# Are we pumping oil into Kuwait? **URL:** \ **Category:** Great Debates\ **Created:** [July 2, 2003, 11:17pm UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894 "2003-07-02T23:17:58Z")\ **Posts on this page:** 15\ **Page:** 1
**Author:** ![Reeder](https://avatars.discourse-cdn.com/v4/letter/r/c6cbf5/32.png) [@Reeder](https://boards.straightdope.com/u/Reeder)\ **Post date:** [July 2, 2003, 11:17pm UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/1 "2003-07-02T23:17:58Z")
> [@](#): > > On May 25, while scanning the Air Force Defense Meteorological Satellite Program images pipelined into his desktop from 450 miles in orbit, Hank Brandli skidded at a nighttime photo of Iraq. It looked familiar. But not exactly. > > Brandli retrieved another DMSP image he’d archived from May 3. He compared the two. The most recent photo showed a blazing corridor of light running the length of Kuwait, south to north, all the way to the Iraqi border. The image wasn’t there on May 3. > > “It’s going right up to Iraq’s oil fields,” says the retired Air Force colonel from his home in Palm Bay. “Maybe I’m full of s—. Maybe all they’re doing is building a highway to put in McDonald’s and sell hamburgers. But why go that way? I think we’re in bed with Kuwait. I think we’re pumping oil out of Iraq to pay for this war.” [http://www.floridatoday.com/!NEWSROOM/peoplestoryA1172A.htm](http://www.floridatoday.com/!NEWSROOM/peoplestoryA1172A.htm) If we are it’s outrageous. All oil monies are supposed to go into a fund for the Iraqi people. There was a big show the other day about the first Iraqi oil being sent out. I believe the Bush administration is not above pumping oil out for their own purposes. ---
**Author:** ![Reeder](https://avatars.discourse-cdn.com/v4/letter/r/c6cbf5/32.png) [@Reeder](https://boards.straightdope.com/u/Reeder)\ **Post date:** [July 2, 2003, 11:20pm UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/2 "2003-07-02T23:20:05Z")
hmmmm… [The Link](http://www.floridatoday.com/!NEWSROOM/peoplestoryA1172A.htm) ---
**Author:** ![Apos](https://avatars.discourse-cdn.com/v4/letter/a/838e76/32.png) [@Apos](https://boards.straightdope.com/u/Apos)\ **Post date:** [July 2, 2003, 11:21pm UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/3 "2003-07-02T23:21:19Z")
MAybe because Kuwait has the capabilities to ship oil out for sale? I mean, how would you expect Iraqi oil be sold that doesn’t involve transporting it out of Iraq somehow? ---
**Author:** ![Reeder](https://avatars.discourse-cdn.com/v4/letter/r/c6cbf5/32.png) [@Reeder](https://boards.straightdope.com/u/Reeder)\ **Post date:** [July 2, 2003, 11:23pm UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/4 "2003-07-02T23:23:01Z")
Iraq has its own pumping and shipping facilities. You think they Kuwait before the war? ---
**Author:** ![Azael](https://avatars.discourse-cdn.com/v4/letter/a/a8b319/32.png) [@Azael](https://boards.straightdope.com/u/Azael)\ **Post date:** [July 3, 2003, 12:13am UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/5 "2003-07-03T00:13:24Z")
It’s a big conspiracy Reeder. It’s always a big conspiracy to screw _somebody_ right? ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [July 3, 2003, 4:53am UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/6 "2003-07-03T04:53:28Z")
The first oil pumped out went through Turkey. ---
**Author:** ![ChaosGod](https://avatars.discourse-cdn.com/v4/letter/c/ac91a4/32.png) [@ChaosGod](https://boards.straightdope.com/u/ChaosGod)\ **Post date:** [July 3, 2003, 5:11am UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/7 "2003-07-03T05:11:31Z")
> [@](#): > > \*Originally posted by Magiver \* > \*\*The first oil pumped out went through Turkey. \*\* The oil shipped out of Turkey was pumped before the war. No new oil has reached Turkey due to the recent sabotage of the oilpipes. ---
**Author:** ![chula](https://avatars.discourse-cdn.com/v4/letter/c/a4c791/32.png) [@chula](https://boards.straightdope.com/u/chula)\ **Post date:** [July 3, 2003, 5:54am UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/8 "2003-07-03T05:54:29Z")
I don’t know if there’s been much talk about this in other threads, but Iraq is being forced to pay around $200 billion to Kuwait as reparations for Hussein’s invasion, as well as an additional $200 billion in other debts incurred under Hussein. No one is seriously considering forgiving these debts. So wealthy Kuwaitis will profit from Hussein’s misdeeds at the expense of the Iraqi people for some time to come. It wouldn’t surprise me at all if Kuwait was directly taking the oil as compensation. ---
**Author:** ![system](https://global.discourse-cdn.com/straightdope/original/2X/e/e489c3b7d8fce19c4b355dd4fc3f88cc39c34b87.png) [@system](https://boards.straightdope.com/u/system)\ **Post date:** [July 3, 2003, 6:29am UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/9 "2003-07-03T06:29:10Z")
> [@](#): > > \*Originally posted by chula \* > I don’t know if there’s been much talk about this in other threads, but Iraq is being forced to pay around $200 billion to Kuwait as reparations for Hussein’s invasion, The reparations bill is in the process of being written down. UN recently reduced a number of Kuwaiti claims rather significantly. > [@](#): > > as well as an additional $200 billion in other debts incurred under Hussein. No one is seriously considering forgiving these debts. False, ongoing talks have begun, and will need Paris and London Club rounds to begin to build a systematic approach to debt restructuring and write offs. Unfortunately, political wrangling is delaying the process, however one can expect serious restructuring, although the Russians are going to be pissers about it. At present there are calls out to survey claims and build an accurate idea of valid claims on Iraq. > [@](#): > > So wealthy Kuwaitis will profit from Hussein’s misdeeds at the expense of the Iraqi people for some time to come. It wouldn’t surprise me at all if Kuwait was directly taking the oil as compensation. I hate to burst bubbles, but that’s very unlikely even to be considered at this stage. Whatever is being built, there is no reason for getting one’s panties in a knot with no information, and indeed it speaks poorly of all. As to shipping capacity, at my last knowledge the southern Iraqi facilities are not yet fully operational, it might be an overland pipeline is being constructed. I doubt that insofar as that is an expensive bet, it’s probably an alternate access route. Existing routes are getting clogged up according to what I hear. ---
**Author:** ![chula](https://avatars.discourse-cdn.com/v4/letter/c/a4c791/32.png) [@chula](https://boards.straightdope.com/u/chula)\ **Post date:** [July 3, 2003, 7:10am UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/10 "2003-07-03T07:10:07Z")
> [@](#): > > \*Originally posted by Collounsbury \* > False, ongoing talks have begun, and will need Paris and London Club rounds to begin to build a systematic approach to debt restructuring and write offs. Unfortunately, political wrangling is delaying the process, however one can expect serious restructuring, although the Russians are going to be pissers about it. At present there are calls out to survey claims and build an accurate idea of valid claims on Iraq. Debt _restructuring_ is not at all the same as debt _forgiveness_. The United States initially suggested debt forgiveness, but quickly backed off because of strong opposition from other countries. If you have some evidence that debt _forgiveness_ is currently on the table, do share. That would be a highly unusual remedy, since countries are routinely held accountable for debts incurred by dictators to support their regimes. (This fact is the basis for some of the criticisms of the international financial institutions.) > [@](#): > > I hate to burst bubbles, but that’s very unlikely even to be considered at this stage. You might disagree with my characterization of the situation, but you can’t really be saying that Iraqi oil revenues are not directly flowing into Kuwait and that this is expected to continue for some time to come. ---
**Author:** ![chula](https://avatars.discourse-cdn.com/v4/letter/c/a4c791/32.png) [@chula](https://boards.straightdope.com/u/chula)\ **Post date:** [July 3, 2003, 7:20am UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/11 "2003-07-03T07:20:19Z")
FYI, here are a few sources: “France, Germany and Russia believe that Iraq’s debt should be rescheduled without write-offs or forgiveness and with interest continuing to accrue and compound.” Financial Times, June 23, 2003. “Germany’s finance minister, however, has said forgiving the debt is not a matter for discussion.” Dallas Morning News, June 23, 2003. “‘I haven’t heard anybody seriously discussing the possibility of writing the Iraqi debt off,’ [Russian economic adviser Andrei Illarionov] told Reuters.” Moscow Times, April 14, 2003. ---
**Author:** ![system](https://global.discourse-cdn.com/straightdope/original/2X/e/e489c3b7d8fce19c4b355dd4fc3f88cc39c34b87.png) [@system](https://boards.straightdope.com/u/system)\ **Post date:** [July 3, 2003, 7:40am UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/12 "2003-07-03T07:40:24Z")
> [@](#): > > \*Originally posted by chula \* > Debt _restructuring_ is not at all the same as debt _forgiveness_. I am well aware of the difference. This is my business, after all. Restructuring can and often does include forgiving or writing down portions of the debt. > [@](#): > > The United States initially suggested debt forgiveness, but quickly backed off because of strong opposition from other countries. The US advanced the idea, but insofar as the US is not a significant debt holder, it doesn’t have much to any leverage on this issue, further to that it’s past position on debt foregiveness and write offs. > [@](#): > > If you have some evidence that debt _forgiveness_ is currently on the table, do share. Why certainly, my dear fellow, why certainly. We may look to The Economist _Paying for Saddam’s sins_ 15 May 2003 > [@](#): > > At the very least, this wording would give Iraq a strong hand in any formal Paris and London Club debt renegotiations… _In regards to the lfiting of sanctions text_ > > Some American officials have made no secret of their preference for Iraq’s debts to be written off, to let its new regime start life with a clean slate. Critics of this idea make two main points: that to pursue it would be bad politics; and that it would be bad for the international debt market and Iraq’s place in it. > > The political risks are obvious. Iraq owes America little money. Its two biggest creditors by far are France and Russia, countries which opposed the war against Saddam and can veto any UN resolution. It would come as no surprise were they to veto immunity for oil revenues, or require it to be temporary. _Nota Bene: in fact as I posted some time back, the biggest creditors by far are the Gulf States, not France or Russia, but in terms of the Clubs, France is the most politically important, followed by Russia_ > > The case for debt forgiveness has been well-rehearsed in recent years, not least in the debate over the HIPC plans for relieving the debts of the poorest countries. Strikingly, two of the main arguments against forgiveness hardly apply to Iraq. There is no obvious “moral hazard”: forgiveness would not reward any bad behaviour of a new Iraqi government, nor—given the unique circumstances—would it generate expectations that similar generosity would be forthcoming in future. Likewise, because a new government would be clearly unconnected to the Saddam regime, refusing to repay all its debts might not hinder the government from borrowing fresh capital—though it is certainly plausible that creditors might look more kindly on Iraq, and thus charge it a lower rate of interest, if it continued to pay existing creditors something, after a formal rescheduling, as evidence of its good intentions over new borrowing. > > Owed by the odious > > Some economists, such as Michael Kremer of Harvard University, argue that, after a change of regime, a country’s new government should have no legal obligation to service the “odious debt” of an illegitimate predecessor, an idea dating back to the Spanish-American war of 1898. In theory, establishing the right of a country to write off odious debt would have potentially huge benefits, not least by discouraging banks from lending to nasty governments that might one day be overthrown. Indeed, says Mr Kremer, setting out precise rules for what counts as an “odious regime”, and thereby making it harder for such regimes to borrow, may be a better form of economic sanction than the traditional approach of obstructing trade. Restrictions on trade hurt ordinary people, whereas making it harder to borrow hurts the baddies in charge more directly. > > If applying the odious-debt doctrine to future debt can make good sense, applying it retrospectively to debt already incurred, as in Iraq, is less straightforward. As Harold James, another Princeton economist, has argued, this could destabilise the global credit markets by making creditors fearful that other countries might one day describe their debt as odious. It is not hard to imagine circumstances in which, say, a newly democratic China might try to shed the external debt—$170 billion at the end of 2001—of the “odious” undemocratic regime it replaced. He has a point: although, given the needs of Iraq, Keynes might well have dismissed it as unhelpful theology. As you can see, write-offs are not off the table. I personally do not care for the odious debt concept for reasons expressed in a similar thread in the past. Nice shiney eyed liberal idea that will have unintended consequences. Insofar as the Paris and London Club members have only begun now surveying, as I said, the debt stock to see who holds what claims, no one yet knows what the end picture is going to be. There will have to be a major debt-holders’ conference, perhaps as early as this Fall, likely a bit later given the confusion, and then we will begin to see what hands are played. > [@](#): > > That would be a highly unusual remedy, since countries are routinely held accountable for debts incurred by dictators to support their regimes. (This fact is the basis for some of the criticisms of the international financial institutions.) Let me rephrase your somewhat bumbling statement: Nations are not routinely allowed to walk away from their soveriegn debts. Nor are sovereign debts routinely completely written off. There is something called moral hazard there. International financial institutions, I presume you mean IMF and World Bank, have only a little to do with this. Rather it is quite a simple principal, you borrow, you pay if you want to be able to come back to the market to borrow again at reasonable rates. If you don’t pay, well don’t expect to borrow or do so at a reasonable rate. IMF helps work at restructuring, but it’s the London and Paris Clubs that are the main fora for such workouts. However, it is emphatically not highly unusual for restructuring of debt to include write offs and write downs of various kinds (e.g. interest, etc.). It is indeed ordinary. What is unusual is sweeping cancellations or massive write offs. There are good reasons for this, and of course any country that decides it doesn’t need access to international financial markets is free to repudiate as it wants. > [@](#): > > You might disagree with my characterization of the situation, but you can’t really be saying that Iraqi oil revenues are not directly flowing into Kuwait and that this is expected to continue for some time to come. Your characterization was lacking in fact and indeed in information. Insofar as there is little in the way of Iraqi oil revenues, there is little flowing to Kuwait, if by that you mean in transfers. And it does not “flow” directly to Kuwait, compensation payments pass by the UN, through the compensation fund. Now, next time comment on something you know about and don’t waste my bloody time with tripe. ---
**Author:** ![chula](https://avatars.discourse-cdn.com/v4/letter/c/a4c791/32.png) [@chula](https://boards.straightdope.com/u/chula)\ **Post date:** [July 3, 2003, 8:22am UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/13 "2003-07-03T08:22:10Z")
> [@](#): > > \*Originally posted by Collounsbury \* > I am well aware of the difference. This is my business, after all. Restructuring can and often does include forgiving or writing down portions of the debt. So you’re admitting that your response didn’t address my initial statement? I was talking about forgiving debts and you were talking about restructuring. > [@](#): > > As you can see, write-offs are not off the table. By “on the table” I meant “being seriously considered by those who are in a position to make decisions.” I did not mean “being discussed by economics professors.” > [@](#): > > Insofar as there is little in the way of Iraqi oil revenues, there is little flowing to Kuwait, if by that you mean in transfers. And it does not “flow” directly to Kuwait, compensation payments pass by the UN, through the compensation fund. I can’t believe you’re suggesting my statement is incorrect because I used the word “flow” rather than “pass.” > [@](#): > > Now, next time comment on something you know about and don’t waste my bloody time with tripe. If your time is being wasted then you are the one wasting it, not me. The broader issue of debt forgiveness and the role of the IFIs in supporting oppressive regimes is beyond the topic here. I simply wanted to point out that the idea that all oil revenues are going to the Iraqi people is erroneous. It is not unthinkable that arrangements would be made to provide oil directly to Kuwait, though I don’t have any evidence that it is actually occurring. ---
**Author:** ![system](https://global.discourse-cdn.com/straightdope/original/2X/e/e489c3b7d8fce19c4b355dd4fc3f88cc39c34b87.png) [@system](https://boards.straightdope.com/u/system)\ **Post date:** [July 3, 2003, 12:43pm UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/14 "2003-07-03T12:43:51Z")
> [@](#): > > \*Originally posted by chula \* > So you’re admitting that your response didn’t address my initial statement? I was talking about forgiving debts and you were talking about restructuring. Quite the contrary, I am indicating that restructuring can and does include write downs and write offs – that is levels of debt foregiveness. > [@](#): > > By “on the table” I meant “being seriously considered by those who are in a position to make decisions.” I did not mean “being discussed by economics professors.” Well Spanky, it is being seriously considered, I can report that as I fucking deal with this fucking professionally. It’s widely understood that some of the debt will be written down or off, and thus indeed we have different parts of the debt trading at steep discounts off face value. The full Economist quote was an illustration, however at present we’re not at the fucking stage where the actual negotiations have started, first we need an idea of what claims are actually out there and valid, then one moves from there. > [@](#): > > I can’t believe you’re suggesting my statement is incorrect because I used the word “flow” rather than "pass."If your time is being wasted then you are the one wasting it, not me. No, your statement is incorrect on the face my dear fellow, insofar as (a) Iraqi oil money does not go directly to Kuwait, but passes through the UN compensation fund, whose relevant body has already cut the amount dedicated to Kuwaiti claims (from 25 % to 5 % as memory serves) per past sanctions and the extent of those claims is indeed subject to review (b) your pretention that Iraqi oil money is being siphoned off scurrilously and directly by rich Kuwaitis is w/o basis – nice little UN mechanisms for war claims compensation handles. > [@](#): > > The broader issue of debt forgiveness and the role of the IFIs in supporting oppressive regimes is beyond the topic here. I simply wanted to point out that the idea that all oil revenues are going to the Iraqi people is erroneous. Your position is nonesensical. (i) Oil revenues at present are effectively non-existent. (ii) The prior oil for food program (or oil for essentials as it might better be termed) certainly did pass oil revenues directly to the Iraqi people via goods (iii) The current arrangements have extended the program and for the immediate future will follow a similar structure. (iv) Bremmer has advanced a plan to sequester portions of the oil revenue into a social security fund, and the UN text lifting sanctions explicitely protects Iraqi oil revenues from certain claims and judgements. > [@](#): > > It is not unthinkable that arrangements would be made to provide oil directly to Kuwait, though I don’t have any evidence that it is actually occurring. It is indeed unthinkable as (a) compensation claims by Kuwait are passed through the relevant UN body, which is not going to do such, never has and never will, the compensation fund is the mechanism, (b) politically there is no reason to do such and is indeed unthinkable © the potential of passing Iraq oil through Kuwait in a pure business relationship (pipeline) is an entirley seperate issue. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [July 3, 2003, 6:01pm UTC](https://boards.straightdope.com/t/are-we-pumping-oil-into-kuwait/185894/15 "2003-07-03T18:01:52Z")
Chula, the fact is that you are in the position of a Chick-tract reading creationist arguing with a molecular biologist. You’re out of your league. For your own good, I advise you to surrender and admit that Col is correct. There are so many REAL inequities going on in the world that I’m sure you could find another one to complain about.