June 30, 2004

UN Special Representative Lakhdar Brahimi, said in a newspaper interview with Russian paper Vremya Novostei, published today, the Iraqis had been enslaved by Saddam and deserved help. He called for all of the sovereign debt to be written off. He also said that Iraq should be relieved from paying reparations to countries, though compensation should be paid to private individuals and companies.

The Global Information Network echos Jubilee Iraq's longstanding warnings "Iraq's already huge debts and its plans to take out more loans for reconstruction are likely to subjugate Iraq to further conditions by such institutions as the International Monetary Fund (IMF) and the World Bank, notorious for taking control of economies from borrowing nations." The World Bank said on Tuesday it recognised Iraq's new interim government as legitimate, a move that opens the door for new lending to the country.

Svetlana Tsalik of Iraq Revenue Watch comments: "[Iraq] has a lot of debt and it remains to be seen whether that will be forgiven. So in such a needy country it may not have a lot of alternatives to saying 'yes' to the IMF and the World Bank."

A confusing statement has been come from Turkey. Jubilee Iraq is unclear of its meaning. It appears to say that Turkey has collected $698m of debt from Iraq since the war, but we find it hard to believe either that so much money was available or that Iraq would have willingly paid it.

"The Turkish State Minister for Foreign Trade Kürsad Tüzmen said that Turkey had collected $698m from its pre-war agreements with Iraq. A Turkish delegation led by State Minister Kürsat Tüzmen had paid a visit to Saddam Hussein before the war and had signed agreements with the old regime. Tüzmen, visiting the Aegean Free Zone, said that the agreement signed with the Saddam regime had been carried through and that the Iraqi debts had been collected."

June 29, 2004

Reuters reports that at the UNCC meeting Kuwait and Saudi Arabia continued to call for their pounds of flesh.

Turki bin Nasser bin Abdulaziz, president of Saudi Arabia's meteorology and environment department, declared: "Iraq has the ability and the means to compensate for all of the damages it inflicted on the claimant countries," and failing to hold an aggressor fully accountable would set "a dangerous precedent." Saudi Arabia is seeking more than $28 billion for damage to its environment caused by Iraqi troops setting oil wellheads on fire as they fled the US-led coalition in 1991.

Khaled Ahmad Al-Mudaf, chairman of the Kuwaiti body assessing compensation claims, told the UN commission there should be "no delay or interruption in the receipt of funds". He said he was confident Iraq would abide by the Security Council resolution.

Jubilee Iraq was protesting outside of the UNCC meeting.

June 28, 2004

In spite of the switch of soverignity to an Iraqi government, the UN Compensation Commission is meeting again tomorrow to award yet more reparations, likely to total hundreds of millions of dollars, to the outstanding $30bn load, awarded mainly to corporations and goverments.

Jubilee Iraq will be demonstrating at the UN between 1-2pm, as we did in March at the last UNCC meeting (see report and photos). We will be handing in a letter to German Ambassador Michael Steiner, the current President of the UNCC, calling for an immediate moratorium on reparation payments - which have totaled $1.64bn since Saddam fell, more than Iraq's combined health & education budgets - and a reassessment of all future and outstanding awards. Media please call +44 7813 137171 for an interview.

Lt. Gen. Jay Garner, briefly ruler of Iraq before Paul Bremer, warns in the Orlando Sentinel of the effect of debt on Germany after WW1 and argues strongly that "we should declare Iraq's debt as a "debt against Saddam" not one against the Iraqi people."

The Center for American Progress, a think tank with close ties to the Kerry presidential campaign, has published a report, Iraq After June 30: A Strategy for Progress, which labels the debt as odious and calls it to be eliminated, along with the reparations. This is precisely the agenda Jubilee Iraq has been promoting and we urge John Kerry to make this an offical campaign pledge.

The full text reads: "Mobilize broader international financial support, including relief of Iraq's odious debt obligations. Former Secretary of State James Baker's current mandate should be broadened to seek greater financial support for the reconstruction efforts in Iraq, particularly from Middle East and Gulf states. Special emphasis should be placed on making sure nations and international institutions deliver on pledges made at the October 2003 Madrid donors' conference. The United States should build upon agreements reached at the recent G-8 Summit and launch an initiative to eliminate odious debt for all countries in transition, with Iraq being the first country considered for inclusion. Finally, efforts should also be made to eliminate Iraq's outstanding reparations to Kuwait from the invasion, by Saddam, of that country. The termination of the reparations agreement should be the first in a broader international program to review war reparations that damage the financial health of post-conflict countries."

The statement after the EU-US summit just reiterated the existing line from in the UN resolution and G8 statement, with the emphasis on the IMF role. The Reuters coverage of the summit described the statement as "sidestepping" the key issue of how much debt to reduce.

"We shall promote reduction of Iraq's external debt burden, as debt reduction is critical if the Iraqi people are to have the opportunity to build a free and prosperous nation. This reduction should be provided in connection with an IMF program, and sufficient to ensure sustainability taking into account the recent IMF analysis. We encourage governments within the Paris Club, and non-Paris Club creditors, to achieve that objective in 2004."

June 25, 2004

Reuters interviews a couple of experts:

JPMorgan in a research report said Saddam's external debt estimated at $125-$130 billion represents 1,100% of Iraq's 2003 GDP and "is clearly unsustainable given the current economic situation and huge reconstruction needs. In fact, JPMorgan believes Iraq will receive a Paris Club debt write off of 75-80 percent in NPV (net present value) terms and that a Paris Club deal could be signed as early as the third quarter of 2004 ."

"I think (the French) are testing the waters. They are waiting to see what the Russians or Germans or Japanese going to do," said Mustafa Alani, consultant at London's Royal United Services Institute. "It's a chicken and egg problem. You can't have security stability without economic stability. I believe certainly for the next 10 years Iraq will not have the ability to repay the debt."

US officials have said that the Bush administration is seeking authority from Congress to forgive 90-100% of Saddam's debt to the United States. But a leaked letter reveals that they intend to take debt from the already pledged reconstruction grants.

In the June 18 letter to lawmakers, a copy of which was obtained by Reuters, the State Department estimated the “budget cost” of forgiving all the $4bn debt to the United States at between $360-640m. The figure represents an amount estimated to secure the loans, largely run up during the 1980s.

According to the document, the administration wants that money to come out of the $18.4bn approved by Congress last year for Iraq's reconstruction. Key lawmakers have already signed off on the plan, but it must still win congressional approval. Congressional aides said the request could prove controversial since it could force the administration to scale back some reconstruction projects by the amount that is being diverted to the US Treasury.

The State Department said providing substantial debt relief would "allow Iraq to invest its oil revenues in its own development," attract foreign direct investment, and clear the way for the World Bank and the International Monetary Fund to provide new loans to Iraq. It said such a measure was “necessary for the successful transition of authority” to Iraqis on June 30.

Rice cited figures from the IMF that she said showed that between 67 percent and 95 percent of Iraq's debt should be forgiven to allow for economic sustainability.

"We have the Iraq debt sustainability study from the IMF. The IMF has said that the range is somewhere between 67-95% that is sustainable", Condoleezza Rice told a briefing at the White House, "People need to be clear that Iraq is not going to be capable of recovering if it has to pay a crushing debt burden. Eventually this will go to the Paris Club, but we are still in discussion with members. This is going to be quite a long process. We still have to go through an IMF program, negotiation with the Iraqis, and this is going to take some time."

Kuwaiti Trade Minister Abdullah al-Tawil said Kuwait is committed to helping Iraq by reducing a debt of up to $18 billion and is open to talks with the interim Baghdad government: "We think that this government is (internationally) recognized, so it will be either with this government or the coming one," Tawil told Reuters.

Jubilee Iraq asserts that Kuwait has no legitimate debt claims against Iraq. The cash it provided to Saddam during the Iran-Iraq war was either (a) grants without any valid loan documents (b) odious loans since they funded the regime's war and did not benefit the Iraqi people. In either case Kuwait has no claims. It's reparations claims are another category, but it is hard to see why the battered Iraqi people should countinue making vast payments to wealthy Kuwati companies ($1.6bn since the fall of Saddam, more than Iraq's combined health & education budgets this year).

June 24, 2004

Iraq's deputy prime minister, Barham Salih, stressed on Iraqi Al-Sharqiyah TV that as well as debt cancellation, the UNCC compensation payments need to be addressed. Jubilee Iraq is demonstrating once again in Geneva this coming Tuesday to call for an end to these payments ($1.6bn since Saddam fell).

"We are hoping that Iraq will be relieved of this burden because it needs assistance in all areas, not just in debts, but also in the compensations issue. We are hoping that the countries that are receiving compensation from Iraq would reconsider the matter and come to the aid of the Iraqi people." (Translated by BBC Monitoring Middle East)

A House of Representative committee on Wednesday urged the US Department of Agriculture to extend new credits guarantees on exports to Iraq. House lawmakers say the USDA could offer export credits regardless of Saddam's existing debt ($4bn to the USDA from the 1980s), but the Department believes that Congress must waive repayment before a new round of credit could be offered. Agriculture Secretary Ann Veneman said if the legal obstacles were removed and "if it meets the criteria, we will use the program when we can" for Iraq.

Reuters interviewed Sinan Al Shabibi, Governor of Iraq's Central Bank and Jubilee Iraq supporter, at the sidelines of an Arab banking conference in London. When queried how big a debt reduction Iraq was seeking, he replied: "The biggest reduction ever."

June 23, 2004

An article in German news magazine Focus on 21 June entitled "An Urgent letter from the construction industry" said that the industry intends to demand compensation if the federal government gives up claims from German companies by cancelling some of Saddam's debts.

In a letter to the Chancellor's Office, the Main Association warns against "rescheduling agreements by the Federal Government without a corresponding approval by the exporter". This is an "intervention liable to compensation claims". The Association bases this stance on a report by trade law expert Friedrich Count of Westphalia of Bielefeld University. The article put the figure on debt from the mid-1980s at 1.2 billion euros.

Jubilee Iraq recieved positive feedback from the German construction industry for an odious debt tribunal at the Berlin conference in March. The tribunal would fairly and transparently seperate out legitimate claims from projects which benefited the Iraqi people (which the German companies believe includes many of their claims) from the odious claims coming from cash and credit given by America, Kuwait and others to support Saddam during the Iran Iraq war.

The debt will be on the agenda of the EU / US Summit taking place this Saturday 26 June at Dromoland Castle, Ireland. The American delegation will be headed by President Bush, Colin Powell, Condoleezza Rice and Donald Evans. The EU will be represented by Bertie Ahern, Brian Cowen, Javier Solana, and Romano Prodi. (Agence Europe report)

European officials said a two-page joint statement on Iraq will be issued at the end of the summit. Philippe Coessens, political counselor for the EU in Washington, told reporters at a briefing that the joint declaration would pledge to implement a debt-relief program as part of an IMF economic program.

After a meeting between Iraq's interim finance minister, Adel Abdul-Mahdi, and France Finance Minister Nicolas Sarkozy in Paris, Foreign Ministry spokeswoman Cecile Pozzo di Borgo told the media: "We don't think it's possible to cancel more than 50%, which already represents a considerable effort by the international community. France is in favour of a substantial cancellation of Iraq's debt. Regarding the extent of this reduction, the situation of Iraq, which has considerable potential resources, cannot be compared to that of other poorer and more indebted countries." Officials have previously said in private that Paris and Berlin have agreed to jointly push for a limit of about 50%.

June 19, 2004

Saddam's debt was the main topic of discussion at the 131st meeting of the Arab Monetary Fund's Executive Directors, but no decision was reached on a possible settlement. AMF Chairman Jassim Al Manai said he presented a report on the debt, over $420m, ($201.7m principal, and the remained interest), which accounts for nearly a third of the AMF's paid up capital. At its meeting in Kuwait last month, the AMF said it would not write off the debt but will seek repayment in the future.

Iraq will make its first postwar debt issue in the next few days, through an auction organised by the Central Bank. However the Central Bank will not be forced to buy the paper as it was during the Saddam era. The Governor Sinan Al Shabibi said: "An Iraqi dinar treasury bill issue is imminent. The proceeds will be used to finance state obligations. We will only buy the government bills if this meets our monetary goals." Asked if foreigners will be allowed to buy the new paper, the governor said: "Eventually this will happen. We are studying the experience of other countries." Shabibi said the central bank had been mostly selling Iraqi dinars in the past few months, which helped its foreign currency reserves double to $2.4 billion.

Monetary authorities, said Shabibi, will remain independent after July. Iraqi officials were wise to resist the "shock therapy" approach to the Iraqi economy pushed for by some in the US-led administration, he added. (Reuters)

June 18, 2004

A contract is out for legal advice on debt restructuring. The rumour mill suggests that three US law firms have been shortlisted for this: Cleary Gottlieb, White & Case and Loeb & Loeb.

June 17, 2004

Member states of the Organization of Islamic Conference (OIC) welcomed establishment of an Interim Government in Iraq. The joint communique issued after the 31st session of the Islamic Conference of Foreign Ministers in Istanbul appealed to all states to contribute to the alleviation of the financial burden on Iraq by writing off Iraqi debts as an expression of their support and as a contribution to the reconstruction of the country.

Jubilee Iraq welcomes this statement, and urges IOC members who have claims against Iraq (Jordan, Kuwait, Morocco, Qatar, Saudi Arabia, Turkey, UAE) to take the lead by immediately and unconditionally writing off their claims.

June 15, 2004

As Jubilee Iraq warned at the time, the UN resolution did nothing to address the reparations Iraq is still paying for Saddam's crimes, something Iraqi officials had explicitly asked for.

Writing in the Financial Times today, Sheba Crocker of think-tank CSIS agrees: "The new resolution will continue the arrangement established last year whereby 5% of Iraq's oil revenues are set aside to pay Gulf War reparations. Added to Iraq's $120bn debt overhang, those reparations take a massive bite out of the money available to Iraq."

President Ghazi al-Yawer said after returning from th G8 summit that "We asked them to extinguish Iraq's debts through the Paris Club and other gatherings. They promised to make good."

Jubilee Iraq will be working in the next weeks to warn President al-Yawer and other members of the transional government not to accept the terms of the Paris Club, but to demand unconditonal cancellation of all the odious debt.

June 14, 2004

Jordanian Finance Minister Muhammad Abu-Hammur told Al-Arab al-Yawm newspaper about planned talked with Iraqi government officials after 30 June to deal with the remaining $500m of frozen Iraqi assets in Jordanian banks.

He said that his priority is getting payment for Jordanian who exported goods to Iraq shortly before the war, which may total $250m. He also said that the forthcoming talks will also focus on Jordan's longterm debt claims, quoted as $3.1bn (much higher than the $1.3bn claimed by the former FM Michael Manto last July).

Reuters reports that the Paris Club discussed Iraq at its monthly meeting today, but the long-awaited IMF report offered no solution to the dispute over how much should be written off. "It's not purely academic, there are simulations, but there is no recommendation," one official said. The official noted that there were no Iraqi representatives at the talks but said that was normal at this stage. The official noted that the US wanted a write-off of 90%, while Japan and Britain were talking of about 80%, Russia around 65%, and France and Germany around 50%.

One official said major non-Paris Club creditors had not yet got the IMF report although Iraqi officials were believed to have supplied a copy to the Saudi authorities. More Paris Club talks are expected next month, but those talks are not expected to produce any breakthrough either, officials said.

Asked if interim government be considered as legitimate for the purposes of signing a Paris Club debt relief deal, one official said, "That seems to be the likelihood". Technically, such a deal can only be struck once the IMF has agreed on an economic programme with Iraq. The IMF is expected to produce what it calls an emergency post-conflict agreement shortly, involving emergency funds. But officials said it was not yet clear or accepted in Paris Club circles whether this would be considered as sufficient for the Paris Club to go ahead and hammer out a formal debt relief deal, or whether further economic programmes would have to be produced by Baghdad with IMF approval. (Reuters, 11 June, "Iraq debt headache continues")

June 11, 2004

Independent Iraqi paper Al-Sabah al-Jadeed reported on tuesday that Vice-President Rosh Noori Shawis said that at the G8 summit President Sheikh Ghazi al-Yawir would raise the issue of settling Iraq's reparations to Kuwait. Shawis said the aim of raising this issue was to get rid of the heavy burdens on the Iraqi economy and to start the great reconstruction campaign. There is no information yet on whether al-Yawir had any success. (translated by www.iwpr.net)

June 10, 2004

Chancellor Gerhard Schroeder told reporters at the G8 summitt that Germany wants a share of Iraq reconstruction contracts in exchange for canceling parts of the debt.

"German industry, of course, shares an interest and we cannot accept on the one hand, one generously grants debt relief while on the other hand, one believes one could decide on rebuilding orders amongst themselves. That won't work. One has realized now that you can win a war alone but that doesn't mean you can organize postwar matters alone."

The German construction industry is "strictly opposed" to debt relief, Michael Knipper, general manager of the German construction industry association, said in Berlin. The industry's claims, worth 1.7 billion euros ($2.1 billion), would be reduced to 340 million euros after an 80% write off, the lobby group said in a faxed statement.

"Iraq is a rich country," Chirac told a final news conference after the G8 summit,
"How would you explain to heavily indebted poor countries or other heavily indebted countries like Nigeria that in three months we are going to (do) more for Iraq than we have done in 10 years for 37 heavily indebted poor countries? It makes no sense. It is not decent. That is why France, and we were not alone, has taken a clear position: A cancellation? Yes. Substantial? Yes. What does substantial mean? For us, it means about 50% I do not want, we do not want to go further."

What isn't decent is that Chirac is expecting Iraqis to pay France for the Mirage jets they gave to Saddam, and the Nigerian people to pay for the money they put into General Abacha's Swiss bank accounts. France, the US and the Paris Club in generals' bad treatment of African countries is no justification for also treating Iraq badly.

Russia is apparently sticking to it's longstanding position of a 65% reduction linked to reconstruction contracts. APF reported, via an unnammed Russian official, that Putin told Bush that "our flexibility will depend on yours and the capacity of our businesses to work in Iraq."

The G8's official statement on Saddam's debt makes no progress, but does restate the cynical self-interest of all the G8 countries, aligned against justice and soverignity for Iraqis. The media hype about a split the French and Americans on the level of reduction misses the key points upon which they agree, revealed in this statement:

(1) Iraq will be forced to apply an "IMF program" of rapid privatisation and liberalisation as a condition for debt reduction. This will dramatically reduce Iraq's effective soverignity over key the economic policies which will shape its future.

(2) The basis of debt reduction will be "sustainability", ensuring that creditors will recieve a regular uninterupted stream of debt payments, ignoring the critical moral and legal issue of whether the debt which financed Saddam is legitimate in the first place.

(3) The deal will be clinched "in 2004", in other words under the unelected transitional government. This key decision will be pushed through before the Iraqi people themselves are able to have a say on it. This is a necessary step for the creditors because Iraqis almost universally oppose payment of Saddam's odious debt and foreign control of their economy.

The full G8 statement reads "Debt reduction is critical if the Iraqi people are to have the opportunity to build a free and prosperous nation. The reduction should be provided in connection with an IMF program, and sufficient to ensure sustainability taking into account the recent IMF analysis. We will work with each other, within the Paris Club, and with non-Paris Club creditors, to achieve that objective in 2004."

June 09, 2004

Adil Mahdi, the new Iraqi Finance Minister (whom Jubilee Iraq met last October in his role as No.2 in SCIRI) spent 20 years living in exile in France and has 4 children who are French nationals.

Le Monde reported yestarday that he will be visiting France at the end of June to meet his French counterpart Nicolas Sarkozy and ask for "the almost complete cancellation" of Saddam's debt. He welcomes Jacque Cirac's offer of a 50% cancellation but argues "Frankly, this is not acceptable. France, which has always adopted a friendly attitude to Iraq, must go further... It is in the interest of everyone, France included, to help Iraq return to good health as quickly as possible...The French compensation -- for erasing the debt -- will be the return of its firms and investors" (Jubilee Iraq translation).

The Le Monde also mentions that France expects Kuwait to make a significant effort in cancelling debt and reparations claims.

Statements by various named and unnamed officals have reiterated existing positions on Saddam's debt. So far there is no sign of any real development on this issue, in spite of considerable media hype.

At a press briefing at the G8 summit in Georgia, an unnamed "senior (US) administration official said: "Our view is that -- I think that [the IMF] analysis supports strongly the position that we have been taking for sometime, that the vast majority of Iraq's debt needs to be reduced. I mean, simply as a financial matter, if you look at what the reconstruction obligations are, if you look at the size of the debt load, if you look at any sort of reasonable GDP projections -- and the IMF has done all of this in this document that's been distributed to the Paris Club -- it just shows that the numbers add up to the need for the vast majority of the debt to be reduced, in order for Iraq's situation to be sustainable, and we continue to hold that position." By making the rational "simply financial" the US is ignoring the odious nature of the debt which it an others lent to Saddam which means that Iraqis have no moral or legal obligation to inherit it.

He said the issue was "not on the agenda for that to be a discussion item or for there to be some resolution of it." but that "there may be a discussion of it," indicatively adding "they are the leaders of the world and they can do what they want." The G8 are not the leaders of the world, representing only about 14% of the world's population (though 65% of it's wealth).

As regards speculation recently that the issues of Saddam's debt & HIPC would be combined, the Washington Post quotes a senior offical (perhaps the same one): "There is no way there is going to be a grand bargain combining HIPC and Iraq debt. That is not going to happen."

A senior Canadian official said: "The IMF document spoke of the need for more than what has been viewed as substantial, which is 66%, the debate will be of course how much more." This is a key bit of new information, since the IMF report has been kept secret, and it ties in with Jubilee Iraq's analysis that even after a 66% reduction Iraq would remain one of the most indebted countries in the world, particularly when reperations are also considered.

Catherine Colonna, a French spokeswoman for President Jacques Chirac said: "Iraq is a country which has resources,. Iraq isn't a poor country. There are very strong points leading us to believe that treating 50% of Iraq's debt would be appropriate, once an agreement has been reached between Iraq and the IMF and the Paris Club."

Germany Chancellor Schroeder said Germany might tie forgiveness of Iraqi debt to assurances its oil profits go directly to its reconstruction.

June 08, 2004

The UN Security Council Resolution 1546 passed today largely follows the draft and our criticisms remain valid.

Paragraph 18 confirms what Jubilee Iraq has been warning about for over six months - the unelected transitional government is given authority by the UN to sign binding agreements with creditors and the IMF which will forcing the future elected government to repay a large part of Saddam's odious debt and submit to economic conditions from the IMF in return for receiving partial "forgiveness" of debt which has no legitimacy in the first place.

Paragraph 27 compounds this disaster by revoking the provision in resolution 1483 which protected Iraqi oil from legal proceedings until December 2007. This revision could mean that after the transitional government signs up to a Paris Club debt agreement, as envisaged in paragraph 18, the creditors may be able to seize Iraqi oil to meet their debt payment claims. This is very dangerous.

The only potentially positive part of the draft resolution (para 20), which may have enabled a moratorium in reparation judgements by the UN Compensation Commission, has been dropped from the final version.

27. Further decides that the provisions of paragraph 22 of resolution 1483 (2003) shall continue to apply, except that the privileges and immunities provided in that paragraph shall not apply with respect to any final judgement arising out of a contractual obligation entered into by Iraq after 30 June 2004;

28. Welcomes the commitments of many creditors, including those of the Paris Club, to identify ways to reduce substantially Iraq's sovereign debt, calls on Member States, as well as internationa1 and regional organizations, to support the Iraq reconstruction effort, urges the international financial institutions and bilateral donors to take the immediate steps necessary to provide their full range of loans and other financial assistance and arrangements to Iraq, recognizes that the Interim Government of Iraq will have the authority to conclude and implement such agreements and other arrangements as may be necessary in this regard, and requests creditors, institutions and donors to work as a priority on these matters with the Interim Government of Iraq and its successors;

A new report by World Vision "An Ounce of Prevention" (press release, report pdf) Calls on the G8 and other creditors to cancel Saddam's debt and also to take the next step and cancel the $84bn combined debt of 16 countries wartorn countries (The report profiles the cost of conflicts that have devastated Sudan, Rwanda, the Democratic Republic of Congo, Lebanon, Cambodia, Angola, Sri Lanka, Somalia, Sierra Leone, Nepal, Liberia, Haiti, Guatemala, Burundi, Afghanistan and Chechnya). Jubilee Iraq agrees that in many of these cases much of the debt is odious and all of the debt inhibits recovery for these countries.

June 06, 2004

The New York Times reports that at a working meeting on the sidelines of the D-Day celebrations, Bush asked Chirac whether France would be willing to be more generous in relieving Iraq's debt, and Chirac said no, according to a French official in the meeting. It would be unfair to treat Iraq more generously than the world's poorest nations, the official said.

Jubilee Iraq notes that generosity does not enter into this issue. The debt is odious and must be written off - unconditionally - by both Bush and Chirac. There are of course many other countries with odious debt, and this should be written off as well. This is precisely why Jubilee Iraq has proposed an odious debt tribunal to tackle this issue fairly for all.

Canadian Finance Minister Ralph Goodale told Reuters that the G8 will decide how much of the debt should be forgiven when they meet next week.

"There is a view -- at least on the part of some European countries -- that something in the order of 60-65% would be appropriate. There are some other countries, including the United States, that would argue for a substantially higher number in the 90-95% range. They'll discuss it. Whether it'll be ripe for conclusion remains to be determined. Our Canadian view would be that something toward the higher end of the range would be most appropriate and we could also argue very strongly that this does need to be accomplished under the auspices of the Paris Club. We're not publicly putting a figure on it. We're trying to be helpful in the discussion here."

June 04, 2004

Agence France Presse reports that sources in President Jacques Chirac's office said today that France is opposed to a massive cancellation of the debt.

The sources said that an 80-90% cancellation is impossible for political reasons, noting that debt cancellations traditionally only amount to two-thirds of the total. It would be difficult to explain to Nigeria, Indonesia and other debtor nations why Iraq had been given more over the course of a year than the rest of the world's poorest countries combined. The French sources said that Germany is in agreement, whereas Britain, Italy and Japan were "more open" to massive cancellation.

Adel Abdul-Mahdi, Iraqi's new finance minister and a member of SCIRI, told Reuters "We expect up to 90% of the debt to be forgiven, but because negotiations are ongoing it is too early to give figures and ratios. We really want Iraq to be forgiven of (all) debt if that is possible, but we believe the larger part must be gotten rid off."He said he expected a breakthrough in debt negotiations this year. "A large number of countries have announced that they will forgive Iraq from either all or a substantial part of these debts." He said Iraq would have full control of its financial affairs after the formal handover of sovereignty and would tolerate no outside interference in its decision-making. (JI - presumably this includes IMF conditionality attached to a Paris Club debt reduction deal).

Jubilee Iraq first met with Dr. Mahdi last October and we have maintained a close dialogue with SCIRI. We are delighted that he is speaking out so forcefully, and urge all the creditors to treat Iraq justly by unconditionally writing of at least 90% of their claims.

Reuters quotes an anonymous European diplomatic source, saying the G8 will discuss the debt next week: "The percentage to cancel and restructure will be in a range of 60% to 90%."

June 02, 2004

Reports over the last few days about Australia cancelling Saddam's debts have been premature. What was being refered to was just standard participation in a Paris Club deal, which Jubilee Iraq has been arguing would be unfair on Iraq.

Trade Minister Mark Vaile said today: "The exact proportion of debt forgiveness to Iraq remains to be determined in international negotiations over coming months. After debt forgiveness, the government will still be working actively through the Paris Club to seek a recovery of as much of the remaining debt as possible." he added. Vaile said Iraq has an external, unrecoverable debt burden in excess of US$150 billion, but there is no way this can be serviced. He said that, relieved of this debt, Iraq has the potential to be a stable trading partner for Australia, providing new opportunities for exporters and investors.

Vaile said the debt accrued from wheat sales to Iraq in 1987 through 1989. Some 80% of the sovereign risk of these sales was underwritten by the government on its national account through its then Export Finance Insurance Corp. Wheat growers were reimbursed US$381 million from a total debt of US$481 million from the government in 1991.

June 01, 2004

There is heated debate going on in Australia over the export credit loans extended to Saddam in the 1980s.

Michael Danby, an MP for the Australian Labour Party, said those who backed the decision of the then Australian Wheat Board (AWB) to trade with Saddam Hussein should be held to account.

"This is a public scandal... The decision over the last 15 years of the Australian Wheat Board to sell wheat to the Saddam Hussein regime has effectively subsidised that regime. The Australian people fed the people of Iraq while Saddam Hussein was able to spend his money on tanks and palaces, on advanced weaponry - it's a public scandal." (Australian Associated Press, 31 May)

Trade Minister Mark Vaile has warned Australian grain growers they are unlikely to recoup millions of dollars Iraq owes them. Mr Vaile says the chances of the debt being paid are remote and farmers' best interests are served through a prosperous Iraqi economy. "What is the best interest in terms of the global community and particularly our grain growers is for the development of a strong and stable economy in Iraq. There is always going to be a market for about 2.2 million tonnes of wheat every year."

However, wheat exporter AWB Ltd says it has not given up pursuing the debt. AWB board member Chris Moffat says wheat growers should not be penalised for circumstances beyond their control. "We haven't signed it away, we've had no intention to. The board is very strong that this money belongs to growers and must be accounted to the growers in its use and its end destination and that's where we are with it."