I was flipping through the latest "Forbes" today and read Steve Forbes's column Fact and Comment. In it he proposed that whoever ends up in charge of Iraq repudiate the country's debt:
QUOTE
Bum's Rush for Butcher's Big, Bad Debts
One immediate matter that Post-Saddam Hussein Iraq faces is the massive debt run up by its monstrous ruler. Experts estimate Baghdad is in hock for between $60 billion and $130 billion--and that's not counting reparations for the invasion of Kuwait. Those reparations alone could cost $200 billion. This level of debt for a nation with a GDP of $32 billion. The lion's share of Iraq's oil revenue could conceivably go just to servicing those obligations.
The U.S. and Iraq's new government should make it clear that Saddam's debts, for the most part, are not the debts of the new, democratic Iraq. The French and Russians will squawk. Baghdad should inform Moscow that its claims will be settled in the same manner that the Soviet Union honored czarist bonds. As for Russia's pending Saddam-era contracts: They should be declared null and void. Jacques Chirac should be told: \"This is nothing new for ‘La France.' After all, wasn't France the biggest buyer of czarist bonds?\" Besides, after the 1991 Persian Gulf war Saddam reneged on most of Iraq's debts anyway.
If France gets persnickety and tries to take legal action against the new democracy, Washington should demand payment of France's still-unpaid World War I debts. If the Germans also become difficult, we should dust off delinquent World War I reparations. Creditors should understand: Getting in bed with the devil is not a risk-free proposition.
The UN-run reparations program initiated after the 1991 Gulf war should be quickly wound down. The guilty regime is gone. Its successor should offer to settle claims realistically--say, 20 cents on the dollar over 20 years. The UN-run Oil-for-Food Program should be promptly terminated. Secretary-General Kofi Annan will bellyache because it's been a great slush fund--the UN siphoned off 2.2% of the monies as an administrative fee.
Then, just a while ago, I was watching the \"BBC World News.\" Who should I see but Paul Wolfowitz, and what should be his suggestion but that Iraq's creditors should forgive the debt. One immediate matter that Post-Saddam Hussein Iraq faces is the massive debt run up by its monstrous ruler. Experts estimate Baghdad is in hock for between $60 billion and $130 billion--and that's not counting reparations for the invasion of Kuwait. Those reparations alone could cost $200 billion. This level of debt for a nation with a GDP of $32 billion. The lion's share of Iraq's oil revenue could conceivably go just to servicing those obligations.
The U.S. and Iraq's new government should make it clear that Saddam's debts, for the most part, are not the debts of the new, democratic Iraq. The French and Russians will squawk. Baghdad should inform Moscow that its claims will be settled in the same manner that the Soviet Union honored czarist bonds. As for Russia's pending Saddam-era contracts: They should be declared null and void. Jacques Chirac should be told: \"This is nothing new for ‘La France.' After all, wasn't France the biggest buyer of czarist bonds?\" Besides, after the 1991 Persian Gulf war Saddam reneged on most of Iraq's debts anyway.
If France gets persnickety and tries to take legal action against the new democracy, Washington should demand payment of France's still-unpaid World War I debts. If the Germans also become difficult, we should dust off delinquent World War I reparations. Creditors should understand: Getting in bed with the devil is not a risk-free proposition.
The UN-run reparations program initiated after the 1991 Gulf war should be quickly wound down. The guilty regime is gone. Its successor should offer to settle claims realistically--say, 20 cents on the dollar over 20 years. The UN-run Oil-for-Food Program should be promptly terminated. Secretary-General Kofi Annan will bellyache because it's been a great slush fund--the UN siphoned off 2.2% of the monies as an administrative fee.
QUOTE
No deal on debt
US Treasury Secretary John Snow, who hosted the G7 meeting, said that the way was now clear for the two institutions to provide technical assistance and expertise.
Treasury officials later said that there was no change of policy regarding the UN, citing the text of the joint Belfast statement of President George W Bush and UK Prime Minister Tony Blair.
Mr Snow appeared to have had less success in persuading his fellow finance ministers to forgive the debts owed by the Saddam Hussein regime to Western nations.
On Thursday US Under-Secretary of Defence Paul Wolfowitz had said it would be helpful if Germany, France, and Russia would ignore these debt payments.
But the G7 statement merely says that \"it is important to address the debt issue\", which will now be passed on to the informal group of official creditors known as the Paris club.
German Finance Minister Hans Eichel made it clear that Germany will be insisting on debt repayment and restructuring, not forgiveness.
\"We do not only expect to get our money, we will get our money back,\" Mr Eichel told a press conference.
Here's a link from Frankfurter Allgemeine Zeitung:US Treasury Secretary John Snow, who hosted the G7 meeting, said that the way was now clear for the two institutions to provide technical assistance and expertise.
Treasury officials later said that there was no change of policy regarding the UN, citing the text of the joint Belfast statement of President George W Bush and UK Prime Minister Tony Blair.
Mr Snow appeared to have had less success in persuading his fellow finance ministers to forgive the debts owed by the Saddam Hussein regime to Western nations.
On Thursday US Under-Secretary of Defence Paul Wolfowitz had said it would be helpful if Germany, France, and Russia would ignore these debt payments.
But the G7 statement merely says that \"it is important to address the debt issue\", which will now be passed on to the informal group of official creditors known as the Paris club.
German Finance Minister Hans Eichel made it clear that Germany will be insisting on debt repayment and restructuring, not forgiveness.
\"We do not only expect to get our money, we will get our money back,\" Mr Eichel told a press conference.
QUOTE
Germany reluctant to erase Iraq debt
Business lobbyists unfazed by threats of exclusion from reconstruction
By Elise Kissling
Paul Wolfowitz, the deputy defense secretary of the United States, has asked Germany, France and Russia to forgive debt to Iraq totaling around EUR20 billion ($21.8 billion), of which it owes Germany EUR4 billion.
That may not be so easy, the BBC went on to report, because up until 1989, the Soviet Union "urged" its satellites to loan money to Iraq. These same satellites were included in the "Coalition of the Willing." Business lobbyists unfazed by threats of exclusion from reconstruction
By Elise Kissling
Paul Wolfowitz, the deputy defense secretary of the United States, has asked Germany, France and Russia to forgive debt to Iraq totaling around EUR20 billion ($21.8 billion), of which it owes Germany EUR4 billion.
My guess is that their willingness to be in a coalition does not extend to a willingness to write off the money owned to them. Sooooo, the question du jour becomes, "who will be left holding the bag?" I think that the new government will not honor the "odious debt," the term for such a debt. We will find that all creditors are equal, but that some creditors are more equal than others. Specifically, no country in the COW will lose money, while France, Germany, and Russian will get stiffed.
Where will the money to pay off the COW members come from? Really, do you have to ask? I mean, it's only a few billion here and a few billion there, so it's not as if we're talking about real money.
And so the cost goes up. Keep paying attention to the foreign news.
[ April 17, 2003, 10:40 PM: Message edited by: twin58 ]
