Iraq's Foreign Debt
Now that the war in Iraq
is coming to a close, the question in my mind is what should be done with all
the debt that Saddam Hussein piled up over the years? Iraq
is essentially facing what appears to be a national bankruptcy. Economists are estimating that Iraq's
international debts are the largest of any developing nation, topping the scale
at an estimated $387 billion (Francis). According to Barton-Crocker,
Iraq owes $199 billion in
compensation claims to more than a dozen nations, $127 billion in foreign
debts, and $57 billion in pending foreign contracts-public & private. Iraq
owes Russia $12
billion, Kuwait
$17 billion, the Gulf States $30
billion, and much smaller sums to Turkey,
Jordan, Morocco,
Hungary, Bulgaria,
Poland, and Egypt
(Vaknin).
This amounts to roughly $16,000 for every man, woman, and child in Iraq,
many times greater than their per capita income (Francis).
In the short run there is no way
that Iraq could
service all of its debts. It would be a tough call for one of the countries
listed above to simply erase the debt altogether. I feel that in the long run the oil wealth of
Iraq will help
reconstruct its finances. Iraq
should be given some time so that they can exploit the strengths of their huge
oil and gas reserves thus helping them to pay off their debts. Just as Yugoslavia
received a five year moratorium on its debt payments in 2001 following the
removal of its dictator, Iraq
too should receive some kind of delay (The Washington Times). This would be a great starting point for the
new Iraq.
References:
Francis, David R.
(2003), "Iraq's
Debt Burden Too Big For Broke Economy to Bear", Christian Science Monitor,
April 14th issue.
The Washington
Times, (2003), "Oil and Iraq's
future", Editorial, April 17th issue.
Vaknin, Sam.
(2003), "Forgiving Iraq's Debt", April 17th.