Odious Debt, Odious Allies: Pillaging Iraq
by Ed Kinane

They are asking us to pay for the knives they gave Saddam to slaughter us. - Dr. Hasim al Hassani Iraqi Islamic Party
Banner held during the Geneva (Switzerland) Fast for Economic Justice in Iraq (June 2005). Photo:
Voices in the Wilderness website, http://vitw.org/archives/909

When Saddam Hussein grabbed power in 1979, Iraq had no long-term foreign debt. Cash reserves were $36 billion. Iraq had high literacy and public universities; it had extensive socialized health care. It was becoming a "first world" nation.

Soon, however, this violent, cunning despot began squandering that wealth. Borrowing tens of billions of dollars, he built up a vast military and security apparatus. In 1980 - with US blessing - Saddam invaded his neighbor, the Ayatollah Khomeini's oil-rich Iran.

To Saddam's utter surprise, that war wasn't over in a few weeks. It became an eight-year long quagmire. Hundreds of thousands on each side were maimed and killed.1

The Iran/Iraq war (1980-88) severely weakened these two obstreperous nations. The world's power brokers could endure the suffering. With their military aid (to both sides) they kept the pot boiling. And those power brokers could endure Saddam using their toxic chemicals and other weapons to terrorize "his own people." Saddam's regime extirpated domestic dissent, killing tens of thousands of Iraqis - mostly Kurds and Shiites.

In 1990, after his invasion of Kuwait (with its vast oil reserves), Saddam finally became an international pariah. That set the stage for the First Gulf War and for 13 years of murderous UN/US sanctions against the Iraqi people.

By 2003 no one in the world owed more money than Saddam Hussein. Because so many of the loans were state secrets, Saddam's total debt is unknown. Jubilee Iraq cites, among others, the International Monetary Fund (IMF) estimate of $125 billion. But this excludes, for example, over $30 billion in outstanding Kuwaiti reparation claims. Nor does it include Iranian and Iraqi-Jewish claims totaling nearly $200 billion.

Saddam's creditors - US, France, Russia, England, Japan, Saudi Arabia, etc. - had no illusions. They knew how Saddam was using their money. After all, as with many international loans, much of the money was spent in the creditor's country. Weapons exporters didn't complain. Anyway, Khomeini had few friends…and the only advocates for the Iraqi people were like a few voices in the wilderness.

In 2003 the US invaded Iraq and deposed Saddam. Most Iraqis were greatly relieved. But even apart from the ensuing Occupation, their ordeal - their captivity - was far from over.

Odious debt
Saddam's creditors, Saddam's former allies, have forced Iraqis to pay billions annually in debt service. If the US and other world powers have their way, the Iraqis will keep being bled dry - and having their oil hijacked - paying off Saddam's loans for decades to come. As things stand, Iraqis have no choice: with the Occupation, the gun is literally at their heads.

In an interesting wrinkle, the US is simultaneously seeking to have some loans "forgiven." The US isn't being altruistic; the price would be more IMF structural adjustment and privatization. "In exchange [for some debt forgiveness], 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." (Brian Dominick, The NewStandard)

But this all too familiar scenario isn't inevitable. Grassroots activists and economists, especially in Canada and England, have a compelling tool for debunking invalid debt claims: the doctrine of "odious debt." This doctrine states that "when creditors lend to a dictatorial regime which they know is not using the loans to benefit the population, then debt payments cannot be demanded of those people once they are free." (Justin Alexander, Jubilee Iraq2)

Odious debt is no novelty; it goes back to 1898. At the end of the Spanish-American War the US applied the doctrine by refusing to enforce payment of Cuba's odious debt to its former colonial master, Spain.

The ruling nations and their international banks lend money to the tyrants (Mobutu of Zaire, Duvalier of Haiti, Marcos of the Philippines, and so on) who serve them well. Odious debt is not a doctrine these creditors want to hear.

International tribunal
Exceedingly rare would be the Iraqi who felt obliged to take on Saddam's debt. Nor do Iraqis want the IMF or the G-8/Paris Club creditor nations to sort out Saddam's debts behind closed doors.

What Iraqis want is a transparent, international tribunal - one the creditors don't control. That tribunal would adjudicate every outstanding documentable loan. It would determine whether the loan was odious (and therefore invalid) or whether it was designed to benefit the Iraqi people (thereby legitimizing it).

The tribunal may well find that some loans and reparations claims - which the G-8/Paris Club creditors would tend to honor - lack legitimating documentation. It may also find that some creditors will prefer to forfeit possible repayment rather than reveal the terms and purposes of their secret loans.

According to Justin Alexander, the tribunal "would dramatically reduce Iraq's debt, set a clear precedent for other countries which have inherited debt from dictators and discourage creditors from financing the Saddams of the future." It would eliminate debt without attaching IMF strings.

There's a lesson here for anti-war activists: our work won't be done when finally all the US troops and mercenaries come home. The Occupation won't be ended if the odious debt isn't abolished.3

 

Footnotes
1 Note the Saddam/Bush parallel. When the US Supreme Court appointed George W. Bush president, the US also had a budget surplus; now the US has its own vast budget deficit. Like Saddam's, Mr. Bush's deficit derives from a bloated military and security apparatus and from an oil-driven invasion. Nor has Bush Inc. been idle on the squash-domestic-dissent front.

But the parallel only goes so far. It isn't likely that our children - who will get stuck paying the deficit - can claim it is an odious debt. Many of their parents - whether duped or not - supported the military build-up and the Iraq invasion. And many, with jobs linked to the weapons industry, derive income from this militarism.
Fasting to Erase the Debt

This past September several members of Voices for Creative Nonviolence (www.vcnv.org/) fasted for two weeks outside the International Monetary Fund in Washington, DC. With our banner and our flyers we were trying to reach the international delegates then attending an IMF meeting on Iraq debt. There's no way we'll know if we had any impact. But given the low profile of the issue and given the stakes, it seemed worth the effort.

  2 To learn more about odious debt, check www.odiousdebts.org. A key organization working on this issue is the London-based Jubilee Iraq, www.jubileeiraq.org. An important commentator is Probe International's Patricia Adams, author of Odious Debt (1991; paperback, 256pp). For a lively expose of the international debt racket, read John Perkins' 2004 non-fiction bestseller Confessions of an Economic Hit Man.

3 But debt abolition, despite it being our focus here, is insufficient. The occupation won't truly end until the invader somehow cleans up the toxic and radioactive depleted uranium it has left behind and provides reparation for the lives and infrastructure it has destroyed.

 


Ed is a frequent contributor to the PNL