It’s been 19 years since Saddam Hussein’s army invaded Kuwait, and six years since the United States led the invasion that overthrew the dictator, but Kuwait is still demanding reparations from the Iraqi people.
According to Kuwaiti officials, Iraq still owes $25 billion in war reparations, in addition to some $16 billion in loans that funded Iraq’s eight year war with Iran. At the same time, Iraq is considering a request for $7 billion in loans from the International Monetary Fund as it struggles to pay for reconstruction. Oil revenues have plunged from $7 billion in June 2008, to just over $2 billion in May.
Given the beleaguered state of Iraq, and all it has been through, it is high time that these reparations and debts are confined to the dustbin of history, finally closing the chapter on the Saddam Hussein era.
It is outrageous that a country that is among the richest in the world, with a per capita income of $41,000, is forcing Iraqis, with a capita income of just under $4,000, to pay for Saddam Hussein’s actions.
Kuwait was, after all, no innocent bystander in the Iran-Iraq war, or a hapless victim of the 1990 invasion. It helped fund the war and was happy to have Iraq do all the dirty work to contain and weaken the fledgling Islamic Republic. Kuwait had goaded Iraq from the outset of the end of the war, allegedly violating OPEC agreements by increasing oil production pumped from the disputed Rumaila oilfield, which is partly in Kuwait but mostly in Iraq.
The increased production caused oil prices to tumble. Iraq accused Kuwait of waging “economic warfare” and violating Iraqi sovereignty. Baghdad estimated the loss in revenue cost Iraq’s treasury an estimated $4 billion per year, which the regime said it needed for reconstruction. After a 16-month standoff, Saddam made his fateful mistake and invaded his southern neighbor. The Iraqis have been paying economically ever since.
After the end of US-led war to expel the Iraqis from Kuwait, the United Nations Compensation Commission (UNCC) was created to assess and payout claims, with Kuwait claiming $386 billion in damages. Individuals and businesses from 100 countries also filed claims. Multinational corporations have received vast sums, not for war damage, but for “profit loss” and “lost potential earnings.” As of April, according to the UNCC website, Iraq has paid out $27 billion to the commission.
But as Kuwait reminded Baghdad, there is still a further $25.5 billion to pay. And then there are the other debts Hussein accrued with numerous nations around the world. However, following lobbying from the US after its occupation of Iraq, and pressure from organizations such as Jubilee Iraq, many countries have waived Iraq’s debts, most recently the United Arab Emirates writing off $7 billion.
Kuwait should follow suit. The 1990 invasion was a decision of a dictator, not the Iraqi people. Furthermore, history has numerous precedents of debts being written off that were made by an individual — the leader — not the country itself. And most famously, of course, reparations have been shown to have negative consequences, particularly if one recalls the outcome of the Versailles Treaty in 1919 that forced Germany to pay out billions, yet resulted in hyperinflation and acted as a catalyst for the rise of National Socialism. We all know where that led.
But while such an outcome is exceedingly improbable in Iraq, paying out reparations means there is less money for reconstruction. It is also disingenuous on Kuwait’s part to divert such funds away from Iraq, as an unstable and poor neighbor is not to Kuwait’s benefit, or anyone else for that matter.
To date, Iraq has received $125 billion in reconstruction aid, according to the US Government’s Special Inspector General for Iraq Reconstruction. Hundreds of billions of dollars more are needed. Oil revenues are expected to help in this regard, but with low oil prices and billions needed to upgrade energy infrastructure, Iraq is still years away from being able to allocate oil revenues to pay off debts when it needs money for reconstruction. Either debts are frozen until Iraq has ample revenues, or written off completely by Kuwait. This is what Iraq has asked for.
Equally, the whole reparations deal reeks. There have been innumerable wars and invasions since World War II and the victorious Allies rightly realized that reparations from Germany and Japan were a bad idea. Few, if any countries, have received compensation since then for being on the receiving end of aggression. The US has certainly never paid out reparations for the numerous wars and conflicts it has been involved in, while Israel has never paid a cent for the damage it has caused to the Arab economies, left to foot the bill from decades of Israeli aggression.
While Kuwait has not acted militarily, the Gulf state’s demands are not healthy for Iraq, for its border with its neighbor, or for the region. Kuwait’s requests should end and allow a more prosperous Iraq to develop.
PAUL COCHRANE is the Middle East correspondent for International News Services