December 26, 2004

Foreign Minister Hoshyar Zebari has been in China. He said that China's extant debt claim is $4.6-6bn, some of it directly to the Beijing government and some to Chinese firms. He said Beijing expressed its willingness to "take steps or measures to eliminate the government debts on Iraq but there are certain debts by the Chinese private sector or private companies that need to be negotiated," he said. "We agreed in fact to negotiate those debts through bilateral contacts in the near future."

December 25, 2004

Dr Ghassan al-Rubay'i, writing in Iraqi newspaper Al-Mu'tamar today, criticises Arab countries for stealing Iraq's wealth, saying that Syria and Jordan are preparing and claiming false lists of debts.

December 24, 2004

Al-Adalah, the newspaper of SCIRI, yestarday published the seven point manifesto for the Unified Iraqi Coalition list (of 16 parties including SCIRI, Da'wah and the INC, which was organised with Ayatolah Sistani and is expected to attract the largest number of votes). Point six, on the economy, calls for: "a balanced economic policy that will ensure the solving of the country's problems and that will work to write off Iraq's debts, cancel reparations and use the oil wealth for economic development projects and achieving prosperity for the citizens." The manifesto also promises: "A social security system under which the state guarantees a job for every fit Iraqi, provides him with means of livelihood if he becomes incapacitated and offers facilities to citizens to build houses."

December 23, 2004

In an interview with Jordanian newspaper al-Ra'y today, Prime Minister Allawi responded to a question about arab debts: "The Arab brothers adopted positive stands which we appreciate. As you know, the Paris Club member states cancelled about 80 to 90% of the Iraqi debts. Poland, whose prime minister visited us, cancelled all its Iraqi debts. We hope that the Arab brothers who have not made a decision yet on reducing or cancelling these debts to be as generous as Poland, especially since these funds were not extended to Iraq for developmental projects. Most of them were regrettably used as a fuel for the wars launched by the former regime."

There have been confusing and contraditory statements by Russian officals on the level of debt relief they are providing under the Paris Club. Today Vladimir Putin said: "You know that Russia has agreed to an unprecedented write-off of Iraqi debts, although we believe that Iraq is, of course, capable of paying off these debts on its own... When we joined the Paris Club we agreed to write off up to 60% of debt of such countries. In addition, now we have agreed in the framework of the Paris Club to write off 80% of the remainder, as all other countries. So the overall write-off has reached 92-93%." This conflicts with Finance Minister Kudrin's statement on 29 Nov gave the figures as 65% and then a compounded 50%.

December 21, 2004

At a press conference in Washington today Finance Minister Adil Mahdi fielded some questions on the IMF. He said "With the IMF, we've already had some meetings in Amman. We had meetings here in Washington. And we think they can report early February really regarding the situation. And we will work on the standby agreement maybe before the middle of next year." Reuters explains: "A standby accord will commit Iraq to economic targets and tie loan disbursements to quarterly IMF performance reviews."

One journalist queried the suitability of IMF conditions to Iraq's shattered economy: "I wanted to question Iraq's capacity at the moment to implement the conditions in the IMF post-conflict assistance, which we know hasn't got as strict conditions as would the Standby." To which Madhi replied: "Really, we saw the people of the IMF and they were very happy with what we have already done, so I think Iraq will meet those commitments. I think this is an assistance for the Iraqi economy, they are not really conditions on Iraq. We really need to work on our subsidies side. Subsidies are taking almost 60% of our budget, so this is something we have to work on. We have to be more transparent in our economy. Other measures really are a real necessity for the Iraqi economy before being conditions asked by the IMF."

On the oil sector Mahdi commented: "It will be open to investment, to foreign investment downstream, maybe even upstream," adding that it will be ''very promising to American investors and to American enterprises, certainly to oil companies."

December 20, 2004

It was announced today that on 16th December Iraq cleared $110m of overdue debt payments to the International Bank for Reconstruction and Development, a division of the World Bank. This is equivalent to a fifth of Iraq's annual education budget. This payment is likely to pave the way for more World Bank loans. The World Bank naturally praised the payment, saying: "This arrears clearance is another key step in the overall process of the republic of Iraq's program of economic recovery and reform."

On 24th November Naomi Klein talked at a meeting joinly-organised by Jubilee Iraq about the corporate invasion of Iraq, raising funds for grassroots Iraqi NGOs. The talk is now available online at indymedia, direct download here naomi_klein.MP3 (31MB) and WAV format here (350MB). A transcript will be available shortly, and a some video clips are available on the excellent Big Picture TV.

Naomi continues her analysis of the US attempts to reshape Iraq's economy. Her latest article says: "The United States, having broken Iraq, is not in the process of fixing it. It is merely continuing to break the country and its people by other means, using not only F-16s and Bradleys, but now the less flashy weaponry of WTO and IMF conditions." She is also critical of the antiwar movement for failing to engage with the critical economic issues: "When the Iraqi National Assembly forcefully condemned the Paris Club deal for forcing the Iraqi people to pay Saddam's odious debts and robbing them of their economic sovereignty, the antiwar movement was virtually silent"

Iranian Foreign Ministry spokesman Hamid Reza Asefi said today: "The demand for war reparations and indemnities is one of our rights and there is no question of renouncing them at the moment. Wiping [them] off is not on the agenda." He estimated that Iran suffered $1,000bn of damages as a result of the Iran-Iraq war. While Jubilee Iraq recognises that Iranians suffered in that war, Iraqis suffered to a similar level, and the responsibility rests with Saddam and his regime not the Iraqi people.

December 19, 2004

Brian Dominick writes today in the New Standard about the importance the US places on the IMF conditions attached to the debt relief deal. "In exchange, Iraq will surrender its economic sovereignty to global financial institutions, provide foreign investors greater access to Iraqi natural resources, and increase investment opportunities for multinational corporations."

December 17, 2004

US Secretary of State Colin Powell, Treasury Secretary John Snow and Iraqi Finance Minister Adel Abdel Mahdi will today sign their bilateral component of the Paris Club deal. According to a State Department statement: "The signing of the debt cancellation agreement is the bilateral agreement that implements the United States' part of the Paris Club debt-reduction agreement reached November 21, 2004. In fact the United States will go beyond the 80% reduction agreed at the Paris Club and forgive 100% of the $4.1bn Iraq owes the United States from the Saddam era."

Jubilee Iraq welcomes this move but it is a hollow gesture unless the US makes it immediate and unconditional rather than linked to 3-4 years of privatisation and other economic conditions, as emphasised by John Snow today: "I urge Iraq to move quickly in negotiating and implementing an IMF Stand-By Arrangement, which will trigger the full amount of debt reduction promised by Paris Club members."

Snow said "the debt is simply unsustainable", but we respond that it is simply odious, as Colin Powell couldn't help but admit in his statement today that the loans were for: "financing the vices of an old tyrant." We also call on other creditors to match this 100% cancellation, and to go beyond the US by making it immediate and unconditional.

Media - please call +44 7813 137171 (London) for more detailed comments.

December 14, 2004

Romania's outgoing Finance Minister Mihai Tanasescu met with Iraqi Finance Minister Adil Abdul Madhi and Central Bank Governor Sinan Al-Shabibi. Tanasescu said: "We are ready to start negotiations to clear this debt. The Iraqi delegation understands the difficulties that Romania goes through now, that it can not accept the conditions of the Paris Club and is open for a bilateral solution. We will start to negotiate from an amount of $2.6bn," Tanasescu said. He said the debt was $1.7bn in 1990 and has increased by $900m due to penalties and interest. He added that "After Iraq’s elections, we will send a team of experts, having as a starting point the financial agreement signed in February 1990." The experts will be from the National Bank of Romania and the Banca Comerciala Romana. The Feburary 1990 agreement put the debt at $1.2bn.

Adil Mahdi said "We can understand Romania's position and this is why we are open to any discussions that could bring a favourable solution to both parties... We'll continue to reconcile this and put common figures on the table." Cristi Cretzan of Dow Jones writes: "Iraq's agreement with the Paris Club stipulates it can't offer better deals to other creditors. But this obligation refers to cash only, and doesn't apply if the two sides agree to restructure the debt, offering equity or investment opportunities instead."

Recently Minister Tanasescu sent a letter to Bulgaria, the Czech Republic, Croatia, Poland and Slovakia asked for a common Eastern European position on the debts. So far he has not received any official reply from his addressees, but had a phone conversation with his Bulgarian counterpart. (Sources: Reuters, Mediafax News Brief Service, Romanian News Agency Rompres, Xinhua)

December 13, 2004

John Dizard writes extensively in the FT about the commercial debt, which he estimates at $16-22bn "although that total may rise as more claimants come forward."

Saleh Daher of Boston distressed debt trader Turan says the debt hasn't been trading well: "This stuff has been the Pet Rock of emerging market credits. It just sits there and does nothing." Richard Segal of Exotix says: "The trade claims in particular have been difficult to price but claims that are clearly valid on their face could have an indicated value of 17 to 20 cents on the dollar of their principal amount." However there have not been transactions carried out at those levels. Robert Smith, also at Turan, says: "If you wanted to sell something quickly, like within a week, you would be looking at the high single-digit percentages of principal value, or maybe even as much as 10 cents on the dollar." [that is as little as 5% of the total value of principle + interest, assuming a 95% write down, the minimum level recommended by Jubilee Iraq].

Regarding reconcilliation of claims, one adviser to the Iraqi government, says: "Ernst & Young will be putting a solicitation for claims on the internet in December. Then you have to remember that the elections come up at the end of January, so it won't be possible for the government to take any real action until that's all over. The central bank governor will stay in place, so that will provide some continuity, but we don't know who the minister of finance will be. Realistically, the earliest substantive questions can be addressed is February. More likely, negotiations with the private creditors will start in March. Even so, I think it will be possible to have a rolling series of deal closings with the private creditors over the course of 2005."

Dizard adds: "Private creditors have virtually no leverage over the Iraqi government. Iraq has no significant overseas assets and in any event the standstill agreement among all United Nations members means any past judgments are effectively uncollectable. The oil revenue is also ring-fenced from private claims. So creditors can leave their litigators at home."

Knight Rider quotes Olin Wethington, John Snow's chief aide on this issue, who expressed optimism that by the end of 2005, most creditors would agree to Paris Club terms because it is favourable for them: "They cannot hope for a better deal." He continued: "I think because of its importance, we can anticipate that creditors globally are going to step up and do at least what the Paris Club has done." He said some countries may cancel more than 80% but didn't say which countries. He also said the Iraqi government soon will send a message to private creditors that it wants to begin the debt-relief process, which he believes will be quick. Robert Hormats, vice chairman of Goldman Sachs International said "You don't want that black cloud of debt hanging over them." He said he expected private creditor terms to be comparable: "I don't think it's politically feasible for industrialized countries or creditor countries to have one set of terms and the private sector to have better terms."

December 09, 2004

Montenegrin newspaper Dan reports that: "The USA is asking our country [Yugoslavia] to "forgive and forget" $800m dollars and remain on the list of creditors, with the debt reduced to $200m... According to our source, it still remains to be seen what the Serbia-Montenegro answer to the US request will be." [translation by BBC Monitoring] Jubilee Iraq notes that this figure of $1bn Serbian & Montenegrin debt is higher than estimates from 2003 of $700-750m; if it is correct then the debt to all the former Yugoslavia republics rises to about $2.63bn (given that Serbia-Monenegro has 38% of the total).

Bulgarian Finance Minister Milen Velchev is quoted in the daily newspaper Monitor: "The Paris Club will not enforce any decision on us, but it is normal for such write-off contracts to ensure that Iraq should not give preferential treatment to any of its other creditors. If we do not do anything, we will most probably get 20% of the debt rescheduled in instalments over a long period of time. The question is: Is there really any other option?"

In another scandalous decision against the Iraqi people, the UNCC today awarded a further $2,906,694,267 in reparations (from F4.4.2), bringing the total awarded to date to $51.8bn. Kuwait received $2,277m and the remaining $629m was largely for Saudi Arabia (from F4.4.1). The 55th meetinf of the UNCC will be on 8-10 March 2005. The 56th and final meeting is expected in June. The next payment of funds from Iraq's account to awardees will be in mid-January.

The world media have almost completely ignored this abuse. Jubilee Iraq continues to affirm that the Iraqi people, the primary victims of Saddam's agression, should not pay anymore reparations. Instead Saddam's financiers, in the Paris Club and elsewhere, should behave honourably and pay reparations both to UNCC claimants and also the the Iraqi people themselves.

December 08, 2004

Zaid Al-Ali, an Iraqi international commercial arbitration lawyer based in Paris and editor of Iraqieconomy.org reflects on the Paris Club deal and the role it gives the IMF in Iraq's future, drawing on his knowledge of the IMF's disasterous interventions in Argentina and Southeast Asia (in which Malaysia, the only country to reject the IMF, was the first to recover from recession): The IMF and the Future of Iraq. Al-Ali writes: "Post-Saddam Iraq offers a perfect illustration of how the industrialized world has used debt as a tool to force developing nations to surrender sovereignty over their economies."

Refering to the Russian participation in the Paris Club, Vladimr Putin said after a meeting with Iyad Allawi: "We did it in the spirit of solidarity with the Iraqi people. But at the same time we based our action on the expectation that the interests of our companies will be taken into account." Allawi appeared to aquiese, saying: "[Writing off the debt] is a very noble position. This certainly will help Russia play a leading role in rebuilding Iraq's economy and industry."

Russian Industry and Energy Minister Viktor Khristenko met with Iraqi Oil Minister Thamir Ghadhban and Energy Minister Ayham al-Samarrai and said that they told him that Baghdad does not intend to scrap deals closed with Hussein's government. West Qurna-2 was mentioned but no specific decisions were made, said a source.

December 07, 2004

Commenting on the Putin-Allawi meeting, a high-ranking Kremlin source told Novosti news: "Russia’s consent to considerably write off Iraqi debts is the most important contribution to the restoration of the economy and social infrastructure of the country. [In return] the Russian side expects that its legal economic interests in Iraq will be taken into account." Refering to the Lukoil claim on the West Qurna oil field and other contracts with Saddam.

In response to Russian participation in the Paris Club deal, the Iraqi Ambassador to Russia, Abdulkarim Hashim Mustafa, said: "If we spoke about the desire of the Iraqi government, it would certainly prefer to have the country's entire debt written off," adding that a number of non-Paris Club creditors friendly to Iraq have already announced their readiness to erase Iraq's whole debt. He also said that Iraq would seek compensation if Russian companies were found to have violated the UN oil-for-food program: "If there is real evidence behind accusations against any Russian companies, the Iraqi authorities will demand compensation."

Here is an article (in arabic) today in Azzaman.

The UNCC will review $23bn in claims this week, the largest chunk to date of a total $87bn sought for "environmental losses" during the occupation of Kuwait. $11bn of the claims are from Saudi Arabia and $7.5bn are from Kuwait, other claims come from Iran, Jordan, Syria and Turkey. In September Iraq accused its neighbours of lodging "astronomical" claims for environmental damage and called for rejecting at least $49 billion of it. Michael Schneider, a Geneva lawyer representing Iraq, said that Iraq would press the need to monitor the use of any funds awarded to states for environmental remediation projects. "You can't give blindly to these governments, there must be some mechanism that supervises expenditures in the future." A Western diplomat told Reuters: "To the dismay of some of these governments, they will find that they are just not getting what they thought. It is not political, but scientific, and the merits are not there to support high payments."

December 06, 2004

Tomorrow the UNCC will open its 54th session, running from 7-9th December. The main claim still to be assessed is the $67.9bn Kuwait "F4- environmental" claim for damage caused by the burning of Kuwaiti oil fields. Jubilee Iraq continues to insist that the Iraqi people, as the principle vicims of Saddams agression and particularly in their battered state, should not pay reparations for Saddam's crimes. Instead the creditors who armed and financed Saddam should face up to their responsibility to pay reparations to Kuwaitis, Iranians and Iraqis for the damage he was able to cause thanks to their backing.

Iyad Allawi is in Russia today, where the Russian government is expected to put pressure on Iraq over the Lukoil West Qurna contract (which Saddam signed and then later tore up), trying to squeeze more consessions from Iraq in return for participation in the Paris Club deal.

Jubilee Iraq's view is that it is up to a future elected Iraq government to make long term decisions on issues such as the development of oil fields, but there should be no conditions or quid-pro-quos on the cancellation of odious debt.

December 05, 2004

Today Jubilee Iraq participated in a teach-in on Iraq in London organised by Iraq Occupation Focus. We spoke at a seminar on the economy along with Dr.Kamil Mahdi and Greg Mullet of PLATFORM. Here is a report of the seminar by Tahrir Swift of Arab Media Watch.

Iraqi newspaper Al-Mashriq carries long article discussing the legitimacy of the debts. The writer, Hadi Hasan Ulaywi, argues that "since forgiving these debts is divided into three stages, it will not help Iraq to have a strong economy."

December 04, 2004

Al-Hayat reports today that Mahdi al-Hafez, Iraq's minister of planning, said that the Paris Club's decision is not binding for Iraq and represents the viewpoint of the member states in the club. He said that Iraq seeks the cancellation of 95% of its debts through negotiations with the creditor states. However, Iraq will resort to international arbitration if negotiations with these states reach a dead end, especially since the creditor states have not provided the Iraqi side with valid official documents, which prove Iraq's indebtedness to them, he added. He noted that the only document, which Iraq possesses about the truth of these debts, dates back to the year 1991 and indicates that $42bn owed to several countries. As for the declared figure of $120bn, according to IMF estimates, it is attributable to the accumulation of interest charges as a result of the delay in repayment. He hinted that Iraq will not repay the remaining debts [the difference between 120bn and 42bn dollars] before the creditor states present official documents, which prove the validity of their claim about the amount owed by Iraq.

December 02, 2004

The FT reports that Adel Abdul Mahdi said today: "We expect our Arab brothers will give us the highest reduction rate. Any negotiations should start with the 80% rate." He also said that Iraq had considered designating some of its obligations as "odious debt", loaned for "destruction and war", which need not be repaid.

Kuwaiti Foreign Minister Sheikh Mohammad Al-Sabah said today that Kuwait has official documents to prove that the debts were legal and said: "Any single dinar that Kuwait paid to Iraq without a legal and official proof will be worthless."