September 30, 2005

Following a meeting in Washington with Iraqi Finance Minister Ali Allawi and Iraqi Central Bank Governor Sinan al-Shabibi, Russian Finance Minister Alexei Kudrin told reporters that the size of Russia's debt claim had not yet been fully agreed on. Kudrin said that the debt reconciliation had been delayed for a number of reasons, including the loss of key documents, and that Russia had responded to these problems with understanding. The issue of writing off Iraqi debt within the framework of the Paris Club has been decided in principle. Originally Baghdad's debt to Russia was estimated at $10.5 billion. Under the terms of this agreement the sum will decrease by 90%.

September 29, 2005

The UNCC said that because of higher oil prices it recieved a record $134m from Iraq in August alone, and is removing the $200m a quarter cap on reparation payments. "There has been a decision to accelerate the payments. The council decided that beginning with the October payment, we will pay out the maximum available," said spokesman Joe Sills. "From now on, we will pay out whatever is in the coffer," UNCC executive secretary Rolf Knutsson told Reuters. He expects to pay out around $600m of Iraqi money in late October. The UNCC says that invididual claims, for injury, lost of property or income, representing just $600m of the outstanding $33bn of awards, should be paid off by mid-2006, leaving only corporate and governmental claims. UNCC official Mojtaba Kazazi added that some of the environmental claims would be paid in 2006 and refered to a regional meeting on the environmental claims that took place in Kuwait on Sept 13/14. Jubilee Iraq continues to campaign for an immediate moratorium and eventually cancellation of most of the reparations.

September 27, 2005

Today the UN Compensation Commission begins its 57th 3-day meeting. Although all claims have now been processed the UNCC is still busy doling out $33bn of Iraqi money to those it has awarded reparation claims.

Voices in the Wilderness moved from outside the IMF in Washington to continue their 2nd Fast for Economic Justice in Iraq outside the UN in New York. Meanwhile in Geneva, where the UNCC is based, an Iranian activist, Babak (creator of the selvesandothers.org website), joined the fast and stood vigil outside the UN. He was harrassed by Geneva police who confiscated his banner calling for justice for Iraq and his leaflets, and was warned that if he made any attempt to discuss the reparations with UN staff then he would be arrested. In spite of this intimidation he continued on his vigil, a true example of Iranian-Iraqi solidarity.

September 26, 2005

Malta has just cancelled all $8m in debt claims against Iraq. It is the second country to agree to 100% cancelation and the first non-Paris Club country to do so.

September 24, 2005

Here is the text of the Town Hall meeting at the World Bank on Thursday. There is also a media player video of it. We quizzed them at the same event last year, focusing then on the odious nature of the debt.

Maysa Ibrahim of Jubilee Iraq: "My question relates to the World Bank/IMF support of democratic institutions. The recent IMF plan promoted for Iraq is said to involve popular IMF notions such as ending subsidies, privatization, reduction of state salaries, and thereby arguably undermines the fledgling democratic process in Iraq by imposing policies on an extremely vulnerable country that has inherited crippling legacies of odious debt. In such a situation, can Iraq really be said to have a free choice in the acceptance of your policies - which seem to fail time and time again, most notably in Russia - if imposed by the World Bank and IMF, not domestically, I can't see it helping the security situation, and I must add I left Iraq ten days ago, and you only need one day in 55 degrees heat with no electricity and no air-conditioning to understand their sentiments. There is no employment and their situation is appalling and how can your imposition of such policies on a vulnerable government help them?"

Paul Wolfowitz (President of World Bank): "Mr. de Rato may want to comment more on the question about whether or not we are imposing conditions on the [inaudible] government in Iraq. The one issue I am most familiar with is the issue of the oil subsidy, and frankly, it is not a matter, at least from the World Bank point of view, that we are imposing conditions, but we are strongly encouraging the Iraqi Government to do something about a problem that is--nothing is free, and there are billions of dollars being wasted or worse, basically giving oil away. Much of it is taken out of the country and sold. Much of the sales probably go to support the people who are planting bombs. It is really fueling their enemies, I think. And I think an adjustment to the oil subsidy price in Iraq is something that could be done in a way that would actually improve the lives of the poor. And at least the World Bank is talking to Iraqi officials about how they might change that program, not as a matter of conditionality but as a matter of sound, good policy."

Trevor Manuel (South African Finance Minister and Chairman of the WB Development Committee): In respect of the question about Iraq, I don't know. I mean, there is so much I don't--I can't imagine taking any kinds of decisions in an environment such as that which obtains in Iraq. And when I last looked, the average daily fatality rate was 37, Iraqis primarily..55..my apologies. I mean, that cuts across so many families, every community. How do you take decisions about what appears quite banal, like energy and so on? I think that what is important is to put heads together about how we move from where we are, because I can't see the current situation continuing. I mean, the stuff I saw just earlier this week from Basra is a source of profound concern. And I think that at the end of the day, they are the same issues--governance, quality of life of people, and getting that country from where it is now to something that at least has a semblance of order. Clearly, those scars will remain in the lives of families, but I think that's a big challenge, and the sense that things are improving just in the environment where people live I think is an important part of that. So if you are saying that in some circumstances, we must say to the Bretton Woods Institutions "Is it possible to apply the rules differently? These are the circumstances. Can we march together on this one?"--then I would go along with you."

Rodrigo de Rato (MD of IMF): "We have a program with Iraq since last fall. We were probably one of the first institutions that had it. It is a post-conflict program, and I think it has been very useful for the country. And we are working for a new program after December, and we have some conditions, yes, and I'm going to give you the three most important ones. The first one is that the Iraqi authorities will continue to improve the data they provide us, so that we can make decisions. And those that are, of course, we are talking about the Central Bank and the Economic Minister. And I agree with Trevor that they are working in tremendously difficult circumstances. But the fact that they are able to provide us data is also the fact that they can have data for themselves, and I have to say that the circumstances in Iraq from the point of view of macroeconomic policies have improved, and therefore, are going to be of the budget, too, because of the oil revenues. The second condition is that the Iraqi Government makes an audit in the Central Bank. Why? Because you probably--you, or I don't know if you are aware, but last year, there was quite a substantial scandal regarding quite a substantial amount of million dollars that were not in the Central Bank when they should be. So we decided that it was important for the wellbeing of the Iraqis that the IMF will be providing resources but that those resources also will help the Iraqi authorities to clarify and get a grip of their own resources. And I have to say that that audit has been already given to an international audit firm, and we hope that by the end of the year, although the audit firm is not completely finished, but it will be quite advanced. And the third condition are the subsidies. Iraq is expending 25 percent of GDP in subsidies for oil. It's about US$8 billion. Not only our impression; our knowledge is what are the best beneficiaries of the subsidies? The people who take the oil from Iraq and go and sell it in Jordan, which is the biggest business right now. You get a liter of oil at 2 cents in Iraq, and you sell it in Jordan for 50 cents, so you really make a killing. And some of those people, some of those people are just mere speculators. Others are worse than speculators. But even if they are only speculators, there are countries that are using subsidies of around 25 percent of GDP that are not targeted to the poor at all. I have to say to all of you that subsidies in no countries are targeted for the poor. The subsidies are benefitting those who are better off in society and are usually benefitting the speculators all over the world. And we are asking the Iraqi Government to use, of course, not to wipe out the subsidies right away from Monday to Tuesday but to have a plan to scale down the subsidies and use those resources for social policy. We are not asking for those resources for anything else. We are saying to them try to get part of that US$8 billion. Maybe you cannot get in the same year more than, what, US$3 billion, US$2 billion, US$5 billion? And target it to the families. They really need the money. And give them to them. And stop that bleeding of your country, of getting resources up to 25 percent of the GDP so that people can make a killing just taking 500 kilometers the oil that is supposedly free and is being sold in the black market in Jordan. Everything is aggregable, but I'm very, very convinced of the conditions that we are negotiating with the Iraqi Government, because we are convinced that if we are able to help them move, I want to express once again that we're not asking them to move from zero to 100 immediately, but we're helping them move. In two or three years, the Iraqi Government will be able to use those US$8 billion to do social policy in Iraq instead of having that US$8 billion in foreign accounts of speculators outside or Iraq, or even worse, in the hands of people who are killing Iraqis."

September 23, 2005

Jubilee Iraq legal advisors Haider Hammoudi (+1 917 547 5205) and Maysa Ibrahim (+1 212 854 9796) are currently at the IMF/WB meetings in Washington, arguing the case for economic justice and self-determination for Iraq.

Speaking at a press conference today, President Talabani said that in his view and according to international law "the elected government that comes after an illegitimate government that was not elected in a democratic manner and that piles loans on its people has the right to reject all these debts and consider them as void and null. We have the right to say that all the Iraqi debts are null and void, particularly the military debts... In spite of this, we raised the issue and countries are willing to cancel the largest part, 80, 85 or 90 per cent of the debts. We must ask our Arab brothers to cancel all the debts." (broadcast on Al-Sharqiyya, translation by BBC Monitoring)

At a Town Hall meeting in the World Bank yestarday, Jubilee Iraq representative Maysa Ibrahim questioned leaders including Paul Wolfowitz, Rodrigo de Rato and Trevor Manuel. At an earlier meeting Ms. Ibrahim and Haider Hammoudi discussed the IMF's plans to remove fuel subsidies with Minister of Finance Ali Allawi and various IMF/WB representatives. They argued that big decisions who wait until a permanant government has formed and that the pace should be set by Iraqis not because of IMF pressure. They emphasised the hardship the subsidy reduction could cause to poor Iraqis and insisted that alternative assistance mechanisms must be in place before subsidy reduction can be contemplated.

"Our discussions with Managing Director de Rato this morning and with the IMF staff over the past week have been cordial and constructive. We are very pleased that negotiations on a new IMF program to support Iraq's economic reform efforts have now formally begun. We look forward to working intensively with the IMF staff on the details in the coming weeks with the expectation that the program can be finalized before the end of the year." Finance Minister Ali Allawi and Central bank Governor Sinan al-Shabibi announced that they anticipate that the next meeting with IMF staff would take place in early October.

September 22, 2005

At a press conference today, IMF Managing Director Rodrigo de Rato said that he expected progress to be made in three areas. Firstly an improvement in data quality; secondly imporved transparency by central bank; thirdly "the reduction of the very important oil subsidies that the Iraqi government has in the budget and certainly a source of very, I would say even unjust social policy in which speculators are making a lot of money just taking the oil out of Iraq and selling it in other markets. Progress there, also, has been achieved. In the last few days the Iraqi authorities increased some of the price of oil in Baghdad... If we have progress on those three issues, I think that we could put to the Board a Stand-By Agreement by the end of the year."

Elsewhere John Snow, US Treasury Secretary, said "We would hope that later this week the next milestone would be reached and the IMF, with Iraq, would be able to announce that they're moving into the negotiations phase of the standby agreement."

September 17, 2005

Speaking in the UN General Assembly today, Iraqi PM Ibrahim Jaffari said: "I am seizing this opportunity to urge creditor nations to help us by canceling Iraqi debt. That debt was accumulated by the corrupt policies of the previous regime."

Jubilee Iraq recently presented a paper on the IMF role in Iraq to the International Association of Contemporary Iraqi Studies (IACIS).

The IMF/WB Autumn meetings in Washington are coming up next weekend, and two Iraqi lawyers will be representing Jubilee Iraq at them. Interestingly the only country-sepecific session in the schedule of dialogue meetings with civil society is on Iraq, specifically the issue of subsidies which the IMF is keen to see removed. More information on the IMF/WB meetings will be posted in the next coming days.

September 16, 2005

The first phase of the commercial debt restructuring, orchestrated by JP Morgan and Citigroup, involves about $750m of commercial debt. 78% of claimants accepted the offer, which will pay them 10.25% of net present value. Only 2% rejected the terms outright. The final figures will be published next week on Eyidro.com "We are very encouraged by the results of this first round of offers," said Ali A. Allawi, Iraq's minister of finance." This first batch is only a small portion of what is thought to be more than $20bn in commercial claims. "It sets the tone for the entire process," said Nasser Malik, managing director of fixed income at Citigroup. "We are gratified with these first results and Iraq will soon be moving forward with additional cash offers on the same terms. Iraq aims to put the issue behind it by year-end or early 2006." said Daniel Zelikow, managing director at JP Morgan.

Violence in Iraq has slowed reconstruction and economic recovery more than expected, the World Bank said today. In a report the World Bank said deadly attacks had spooked private investors and slowed physical reconstruction, while oil production and electricity were disrupted by sabotage. "Continued insecurity, political uncertainties and weak public institutional capacity have resulted in mixed economic results and slower-than-expected reconstruction over the past 24 months," said the report, discussed by World Bank member countries on Thursday. Sabotage to oil infrastructure had stagnated production and exports and that would likely slash economic growth to 3.7% in 2005. For 2006, the bank said economic growth should climb again to 17% if security and oil output improved and then decline slowly to 7% by 2010. The bank warned there was no room for relaxed fiscal discipline or a sharp decline in the oil prices that are keeping Iraq's budget afloat. The government's ability to allocate resources effectively and track spending was limited, it noted. Most of Iraq's 192 state-owned enterprises are idle because of damage from war and looting, while salaries and pensions of the 500,000 employees were covered by the budget, the bank said. It estimated at least 2 million Iraqis were unemployed-about 30% of the total workforce-with families heavily dependent on government subsidies for food, fuel and utilities.

Seperately the Washington Post reports on a leaked "second interim strategy report" in which the return of Bank staff to Iraq is contemplated, 2 years after an Iraqi staff member was killed in the bombing of the Canal Hotel. The World Bank is now headed by Iraq-war architect Paul Wolfowitz. Last week the World Bank's board approved a plan for using up to $500m in pledged interest-free loans, however the lack of permanent staff on the ground is making administration of this, and the donor Trust Fund that the WB manages, difficult. The report mentions that the "risks that funds may not be used effectively or in a manner conforming to Bank procedures are likely to remain high even in comparison to other conflict-affected situations." Because of the uncertain outlook, "if security and political stability improve, the Bank will ramp up its assistance and deepen policy dialogues. If the security situation further deteriorates, the Bank will scale down its financial assistance as necessary."

September 14, 2005

Chicago-based group Voices in the Wilderness is holding a 16 day Fast for Economic Justice and Cancellation of Debt in Iraq, firstly outside the IMF and World Bank headquarters in Washington DC in the run up to the organisations' Autumn Meetings, then outside the UN headquarters in New York 27-29 September during the time when the UN Compensation Commission is meeting in Geneva. This follows a similar fast outside the UNCC in Geneva in June. Press release here, contact Jeff Leys on 773-573-5380 or Farah Mokhtareizadeh on 856-236-6141.

September 10, 2005

The Sunday Business Post in Ireland reports today on an Antrim-based construction firm Mivan which "first worked for Hussein when it installed electronic gates on his home and then re-roofed his Baghdad palace. The firm later built him a €6 million kitchen and a €40 million palace. Mivan pulled out of Iraq when the Gulf War began in 1991, and subsequently received war reparations of €1.5 million from the UN for equipment lost in Iraq during the war."

September 02, 2005

Writing in the New Republic, Patrick Clawson, the deputy director of the neo-conservative think tank the Washington Institute for Near East Policy, and a former staff member at both the IMF and World Bank, suggest that the Paris Club debt relief does not go far enough and adds that "It would be appropriate for banks and Arab debtors to write off large parts of the odious loans they made to Saddam, and for Kuwait to forgive the war compensation it is due. A clean slate... is what Iraq's economy needs most from the outside world."