April 20, 2005

Reynato Puno, Associate Justice to the Philippines' Supreme Court, urged the government to stop repaying Marcos' loans for the mothballed Bataan Nuclear Power Plant. Speaking at the Integrated Bar of the Philippines' 10th national convention, he appealled to the doctrine of odious debt. The dictator Marcos borrowed at least $1.9bn to build the ridiculous nuclear power plant which was never used because it was build on a known fault line. The Philippines is repaying $170,000 a day for this worthless project, and will continue paying until 2018.

Puno said the creditors need not be paid because they were parties to the crime. Citing Noreen Hertz, an economist at the University of Cambridge, he said "there are debts which should be considered illegitimate and therefore should not be paid. He also cited Jubilee Iraq's consultation with Iraqi politicians, quoting Hajim Al Hassani (who is now the speaker of the Iraqi parliament): "They are asking us to pay for the knives they gave Saddam to slaughter us."

April 18, 2005

BusinessWeek today asks us to: "Pity the fund manager who once looked for familiar names in emerging markets when he wanted to provide a quick pop in returns... So where do investors with an appetite for risk go in search of higher returns? Increasingly, it's to investments well off the beaten path: Kazakhstan, Serbia, Ukraine, or perhaps even Iraq."

The articles suggests that investors after high returns could "bet on Iraq". "For a walk on the wilder side of the fixed-income market, look no further than distressed Iraqi debt. Back in 1990, the government of Saddam Hussein defaulted on $120 billion in loans in the runup to the first Gulf War. Some of that debt may be written off by the U.S. and its allies, but the rest will probably have to be repaid once Iraq is back on its feet -- probably at a big discount. The successful Iraqi elections in January, and International Monetary Fund projections for 9% growth in 2006, have led investors to pay up to 30% of face value for the Iraqi debt in a market with trading volumes approaching $500 million a year." The article contains a recommendation from Exotix that "Returns on Iraqi paper could run as high as 20%."

April 17, 2005

In his column in Al-Dustur Iraqi newspaper today, Sa'ib Khalil lists a number of priorities that should be addressed by the government. "The government has real opportunities for great achievements, being the first elected Iraqi government." He demands that it takes a decisive stance regarding the debts inherited from Saddam. He adds that privatization is another issue which the government must handle carefully, because of its potential effects on people's daily life.

April 16, 2005

The Nihon Keizai Shimbun reports today that Japanese companies have submitted details of their uncollected bills to Ernst & Young, actting as an agent for Iraq's Ministry of Finance. The new government is now expected to run the submitted details against its own records and start holding unofficial meetings with creditors as soon as early May to set negotiation timetables and other conditions.

350 billion yen is claimed by Japanese companies, mainly uncollected bills for engineering and construction work performed during the Saddam Hussein era. These Japanese firms include Mitsubishi Heavy Industries Ltd. (7011), Mitsubishi Corp. (8058), Sumitomo Corp. (8053) and Itochu Corp. (8001). And the debt excludes what the Japanese companies were able to recover through trade insurance.

A report by the Egyptian Ministry of Foreign Trade and the Central Bank indicated that the former Iraqi regime owed $131.9m to Egyptian firms. The figure covers the original debt plus interest, as well as an unspecified sum held in Iraqi bank accounts as security deposits (The former regime required that exporters deposit 10% of the contract's value in an Iraqi bank as a security on shipment). Contractual agreements between Egyptian companies and the Iraqi government reached $2 billion in 2002, primarily exporting foodstuffs, pharmaceuticals and industrial materials, within the framework of the oil-for-food program. An official at the Federation of Egyptian Industries (FEI) said they had already sent the Egyptian government a comprehensive list which includes the names of 39 companies and losses incurred by them, estimated at 900 million euros.

April 15, 2005

The Ministry of Finance and the Central Bank of Iraq today announced that the previously announced informational and consultative meeting with commercial creditors to be held on May 4, 2005 will be held in Dubai.

April 12, 2005

A leader in the Financial Times today argues that governments should not count writing off official commercial debt as development aid. The article says "When is "foreign aid" not foreign aid? When it is debt written off by governments that should never have lent it in the first place." Jubilee Iraq expects the creditors will try to count debt write-downs as "reconstruction aid" to Iraq, however the FT explains why would be very misleading.

Refering to the Paris Club deal on Iraq, "Next year, the first $15bn to be written off will boost OECD members' aid total by more than 15%. But this is misleading... The official export credit agencies whose often questionable loans generate much of the bad commercial debt are mercantilist export promoters, not aid agencies." Although "according to the OECD's rules, the full face value of official commercial debt written off by its member governments counts as foreign aid," the FT argues that, "if governments lend for commercial purposes, they should expect to be treated more like commercial entities. Iraq's debt relief is not proper aid. Creditors should not pretend it is."

April 11, 2005

Kuwaiti newspaper Al-Watan reports that former US Ambassador to Kuwait Richard Jones announced that a Middle East meeting will take place in June to discuss ways to reduce Iraq's debt by 80%.

Kuwait newspaper Al-Anbaa reports that Foreign Minister Sheikh Mohammad says cancellation of Iraqi debts lies in the hands of Kuwait's parliament and the Paris Club of donor nations.

April 08, 2005

The Ministry of Finance and the Central Bank of Iraq today announced that they intend to host an informational and consultative meeting on May 4, 2005, at a location to be announced, with commercial parties holding claims against Iraq or Iraqi public sector companies. Further details and information on the location and logistics for the meeting will be released next week.

Ernst & Young is managing the commercial debt reconcillation and has a website for this eyidro.com

April 05, 2005

Kathy Kelly, the founder of Voices in the Wilderness, which lead the campaign against Iraq's economic sanctions prior to the invasion, was arrested today protesting against the odious debt.

Tomorrow the US Senate Appropriations Committee is considering a new $80bn Iraq supplementary spending bill. Kelly and 3 others were seeking a pledge from Chicago Senator Durbin to vote against the bill. Their letter to him read:"Our country has waged economic and military warfare against the people of Iraq for the past 15 years. It is time for this war to end... to cancel the 'odious debt' incurred by Saddam Hussein, to pay reparations to Iraqis ... and rebuild their country in a manner which benefits the ordinary Iraqi and not the interests of the U.S., the World Bank and the IMF."

April 01, 2005

Russia and Iraq will sign an intergovernmental agreement writing off 90% of the nation's $10.5bn debt to Moscow by the end of the year, a Russian Finance Ministry spokesman said Friday. Officials are still determining the exact amount of Iraq's debt, spokesman Andrei Saiko said. "Work will be completed by the end of the year," he said.

It is still unclear whether the Russian deal will go beyond the terms of the Paris Club deal, or merely match them, in which case the debt write off will be phased over a period of years dependent on Iraq obeying IMF economic policies.