The Theatre of Debt Absurdity

American taxpayers don't like their money to be wasted
The war in Iraq (no matter whether remains of the Iraqi army will continue the diversion war or not) is over for a good long while. No matter what the US propaganda says about safety of the Iraqi oil and transport infrastructure, it is perfectly obvious that Iraq is lying in ruins. It is hardly unlikely that Umm Qasr port and oil-loading terminal remained intact after the two-weeks vehement fights. It is also unlikely that oil pipelines and oil storage, everything that makes up Iraq's oil might, remained safe after the operations in Iraq. The coalition armies have suffered very serious material spending: they burnt down tons of petrol, kerosene, fired millions of shells and spent reserves of their smart bombs, which makes much money. As we know, American taxpayers are nervous and whimsical, they don't like their money to be wasted. It's just a convenient moment to find a scapegoat, a potential sponsor.  US's experience in the art of finding sponsors is considerable enough.

The Federative Republic of Germany must remember perfectly well that after WWII the federal government tore away billions of Deutsche mark to maintain the military contingents of liberator countries, Great Britain and the USA. No doubt that in accordance with the Marshall Plan Germany got practically for free large sums of money for purchase of industrial equipment, consumer goods, food and raw stuffs in the USA and Germany. They money was also spent on work done by consultants, advisors and experts, people who held US and British passports.

Under the hard present-day situation the USA also needs sponsors. It is obvious that new Iraqi government will be spending majority of the national income on compensations to the "liberators" for several years. However, we should keep it in mind that Iraq itself owes considerable sums of money to other countries as well. As it became clear after statements made by some high-ranking representatives of Iraqi opposition, these countries are very resolute concerning the debts and they cannot be waved aside. What is more, governments of these countries are eager to profit from participation in reconstruction of Iraq, even despite their harsh criticism of the war. Probably these very claims spurred Washington strategists to an ingenious idea. 

France, Russia and Germany reacted rather indignantly to the suggestion voiced by US Deputy Secretary of Defense Paul Wolfowitz that Iraq's debts must be written off which would be considered as participation in post-war restoration of the country. German Chancellor Gerhard Schroeder pronounced NEIN being at a mini summit in Russia's St.Petersburg. In fact, it is the Paris Club of Creditors that writes off all debts. There is a special procedure for this purpose. Germany is a member of the authoritative international organization. Consequently, debt writing off can be considered only when Iraq gets legitimate government recognized by the international community. And this new government is to sent a written request on this issue.

Russia's Foreign Ministry declared that Russia wouldn't take up the problem in the nearest time because Iraq had no legitimate government. What is more, the Russian side said, the issue could be discussed only taking into account important resolutions of the UN Security Council. But the resolutions are either disregarded or trampled on. On his visit to Washington, Russia Vice-premier Alexey Kudrin declared that Iraq owed money not only to Russia, he said the debt problem was many-sided; he mentioned the Paris Club of Creditors as well.

Russia President Vladimir Putin declared after the mini summit with Schroeder and Chirac in St.Petersburg that "Russia didn't object to this solution of the problem", he said the Russian side would consider the issue only at negotiations with the World Bank and the International Monetary Fund. Vladimir Putin mentioned as well that regarding the total volume of written off debts of poor countries, Russia was rated third in the world; regarding the ratio between GDP and written off debts Russia is rated first in the world.

Russia Vice-president Alexey Kudrin got back from Washington, studied opinion of the Russia president on the debt issue and developed final point of view of the country on the problem. In his words, Russia shouldn't write off Iraq's debt as the country itself has to pay debts of the former Soviet Union which were not written off previously. That is why the international law and Russia's membership in the Paris Club of Creditors allow to insist that the debts must be paid back. In a live program of the Russian television Rossiya, Alexey Kudrin said: "In this situation we are acting on equal terms: as they treat us, the same way we treat them." At that he mentioned that Iraq's debts to Russia were mostly civil, not military. Thus, Washington's desire to "punish" and humiliate those countries that refused to support the US aggression in Iraq has been driven into pragmatic course.

The suggestion of Washington saying that Iraq's debts to other countries must be written off is humiliating indeed. Otherwise, it may seem that experts of the US Department of Finance "are unaware" how much and to whom Iraq owes. But this is truly impossible.

Different experts estimate Iraqi debts differently. If we sum up different calculations we can see that Iraq's debt to Russia may make up $8-12 billion, to France – $10-12 billion and to Germany – about $4 billion. When Secretary of the US Treasury John Snow met with G7 ministers of finance in Washington where Russia also participated, he said that he had no exact information concerning Iraq's debt, but he said the sum of Iraq's supposed debt to France and Russia made up $100-300 billion which was 12-30 times as higher as the countries themselves officially admitted. Statements of this kind give much food for reflection.

In any case, Iraq's debts to Russia, France and Germany are much less that to any other country of the world. Some experts say that Saddam's biggest debt is to Iraq's neighbors, the Persian Gulf countries, Saudi Arabia, Kuwait, etc. The sum of these debts may make up several tens of billions to each country.  However, the USA didn't suggest that Saudi Arabia must write off the dictator's debt. At the same time, America isn't eager to write off Iraq's debt to the USA, which seems to be very confusing. Probably this is the reason why the US's suggestion to write off Iraq's debts was transformed into an appeal to G8 countries, as it was clear that Arabs wouldn't write their debts off. And this condition is the main guarantee of their loyalty concerning the war in Iraq.

US's allies from the Iraqi opposition have played a dirty trick upon the USA which expected that the opposition would make up new legitimate government of Iraq. Prominent Iraqi oppositionists have suddenly declared that they hadn't asked the USA to appeal to other countries and settle the debt problems of Iraq.  In their words, Iraqis respect their liabilities; a new government of Iraq will negotiate debts settlement with each of the countries to which Iraq owes money.  It was also added that such countries as Russia, Ukraine and Belarus were Saddam's friends and supported him. That is why, the opposition says, nobody is going to pay the debts to these countries back. "They supplied weapons to Saddam, that is why let them settle the problem with Saddam themselves." However, in addition to the debts connected with weapons and military supplies, there are also debts to Russian companies that have an international status. Majority of the deals had been concluded with participation of the UN Security Council in the network of the Food for Oil program. Even if the USA privatizes Iraq's oil industry, it will be impossible to leave the UN out in this situation. Consequently, even Saddam's adversaries who are resolutely against Russia won't be able to reject debt payment.

In the network of the above mentioned mechanism of debt writing off (Russia writes off Iraq's debts, and the Paris Club of Creditors writes off Russia's debts in its turn), it may happen so that it will be cheaper to make Iraq pay the debts to Russia than to make Russia write the debts off. At present, Russia's giant foreign debt is the US's key instrument of pressure. The USA won't allow to create a precedent of momentary reduction of the debt.

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Author`s name Margarita Kicherova