to be a very serious look at this whole reparations issue." Bremer said he didn't know if the Governing Coucil had raised the issue of reperations with Kuwait and Saudi. He said Iraq should have an income of $19-20bn in 2005 with a budget cost of about $15bn, leaving $4-5bn for reconstruction costs. But debt service at 6% would cost at least $7bn.

MP Yousef al-Zalzalah told al-Watan: "Demanding that Kuwait of its own accord give up its rights is something unacceptable because the reparations are part of the big losses of the tyrannical (Iraqi) invasion."

MP Daifallah Buramiya told the Arab Times: "If Bremer is so concerned about per capita income he has to demand dropping all of the United States of America debts on poor nations where per capita incomes don't exceed $30 a year."

Islamist MP Khaled al-Adwa said: "The Iraqi occupation happened, so the past political leadership or the one that follows it must bear responsibility for that occupation."

Islamist MP Walid al-Tabtabai said: ''So how can such a (U.S.) call be made?'' Tabtabai asked. ''We will reject this call which robs the Kuwaiti people of what rightfully belongs to it.''

If response to the issue of whether US reconstruction funds should be loans not grants, Bremer said: "The problem with that argument is, at least if you look at it from my perspective, the Iraqis have more than $200 billion in overhang from debt and reparations. This is a big chunk of change. And although the reparations don't carry an interest rate, if you just take the debt -- it's about 124, 125 billion (dollars); nobody's quite sure -- and if you assume that that debt carried an average interest rate of, say, 6 percent, which is the rate these days, that would mean a debt service amount of $7 billion a year.

Well, I just went through what the likely budget looks like in 2005, when we finally get our nose above water, and we're only going to have $5 billion more than we're going to spend. So the debt servicing, in other words, would bankrupt the country in 2005, if you just take my back-of-the-envelope calculations.

So it's very difficult to see how a country which now has no means of repaying these debts should have more debt laid on it by the United States. And therefore, I've made the point that I think it's a mistake to try to attach future revenues, to try to have a loan as part of this thing. It seems to me this will put an unnecessary burden on a country when what we're trying to do is get this country stable and so it can go forward.

And again -- I hesitate to repeat what I said often on the Hill -- let's not repeat the mistake of the Versailles Treaty in 1919, which laid very heavy reparations on Germany and which contributed directly to the morass of unrest, instability and despair which led to Adolf Hitler's election."

And also: "I said not a dollar (of US money) -- not a dime was the suggestion of one congressman -- should go to repaying those debts."

Jubilee Iraq volunteer Justin Alexander has arrived in Baghdad today to survey Iraqi views on the debt and reparations. He can be reached at the Al Fanar Hotel (in shadow of the Palestine Meridian), room 708, email to justin [at] jubileeiraq.org or Thuraya +88 216 5201 1417 (best to send text message as reception not great).

Paul Bremer attended another congressional committe today, chaired by Sen. Richard Lugar, one of 6 he is appearing before this week. Sen. George Voinovich, R-Ohio, and other lawmakers said the $200 billion that Iraq owes in debts and reparations should be forgiven by other countries as a gesture that they are willing to bear some of the expense. Bremer said that may happen, but it will take time - as much as 18 months. "At the end," he said, "there should be a substantial decrease."

6 months after the invasion of Iraq the level of debt is still unknown. Tony Fratto, a Treasury Department spokesman, estimated it at $60 billion to $110 billion. That's a big margin of error, and ignores the reparations, currently standing at a further $28bn, with large claims still unsettled.

Preferentially guaranteeing Iraq's debt to the United States (for funds paid out to American contractors) with future oil revenue would only reinforce suspicions around the world about our motives for going to war. Nor is it sensible economically. Baghdad may earn only about $10 billion from its oil sales next year, and while Iraq stands to make more than that in the longer term, it is hard to see how the struggling country would be able to repay a $20 billion loan from Washington. (source)

According to GOP officials who attended a private meeting on Iraq between Cheney and House Republicans. , Rep. Zach Wamp, R-Tenn., raised the prospect of using Iraqi oil revenue to repay the United States. Moments later, Rep. Dana Rohrabacher, R-Calif., said the result of the administration's proposal would be for U.S. taxpayers to help repay debt that Saddam Hussein owed to European nations before his government was toppled. Cheney and Rumsfeld said the United States will not let federal funds be used to repay debt owed by Saddam's government. And testifying to members of the House Appropriations Committee, Bremer said he would not oppose language forbidding use of the money to repay Iraqi debt. Jubilee Iraq notes if Americans are not prepared to pay Saddam's debts, why should Iraqis, who suffered the most from the loans to the former dictator?

An article by Amy Kaslow in the Gulf News today: Toppling of Saddam leaves debt questions to be solved. This is the first newspaper article focused on the debt for a few months. Here is one interesting section:

Duncan Darrow is a specialist in financial and bankruptcy law at New York's Orrick, Herrington & Sutcliffe. Orrick is among the world's top securitization firms. For Iraq, Darrow expects a "multiple solution" including: an element of debt forgiveness - a wiping away of debt; a small cash payment by monetizing a percentage of future oil revenues; and a rolling over, or conversion, of the current debt into some kind of new debt instrument. It is the latter that Darrow is positioning his firm to pounce on as a financial opportunity.

Darrow hopes to soon trade in the form of "Freedom Bonds" - debt securities created from future cash flow of Iraq's oil business. This form of securitization banks on performance in Iraq's oil sector that defies the current state of major resistance to the U.S. occupation in Iraq and the constant threats and setbacks to the recovery of the oil sector.

But he hopes to soon introduce the Freedom Bonds to the market in three tranches. Series A would be $20 billion in rated debt; Series B would be $30 billion in unrated debt; and Series C would be $50 billion in unrated debt with a contingent payment feature, depending on Iraq oil revenue topping a specific mark determined by increased production and/or price.

Complicating things for Darrow and others looking to bundle Iraqi debt and trade it on the secondary market are the proponents of the odious debt doctrine.

"This has an intellectual genesis, and revolves around the concept that either be it countries or banks - whoever lent money to Iraq - if the lent funds were used to support Iraq's military activities - that somehow those monies are tainted," Darrow says. He exhales slowly and adds: "And they have been spoken of as prime candidates to simply be wiped out."

The article also includes an interview with James Steinberg, director of foreign policy at the Brookings Institution and former deputy national security advisor for President Clinton.

Finance minister Milen Velchev exchanged a few words with the Iraqi delegation at a reception put on by JP Morgan Chase. "I didn't touch the issue of the Iraqi debt to Bulgaria, I know they will refer to Iraq being in ruins", Velchev said. The problems associated with the Iraqi debts will be transferred to the Paris Club, where the USA will call the tune, it emerged after his meeting with the WB's director for Bulgaria Ad Meltker. (report from Bulgarian newspaper PARI Daily). Yestarday the Bulgarian News Agency reported that Velchev held an informal meeting with the economic team for partnership with Iraq. However, "no concrete results as to the repayment of the Iraqi debt are to come from these talks", Velchev said, noting the US administration has different views on the issue.

President Bush, addressing the UN General Assembly today, said "Saddam Hussein's monuments have been removed, and not only his statues. The true monuments of his rule and his character - the torture chambers, and the rape rooms, and the prison cells for innocent children - are closed."

However one huge monument remains - the debt which financed those statues and torture chambers. A leading Iraqi economist, now Governor of the Central Bank, Sinan Al Shabibi explained in eloquent and impassioned terms to Jubilee Iraq back in June:

"Saddam has wrecked Iraq's past, rebuilding Babylon with bricks stamped with his name. He's wreked the present generation with war and repression. And the danger is that he will wreck Iraq's future through the debt and reparations he accumulated." (quoted from memory).

Extracts from an arabic interview with Planning Minister Mahdi al-Hafiz in Al-Hayat on 15/9/03.

"Security Council Resolution 1483 had referred this issue to the Paris Club to settle it in a positive way, which means resolving it either by reducing some of these debts through exemption or finding a new formula for payment over successive periods of time. However, in our view, the problem should be solved radically because the country has suffered a great deal over the past two decades, and there are new burdens because of the need for revenues for reconstruction."

Of course, we have another problem, which is the problem of compensation. The truth is that the former regime and not the Iraqi people, is responsible for what happened. So far, Iraq has paid around $19bn in compensation. According to the records of the (UN) Compensation Commission, the value of required compensation exceeds 300bn dollars. Also, claims worth 50bn dollars have been approved by the Compensation Commission, and Iraq is supposed to pay them. This is very unfair, and it should be stopped. We do not want to do injustice to anyone or to deny anybody his right, but justice should be equal (for everybody), and the Iraqi people should be saved from this catastrophe: that is, burdens of previous policies.
Full article

Over the weekend at Dubai Bulgarian Finance Minister Milen Velchev discussed with investment bank representatives discussed opportunities for corporate business in Bulgaria, investment in infrastructure projects and possible ways for the investment banks to act as intermediaries in the settlement of the Iraqi debt to Bulgaria. He met with representatives of JP Morgan, Deutsche Bank, DePfa Investment Bank, UBS, the National Bank of Greece and Bank Austria Creditanstalt. (Bulgarian News Agency 21/9/03)

Romanian Foreign Minister, Mircea Geoana, stated on Monday at Otopeni Airport that he would hold talks in New York, where he is going to attend the UN General Meeting, about the issue of Iraqi debts to Romania and about the participation of Romania's companies to Iraq reconstruction. Mircea Geoana pointed out that he would debate this topic with the Iraqi officials and with the leaders of the international coalition. "We will be able to have more significant presence in Baghdad and in Iraq as soon as our new ambassador, Mihai Stuparu, will leave for Baghdad." (Mediafax news agency)

Russia is prepared to write off some Iraqi debt, Russian Finance Minister Alexei Kudrin. He said he had discussed the issue with IMF Managing Director Horst Koehler on Monday morning. "We are against writing all of it off. We think that this debt must be worked out and must be worked out with a big write-off which we are ready to do in the framework of the Paris Club."

Kudrin also said Russia is considering writing down most of an estimated $9 billion debt it claims from Afghanistan.

Creditors should write off most of Iraq's huge Saddam-era debt, Marek Belka told Mona Megalli of Reuters at the IMF/WB meetings in Dubai. Belka is a former Polish Finance Minister who leads the Council for International Coordination CIC, a body raising funds for Iraq's reconstruction.

"About 90 percent of Iraq's potential, virtual debt is war-related...I cannot see how a country like Iraq can bear this burden. I come from a country that has on the books quite a substantial amount of money. Does anyone in Poland really believe we are getting the money back. Come on! A serious, serious write off (is needed)." Iraq owes Poland several hundred million dollars, mainly for unpaid communist-era contracts.

Belka pointed out that the write-off of official debt will not be enough to lift Iraq from its present predicament. The country needs cash injections to finance reconstruction and investments. ((arabic link - Az-Zaman)

But once again we must examine the facts and the historical record. Iraq has almost $200 billion in debt and reparations hanging over it as a result of Saddam’s economic incompetence and aggressive wars. Iraq is in no position to service its existing debt, let alone to take on more. Mountains of unpayable debt contributed heavily to the instability that paved Hitler’s path to power. The giants of the post-World War II generation recognized this and Marshall Plan assistance was overwhelmingly grant aid. (full statement)

Several Republican senators are prodding the Bush administration to convert reconstruction funds into loans.

Sen. George Allen (R-Va.), referring to the $21 billion the administration has proposed to rebuild Iraq’s infrastructure, said, “I would like to see it in the form of a loan, so at some point, when they’re on their feet, they can pay it back.”

Sen. Michael Crapo (R-Idaho) added: “Iraq is not a poor nation. Iraq has the capacity, the wealth, to participate very significantly in its own reconstruction and I believe that is only appropriate.”

Yestarday, in testimony before the Senate Appropriations Committee, Paul Bremer voiced his opposition to providing U.S. loans to Iraq. He called for direct grants instead.

“I believe it would be a mistake to lay any more debt onto the backs of the Iraqis,” he said. Bremer estimated that Iraq already owes $100-120 billion to other nations from debt racked up under President Saddam Hussein, plus another $90-100 billion that other nations are claiming in war reparations. “There is no way the Iraqi government is going to be able to pay that.”

It also is not clear whether the provisional authority now running Iraq has the legal authority to take on new debt. The administration is hoping that Iraq’s new import tariff and rising oil revenues will help the country pay its own operating expenses.

Sen. Byron Dorgan (D-N.D.), an Appropriations member who supports letting Iraq use oil money to pay for its own reconstruction, encouraged Bremer to “work hard” at debt forgiveness. Dorgan said there shouldn’t be “any obligation” for the provisional government in Iraq to be held responsible for debts incurred under the rule of Saddam Hussein, international law notwithstanding.

Sen. Pete Domenici (R-N.M.), another appropriator, has said the United States should provide loans to Iraq, although he said he understands the administration’s argument about Iraq’s large outstanding debt.

Senator Joseph Biden, a senior Democrat on the Senate Foreign Affairs Committee, was asked on Fox News Sunday whether he thought Russia and France should forgive Iraqi debt, he replied with a broader call for debt fogiveness:

"Oh, I think debt forgiveness for everybody. Look, the notion here is that — the idea that this new government can get up and running without having the... debt that they have out there forgiven is preposterous. That's why these ideas floated from some of my colleagues that we ought to get an IOU on future revenues from oil, in order to pay for what we're doing, that is — it'd be wonderful, but it's kind of ludicrous, because there is such a gigantic outstanding debt. Dick Lugar pointed that out a year ago. So, all the countries, all the countries, are going to have to engage in debt forgiveness for this country to have — this new country to have any possibility of getting off the ground. [Senator] Evan's got that part right."

George Abed, IMF Middle East Director, told a press briefing on 18th September: "The data, with respect to Iraq's debt, are subject to wide degrees of uncertainty. The Paris Club has made an assessment of the debt owed to its members. The Secretariat has polled its members and come up with a figure I believe that was announced, something like US$21 billion in principal and up to US$40 billion, including interest and charges. Now, the non-Paris Club members, including a number of countries in this region, also have extended credit to Iraq in the past, especially in the '80s and up to 1991, the first Gulf War. We, in the IMF, in the interest of facilitating addressing this issue, are in touch with the different countries to see if we can get some information on the debt, strictly as an information-gathering exercise. This exercise is not complete yet, but there is also substantial debt owed to non-Paris Club members. We hope to have some assessment in the next few weeks that could be useful for those who will then engage in dealing with this issue which is, as you know, very complex and will require a good deal of preparation and work, both on the part of the Iraqis and the CPA and on the part of the international community as well."

Finance Minister Kamel al-Keylani announced a string of economic policies at the IMF conference in Dubai, very much in line with standard IMF structural adjustment policies to enable privatisation and foreign ownership of Iraqi industries. The laws abolish almost all curbs on foreign direct investment except in natural resources and allowed foreign domination of the banking sector.

Wadi Surab, a member of the Iraqi Businessman's Union in Baghdad, told the BBC Arabic service the proposed reforms would "destroy the role of the Iraqi industrialist", as Iraqi business groups could not compete in privatisation tenders. The measures surprised US allies. A UK Treasury official told the Financial Times he was unaware of them.

Jubilee Iraq takes no view on privatization, however the speed and scale of these moves are of concern since the conditionality of a debt restructuring agreement with the Paris Club is likely to prevent a future elected Iraqi government from pursuing different policies to those unveiled today. This does not seem in keeping with the universally stated aim of democracy and self-determination for Iraq.

Seperately Joseph Saba, the World Bank's Middle East director, said Iraq is well short of meeting the international Millennium Development Goals for reducing poverty. "The basic fundamental services that a government is expected to provide should be considered the base line for our work."

Jeff Tice of Las Vegas is asking Nevada Senator Harry Reid to help collect $939m he and 16 other prisoners of war during the Gulf War won in a judgment against Saddam Hussein's regime in US courts. US officials say the money is needed for rebuilding Iraq. Surely the US should take this same line on the debt and UNCC reparations?

"We support the IMF and the World Bank rapidly providing, subject to their policies, financial and other assistance to Iraq and call upon regional financial institutions to do likewise. We call upon the Paris Club to make its best effort to complete the restructuring of Iraq's debt before the end of 2004. We urge all non-Paris Club creditors to cooperate."

Germany's deputy finance minister Caio Koch-Weser had earlier said at a breakfast briefing: "We agreed yesterday that as quickly as possible but hopefully by the end of 2004... that we must undertake a restructuring of the debts."

German Finance Minister Hans Eichel said he could not yet say whether debt restructuring could include forgiveness. "It is too early to speculate. It has to be dealt with under the auspices of the Paris Club but I have indicated we will be very cooperative." (Reuters)

The UN Compensation Commission finished it's 49th Session today, adding another $315m of compensation awards against Iraq to $46.3bn it had previous awarded. Iraqis have paid enough for Saddam's invasion of Kuwait, $17.8bn to date, not to mention over the million or so who died during the sanctions.

Allah (PBUH) decreed to the prophet Musa on Mount Sinai that every 50 years a ramshorn trumpet should be blown across the land. It signalled the Jubilee year, a time not just for cancellation of debts, but freedom for slaves, redistribution of property and a fallow year to restore the environment. The Jubilee practice almost certainly has its routes in Sumeria, the ancient Iraqi civilisation into which the prophet Ibrahim (PBUH) was born.

Our world desperately needs a Jubilee. The 50th session of the UNCC on 16-18th December should be a Jubilee Session in which the outstanding awards and claims against Iraq are cancelled in line with divine law and human justice. The Iraqi people have suffered enough for Saddam's crimes, and should not pay any more compensation.

Members of the Iraq Prospect Organisation are interviewed today in the Independent, and finish by saying: "There's something I'd like to say to your readers. People who really care about Iraqis should join us in fighting for democracy in Iraq and for the debts accumulated by Saddam to be cancelled. Join Jubilee Iraq." Much appreciated.

Mahdi al-Hafiz, Minister of Planning in the new Iraqi government, yestarday denounced the continued payment of reparations to Kuwait, according to al-Hayat (article in arabic). He said rebuilding Iraq would cost at least $100 bn., and that the former regime, not the Iraqi people, invaded Kuwait and contracted enormous loans. He said today's Iraq should not be burdened with these past obligations incurred by Saddam. Jubilee Iraq will be meeting with Mahdi al-Hafiz and others in Baghdad in the coming weeks.

Managing Director Horst Köhler made some comments on Friday. ago: "The IMF is concentrating on our areas of competence, and this is the macroeconomic framework, budget, monetary policy, exchange rate policy. We are working to get an overview about the debt situation of Iraq, and we are in the process of putting all this together for the donors conference in Madrid the 24th October... The IMF would have a possibility to lend to Iraq because Iraq is still a member, but they have not a government which exercises this membership. So that we want to hope that this issue of a representative government, internationally recognized government, is solved soon so that on this basis Iraq could also get access to its quota within the IMF."

Jubilee Iraq was expecting the IMF's report on Iraqi debt at Dubai; Köhler's comment seems to imply this will be delayed another month until Madrid.

From the Wall Street Journal Europe back on 23rd June, reporting from World Economic Forum summit on the Dead Sea:

Bush administration officials described a three-pronged debt-relief plan to release funds to finance Iraq's reconstruction. It includes refining estimates of the debt, delaying any demands for repayment through 2004 and meeting with 20 to 30 leading creditor nations to agree to a "flexible" mix of Iraqi debt write-offs and rescheduling. (JI - this presumably means the Paris Club, not a seperate forum)

To illustrate Iraq's financial plight, Paul Bremer said that if the country had to pay all principal and interest owed on its debt next year, that would eat up 80% percent of its oil revenue.

Strong support for debt-relief was expressed by Amre Moussa, Secretary-General of the Arab League.

US Senator Chuck Hagel, (R-Nebraska), a member of the Senate Foreign Relations Committee who chairs the subcommittee on international economic policy, said in an interview that "estimates of how much oil will be pumped out of Iraq are being overestimated" and Iraq will have "no future" until the Iraqi debt issue is dealt with.

"We need to get on with debt rescheduling very rapidly," added Sen. Richard Lugar (R-Indiana), chairman of the Senate Foreign Relations Committee.

Iraq's interim oil minister also called for debt relief, while stressing that his opinion was strictly personal. "I am not a politician or an economist," Mr. Al-Ghadhban said, "but I believe all debts should be looked at by the international community in a way that helps Iraq, and all of it should be written off, all of it."

Sinan al-Shabibi, a senior Iraqi economist who worked for over 20 years with UNCTAD, has just been appointed Governor of Iraq's Central Bank. Sinan was one of Jubilee Iraq's earliest supporters, and we met with him in Geneva at the time of the G8 summit in June. He has written extensively on the debt issue, warning of the threat it poses to Iraq's ecnoomy as long ago as 1991. Jubilee Iraq looks forward to working with him to ensure Iraq recieve fair treatment from creditors and is not required to repay Saddam's odious debts.

Jubilee Iraq representatives from creditor countries are visiting Iraq 27th September - 19th October. The aim of the trip will be to consult extensively in order to make the campaign more accountable to Iraqis, to share information and to survey the prespectives of Iraqi leaders on the debt. This trip is critical in the run up to the Donor Conference in Spain and Paris Club meetings which are likely to decide on debt payment with little input from Iraqi.

If you are involved with a political party or civil society group that would like to meet with us during the trip, or a journalist who would like an interview, then please contact us on Iraq: +88 216 5201 1417 or UK office on +44 7790 498 911 or email: mail [at] jubileeiraq.org

The World Markets Resarch Centre reported on 28th August that Bulgarian Deputy Finance Minister Krasimir Katev has indicated that the government is preparing to sell outstanding Iraqi debts or around $1.5bn (a further $200m debt is claimed by Bulgarian companies). WMRC explains that "Bulgaria was one of the main supporters of an attack on Iraq at the UN security Council in the run up to the US invasion, with the issue of outstanding debt arguably a major factor in its support."

Gerald Owen, wrote in the Canadian National Post on 23rd August regarding Polish troops being deployed in Iraq: "one theory of the Polish presence is that it will be a way of collecting on old Iraqi debts."

The draft resolution presented to the Security Council today by the US has a couple of paragraphs of relevance to Jubilee Iraq:

3. Reaffirms its resolve that the United Nations...should play a vital role in Iraq... including by providing humanitarian relief, promoting the economic reconstruction of and conditions for sustainable development in Iraq. - Sustainable development will only possible with major debt cancellation.

13. Appeals to the international financial institutions to remain engaged in Iraq to assist the people of Iraq in the reconstruction and development of their economy, and calls upon those institutions to take immediate steps to provide their full range of loans. - This is a call for IMF, World Bank and other multilateral loans. It seems unwise adding further to Iraq's debt burden. If this is indeed necessary then it reiterates the urgency in clearing Saddams debts so Iraq can borrow on good terms and at sustainable levels.

14. Urges Member States and international and regional organizations to accelerate the provision of substantial financial contributions to support the Iraq reconstruction effort. - The amounts likely to be pledged will probably only a few billion dollars max, a tiny fraction of Saddam's outstanding foreign debts.

16. Reminds all Member States of their obligations under resolution 1483 (2003) immediately to identify and cause the transfer of all funds or other financial assets or economic resources covered by paragraph 23 of that resolution, including those Iraqi assets that may have been previously frozen, to the Development Fund for Iraq for the benefit of the Iraqi people; - This is relevant to Jordan particularly, which has frozen Iraqi assets as security for debt payment.