Why should Iraq repay its past debts?

Iraq is not a poor country, everyone knows that. Back during the "sanction days" as Iraqis called them, referring to the 1990-2003 UN-US economic sanctions imposed on the country, affecting and degrading us Iraqis, we used to wonder: Is it possible that we were actually on the abyss of poverty, while at the very same time, we were walking on ponds upon ponds of black gold?

Today, five years after the downfall of the Baathist regime, a full fledged war, an invasion, swinging back and fourth on the brinks of a civil war, insurgency, Al Qaida, illegal armed militias, and heaven knows what else, the Iraqi government is trying its very best to enforce the status of law.

But, Iraq is still burdened with debts. To be precise, Iraq has to pay back the Paris Club Group of developed countries around $13 billion, and another $50-70 billion to different Arab countries. Most, if not all these debts occurred during the eight year Iran-Iraq war.

Related issues

A number of related issues were addressed recently at the International Compact with Iraq (ICI) conference which was held in Stockholm last week.

"This isn't a donor conference. The Iraqis don't need large sums of money," US Secretary of State Condoleezza Rice said. "They do need large infusions of technical assistance, project support, etc..." she added.

Swedish officials also played down the possibility of new initiatives at the meeting, and Foreign Minister Carl Bildt said debt was not its subject.

But how is it that Iraq does not need large sums of money, when it has to re-construct its basic infrastructure from scratch?

And is Iraq truly able to pay back these debts, and re-build a devastated country which will need tremendous efforts? Lastly and most importantly, are these debts fair?

Going back to 1991, the official amount of all Iraq's debts was $42 billion. This figure was stated in an official document submitted to the UN Security Council at that time, and as a result, Resolution 687 was issued and a ceasefire was carried out.

Most of the loans offered by major industrial countries around the world at the time were tied to Iraq's purchase of weapons to be used in the war against Iran. Those loans were given to the Iraqi leadership for political considerations.

So, it is not enough that Iraq today has to pay the debts of the regime which the international community decided to first weaken by imposing sanctions against it, then started a war to topple it and finishing off with all that was left of the country's infrastructure, not mentioning the deaths, diseases and misery. Iraq has to also pay the accumulated interest on the major loans.

All this seems very unfair. The loans interest took place during the 13 years of UN sanctions against Iraq, when Iraq had no inflow of foreign currency. Even the revenue of $21 billion generated during the UN oil-for-food programme went unaccounted for at the time of Paul Bremer, the US head of the Coalition Provisional Authority in Iraq.

It was stashed away in French and American banks like lame ducks! No interest was added to Iraq's frozen assets in foreign banks for 13 years, so why should Iraq pay interest now?

Only country

Russia was the only country that dropped all of Iraq's debts. Needless to say, the loans given to Iraq were unethical in the first place, as they were given to step up a destructive war.

James S. Henry is a successful American entrepreneur, attorney, economist, and investigative journalist with outstanding record of professional accomplishment.

On his blog which he has called "Submerging Markets" he wrote: "Indeed, as I've argued before, if Iraq's foreign debt had been restructured in the late 1980s, when (James) Baker was secretary of state, many of our difficulties with Iraq - including Saddam's 1990 invasion of Kuwait, the prolonged embargo, and our most recent invasion of Iraq - might well have been avoided entirely."

So isn't it time to take Iraq seriously for a change, and treat its people like human beings?

The region's stability and wellbeing is interwoven with Iraq's security, and stability. Relieving debts that were given to Saddam Hussain for political interests of countries that gave them must be considered before it is too late.