May 8, 2007:
Iraq has been asking nations to cancel
over $50 billion in debts, incurred during Saddam Husseins rule. The
implication here is that, if the debts are not cancelled, Iraq will simply
renounce the debts as being those of dictator Saddam Hussein and his henchmen,
and not an obligation of a democratic Iraq. That would put Iraqs international
financial status at risk for several years, as lawyers battled it out and banks
retaliated. Most foreigners feel that Iraq should pay, if only because the
country sits atop over a trillion dollars worth of oil, and that most of the
money went to pay for a war with Iran, a war started when Saddam invaded in an
attempt to steal Iran's oil fields.
Iraq owes nearly $60 billion, most used to pay for
the 1980s war with Iran. After the initial 1980 invasion failed, Iran struck
back. It was only because of generous gifts and loans from other Arab states,
and generous credit terms, from Russia and China, for weapons purchases, that
Saddam was able to survive.
The largest creditor is Saudi Arabia, which is owed
$17 billion. Saudi officials are apparently willing to forgive 80 per cent of
the debt. Saudi Arabia sees Iraq as its main defense against Iranian
aggression, and wants to develop good relations with the new Iraqi government.
Kuwait is owed $15 billion. Because of the 1990
Iraq invasion (partly in an attempt to cancel that debt), the Kuwaitis refuse
to cancel the debt. Kuwait's ruler could just forgive the debt, but the elected
parliament has enough power, and popularity, to rally public opinion against
the Emir. While the elected officials have a lot of power, the unelected emir
still has more. Other Arab states in the Gulf see Kuwaits quasi-democracy as a
mistake, as it seems to create more arguing and conflict, than anything else.
In Kuwait, the elected officials dare not risk offending their constituents by
showing any willingness to forgive the Iraq debt.
Russia is owed $13 billion, and is willing to
forgive the debt, in return for guarantees that new business will be
forthcoming. Russia has worked out similar deals with other Arab nations that
bought lots of weapons from the Soviet Union, and then were unable, or
unwilling, to pay. These days, Russia is much stricter when it comes to getting
paid for weapons.
China is owed $8 billion, has said little, but is
believed to want whatever deal Russia gets.
The rest is owed to a collection of Western and
Moslem states, all of whom wanted Iraq to survive its war with Iran in the
While many of the elected Iraqi leaders see Iran as
a natural ally, they also have to deal with the fact that the Shia Arab
majority (65 percent) is more Arab than Shia when it comes to politics. Iran is
a needed ally to make sure the Iraqi Sunni Arabs are crushed. Ironically, most
of the money is owed to Sunni Arab nations, who have long supported the Sunni
Arab minority that ruled Iraq, until 2003, and have supplied most of the terrorists,
mainly for attacks on Shia Arabs, since then.