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Can the Iraqi people, who have been under the rule of Saddam Hussein's tyrannical regime for decades, be required to repay Iraq's international debt after Saddam is removed from power? On the answer to this question rests a not insignificant component of the economic futures of three nations — Germany, France, and Russia — that have been recalcitrant in the UN debate on Iraq. The three have painted themselves into a corner because of their business dealings with Saddam's Baathist regime, and the economic bind in which they find themselves is at the root of their threats to veto UN resolutions in favor of expediting Saddam's ouster.
A major part of their reluctance to support regime change in Iraq is due to the fact that International Law does not look kindly on nations that help provide the means for dictators to suppress their own people. At issue is what is known as the Doctrine of Odious Debt. The doctrine was formulated more than a century ago and refined in the period after World War I when the issue of war reparations took on international significance as national boundaries were redrawn and some sort of fairness principle was sought for assessing the legitimacy of debt and calculating reparations. This doctrine essentially says that the people under the rule of a tyrant cannot be held responsible for the debts incurred by that tyrant in their country's name if such debts were incurred for the purpose of stifling political dissent and keeping the people subsurvient to the regime. A look at the economic situations of Germany, France, and Russia will help to clarify the implications of this legal principle.
Germany's economy can best be described as what happens when socialists go on a bender and the authorities turn their backs instead of citing them for DWI and getting them off the road and into rehab. So over-regulated and union-dominated is the German economy that in addition to six weeks' vacation, upwards of a dozen legal holidays, and substantial cash "vacation" bonuses, workers receive at least one mandated "pinkelpause" ("pee break" in the vernacular) per workday. Apparently German employers weren't attentive enough to their employees' needs to answer nature's call, and legislation was required to make sure that those employees were not being prevented from relieving themselves.
In the wake of such growth- and productivity-destroying regulation (coupled with increasing restrictions associated with membership in the European Union and the ongoing difficulties of attempting to integrate East and West German labor and industry), the German economy's projected growth rate for the current year is a dismal two tenths of one percent. This despite the fact that Germany has been the largest western supplier to Iraq of munitions, technical products, and so-called dual-use goods. The value of this business was more than US$ 300 million in 2001, and its loss would be, if not catastrophic, at least detrimental to Germany's hopes for economic recovery.
Germany is not alone. In typically perverse fashion, the French have found yet another dictatorial regime to appease in the name of "peace in our time." In 2001, France did approximately US$ 1.5 billion worth of business with Iraq, more than any other European Union country. Since the oil-for-food program began in 1996, France's trade with Iraq has amounted to US$ 3.1 billion. And France is owed more than US$ 4 billion by Saddam's government, putting it in third place among Iraq's creditors. But in addition to legitimate business with Iraq under the aegis of oil-for-food, France has been an important supplier to Saddam's military. A significant percentage of the Iraqi air force consists of Mirage jets, while French Exocet missiles are included in its armory. France is Iraq's largest western trading partner, and French petroleum interests hold the rights to develop Iraqi oil fields promising yields of more than 20 billion barrels.
Russia is Iraq's largest creditor, with estimates of Iraq's indebtedness to Russia ranging from US$ 7 billion to 12 billion. To a country whose GDP hovers in the US$ 300-350 billion range, this is not a debt that can be forgiven easily. In addition, Russia, in the name of its LUKoil, has recently gained significant commitments from Saddam Hussein to develop Iraqi oil fields.
None of the three countries can afford to see Iraq's debt to them cancelled under the Doctrine of Odious Debts, nor can they afford to forego the enormous military and oil development contracts they have negotiated with Saddam's regime. All three are seeking behind-the-scenes deals which will protect their creditor status and business interests in the event a U.S.-led coalition ousts Saddam.
For his part, Saddam virtually bankrupted Iraq in the war against Iran, even before the Gulf War of 1991. In the Gulf War, because of the damage he wreaked on Kuwaiti oil fields, he also amassed a huge reparations bill. Because of his own country's ruined oil industry, Saddam would not have been in a position to service Iraq's international debt, even had he not faced sanctions resulting from the Gulf War. But the key to this debt is that it can very clearly be argued to have been incurred for the purposes of suppressing Iraq's Shiite majority as well as many of Iraq's minority populations, including Kurds. Saddam is transparently using this debt to Russia, Germany, and France, as well as the carrot of future oil and industrial development deals, to influence his three major business partners to help him remain in power by voting against UN-approved regime change. If Saddam's ouster is achieved, their chances of collecting the money owed them and bringing to fruition future economic commitments is in serious jeopardy.
The major concern of the international "peace" movement seems to be that the United States is going to depose Saddam Hussein for the purposes of doling out Iraqi oil development rights to U.S. companies. Hence the watchword, "No blood for oil." In fact, however, the "peace" movement, which marches in lockstep with Russia, Germany, and France, is by default advocating "peace for oil"; they would, in effect, trade the lives of Iraqi citizens and the danger to western countries of Iraqi weapons of mass destruction for the assurance that Saddam will remain in power to pay his debts and honor future contracts with three of his largest creditors. As odious as the debt itself is, the cynical implicit support of Saddam's regime in the name of "peace" is doubly odious.
While oil is certainly one of the reasons for considering forcible regime change in Iraq, as far as the U.S. is concerned it is not the only, or even the primary, reason. The same can't be said for the key remaining anti-invasion holdouts. Their economic interests have essentially blinded them and their supporters in the peace movement to the human-rights and weapons-of-mass-destruction aspects of overthrowing Saddam Hussein's regime, making them co-conspirators in the perpetuation of a murderous government, a government whose ouster would be a blow struck in the name of political, social, and economic freedom the world over.