November 30, 2003

According to Jan Rokita of the Polish opposition party Civic Platform, told news agency PAP that (former Polish finance minister) Marek Belka's call to write off the Iraqi debt to Poland was "a total curiosity". "Politics is not accountancy, this debt is not today's debt of the Iraqi nation, but America's debt."

November 27, 2003

With the new session of the UK Parliament this week, Barry Gardiner MP has tabled a new cross-party Early Day Motion on Iraqi debt. You can check the progress of EDM 138 here. It should be noted that the motion was tabled independently of Jubilee Iraq, although we will be supporting it and lobbying MPs to sign it. Write to your MP.

Text: "That this House notes that the creditor countries of the Paris Club estimate that Iraq's sovereign debt amounts to more than US$21 thousand million and, mindful that IMF rules regard debt of twice annual export income as unsustainable for HIPC counties, whereas Iraq's debt represents 10 times that country's projected export income for 2004, concludes that Iraq's debt is unsustainable; further welcomes and supports Jubilee Iraq's proposals for debt cancellation; applauds Her Majesty's Government and the US Government's support for the more generous Evian approach to debt forgiveness; and urges the four largest of the 19 Paris Club creditor countries, namely France, Germany, Japan and Russia, who between them lay claim to US$13 thousand million of the debts lent to support Saddam Hussein, to remember the benefit they received under the United States Marshall Plan and to be equally generous in their approach to debt cancellation in Iraq."

November 26, 2003

Peter McPherson, back at Massecusets State University, having spent 5 months on leave as President of the university to be the financial coordinator of ORHA/CPA in Iraq, told the MSU Union that a critical step in future economic success of Iraq is ending some of the $100 billion of reparations Iraq owes to Kuwait and Saudi Arabia for its role in the first Gulf War. "We can't have Iraqis paying for Saddam 25 years from now. To postpone the debt would be a geopolitical mistake."

Justin Alexander, UK Coordinator of Jubilee Iraq, will be speaking tomorrow (Thursday 27 November) at 6pm in Committee room 6 of the Houses of Parliament. Event organised by the One World Trust.

November 25, 2003

Speaking at a meeting with editors of The Wall Street Journal in New York last Friday, during a visit to encourage US investment in Germany, Chancellor Gerhard Schroeder said Germany would endorse a reduction of debt, once Iraq's security situation and political structure had improved.

Treasury spokesman Tony Fratto commented: "Clearly for Iraq to stand on its own, substantial restructuring of its debt is necessary, and participation from the Germans in the Paris Club to rework Iraq's debt would be very positive."

Bush cabinet members have been debating whether to press other nations for a huge write-off of Iraq's obligations -- say, 90% -- or something less aggressive. So far, top officials have released no target figure, but "it's closer to a bigger number than a smaller number" Mr. Fratto said.

Mr. Schroeder recalled Germany's own situation after World War II when, he said, the sweeping forgiveness of debt and war reparations was a critical element in the success of reconstruction. Mr. Schroeder didn't commit himself to any specific level of debt reduction. A senior German official said the idea had been broached with French and Russian representatives but didn't comment on their responses.

November 23, 2003

German Chancellor Gerhard Schroeder talked about Iraqi debt in an interview with Der Spiegel which will appear tomorrow. The tone seems more positive than previous German statements.

''It's in Germany's and Europe's interest that the reconstruction and democratic process in Iraq succeeds." He added. "We have not forgotten what helped Germany after World War II. Without the Americans' generous repayment plan, there would not have been reconstruction and an economic miracle in Germany," the chancellor said, adding that "Germany will provide its help" with regards to Iraq's debt repayment. "The immediate issue in the Paris Club is debt rescheduling. We'll see what else is needed. I do not want to exclude a partial forgiveness of (Iraq's debt)," Schroeder appealed for quick negotiations: ''The important thing is that this discussion finally gets going. An agreement quickly is needed so that the money in Iraq is used for reconstruction.''

November 20, 2003

The International Monetary Fund external director Tom Dawson said hey are considering whether to send missions to meet with Iraqi authorities by the end of the year. "I am aware that several missions are under consideration to meet with the Iraqi authorities in a variety of areas; these would take place outside of Iraq in the next several weeks."

The interim Iraqi oil minister, Ibrahim Bahr Al Uloum, was quoted in Kuwaiti newspaper Al Siyassah as saying that he is willing to pay some of the debt claimed by Kuwait in natural gas, though did not elaborate on the swap offer. Kuwait does not produce natural gas and is seeking to import it for use in generating electricity. He also said "Contracts signed under the former regime will be reconsidered with regard to their legal status, competitiveness and the interests of the Iraqi people." Speaking with Jubilee Iraq last month in Baghdad he said he favoured a case-by-case assessment of debt legitimacy by a panel of judges. Almost all Iraqis we interviewed strongly rejected the debt claims by Kuwait and other Gulf states.

November 17, 2003

US Treasury Secretary John Snow said he intended to discuss debt relief for Iraq with Gordon Brown, British Chancellor of the Exchequer, this week. He also said he had a figure in mind for how much Iraqi debt should be forgiven but declined to give details. "It has to be a debt level that's sustainable and that doesn't cripple the country going forward, suffocate it."

November 16, 2003

US Treasury Secretary John Snow met French Finance Minister Francis Mer today. "We talked primarily about the debt side and I think France will be very forthcoming on the debt side." Though Snow did not say whether France might forgive Iraqi debt or relieve its debt burden in another way, nor did he give any figures. He said the accelerated timetable for transferring power to a provisional Iraqi government was well-received by Mer. Snow said he and Mer discussed the role of the Paris Club -- a group of industrial countries that considers sovereign debt restructuring and cancellation -- in trying to ease Iraqi debt. He said France's chairmanship of the Paris Club gave it some influence over it.

Philip Merrill, President of the US Export-Import Bank, announcing a $500m credit facility with the new Trade Bank of Iraq on the 12th Nov, said: "In order to have physical security and political stability, we must do something to enable Iraqis to realize their wealth more quickly. And, of course, we must also turn more responsibility over to Iraqis. This will require resolving the Iraqi debt problem. A country with a pre-war GDP of $26 billion, about the same as the annual sales of Lowe's Home Improvement Centers or 10 percent of Wal-Mart's, cannot service $130 billion in debt, plus billions in reparation obligations from previous wars. If there is going to be any long-term investment, this debt will have to be dealt with promptly. Investors will need comfort that they have a prior position to the old debt."

November 15, 2003

Nile Gardiner, of the influential Republican think-tank The Heritage Foundation, recommends that Britain and the US should reach a common position on Iraqi debt during Bush's visit next week. Jubilee Iraq will be pushing them to do this.

"The White House and Downing Street should also formulate a joint position on the Iraqi debt question, advocating debt forgiveness as opposed to debt restructuring. The U.S. and U.K. should formally call upon European countries (primarily Russia, Germany, and France) and Arab countries (including the Gulf states and Egypt) to forgive the huge debts owed by the Iraqi government. It would be an opportunity for Europe and the Arab world to make a historic contribution to the economic development of post-Saddam Iraq and a major gesture of support for the Iraqi people. If the Iraqi debts are not forgiven, the Iraqi people will be financially crippled for a generation--perhaps even generations."

November 14, 2003

One of the most widely read legal journals has published an opinon piece on Iraqi debt by Hussein Damirji. It explains "The basis of the [odious debt] argument is not just moral and political: it is grounded on a century-old international legal doctrine that has been revived recently to deal with increased accountability for creditor complicity in shady lending practices."

November 13, 2003

Business Day reports that Saddam owed 159.4 million rand ($24m) to the Export Credit Insurance Corporation of South African Limited, according to Finance Minister Trevor Manuel. In a written reply to a question from Inkatha Freedom Party finance spokesman Gavin Woods, Manuel said that the Iraqi Ministry of Defence owed an outstanding amount of about 135 million rand on an original amount of nearly 400 million rand regarding three contracts. Hutteen General Establishment of Iraq and SAAD General Establishment of Iraq still owed 439,000 rand and 22.5 million rand respectively on original amounts of 2.3 million and 131.3 million rand respectively. Manuel said they were in respect of export credit re-insurance claims that had been paid by the Trade and Industry department of South Africa in 1990 and 1991.

Khaled Yacoub Oweis, reporting for Reuters in Baghdad, notes that Saddam stashed away billions of dollars from 1990-2003 in cash from oil deals with foreign firms in contravention of U.N. sanctions in Lebanese and Jordanian banks. A significant part the money was withdrawn during the U.S. invasion and the build-up to the war, bankers said, and added that Iraq will struggle to recover $1.6 billion of cash assets deposited in Jordanian and Lebanese banks due to insufficient recognition of its U.S.-installed government and debts the country owes.

Lebanese banks have around $400 million of Iraqi government deposits. Joe Sarrouh, executive adviser at Fransabank in Beirut, said "The Iraqis will face difficulty. Lebanon does not recognise the authority of the Iraqi governing council and Lebanese businessmen are demanding the money to settle debt." Iraq's central bank governor Sinan al-Shabibi will head to Beirut in the next few weeks. The governor said his trip will only cover banking sector cooperation but bankers expect the assets to figure prominently in the talks.

Jordan froze an estimated $1.2 billion of Iraqi deposits just before the war. The sum comprises Iraqi government accounts and of individuals with ties to Saddam Hussein. Bankers and officials say the money will remain frozen until $1.4 billion of Iraqi debt is settled, including $400 claimed so far by Jordanian businesses against Iraqi creditors. "There has to be a settlement of Iraqi debt." said Foreign Minister Marwan Muasher in a recent press conference.

Early Day Motion 1851, proposed by Harry Cohen MP (Labour) has so far been signed by 26 MPs, and reads:
"That this House notes with dismay that on 16th October the United Nations Compensation Commission paid out another $196,246,476.95 of Iraq's money to 26 governments and three international organisations for distribution to 1,395 claimants; further notes that this brings the amount disbursed to almost $18 billion, making it probably the biggest reparations operation since Versailles; further notes that under the USA Patriot Act the federal government has confiscated $1.7 billion of Iraqi assets in the US; regards these continued reparation payments, confiscation of assets and refusal fully to write-off Iraqi debt in current circumstances as deplorable; further notes that the US controlled Iraq Development Fund falls a long way short of being properly accountable; and calls on the Government to make its position clear in the face of this scandal."

November 10, 2003

Jassem El-Kharafi, speaker of the Kuwaiti National Assembly, was asked in an interview with Lebanese newspaper Monday Morning "what about the compensation owed to Kuwait as a result of the Iraqi invasion?" He replied: "In Kuwait we make a distinction between what we have a right to, on the one hand, and our duty to help Iraq, on the other. We don't confuse the two. We were present at the Madrid conference of donors and our contribution to the reconstruction of Iraq is the most substantial. We're not going to make the issue of war reparations something that embitters relations and causes hatred between our two peoples. Kuwait does not base its dealings only on the logic of material matters; Baghdad does not appreciate what Kuwait accomplished during the phase of liberation."

Debt and Poverty from the Islamic Perspective by Muhammad Imran, Development Education Officer at Islamic Relief.

November 07, 2003

The Paris Club had their regular month meeting yestarday. Once again Iraq was high up the agenda, though little information has filtered through. One anonymous source told the Associated Press: "Although countries with major oil resources do not normally qualify for debt cancelation, its postwar situation could make it an exception. But the kind of sweeping treatment given to poor countries such as Mali -- whose debts were slashed by the club earlier this year -- is not possible for Iraq. Any debt relief offered to Iraq by the Paris Club would depend on an evaluation of the level of repayments it can sustain." Nothing new here.

Thomas Crum, COO of Halliburton subsidiary Kellogg, Brown and Root (the firm with the largest reconstruction contracts) yesterday called for generous debt-write off for Iraqi foreign debt. Crum stated that the reconstruction of Iraq could not be fully realised with such a large volume of debt overhanging the country.

In a critical analysis of the Madrid Conference, Iraqi economist Kamil Mahdi warns in Al-Ahram Weekly that "most pledges made at Madrid were in the form of loans and trade concessions that further burden Iraq's already onerous international debt." He accuses the donors of pursuing their own business and debt claims: "Rather than being generous, Saudi Arabia seems bent on fortifying its claims in the forthcoming Paris Club arrangements, trying to increase its own chance of repayment, rather than aid the Iraqi people." He concludes "Iraq does not need aid. It needs an end to the double bind of occupation and debt."

Paul Bremer, in an interview with told the Washington Post, say he intends to devote more attention to reducing Iraq's debt, estimated at about $200 billion. Bremer is considering several options to address the issue, including asking Bush to appoint a senior official to engage in negotiations with foreign governments.

Tom Dawson, the Director of External Relations for the International Monetary Fund told a regular press briefing yestarday: "I would say we are still in the process of collecting both information regarding the extent of [Iraq's] total obligations, as well as making an estimate with regard to what is potentially a debt sustainability, a level that would be sustainable, from a debt sustainability point of view." He said it would not be appropriate for the fund to disclose estimates right now. The IMF had initially planned to have completed its survey of Saddam's debt by mid-July, it has taken much longer than expect.

November 06, 2003

Bulgarian Foreign Minister Solomon Passi, said that Bulgaria was not ready to cancel Iraq's debt. "Bulgaria also inherited a huge external debt but started paying it nonetheless. Every government represents the same country, no matter when or how it accumulated its debts, and this is a principle which must be complied with." According to Passi, Iraq is a country rich in natural resources and, without pressure, the Iraqi government should be able to start repaying the external debt in the medium term. Passi said that Bulgaria was in a unique position because the Iraqi debt was more than $ 1.7 billion, which is about 12 per cent of Bulgaria's GDP. He said the Iraqi debt must be restructured and paid back, and must be paid back 100 per cent.

Saudi' Arabian newspaper Al-Riyadh noted today that Jordanian debt to Iraq for the supply of oil comes to JD 767 million (about $1 billion), similar in scale to the debt claims Jordan is making against Iraq. The Jordanian government has appointed a special committee to handle the debt dispute headed by the Trade & Industry Minister and the Governor of the Central Bank.

November 05, 2003

We are in the process of agreeing a letter to the NY Times with others whom Mark Medish yestarday called "misguided" for advocating debt cancellation.

Glenn Halpern has done some excellent research on Mr. Meldsh on his HipperCritical blog, noting that one of Akin Gumps clients in its soverign debt practice is Jordan, which has siezed Iraqi assets as security for debt payment. It is also interesting that Mr. Medish has argued very strongly for the cancellation of Russian debt in contradiction to his position on Iraq.

Peter McPherson (who headed the US Treasury team in Iraq until recently) and Mark Malloch Brown (administrator of the UNDP) addressed the Senate Banking Committee's subcommittee on international trade and finance.

Both men said the United States and the World Bank must pressure France, Germany, Russia and other debtors to lower the amounts they expect Iraq to repay. Kuwait also must not demand full reparations for the Persian Gulf War, they said. "If we're having Iraqis pay for Saddam 25 years from now, that's a big geopolitical mistake," McPherson said.

Malloch Brown said Iraq's debt is now between $100 billion and $200 billion, or about 10 times the country's gross domestic product. He said economists generally believe that countries cannot service a debt that amounts to more than 1.5 percent of their gross domestic product.

McPherson said he advocates a debt reduction plan for Iraq through the World Bank and other conventional procedures. But Sen. Evan Bayh (D-Ind.) suggested a tougher approach, saying he was angered that European countries have not yet pledged to forgive their debt. "The French were good for nothing, the Germans were good for nothing, the Russians were good for nothing. If you do business with murderous dictators, you take that risk as a creditor."

McPherson also gave a gloomy picture of the short term prospects for Iraq's economy: "We cannot expect substantial, real growth soon. There is no evidence that that happens in a case like this."

November 04, 2003

Mark Medish, a corporate lawyer, argues in a New York Times article that creditors should "make Baghdad pay."

What he fails to disclose is that his firm Akin Gump is representing Korean company Hyundai, and I believe a number of countries as well, in their attempts to extract debt from Iraq. Another interesting fact is that a letter he wrote to the Financial Times in May argues quite a different angle.

We will post a point by point rebutal here later today.

Hamid Majid Musa, the Iraqi Communist Party representative on the interim Governing Council, said yesterday that Iraq's huge debts are exaggerated. He blamed the former regime for the big and deliberate financial chaos because it did not appoint any party to oversee these debts, such as the Central Bank of Iraq or the Finance Ministry. In statements to journalists, Musa estimated the debts at between $100bn and $120bn. However, he doubted the accuracy of these figures, saying that the figure has been fabricated several times. He added that some debts should not be paid at all because they were used to finance wars launched by the former regime.

Hamid Musa's ICP colleague Saleh Yasir told Jubilee Iraq a few weeks ago that "there is no way to achieve democracy in Iraq without a solution for the economy, and resolving the debt is the most important component of this." He was also clear that Iraq would not accept an IMF structural adjustment program as a condition for debt relief. For more detail see our report: Iraqi views on debt and reparations