Iraq, War, Debt, Reparations and the G8

by Eric Toussaint (CADTM)

Some days after the beginning of the invasion of Iraq by the American, 
British and Australian forces, George W Bush gave an estimate to 
Congress that the cost of the war for the US Treasury would reach 
80 billion dollars. According to the UNDP and UNICEF, that is 
precisely the annual sum needed to guarantee for the whole planet 
universal access to drinking water, basic education, primary health 
care, a decent food supply and gynaecological and obstetric treatment 
for all women. The US government achieved the feat of raising and 
spending this amount in several months - a sum which no world summit 
in recent years has succeeded in bringing together (in Genoa in 2001 
the G7 only managed to raise a little less than one billion dollars 
for the funds for combating AIDS, malaria and tuberculosis). The 80 
billion obtained by Bush from Congress is the amount necessary to 
destroy Iraq and guarantee an occupation of its territory until 31st 
December 2003. Apparently the financial costs of the damage inflicted 
by this intervention have not been taken into account.

This neo-colonial aggression once again made use of a humanitarian 
pretext: the wish to offer the Iraqi people a democratic regime and 
to save humanity from weapons of mass destruction. This pretext is 
one more in the long list of humanitarian justifications used to 
cover up disgraceful operations of territorial conquest and economic 
rape and pillage. From the evangelisation of the Americas by the 
conquistadors to the fight against terrorism, via the fight against 
slavery which screened Leopold II's colonial campaign in the Congo...

Who will really pay the price of this aggression? The war was not 
yet over when the finance ministers of the 7 most industrialised 
countries met in Washington on 10th/11th April 2003 to prepare the 
Spring meeting of the World Bank and the IMF and the annual G8 summit 
(due to take place in Evian, France at the beginning of June). They 
agreed to set Iraq's foreign debt at 120 billion dollars, higher 
than that of Turkey (which has almost three times the population of 
Iraq). This does not include the compensation owed by Iraq for the 
invasion of Kuwait in 1990. If the finance ministers of the G7 are 
to be believed, were this compensation taken into account, Iraq's 
debt would be increased to 380 billion dollars. Post-Saddam Iraq 
would thus have the unhappy privilege of being the most indebted 
country in the Third World, far surpassing Brazil, which currently 
holds the record of 230 billion dollars. The arbitrary agreement on 
this amount is directly aimed at justifying the take-over of Iraq's 
oil resources on the pretext of ensuring the repayment of the debt. 
Fixing the debt so high has the enormous advantage of subjecting the 
new Iraqi authorities to the demands of the creditors for decades. 
Even if the military occupation were of limited duration, and even 
if the UN undertook the management of reconstruction, the country's 
politics would still be determined by the creditors and by the oil 
multi-nationals which will obtain the concessions. 

This is why the demand to cancel Iraq's foreign debt is not only 
legitimate but also a condition sine qua non for re-establishing 
Iraq's sovereignty after the ignominious military aggression which 
it has suffered. In international law, the doctrine of odious debt 
can be applied perfectly to Iraq. According to this doctrine, "if a 
despotic power (= Saddam Hussein's regime, Ed.) contracts a debt 
that is not used to meet the needs and interests of the State, but 
to strengthen the despotic regime and oppress the population which 
opposes it, this debt is odious to the population of the State as a 
whole. This debt is not binding for the nation; it is the regime's 
debt, a personal debt of the authorities which contracted it. 
Consequently, it becomes null and void with the fall of the regime." 
(Alexander Sack, Les effets des transformations des Etats sur leurs 
dettes publiques et autres obligations financières, Recueil Sirey, 
1927). The USA have applied this doctrine at least twice in the past. 
In 1898, after their victorious attack on the Spanish Armada off the 
coast of Cuba to "liberate" Cuba from Spanish domination, the US 
government used it to get Madrid to give up its financial claims on 
Cuba.

25 years later, in 1923, the US Supreme Court rejected the claims of 
the creditors of Costa Rica after the fall of the dictator Tinoco1, 
arguing that they should be addressed to the deposed dictator and not 
the new regime. In 2003, you can bet that the members of the G8, not 
only the four who supported the war (USA, UK, Italy, Japan) but also 
the four who were opposed to it (Germany, France, Canada, Russia) 
will come to an agreement not to apply the doctrine of "odious debt" 
to Iraq.

It is up to the movement for an alternative globalisation to promote 
the demand for cancellation of Iraq's foreign debt, along with other 
demands such as the withdrawal of the occupying forces, the full and 
complete exercise of sovereignty by the Iraqis themselves (including 
the benefit of their natural resources), the payment of reparations 
to the Iraqis for the destruction and pillage caused by the war 
started by the US/UK/Australian Coalition. Let us remember that the 
looting which took place in April and which continued in May took 
place in the presence of occupying forces which, according to the 
laws of war, are fully responsible for the protection of goods and 
individuals.

It is just as necessary to follow the law and to condemn Bush, Blair, 
Aznar, Howard (the Prime Minister of Australia), and the Danish and 
Dutch leaders for being responsible for crimes of aggression and war 
crimes.

The issue concerns the importance of the doctrine of odious debt for 
the future of the Iraqi people and, beyond that, for the majority of 
the populations of the indebted countries described as "developing". 
In the case of Iraq, the doctrine of odious debt can also be applied 
to the debts incurred during the occupation of its territory. In 
fact, the debts incurred by the countries which are occupying Iraq 
on the pretext of "reconstructing" it cannot be charged to Iraq, as 
they only concern the occupiers. International law is clear on this 
subject (cf. the Treaty of Versailles relating to the debts incurred 
by Germany during its occupation of Poland). If the doctrine of 
"odious debt" were applied to Iraq, this would have a much broader 
impact, because many governments and peoples would have the right 
to demand its application. Let us take for example the foreign debt 
of the Democratic Republic of Congo (of which 95% was incurred by 
Mobuto's despotic regime between 1965 and 1997), of Rwanda, South 
Africa, Nigeria, Indonesia, the Philippines, Pakistan, the countries 
of the southern part of Latin America where the dictatorships which
were in power there between 1970 and 1980 were responsible for 
running up massive debts. The citizens of these countries are 
perfectly entitled to demand that most of the debts of their 
countries should be declared null and void through the application 
of the doctrine of odious debt.

For the reasons mentioned above, there is every reason to suppose 
that the members of the G8, both the four who launched the attack 
and occupation of Iraq (USA, UK) or supported it (Italy, Japan), or 
the four who opposed them (Germany, France, Canada, Russia), will 
agree not to apply the doctrine of odious debt to Iraq.

Clear differences divided the members of the G8 before the beginning 
of the aggression against Iraq. They will undoubtedly try to minimise 
their differences and unite again, ready for the next stage in 
pushing neo-liberal globalisation even further. They will try to 
reach agreement on tackling the global financial crisis (rampant 
stock market crashes, financial instability, massive debts in the 
private sector in the most industrialised countries) and on their 
approach to the inter-ministerial meeting of the WTO, planned for 
the beginning of September 2003 in Cancun (Mexico). They have learnt 
the lesson of Seattle: they are aware that the lack of an agreement 
between the USA and the EU on a commercial agenda could lead to the 
failure of Cancun. They will be meeting in Evian from 1st to 3rd 
June 2003 to harmonise their points of view.

The alternative globalisation and anti-war movements will be there 
too.

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[1] See Damien Millet, Eric Toussaint, " 50 questions /50 réponses 
sur la dette, le FMI et la Banque mondiale ", joint edition CADTM / 
Syllepse, Bruxelles / Paris, 2002, pp. 163-179 and 184-187. 

This book will be published soon in English by Zed Books.