Iraq's debt continues to divide its creditors. For three days, Nov. 17-19, 2004, the 19 rich countries who are members of the Paris Club tried to agree on how to handle it. But the discussions are particularly difficult. The nervousness of the Paris Club's president, whom we were able to meet on the first day, reveals the importance of the stakes and the tensions existing inside this opaque club that calls itself a "non-institution."
If the $120 billion of Iraqi debt (not counting the enormous sums demanded as reparations for the first Gulf War, estimated at $200 billion) are so preoccupying the moneymen of the world, it's above all because they constitute a central factor in the domination that the great powers and their companies exert over the economy of the Middle East.
The United States and Great Britain, who have had management responsibilities in Iraq since the March 2003 invasion, are demanding from the nations of the Paris Club a 95% reduction of the Iraqi loans that they hold. France, Russia, and Germany, which opposed the war, are for the moment conceding only the figure of 50%.
But is it legitimate to allow oneself to be limited to a debate where the only choice you have is a number between 50 and 95? Might it be that the question is poorly posed?
A rather broad consensus exists affirming that Saddam Hussein was a dictator. It follows logically from this that the debt that he contracted in the name of Iraq is odious. This very clear legal doctrine was conceived in 1927 by Alexander Nahum Sack, Nicholas II's former minister and professor of law in Paris: "If a despotic power contracts a debt not for the needs and interests of the state, but to strengthen his despotic regime, to repress the population fighting him, etc., this debt is odious for the population of the entire state. This debt does not encumber the nation; it is a debt of the regime, a personal debt of the contracting power, and consequently, it falls with the fall of that power." The debts contracted by Saddam Hussein are thus null and void. Repayment should be personally demanded from the former leaders: it is not a debt of the Iraqi state. This argument has already been acknowledged and used at law; it is not a heresy.
Today, the Iraqi government is illegitimate: it was imposed by the United States as the result of a war launched in violation of international law, without the approval of the Iraqi people, to say the least. The debts that this government contracts, too, and particularly those toward great United Statesian multinationals like Halliburton, are odious.
In addition, Sack affirms that in the case of debts recognized as odious, the creditors who knowingly lent to the dictatorial power bear a share of the responsibility and have no right to require populations to reimburse them. Now, Iraq's creditors knew Saddam Hussein and the nature of his regime well.
The conclusion follows: Iraq's debt does not exist. What is urgent is thus not discussing the percentage of debt relief. It is ending the military occupation and giving decision-making powers to the Iraqi people. The democrats of the entire world should do all they can to bring this about and to pressure their governments to act firmly in this direction.
Consider: once Iraq has democratically elected its government, this government will be perfectly capable of refusing to recognize the debt contracted in its name by Saddam Hussein and then by the authorities named by the United States. Repayments will then be out of the question. Other countries that have known dictatorships, like Argentina, Chile, Brazil, the Philippines, Indonesia, the Democratic Republic of Congo, Nigeria, and many others, will be able to follow this example.
It will then no longer be necessary for the creditors of the Paris Club to spend long days discussing the percentage of cancellation. This little game among lenders will be able to come to an end. Unlike today, decisions concerning the countries of the South will finally be able to be made in the South, but the South, and for the South.
About the Author: Damien Millet, author of 50 questions 50 réponses sur la dette, le FMI, et la Banque mondiale ['50 Questions and 50 Answers on the Debt, the IMF, and the World Bank'] (Éditions Syllepse-CADTM, 2003), is president of the Comité pour l'annulation de la dette du tiers-monde ['Committee for the Cancellation of Third-World Debt']