January 31, 2005

Today the Japanese government started discussions with Iraq concerning new loans (up to $3.5bn was pledged at Madrid in Oct 2003) which could be made as early as this summer. An official at the Ministry of Foreign Affairs said Japan's financial assistance will likely focus on power plants and irrigation facilities. (Source: Asia pulse)

January 29, 2005

Even the US State Department's own Washington File reports that: "In terms of Iraq’s economic relations with other countries, several of the parties state their intention to work toward achieving a complete cancellation of Iraq’s foreign debt and the elimination of war reparations resulting from Saddam Hussein’s military campaigns." The San Francisco Chronicle also interviews Makki al-Said, and official for the Omar Party (headed by Saad Salih Jabr), quoting their leading policy as getting "the international debt canceled. Most of it was run up by Saddam, and we Iraqis should not pay the price for his mistakes."

January 28, 2005

Leading UK news magazine the New Statesman has a pessemistic editorial on the elections: "We might nevertheless still muster enthusiasm for Iraqi democracy if we had confidence that it could do what it says on the tin. But even the most advanced western democracies are now constrained by big corporations, the money markets and international institutions such as the World Bank. Their grip is all the stronger in poor countries. The forgiveness of Iraq's enormous debts will depend on it following programmes laid down by the IMF. Astonishingly, the country is still paying reparations for Saddam Hussein's invasion of Kuwait, with millions of dollars going to multinationals such as Halliburton, Shell and Pepsi."

On the other hand, Johann Hari of The Independent is more upbeat about the elections: "The Iraqi people are about to risk their lives to show the world how much they want real democracy." But he also concludes: "Physical occupation can end while economic occupation through the IMF continues. Those of us in Britain who want to see real Iraqi democracy must battle to reform the IMF and other anti- democratic international bodies, and for a real, no-conditions cancellation of Iraq"s debt."

The Church of England's newspaper today warns that Iraq is "another nation in debt and under the IMF".

January 27, 2005

The Ministry of Finance and the Central Bank of Iraq today announced that Iraq has retained the services of two financial advisers to assist Iraq in its negotiations with its bilateral creditors in 2005. Lazard Freres & Co. LLC will act as Iraq's financial adviser in negotiating bilateral agreements with Iraq's 17 Paris Club creditors. Houlihan Lokey Howard & Zukin will advise on debt talks with non-Paris Club bilateral creditors.

January 25, 2005

Chinese Foreign Ministry spokesman Kong Quan today described the Iraqi Interim Government Deputy President Rozh Nuri Shawes's visit to China as "important and conducive to Sino-Iraqi relations". He said that Shawes held talks with Chinese leaders to review the countries' relationship, during which China expressed its willingness to consider greatly reducing Iraq's debts to China. (Xinhua news agency)

January 23, 2005

In an excellent opinion piece in Newsday, David Waldner, director of Middle East studies at the University of Virginia, argues powerfully that the parliamentary system to be created by elections next week bears a great deal of similarity with the puppet government controlled by the British in Iraq from the 1920s through to 1958. The way to prevent a repeat of that disasterous senario is to allow Iraqis to make decisions about their own economic future, rather than imposing policies by direct US fiat or via IMF conditions on debt.

"Despite exercising the right to vote, the Iraqi public will have little input into issues of great importance to them, for when it come to the status of the Iraqi economy key decisions have already been made. With remarkably little fanfare, L. Paul Bremer, the former administrator of the occupation, skirted international law prohibiting occupying powers from making major social and economic transformation and signed into law measures that called for the privatization of state-owned enterprises, opened the Iraqi economy to foreign investment, imposed an essentially flat-tax system with rates capped at 15 percent, and suspended almost all tariffs, duties and taxes on international trade, leading to a massive inflow of consumer products that crippled local producers. Left to their own devices, ordinary Iraqis would not have voted for these measures that are almost guaranteed to recreate long-past inequalities of economic power; indeed, there is good reason to believe that the measures themselves have motivated insurgents and provided them with popular support."

"Ceding control over economic policy to foreign interests is all too reminiscent of how British intervention undermined the authority of the earlier parliamentary system. In principle, of course, an elected Iraqi government can reverse these measures. The prime minister of the interim Iraqi government, Iyad Allawi, has signaled that he will not do so. And if he is not the next prime minister, the United States still will have tremendous influence with subsequent governments. And if U.S. influence is not sufficient, then Iraq's many foreign creditors can neatly step in. Major creditors already have made clear that they will forgive portions of Iraq's enormous external debt only as Iraq signs and adheres to agreements with the International Monetary Fund, the terms of which neatly mirror many of the laws already imposed by Bremer."

"Sound familiar? An electoral system that produces a parliament that is neither accountable to the people nor a counter-weight to other government bodies. A political elite of expatriates and tribal leaders. The creation of a new economic oligarchy. Ongoing foreign intervention. We know how all this turned out the first time around. Can anything be done? The lesson of the past is that ordinary Iraqis can hold their government accountable and enjoy rights of political equality only in the absence of enormous economic inequality. A new economic and political oligarchy will otherwise be free to use patronage and selective repression to deflect demands from Iraqis distracted by their struggle for daily existence. Along with security from violence, ordinary Iraqis need security from economic deprivation. That means a massive effort to employ Iraqis and Iraqi companies in reconstruction efforts. That means the erection of social-welfare policies that citizens of wealthy democracies enjoy. And measures to ensure that if privatization occurs, Iraqi wealth - from oil, state industries and agriculture - will be broadly distributed."

"Bremer's orders restructuring the Iraqi economy should be revoked; only sovereign and unconstrained Iraqi governments should decide Iraq's economic future. Iraqi debts should be unconditionally forgiven under the doctrine of odious debt. A fledgling Iraqi democracy should not be held responsible for the debts of the dictatorship it replaces; nor should creditors exercise leverage over policy making that nullifies the preferences of the Iraqi electorate."

January 22, 2005

Iraqi Finance Minister Adil Abdal Madhi met today with his Iranian counterpart Safdar Hoseyni in Tehran. He called for finding resolutions on the issue of the reparations claimsed by Iran (the Iranian news agency IRNA misreports this as "the loans owed by the country to Iran"). He said: "The Iraqi government is hopeful that the loans by Iraq will be mitigated based on the Paris Club decision last month."

January 20, 2005

The Bulgarian news agency (BTA) reports today that Finance Minister Milen Velchev has returned from meeting with US and IMF officials. "Conferring with US Congressman Robert Wexler (Democrat of Florida), Velchev discussed Bulgaria's desire to recover a larger share of its Iraqi debt than the portion agreed by the Paris Club."

January 18, 2005

During a meeting in Amman today with the Iraqi Planning Minister, Mahdi al-Hafiz, King Abdallah of Jordan said he would would urge the international community to help rebuild Iraq's national institutions and ease its debt burden. However no committments have yet been made on the $1.3bn debt claimed by Jordan.

January 14, 2005

Russia's decision to participate in the Paris Club was guided by economic self interest. During an Internet conference of the Russian Security Council dealing with a new national security concept for Russia, a participant wrote: "Russia was governed by its long-term economic interests aimed at helping Russian companies take part in reviving the Iraqi economy and implementing our previous contracts with the Iraqi party."

January 13, 2005

Today Iraq had to pay another $194m in Gulf War reparations through the UNCC, bringing the total paid to date to $18.99bn. Recipients included companies from America, Britain, France and Germany. Jubilee Iraq continues to protest this unjust syphoning off of Iraqi funds at such a a desperate time.

January 12, 2005

Syrian officials have not been returning enough of the Iraqi assets that Saddam Hussein kept in a Syrian bank said Juan Zarate, the US assistant secretary for terrorist financing and financial crimes. In congressional testimony in November, Zarate said Saddam had about $1bn in Syria at the start of the war and about $600m was later paid from the account to satisfy Iraqi debts. The Syrian Embassy, in a statement to the AP, said the initial figure was $780 million, of which $264 million remains available after satisfying claims from creditors. Additional claims are pending. The embassy said less than $4 million in undisputed funds has been returned to Iraq so far. Zarate said Syria has not provided an accounting for the money it says it paid to Syrian creditors. Syria says it has urged Iraqi officials to come to Syria to review the claims already paid and work out ``a final and fair solution'' for the remaining funds. He said Deputy Secretary of State Richard Armitage, in a Jan. 2 visit to Damascus, said he would encourage the Iraqis to respond soon. (AP)

James Baker claims that Bush's re-election helped get through the Paris Club deal (which Jubilee Iraq continues to argue falls far short of fair treatment for Iraq). "Until his re-election victory, some major creditor countries were unwilling to agree to more than a 50 percent reduction," he said. "After the win, we were able to rather quickly conclude the agreement for an unprecedented 80 percent reduction."

January 11, 2005

The most interesting of the 19 audit reports appears to be ICC ref. 54 which concludes that "the UNCC practice of determining the dollar value of claims made in foreign currencies by using currency conversion rates from the date of loss, rather than the date of payment, risks overpayment and is not fair to those who submitted claims in US dollars. Determines that overpayment under this system totaled approximately $2.2 billion and that UNCC will overpay $1.27 billion in the future if no changes are made." Also the report ICC ref. 53 regarding the F3 Kuwaiti claims which have "numerous deficiencies in valuation and verificatino of items including 1) overlapping claims for similar items; 2) failure to consider cost saving measures; currency exchang! e errors; 3) calculation errors; 4) claim compensation on insufficient evidence; 5) inadmissable claims; 6) inconsistent application of recommended adjsutments"

January 10, 2005

The Independent Inquiry Committee into the UN Oil-for-Food program, lead by Paul Volcker, today published its initial briefing on the UNCC audits.

The briefing says: "The IAD also raised significant issues about claims processing and claims decisions at the UNCC, which, in OIOS’ view, resulted in significant overpayments to claimants." (p3) and continues: "Many very large potential overpayments were identified. For example, in the 34 page audit report on the review of UNCC F3 claims there are eight broad areas of serious deficiency noted, including double compensation, currency exchange errors, and calculation errors.18 At the request of UNCC, in November 2002 the UN Office of Legal Affairs pronounced that the OIOS/IAD mandate did not extend to the decisions and workings of the UNCC.19 IAD disputed this ruling and continued to audit all aspects of claims. As noted above, IAD’s findings regarding over-awards are contested by the UNCC and will be investigated by The Committee." (p9)

Colum Lynch writes in the Washington Post comments: "The audit division charged that the UNCC routinely overpaid claims and may have wasted as much as $2bn by using a different method for currency conversion. It also drew attention to claimants 'who file grossly inflated fraudulent or unsubstantiated claims'."

In an excellent article sojourners magazine argues that: "Rich countries have decided to control Iraq the old-fashioned way - by using claims of foreign debt to put the country under the IMF’s thumb... Almost all of this debt is "odious"... no matter what bad debt deal US-appointed Prime Minister Allawi signs before the upcoming Iraqi elections, Iraq is an opportunity to reexamine the entire debt system and the persistently wrongheaded advice of the IMF.

January 09, 2005

Iraq may have overpaid up to $5bn in reparations, according to auditors' documents revealed today. The internal audits, prepared by the UN Office of Internal Oversight Services (OIOS) were posted on the UNCC website a day before they are due to be made public by an independent panel led by Paul Volcker.

While the audits do not indicate corruption that suggest some claimants were overpaid after raising questions, mainly about evidence in approving awards for damages. Along with exchange rate and other issues, the audits implied a total overpayment of some $5bn, officials told Reuters.

January 07, 2005

Today Kyodo News reports that Japan has announced it will make yen loans to Iraq in the second half of fiscal year 2005 (which starts on April 1). At Madrid in October 2003, Japan pledged $3.5 billion worth of loans. Japan plans to list which reconstruction projects in Iraq will be covered by the envisaged yen loans by around March. Japan is seeking to allocate the loans to major projects, such as building facilities for power supplies and telecommunications, as well as to improve harbor facilities for oil export. But Japan also thinks shorter-term or easier projects such as the repair of existing facilities could come first unless the security situation in Iraq improves.

January 06, 2005

Planning Minister Mahdi al-Hafiz said at a seminar on reconstruction that Iraq's budget for 2005 is $22bn, mainly oil revenue. He demanded the writing off of "odious debts" and the so-called "reparation fund". (source:Al-Dustur)