The deposed Iraqi regime of Saddam Hussein had an estimated foreign debt of $150 billion, not counting $200 billion in reparations owed to Kuwait and Saudi Arabia dating from the Persian Gulf War.
The U.S. Treasury Department estimates Saddam's major creditors were Saudi Arabia ($25 billion), United Arab Emirates and Qatar ($17.5 billion), Kuwait ($12.5 billion), Russia ($9 billion), France ($8 billion), Japan ($6 billion) and Germany ($4.3 billion).
Last week, the U.S. Senate passed an amendment to President Bush's $20-billion aid proposal for Iraq that would convert $10 billion of that aid to a loan unless other nations forgive at least 90% of Saddam's debt.
Germany's Development Minister, Heidemarie Weiczorek-Zeul, has already said Germany will not forgive Iraqi debt. The French are not expected to forgive their debt, either. Secretary of State Colin Powell attended a World Bank and United Nations donor-nation conference in Madrid that began October 23 in the hopes of soliciting contributions for Iraq to counter-balance Saddam's debt. But at the very outset of the conference he said "it may take time to meet the goal" of raising $35 billion worldwide to compliment the U.S. commitment of $20 billion.
HUMAN EVENTS Assistant Editor David Freddoso asked senators last week if the U.S. should extract some penalty from nations such as France and Saudi Arabia if they force a new Iraqi government to pay a toppled dictator's debts.
Once the Iraqis establish a new regime, the French, the Saudis and the Kuwaitis are going to be among many people trying to collect debt from it that Saddam Hussein incurred. . . .
SEN. JIM BUNNING (R.-KY.): They have no obligation to pay. None.
Should we penalize countries that try to make them pay?
BUNNING: No, I don't think we should penalize them. We should leave that up to the Iraqis. After all, if we're going to allow them to write a constitution and have an elected government like a democracy should, they will have to make that decision, whether those old debts that were accumulated by the Saddam Hussein regime should be considered or should not be considered. In my opinion they should not be considered. If [Saddam's regime] had used the money for the Iraqi people, there would be a different question. They didn't use it for anyone except their own personal gratification. So I would feel no obligation if I were the Iraqi people to repay any of those.
We don't want to let other countries bully them into it either.
BUNNING: There will be no bullying.
When the new Iraqi regime is established, it's going to have a lot of debt to countries like France, Saudi Arabia and Kuwait that Saddam Hussein accumulated. Should the United States act to penalize countries that refuse to forgive that debt that was incurred by Hussein-whether it's any sort of diplomatic sanction or [or other penalty?. . . .
SEN. JON CORZINE (D.-N.J.): Well, the first order is to sit around the table and discuss it diplomatically, try to negotiate an overall settlement, a percentage. There are different terms of lending arrangements-some of them are positive, and were intended to help the Iraqi people. Food shipments. . . . It requires detailed analysis of how you got into the loan arrangement, when it was put in place. . . . We should be securitizing future oil revenues-the reserves-as a means to fund much of what is going on.
The reconstruction?
CORZINE: Right. . . . I would like to make a loan agreement, strictly a lien against the oil reserves themselves. It's nothing more than giving to the Iraqi people the money they're going to get when those oil reserves come out.
The administration has been urging countries like France, Saudi Arabia, and Germany to forgive the debt that Saddam Hussein incurred with them. Should the United States act to penalize countries-say, the French, Saudis or the Kuwaitis-if they try to force the new Iraqi government to pay off Saddam's debts?
SEN. PETE DOMENICI (R.-N.M.): Well, I never had thought of it in that way, but I think we have a pretty good position to be tough on them if they want to put themselves in a position to really take the lifeblood out of this country that's just starting. We ought to really resist that very vehemently because we didn't go over there and spend all of our resources with the idea in mind of collecting, having all of that returned to us, the value of our intervention.
The truth of the matter is, we will have spent more freeing [Iraq] and doing the work of reconstruction than any of those creditors. So when push comes to shove, seems to me we could suggest that they don't get paid unless and until America gets reimbursed for everything. . . .
If these guys want to be stubborn, inordinately demanding, then they should know that America is in an awful strong position to say they don't get paid for many, many years. Because that money was given to an Iraq that was a murderous Iraq. We're giving it to try to build a free Iraq. So we could build a ledger saying to them, well, it costs us, all told, say $200 billion, so why don't you sit down and wait a while and we'll work out something. In any event, they should be a Hell of a lot more considerate. Here we are, worried about the impact on this country before it can get on its feet. Any of these countries that may be looking for their money very soon, they've done literally nothing.
Saddam Hussein incurred a lot of debt to countries such as France, Germany, Kuwait, and Saudi Arabia. We're already encouraging those countries to forgive the debt, but should we penalize those countries that try to force the new government in Iraq, once it's established, to pay off the debt Saddam incurred?
SEN. ORRIN HATCH (R.-UTAH): I'm not sure we ought to penalize them. What we are doing in this donors' conference (in Madrid) is making it very difficult to collect that debt. And we have ways of making sure they don't get it. It's not as simple as some of them-France and Germany and Russia and others-think. There's a lot of things that can be done there. But the point is, we just don't want them to be paid out of any oil revenues that are needed to run the country and rebuild the infrastructure. We certainly don't want it paid out of anything that we give. So to be honest with you, we're going to have to face that problem in the future, and so are they. And the Iraqis are going to have to pay, too, but what are they going to do if the Iraqis can't pay anyway?
When you say "there are things we can do" to keep them from collecting-what specifically do you mean?
HATCH: Oh, we're not going to get into that. Those are important things that I know of.
Should the United States act to penalize the French, Saudis or the Kuwaiti governments if they try to force the new Iraqi government to pay off the debts incurred by Saddam Hussein during his regime?
SEN. BILL NELSON (D.-FLA.): I can't answer your question in the abstract. I've got to know more of the facts. You're asking a hypothetical.
The new [Iraqi] regime is going to be faced with a lot of debt to the French, the Saudis and the Kuwaitis. If they are forced to pay that, it means that the money going there as aid from Americans is going to end up with Jacques Chirac. Should the United States somehow penalize countries that do not forgive that debt that was incurred by Hussein?
SEN. JEFF SESSIONS (R.-ALA.): Whether or not a government of Iraq ultimately decides to honor those debts, is the new government's decision. And for a lot of good reasons, the United States probably should be happy that's going to be the case. [Iraqi resistance leader Ahmed] Chalabi, when he was here and spoke to us, was emphatic that he did not believe they should honor the debts made by a killer regime that destroyed the country and killed innocent civilians. . .
If Iraq could walk away from those debts and begin to get their oil industry coming forth, and begin to pump onto the world market a lot of oil-which they could do-they would make a lot of money, they could help break the back of the OPEC cartel by increasing supplies of oil so they couldn't keep the price so high. It would help us and help Iraq. So that would be my convoluted theory about it. I hope that they don't agree to pay them a dime.
