October 28, 2004

The Democratic Party of the Iraqi Nation was launched in Baghdad by Mithal Al-Alusi, who was expelled from the Iraqi National Congress party in mid-September for controversially visiting Israel. It's launch statement included: "The Democratic Party of the Iraqi Nation does not accept the debts incurred under the tyrant and illegal regime ... to kill Iraqis."

October 27, 2004

Although Oct 1, the start of fiscal year 2005, has passed, the US Congress has yet to pass most of its spending bills. This includes the foreign operations spending bill. The Senate version of the bill gives the administration authority to move another $360 million from the $18bn Iraq reconstruction fund to pay off Saddam's debt, but the House bill has no mention of this item. (we mistakenly reported in September that this Bill had been passed).

October 26, 2004

The IMF's internal magazine includes an interview with the Iraq team. Lorenzo Perez said: "Given the complexity of these negotiations, it may take more than one Paris Club meeting." Adding: "Unsustainable debt is a major barrier to foreign investment, since it leaves potential investors without a clear picture of whether a country can service its debt or maintain an open capital and current account... In the short run, Iraq does have a very limited capacity to service its debt."

Alan Bennett said:"We intend to maintain a close dialogue [with Iraq] over the next 6 to 9 months to monitor progress, ensure things don’t fall through the cracks, and help them build their capacity to implement a more ambitious program.When Iraq is in a position to implement a more ambitious program—perhaps in the second half of 2005—a Stand-By Arrangement could be an appropriate step to take." He also explained the special committements the IMF had obtained from creditors to ensure their new $437m loan was protected: "[The] creditors agreed to defer debt service on existing obligations through the end of 2005—the period of the program supported by emergency financing—so that we could be confident that the program was fully financed. And, second, they affirmed our preferred creditor status during the repayment period of IMF resources, so that we would have first call on available resources when the time comes for repayment."

October 24, 2004

David Cobb, Green Party candidate for US President, is calling for the rescinding of all US corporate contract and instead paying the money in reparations to the Iraqi people.

Yestarday US Undersecretary Alan Larson implied that the Paris Club meeting will be on the 15-16th November, however Iraqi Finance Minister Abdul Adel Mahdi said in Najaf yesterday that it would be 12-13th November (arabic link).

The rather weak draft statement for the Cairo conference that will be on 22-23 November, leaked to the AP, includes: "All donor countries and organizations (must) ... expedite the disbursement of financial assistance promised to the various reconstruction projects ... as prioritized by the interim government of Iraq, and also to consider writing off debts owed by Iraq."

We've just uncovered some information about another creditor, the Arab Fund for Social and Economic Development (a regional version of the World Bank) which as of 1998 held about KD49m ($166m) of debts against Iraq. We have contacted them for an upto date figure.

October 23, 2004

US Undersecretary of State Alan Larson, on a trip to Japan, commented on Paris Club debt negotiations to Kyodo News: ''It would be my hope and expectation that sometime during the week of Nov. 15, white smoke will emerge and the deal would be announced. If the G8 countries and the Paris Club are to live up to their commitment in Sea Island then they are going to need to provide extraordinary deep debt reduction.'' He said the US is calling for 90-95% write off: ''We are not picking arbitrary numbers, we are picking numbers that are based on the analysis that has been done by the International Monetary Fund. That's what I think all of the creditors will need to do. We don't want to come back three or four years from now and discover that the recovery of Iraq has been handicapped because they are making too many debt payments and not having enough money to rebuild their country."

October 22, 2004

The Middle East Economic Survey will report on Monday that Iran has demanded that the IMF add $97.2bn to its assessment of Iraq's debt to cover reparations for the Iran-Iraq war. According to MEES, the Iranian request covers the non-military cost of the war to Iran, it is the first time it has brought its claims forward to an international organization.

The Iranian reparation claim is longstanding and Jubilee Iraq argues strongly that, just as with the reparations to Kuwait, Saddam's regime and not the Iraqi people were responsible. It is morally, legally and economically wrong to force these reparations on Iraq.

Sami Haddad's debate program, at 18.30GMT today on al-Jazeera is airing a live debate on the UNCC reparations, in response to Naomi Klein's articles last week. Phone in and explain why you think that the Iraqi people should not pay further for Saddam's crimes.

October 21, 2004

Today the UN Compensation Commission paid out $195m of Iraqi money in reparations to Kuwait and others, bringing the total paid out to date to $18.8bn.

The New York Sun reported that President Mubarak of Egypt is likely to announce that he is willing to host a regional conference on Iraq to discuss security and debt, planned for 21-22 November in Sharm el-Sheikh.

October 20, 2004

Following the debate in an open session of the Majlis last week, there was another debate today prompted by Nureddin Pirmozen MP.IRNA reports that Foreign Minister Kamal Kharrazi said his ministry has left no stone unturned in seeking reparations. "We had no other alternative but to hold bilateral talks on the reparation issue [with Saddam's regime] and we have to press ahead with the process."

Kharrazi reiterated that Iran will proceed with its claims after the Iraqi government takes office. Based on the sixth article of UNSC Resolution 598, the UN secretary-general is required to identify the party which initiated the war, he said, adding: "According to the seventh article of the resolution, the UN should dispatch a delegation to both Iran and Iraq to estimate the damages of the war." Kharrazi said that the then UN secretary-general, in a report to the UN Security Council, officially declared that Iraq started the war, he said. "Though, the UN Security Council had not reacted to this report." He said that the amount of direct non-military damages was estimated $97.2bn according to the deputy of the then UN secretary-general who visited Iran during the tenure of former president Akbar Hashemi-Rafsanjani.

At the last summit of the Organization of the Islamic Conference in Tehran [in 1997] five special committees were meant to be established to study Iran-Iraq war-related issues, among them the issue of reparations received the priority. He said: "That was the main reason for my visit to Baghdad and the trip of the then Iraqi foreign minister to Tehran to follow up the issue of receiving reparations from Iraq."

He added: "Following the downfall of the Saddam regime, we sent a letter to the UN secretary-general (Kofi Annan) on 5 May, 2003 and asked him, on behalf of Iraq, to take measures to pay war reparations." He said Annan replied that paying compensation to Iran should be subject to the establishment of the Iraqi government and bilateral negotiations.

October 18, 2004

There is a new IMF report out on Iraq, linked to their decision to extend $437m in new loans. This is not the famous Debt Sustainability Analysis Report, which is still being kept secret, but is nonetheless interesting: Iraq: Use of Fund Resources -- Request for Emergency Post--Conflict Assistance. The report contains a lot detail on the economy policies the IMF is proscribing for Iraq, which we will summarise shortly. For now here are the main quotes relating to the debt:

"Iraq’s total external debt as of end-2002 is estimated at some US$125 billion, or around six times GDP, and is clearly unsustainable." (the figure includes $42bn Paris Club, $67.4bn non-PC, $15bn private, $0.5bn multilateral, but based on only "partial responses from potential non-Paris Club creditors... [which] may be incomplete", and the IMF assumes a 5% interest rate on non-Paris Club debt).

"The program assumes that creditors will grant Iraq a deferral on external debt service due through end-2005, based on financing assurances provided by the Paris Club and other non-Paris Club creditors in September 2004. On this basis, the overall government fiscal deficit is projected to reach US$6.7 billion in 2005." The IMF pays particular attention to it's own interests: "[creditors should] provide debt relief on appropriate terms to ensure the timely repayment to the Fund of the amounts provided under the EPCA, in accordance with the Fund’s preferred creditor status."

The document includes a section by the Iraqi Interim Government: "We are also taking steps to clear our arrears to the World Bank and the Arab Monetary Fund... IMF staff completed debt sustainability analysis (DSA) for Iraq in May which, in our opinion, shows that Iraq will need substantial debt reduction (in the neighborhood of 90% to 95%) to reach external and fiscal viability... a moratorium on debt payments to our international creditors has been incorporated into our fiscal projections for 2004 and 2005."

Iraq's Letter of Intent with the IMF & Memorandum of Economic and Financial Policies has also just been published (dated 24th September)

October 17, 2004

Russian Defence Minister Sergei Ivanov said in an interview with Al-Arabia: "Our finance minister already stated that we are ready to write off half of the debt, but this does not mean that we shall write off the entire debt. We understand in which situation Iraq now is. We understand at the same time that, say, Iraq is not Afghanistan economically. Iraq is not a poor country. It can repay debts with time. We know that the Iraqi leadership is ready to resume implementing previously concluded contracts when the situation comes to normal." This is echoed in the Beirut Daily Star: "It seems that Lukoil might be attempting to use the debt issue as a bargaining card. Russian officials and international bankers have unofficially sounded out senior Iraqi officials about the possibility of accepting the Lukoil deal in return for [debt] relief."

October 16, 2004

The Tehran Times reports that Iranian Foreign Minister Kamal Kharrazi took part in an open session of the Majlis to answer questions from Nureddin Pirmozen MP regarding securing reparations for the Iran-Iraq war. The figure quotes in the article is "material losses amounting to over $1 trillion". Pirmozen charged that when Saddam Hussein was still in office, no serious steps were taken on this matter, despite the fact that the sixth Majlis passed a bill requiring the government to seek reparations from Saddam, but only now that he is in prison has Iran filed a complaint against Saddam. He added that it is also very strange that Iran’s complaints were not been included in the eight charges against Saddam listed at the beginning of his trial.

October 15, 2004

Following up her expose of the Baker/Carlyle scandal, Naomi Klein writes "By all means, pay Saddam's victims — but surely that means Iraqis, not rich corporations."

She describes the UN Conpensation Commission (UNCC) as "a slush fund for multinationals and rich oil emirates, a backdoor way for corporations to collect the money they were losing as a result of the sanctions against Iraq." While some reparation awards have gone to individuals who suffered damages, "much larger awards have gone to corporations... $21.5bn has been allotted to the oil industry alone." Jean-Claude Aimé, the UN diplomat who headed the UNCC until December 2000, publicly questioned the practice. “This is the first time as far as I know that the UN is engaged in retrieving lost corporate assets and profits. I often wonder at the correctness of that.”

Klein includes a few examples of awards: Halliburton ($18m), Bechtel ($7m), Mobil ($2.3m), Shell ($1.6m), Nestlé ($2.6m), Pepsi ($3.8m), Philip Morris ($1.3m), Sheraton ($11m), Kentucky Fried Chicken ($321,000) and Toys ‘R' Us ($189,449). "In the vast majority of cases, these corporations did not claim that Saddam's forces damaged their property in Kuwait — only that they lost profits or, in the case of American Express, experienced a decline in business because of the invasion and occupation of Kuwait." Texaco was awarded $505m in 1999. According to a UNCC spokesperson, only 12% of the award has been paid, which means Iraqis will have to pay hundreds of millions more to Texaco in the years to come.

She says that if Iraq hadn't paid out $1.8bn since the start of the occupation, "it could have avoided the $437m emergency loan that the International Monetary Fund approved on Sept. 29," with all of the conditions and restrictions that will come with it.

She points out the gross disparity between the $69.8m that Iraq has paid in reparations to Britain ($37m) and America ($32.8m) in the last 18months. This compates to only $29m has been spent on water, sanitation, health, roads, bridges, and public safety combined and $4m that had been spent compensating Iraqis who suffered as a direct result of the occupation.

She says these "grotesque corporate subsidies" would end tomorrow if the actual text of the UNSC Resolution (637) which created the reparations program was applied. It states that “the requirements of the people of Iraq, Iraq's payment capacity... and the needs of the Iraqi economy" must be taken into account. In conclusion she quotes Jubilee Iraq: “If justice and not power prevailed in international affairs, then Saddam's creditors would be paying reparations to Kuwait as well as far greater reparations to the Iraqi people."

The Guardian points out that the Carlyle group has changed its story three times in as many days. On Tuesday Chris Ullman told the Guardian that Carlyle had merely "restricted" its consortium role while Mr Baker was in office, but was still looking to receive a $1bn investment as part of the deal. On Wednesday he claimed that Carlyle "withdrew" from the consortium after Mr Baker became debt envoy last December. Then on Thursday, in the letter to other consortium members Carlyle claimed that "Carlyle was never a member of the consortium". What's next we wonder?

October 14, 2004

In a letter to WTO director general Supachai Panitchpakdi from Trade Minister Mohammed Al Jibouri, Iraq has formally applied to join the WTO.

Hiroshi Watanabe, vice finance minister for international affairs, told reporters. "We want (a write-off of) a vast majority of debt." Asked whether this means supporting the U.S. proposal of a 90-95% write-off, he replied abiguously: "A vast majority means a vast majority. But that does not mean 50%." But he added that Tokyo wanted to keep debt relief at the minimum amount needed for Iraq as Japan's tax payers' money is involved. Regarding French proposals of an initial 50% and possibly more later he said, "We should have a specific number for what would be the total amount for debt relief. We should not leave any uncertainties." He said that Iraqi representatives might attend planned Paris Club meetings in November and December with a view on a deal by the end of the year.

A spokesman told NBC News that Baker "at no time was aware of this proposal" to help Kuwait secure payment. This contradicts with the Carlyle group's claim, in a letter send yestarday by Carlyle general counsel Jeffrey W. Ferguson to the other consortium members (the International Stragety Group, Coudert Brothers and Albright Group), that that "Mr. Baker understood that Carlyle would have no involvement with the consortium."

The Guardian reports that the White House may not have been informed about Carlyle's dealing with the government of Kuwait. Carlyle's spokesman, Chris Ullman, at first said: "I'll get back to you". But 24 hours later he said he was still unable to answer.

After the Guardian's publication of the documents, Carlyle yesterday sought to change position. It claimed that it "withdrew" from the consortium on Mr Baker's appointment. This contradicted, however, its own spokesman Chris Ullman's position on tuesday, in which he said Carlyle had merely "restricted" its role in the consortium at that point. It also contradicts the consortium's own letter to Kuwait, in which it listed the Carlyle Group as a full consortium member.

The Washington Post adds that Carlyle's letter to other consortium members said it never consented to be a part of the consortium and "does not want to participate in any way, shape or form."

According to Chris Ullman, the company was first approached about the consortium in the summer of 2003. Carlyle began working on a memorandum of understanding that would have made it the private equity adviser to International Strategy, helping the group invest Kuwait's money. Kuwait is already an investor in Carlyle's existing private equity funds.

Ullman said that within days of Baker's appointment on 5 December Carlyle informed International Strategy it could not be a part of the consortium because of Baker's role as envoy. Carlyle told the consortium it would consider helping the group manage Kuwait's investments of recovered funds, but that agreement was never finalized. Ullman said Carlyle was not aware of the January proposal from International Strategy to Kuwait. In April, a copy of that proposal was sent to Carlyle, but the firm never responded and did not ask that its name be removed from the document, Ullman said. Carlyle never signed the memorandum of understanding with International Strategy, he said.

Albright's consulting firm said in a statement yesterday, "Our purpose in joining the consortium proposal was to help secure justice for victims of Saddam's invasion of Kuwait and ensure that compensation to Kuwaiti victims, fully consistent with U.S. policy, be used to promote reconciliation, environmental improvements and investment in Kuwait, Iraq and the region." Jamie Smith, spokeswoman for the Albright Group LLC, said the consortium has, as of yesterday, stopped pursuing business with Kuwait. "The proposal is clearly dead."

The Boston Globe explains that numerous calls to Mark Curran, spokesman for the Coudert Brothers, another consortium member, and to Baker's law firm were not returned.

Yesterday the Kuwait ambassador to Washington, Salem Abdullah al-Jaber al-Sabah, said: "As far as my information is concerned, my government is not considering such proposals".

At a press conference in Toyko at the Iraq Donor Conference, Deputy Secretary of State Richard Armitage answered: "Each and every [major creditor] agreed to significant reductions of the debt. Now "significant" to the United States is 95%. I would not say that all of our colleagues signed up to that. The United States, however, has taken $360m, and we will apply it to the Iraqi debt and it will buy down slightly over $4bn of Iraqi debt. The IMF, the World Bank, have done a study on the Iraqi debt. It's $125bn. Eliminating that debt won't guarantee the success of Iraq, but without it, there is no ability for Iraq to be successful. And so, we are using all of our political persuasion, as well as our own money--witness the buy down of the $4bn worth of debt to demonstrate to the international community the worthiness of being a very generous forgiver of Iraqi debt. The fact of the matter is people are not able to get paid now anyway in an Iraq that's mired in $125bn worth of debt. It is our view, shared by some in the international community, that the way to go is to forgive the majority of the debt, but I'm not going to, I can't myself name a specific figure. But if you figure, by the way, that $125bn is the debt, and that the major creditors have agreed to significant reductions, even half of that would be $60-odd billion." Jubilee Iraq notes that there is no "worthiness" in "forgiving" odious debt, it's simple a matter of justice.

October 13, 2004

Today Naomi Klein reveals shocking information about James Baker's attempt to double-cross Iraq (short verion in Guardian, longer version in the Nation and leaked documents. here is anarabic summary ) A summary of the key points follows:

Baker, appointed Bush's Special Envoy on Saddam's debt last December, is also a senior counsellor and an equity partner with the Carlyle Group, an investment bank and defence contractor in which he has a reported $180m stake.

The Carlyle Group is part of a consortium secretly proposing to try to collect $27bn of debt on behalf of Kuwait. On July 16 2003 the consortium met with Kuwait officals and agreed to "prepare a detailed financial proposal for the protection and monetization" of reparation debts from Iraq.

The Proposal to Assist the Government of Kuwait in Protecting and Realising Claims Against Iraq was hand-delivered to Kuwait foreign minister, Mohammad Sabah al-Salem al-Sabah, on January 21 2004. Baker was meeting the same man that very day as Bush's envoy with the stated goal of asking them to forgive Iraq's debts.

The main proposal would transfer ownership of $57bn in Saddam's unpaid debts and reparations. The debts would be assigned to a foundation created and controlled by a consortium in which the key players are the Carlyle Group, the Albright Group (headed by another former secretary of state, Madeleine Albright) and several other well-connected firms. Under the deal, Kuwait would also give the consortium $2bn to invest in a private equity fund devised by the consortium, with half of that going to Carlyle. The consortium would then use its personal connections to persuade world leaders that Iraq must "maximize" its reparation payments to Kuwait. The more the consortium gets Iraq to pay over a period, the more Kuwait collects, with the consortium taking a 5% commission or more. If Kuwait accepts the consortium's offer, it states, "we will distinguish Kuwait's claims - legally and morally - from the sovereign debt for which the United States is now seeking forgiveness."

The Proposal notes Baker's role as debt envoy will initially limit his role, but continues: "We believe that with Secretary Baker's retirement from his temporary position [as debt envoy], Carlyle and those leading individuals associated with Carlyle will then once again be free to play a more decisive role."

In a letter dated August 6 2004, the consortium informs Kuwait's foreign ministry that the country's unpaid debts from Iraq "are in imminent jeopardy". World opinion is turning in favor of debt forgiveness, another letter warns. The consortium's proposal spells out the threat: not only is Kuwait unlikely to see any of its $30bn from Iraq in sovereign debt, but the $27bn in war reparations that Iraq owes to Kuwait from Saddam Hussein's 1990 invasion "may well be a casualty of this US [debt relief] effort". In the face of this threat, the consortium offers its services. Its roster of former high-level US and European politicians have "personal rapport with the stakeholders in the anticipated negotiations" and are able to "reach key decision-makers in the UN and in key capitals".

Kathleen Clark, a leading expert on government ethics and regulations, said this meant that Baker was in a "classic conflict of interest". "Baker is on two sides of this transaction: he is supposed to be representing the interests of the US, but he is also a senior counsellor at Carlyle, and Carlyle wants to get paid to help Kuwait recover its debts from Iraq. Carlyle and the other companies are exploiting Baker's current position to try to land a deal with Kuwait that would undermine the interests of the US government."

Jerome Levinson, an expert on political and corporate ethics, said: "[This is] influence peddling of the crassest kind. The consortium is saying to the Kuwaiti government, 'Through us you have the only chance to realize a substantial part of the debt. Why? Because of who we are and who we know'."

The exact amount of the Saddam's debt to Russia has not been established so far, which makes it impossible to adopt any resolutions on writing it off, Sergei Kirpichenko, ambassador at large of the Russian Foreign Ministry, told Itar-Tass in Tokyo. "The amount will become known, after Russia and Iraq check the Iraqi debt. The sum is going to be rather large, running into billions of dollars." According to Kirpichenko, it is difficult to say when the debt will be checked. He said Russia could make "some reasonable concessions" on the restructuring of Saddam's debt, but, "when making a decision on the issue, we shall take into consideration not only a difficult economic situation of Iraq, but also the lawful economic interests of this country, which is quite natural."

October 11, 2004

John Dizard of the FT quotes an interview with Finance Minister Abdul-Mahdi: "We reject the idea that we should pay past due interest (PDI) that was incurred during the period Iraq was subject to UN sanctions and during the war. We will pay the interest that was due during the period we were not subject to sanctions. We also need a six-year grace period. This is not just a question of percentages. We are asking to have a one-shot deal before the end of this year. We don't want to leave any unknowns. That would be a very negative factor for our development."

Dizard comments: "Even most private creditors understand the legal reasoning behind the rejection of PDI during sanctions. It would literally have been a crime for western banks to have handled the interest paying transactions. When you subtract the PDI, the Paris Club debt shrinks from about $42.5bn to $21.02bn. Write off half that and you are within shouting distance of the American-Iraqi demands." Dizard quotes a source saying that: "the key problem right now... is that the Paris Club members don't want Iraq to be a Paris Club precedent [for countries such as Nigeria and Argentina]."

Dizard also notes that the Turan Corporation of Boston, which deals with private export credit claims, is working with the BDO Stoy Hayward on reconcillition issues and hope that a framework for the settlement of their claims can be set up early next year.

At an Iraqi conference on debt, organised by Dr. Ali Hussani and Mahmoud Al Rubai of the Al-Abrar Islamic Foundation, delegates called for arbitration on odious debt and an end to reparations. "Iraqis should not be forced to pay the debts and should not resort to the Paris Club and IMF for reduction as this will add legtimacy to Saddam debt, but should demand arbitration according to international law. Public interest demands separating out the debts which were used for the benefit of the people [from those used] for oppression. The creditors must bear the burden of proof for the legtimacy of their claims." As regards the UNCC reparations, the conference concluded "The iraqi people should not be held responsible for reparations as they have suffered more than any nation from saddam dictatorship... common sense dictates that countries who helped saddam should pay the Iraqi people reparations not the other way round." Full conference minutes (.doc, in arabic)

Jordanian Minister of Planning Basim Awadallah, meeting with his Iraqi counterpart Mahdi Hafedh, urged the international community to cancel Iraqi debts with a view to develop the living standard of the Iraqi people. It is unclear whether Jordan is committing to cancel its own debt claims against Iraq. This issue may become clearer with the first meeting of the Jordanian-Iraqi Higher Committee in Amman on 3rd November. Jordan also announced that it will hold the 5th Iraq Donor Conference in March.

October 10, 2004

Advocacy group, the Iraqi-Canadian Society, issued letters this week to the leaders of France, Germany, and Russia asking for the details of their debt claims to be made public so that their own citizens could judge for themselves the "kind of financing your government provided to the Saddam regime" and recommends 100% cancellation of these odious debts.

Chairman Dr.Shakir Issa writes: "The Iraqi people have been by far the greatest victims of Saddam’s aggression. It is not fair or just to ask them to pay the debt and reparations for their tormentor's crimes. The Iraqi ability to pay from its vast natural resources has nothing to do with the debts that occurred, which financed the worst dictatorship regime in the world. Our people are and still live in such extreme poverty and need every penny to solve the social and economic hardship suffered during the last 35 years. The future of our good relations is at stake and we request your support to rebuild our nation free from occupation. You have always been far friendlier to Iraq than the US, so please don’t let them now try to take the moral high ground by being seen to lead on the cancellation of Saddam’s debt. Translate your attitude to action and let the Iraqi people recognize their real friends." He adds: "Iraq will and should resolve its debt crisis, not by pleading for mercy from its creditors. We are looking, instead to a fair and transparent arbitration according to the rule of law."

Washington Post columnist Jim Hoagland reports that during his time in Washington Finance Minister Adil Abdul-Mahdi said that the most odious of these debts is the penalties for late payment for the period during which Iraq was under sanctions.

Hoagland says that in his view the debt is "the most visible remaining symbol of international complicity with the dictator's bloody reign. Saddam Hussein was raking in loans and payoffs from Arab states and amassing credits from French banks and U.S. grain export programs during his days of untelevised atrocity. He ran up more than $120 billion in foreign debts that remain on the books today. Arab states were in fact paying Hussein protection money as an investment in survival. Saudi Arabia, Kuwait and their neighbors should write off their $80 billion in claims. American, European and Asian creditors can encourage them to do so by forgiving their $40 billion total."

October 09, 2004

Tomasz Zalewski, the Polish Press Agency correspondent in Washington, writes in the Polityka newspaper that "Opposition to the war is coupled with grievances that the United States has not properly reciprocated for Polish assistance in Iraq... Some critics are even saying that we should... demand guarantees for the payment of Iraqi debts." (BBC Monitoring translation)

October 08, 2004

Supporting Dick Cheney's statement in the vice-presidential debate, Deputy Treasury Secretary John Taylor said: "It is too early to say what the number will be at the end of the year. These negotiations are ongoing and those numbers that were indicated were certainly the kind of things you can expect. You can expect at least $80bn." This would represent about a 65% reduction in the $125bn debt, far too little in Jubilee Iraq's opinion. Unfortunately Taylor's statement seems overly optimistic given that the Paris Club seems likely to use a figure of 50% (reducing their debt claims by only about $20bn) and it is far from clear whether other creditors are prepared even to do this much.

October 07, 2004

Bulgarian Defence Minister Nikolay Svinarov said that the Bulgarian government is investiaging the claims of the US Senate report about the origins of the weapons in Iraq, which mentioned Bulgaria. Svinaror said "No one disputes the fact that half of the Iraqi debt to Bulgaria is the result of arms exports, and there is no doubt that the terrorists in Iraq own a great deal of weapons supplied to Iraq by Bulgaria prior to 1989." (Bulgarian Khristo Botev Radio, translated by BBC Monitoring).

October 06, 2004

The Islamic Development Bank said today that it will provide a $500m loan "for infrastructure development and social programs like building schools and roads," said IDB President Dr Ahmed Mohamed Ali. $5m (1%) of the loan is in grant form. He added that the IDB does not have conditions Iraq must follow through with to receive the funds, except that they be used in "viable projects to serve the Iraqi people."

On the issue of Saddam's debt, Dr Ali said that the IDB will not get involved in that matter, and told the Kuwait News Agency that he encourages nations to forgive the debt only if they can afford to do so. The IDB will reschedule but not cancel it's Saddam-era debts.

IDB's reports from 2000 and 2002 implies that Saddam debts to IDB were at least $125m in 1999.

In the televised debate last night, in response to John Edwards accusation that the US has borne "90% of the costs of the effort in Iraq", Vice President Cheney responded: "The allies have stepped forward and agreed to reduce and forgive Iraqi debt to the tune of nearly $80 billion by one estimate. That, plus $14 billion they promised in terms of direct aid, puts the overall allied contribution financially at about $95 billion, not to the $120 billion we've got, but, you know, better than 40%. So your facts are just wrong, Senator." This is assuming about a 60% reduction in the debt, which has yet to materialise. Also cancelling the debt effectively admits the reality that the funds provided during the Iran-Iraq war were grants to Saddam, this cannot be counted as support for the new Iraq. Nor, of course, can the vast American military spending - while only a few billion of the promised $18bn of reconstruction money has actually been dispursed.

October 05, 2004

Iraqi Finance Minister Adil Abdul Mahdi reiterated: "What we are saying is we want a cut off of 95, 90-95%." Regarding the French proposal of just 50% he said: "This is a starting point. I don't think this will be their definite, their final decision." He added: "What we want is one deal by the end of this year, although we accept mechanisms, or traunching the deal... If those debts rest on the shoulder as a burden ... there will be no reconstruction, there will be no investments, there will be no money coming to Iraq and it will be a crippled country as it is now." He was speaking after a signing ceremony to make a $500m credit program from the U.S. Export-Import Bank operational.

During a meeting in Washington, Bulgarian Finance Minister Milen Velchev told his Iraqi counterpart Adil Abdal-Mahdi:"Although it is necessary to restructure Iraq's debt to make its service possible, we are not inclined to endorse a too big reduction... The issue implies not only political but also considerable financial importance to Bulgaria and the country is keen on solving it fairly."

Interestingly upon returning from Washington Velchev seperately announced that Bulgaria is refusing IMF demands that it desist from raising the minimum wage to 150 leva. This is the kind of demand the IMF may well make of Iraq.

October 03, 2004

US Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan met with Iraq's Finance Minister Adel Abdul-Mahdi and Central Bank President Sanan al-Shabibi. Asked by a reporter what could be done to convince France and Germany that Iraq needs more than 50% debt relief, Abdul-Mahdi replied: "I will tell them we must have a sustainable debt position."

Speaking at the International Institute of Finance, which is holding a conference on the sidelines of the IMF/WB meetings, Governor Shabibi said "Huge debt relief is very important for Iraq... In order to exploit oil stocks and resources, it needs huge debt reduction."

Referring to the 50% figure for Iraq, Canadian Finance Minister Ralph Goodale said his country and others were "toward the higher end of the range and we think we were in the majority."

October 02, 2004

French Finance Minister Nicolas Sarkozy
told reporters that he had support from Russia, Germany and Italy for the French proposal to forgive only 50% of the debt with an option to revisiting this after three years. He added Britain would go along with the French proposal if the initial cancellation were 80%. He had said: "Our position is for a 50 percent cancellation straight away, and for the remainder, give it some time to see how the situation develops in Iraq, the price of a barrel of oil, the capacity of Iraqi production." Russian Finance Minister Alexei Kudrin had earlier said: "The cancellation of debts within the Paris Club of creditors is based on an analysis of a country's mid-term and long-term solvency. It is very difficult to estimate such prospects before a conflict is settled, and therefore it is necessary to look for other solution formulas. Therefore I understand France's and Germany's initiative on the possibility of writing off 50% of the debt at this stage, setting some grace period on debt payments, which should be at least three years, and then re-addressing this issue after the situation becomes clearer. In general, Russia is considering the possibility of supporting this initiative. It seems to me that this proposal involves a great deal of essential compromise, when it is impossible to thoroughly analyze the prospects but when urgent decisions, including political ones, are needed. As finance minister, I can say that I like this initiative," but he emphasised that Russia has not made a final decision on this issue yet.

A senior US Treasury official commented: "There is no negotiation, so when you mention proposals that are out there for 50 percent or something like that, there is no negotiation. Anything like 50 percent is completely unworkable and financially irresponsible because even the most elementary analysis of Iraq's debt shows that it has to be reduced by much more than that if Iraq's going to be put in a sustainable position."

The French proposal would be a complete disaster, and Jubilee Iraq calls instead for creditors to either bite the bullet and agree to a fair arbitration to assess the legitimacy of individual loans and write off all the odious debt, or else to unconditionally write off at least 95%.

October 01, 2004

Paris Club Chairman Jean-Pierre Jouyet told reporters an agreement among the Paris Club group of creditor nations on Saddam's debt is not imminent but could be achieved by the end of the year. "There's no real progress. (A deal) is not imminent.. [this end of the year is] still the target," he said, adding that issues such as the time period over which the debt should be repaid needed to be agreed on as well as the amount of debt to be forgiven.

Kuwait's foreign minister Sheikh Mohammad has dismissed a suggestion by US Deputy Secretary of State Richard Armitage that the Gulf funds to Iraq were grants to help Saddam in the Iran-Iraq war. "That's his own belief ... but we consider them to be debts," Sheikh Mohammad told reporters at Kuwait airport on Thursday upon his return from the UN General Assembly.

He continued: "Armitage's demand for the countries of the world to drop Iraq's debts is the position of the United States. On the other hand, there's a French-Russian position not to drop the Iraq debts but to reschedule them instead. Also, there are a lot of countries in the middle of the road between those two positions as they want ... dropping part of the debts and rescheduling another part." Of the Gulf war reparations, he said: "This is not robbery, it's about rights ... There are committees and a mechanism to estimate the losses for those who have documents."

Iraq's Foreign Minister Hoshiyar Zebari was quoted by Kuwaiti daily al-Rai al-Aam as saying Baghdad was sure of Kuwait's generosity on the debts. Asked if he raised the issue in New York with his Kuwaiti counterpart, Zebari said: "Frankly, I did not because we're confident Kuwait's contribution will be generous, either at the donor nations conference in Tokyo or pertaining to its commitment to what will be decided by the Paris Club."