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Who profits from erasing Iraq's debt?


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Who profits from erasing Iraq's debt?

Heather Wokusch

28 July 2003

Outspoken Pentagon advisor Richard Perle recently called for Iraq's debt to be cancelled as a way of teaching banks about the "moral hazard of ... lend[ing] to a vicious dictatorship."

Fair enough. Other countries with "odious debt" incurred under nasty regimes may be granted debt forgiveness. Why not Iraq?

At stake is more than $184 billion of pending contracts and debts against Iraq, many of which transpired before the 1991 invasion of Kuwait.

Why not indeed. A war profiteer like Perle lecturing on morality is doubtful enough, but who in today's occupied Iraq will really profit from debt forgiveness, the Iraqi people or companies like Halliburton?

At stake is more than $184 billion of pending contracts and debts against Iraq, many of which transpired before the 1991 invasion of Kuwait. In other words, even deals inked when Saddam Hussein was considered a US ally could now be considered odious debt.

No small coincidence that the countries slated to lose most from an Iraqi write-off include Russia, France and Germany: Bush's axis-of-just-as-evil for opposing the recent invasion of Iraq.

But taking Perle's moral high ground for argument's sake, consider that Chile's Pinochet, Indonesia's Suharto, South Korea's Park Chung Hee, and yes, Iraq's Hussein were all former recipients of White House largesse. So much for the US government steering clear of vicious dictators.

And of course, today's "war on terror" has become a goldmine for brutal regimes of strategic US interest.

Uzbekistan and Pakistan

Take Uzbekistan. Despite an abysmal human rights record and corrupt government, the country received $500 million in US funding last year - $79 million specifically earmarked for "torture as a routine investigative technique." Its proximity to Afghanistan and expanding US military presence guarantee ever more funding to back the savage Uzbek government, step up repression and no doubt create the kind of Islamic fundamentalism the US should be fighting in the first place.

And then there's Pakistan. General Pervez Musharraf seized power in a 1999 coup, stifling opposition and rewriting the constitution to shore up his dubious power base - not exactly a model of democratic leadership. Regardless, Pentagon ally Musharraf just left Camp David with $3 billion in fresh US grants, for things like upping the nuclear war ante with India.

Fire in the Ramaylah oil fields © UNEP/DEPI/Post-Conflict Assessment

How ironic that dictatorships like Uzbekistan and Pakistan can cash in on the "war on terror," while fledgling democracies defying Washington's unilateral excesses are punished. The Bush administration's recent rampage against the International Criminal Court (ICC) is a case in point: 64 countries receiving US military aid were forced to sign bilateral agreements exempting US troops from prosecution, or else risk losing the aid. The Bahamas, for instance, was warned funds would be withheld for paving and lighting an airport runway, and Caribbean states were told they could lose hurricane relief and rural dentistry benefits if they didn't support Washington's attack on the ICC.

In other words, the US government provides funding for "torture as a routine investigative technique" but not necessarily for hurricane relief. No wonder they hate us.

The White House is quick to point out that some countries have demonstrated loyalty to the Bush administration by sending peacekeeping troops to Iraq: Poland, Ukraine, Nicaragua, and El Salvador among others. Rarely mentioned, however, is the fact that US taxpayers will be funding this "coalition of the billing" to the tune of $250 million this year alone.

Who really benefits?

But who really benefits from massive cash infusions to Iraq, estimated to be costing US taxpayers $3.9 billion every month? And who would benefit from a hasty write-off of Iraq's past debt?

There's no doubt the country's in chaos and needs help. Twelve years of debilitating sanctions have left the population and infrastructure ravaged, while the recent invasion and aftermath have left thousands dead and millions unemployed. Meanwhile, attacks against US service members grow more frequent and bloody every week.

But not everybody's hurting. Halliburton, the Texan oil company tied to US vice president Dick Cheney, is making a killing on subsidiary contracts to Iraq, doing everything from repairing oil wells to providing housing for US troops. Corporate cronies will also benefit from Bush administration plans to privatize Iraq's 100 state-owned firms, probably at fire sale prices.

No doubt the lack of financial transparency in today's Iraq creates unprecedented opportunities. Some US firms have already been charged with bilking millions of dollars in bogus rebuilding contracts, while the integrity of the US-UK controlled fund slated to recover foreign Iraqi assets has been called into question.

The taxpayer's burden

Clearly, throwing more cash into this mess makes no sense. How long can US taxpayers shoulder the unilateral burden? What new dictators will be propped up? What assets and national resources will be privatized away from the Iraqi people without their consent? How long before they negate today's agreements as odious?

Bottom line, until a stable government is in place, truly representative of the Iraqi people, there should be no debt cancellations - reschedulings or delayed payment allowances perhaps, but no write-offs. Same goes for privatizations. The Bush administration's secretive, unilateral and unaccountable approach to finances is among our biggest moral hazards in Iraq.

Heather Wokusch is a freelance writer living in the U.S.

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