You know there is ancient proverb about Iraq and something called “ ash-shiqaq qa an-nifaaq “ – perversion and hypocrisy if I can translate off the top of my head. Too long to go into now, but many people are quoting it nowadays in regards to the present circumstances.
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Another information item. I believe the bulk of the Iraqi debt is owed to Russia, Germany, and France, and somehow I don’t think any of those countries is in a strong position politically to demand that they be reimbursed at the moment.
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Well, there is this thing called the Free Market. Those of us who deal in it can attest that the Free Market does not like countries that default on their debts, above all unilaterally nor for purely political reasons.
That is to say, if Iraq wishes to return to the open market for debt, and does not wish to be America’s eternal bitch when it comes to borrowing options, they will pay. Experience indicate that it is not a terribly super idea to write off debts for political reasons, and if the US supported that move, well I think even the dimmest among – well mostly – can discern what damage that would do to our general policy position that debts should be paid. Indeed, if you look to the bleating about debt relief and the insistence on not providing negative incentives, one should see the real standard.
Now, as to the actual facts of the debt holding, we can learn from The Economist certain cold facts – if we may introduce actual facts for their novelty – and specifically The cold calculation of war in the 5 Apr 2003 issue. As it happens, the numbers are as follows: $4.8 billion to commercial creditors; $55 billion to Gulf Arab States (GCC including Kuwait which has been a real bitch); $9.5 billion to Paris Club (sovereign) creditors, ex-France and Russia – including the US; “Others” $26.1 billion [unknown status debt]; Russia, $8 billion; France, $8 billion; Central European creditors, $4 billion [prob. Sov. era arms sales by Czech and Polish exporters in general]; Multilaterals (IMF and WB largely) $1.1 billion. Estimates, by the way vary with FT giving slightly (by orders of billions) different estimates.
The first item of note is the gross distortion of pretending that Germany, Russia and France are the major note holders, in fact MENA countries are, followed by a shadowy set of what I believe is traded debt of unknown legality (in re status). As in the case of the contracts, it strikes me that much political hay is being made out of little substance (and with equally little understanding of the economics or finances, although that is often optional in this area).
The legal status of large chunks of this debt is unclear, but in general the rule if one wants to return to the market is one pays ones debts, and any write-offs be properly negotiated on a non-discriminatory basis. That’s the rule f the market, because fucking a creditor for political reasons raises questions about your famed “ability and willingness” to pay in the long run. Maybe next week, I’m out of political favor, so why the fuck should I lend?
Now the total is around $116 billion in debt, and $200 in reparation claims to Kuwait ex-other debts. Iraq may earn around $25 billion/year from oil sales, gross. Nota Bene, this is gross, Iraq still must invest substantial sums to repair damage of a decade of sanctions and piss-poor maintenance. This is serious fucking money, these kinds of capital repairs. Iraqi oil funds, for those who want to run real numbers and not engage in empty hand waving based on fantastical ideas about “oil money” will quickly understand Iraq is not going to be a rich country any time soon.
With a proper, non-political framework for economic renovation, laying aside the Pentagon et al’s immature spoils to the victor POV worthy of 19th century mercantilism, there is a chance it could become – with political stability – something approaching a well off country. Of course, political stability is something of an issue as those who have read my comments in my thread have learned.
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I can’t find the article, but there was a column a few days back at nationalreview.com that said the Iraqi oil fields had been illegally nationalized in the 1970s, and they should be returned to the private (foreign) companies that actually owned them. The implication was that the Bush administation talk about “the Iraqi people” owning the oil was basically socialist propoganda.
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Yes and that bleeding idiot Amity Shlaes pimped the idea in FT some time back.
Well, if one wants to discredit oneself nearly instantly in Iraq and the Arab world, this would be the way. Just call it colonialism bis and be done.
I am, for the record, a free marketeer—however free markets need to have internal and local legitimacy, and those that come at the end of a gun of a foreign power inevitably in the medium term set back genuine free market development.
The nationalization of the oil fields, as in every other Arab country, was popular (and as I recall reimbursed so hardly ‘illegal’ per se, on a national basis). If long term changes are to be effected and we are not simply building a nasty little pseudo-democratic client state on the Euphrates à la nos amis égyptiens, a policy of such stunning “success” to date, then imposing our views is not too fucking bloody smart. Building a consensus and making sure it has local legitimacy is the way to go, not through idiot fucking lawsuits or other similar moves. Now the oil folks I know are largely, even when they are Texan, smarter than this, and I dearly hope that they will tell the idjits writing this to shut their damn mouths rather than derail real reforms.
Super, very super. The Iraqis have to pay for our war. This worked brilliantly after Versailles, so I can look forward to the wondrous results of the ‘criminal’ nation paying the victor’s costs. And this a relatively impoverished third world country paying the costs of the war for the richest nation, by gross GDP, on earth. Why what wonderful piece of PR, this should not only be a brilliant policy for restarting the Iraqi economy but it should also work brilliantly for allaying accusations of colonialism and imperialism for of course it does not in any way resemble 19th century colonial powers extracting the cost of conquest from the conquered nation. I may add of course that the US is not a virgin when it comes to arranging weapons sales to Iraq, nor are all the debts of the G8 creditors weapons related, although large chunks of the former “East Bloc” certainly are.
Now, in regards to the summit meeting, it hardly strikes me that France, Germany and Russia look ‘lame’ – ex of course navel gazing boosterism back in the States. In fact the expressed the desire to see debt relief in the context of a Paris Club meeting for a coordinated multi-donor program to ensure minimization of systematic risk and implicitly to prevent debt-holder arbitrage, policy positions supported by the World Bank and were it not for some fairly childish peevishness, generally and apparently ‘theoretically’ by the Untied States. I refer you to recent Financial Times reporting on this issue. Of note, FT also reports rising resistance to American claims on WB activity in a future Iraq, ex a general G 8 agreement on proceeding.
So, indeed if we want a lasting peace, and one that does not devolve into a disaster, indeed the rest of the G8 has a say, and indeed this summit had no small meaning as a large enough bloc of WB and IMF stakeholders can block Multilateral etc. participation in ‘illegitimate’ activities. And further, French, Russian and German opposition can easily form a kernel of opposition to an Iraqi government, molded solely by the Americans, on the part of Arab governments etc. In short, there is leverage, and real leverage at that, whatever uninformed assertions would have to the contrary.
Or you can of course pursue the same kind of navel gazing idiocy that was pursed after Versailles, I am sure that it will be almost as successful.