Iraq, War, Debt and the G8

26 April 2003 by Eric Toussaint

Some days after the beginning of the invasion of Iraq by the American, British and Australian forces, George W Bush gave an estimate to Congress that the cost of the war for the US Treasury would reach 80 billion dollars. According to the UNDP UNDP
United Nations Development Programme
The UNDP, founded in 1965 and based in New York, is the UN’s main agency of technical assistance. It helps the DC, without any political restrictions, to set up basic administrative and technical services, trains managerial staff, tries to respond to some of the essential needs of populations, takes the initiative in regional co-operation programmes and co-ordinates, theoretically at least, the local activities of all the UN operations. The UNDP generally relies on Western expertise and techniques, but a third of its contingent of experts come from the Third World. The UNDP publishes an annual Human Development Report which, among other things, classifies countries by their Human Development Rating (HDR).

and UNICEF, that is precisely the annual sum needed to guarantee for the whole planet universal access to drinking water, basic education, primary health care Care Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine. , a decent food supply and gynaecological and obstetric treatment for all women. The US government achieved the feat of raising and spending this amount in several months - a sum which no world summit in recent years has succeeded in bringing together (in Genoa in 2001 the G7 only managed to raise a little less than one billion dollars for the funds for combating AIDS, malaria and tuberculosis). The 80 billion obtained by Bush from Congress is the amount necessary to destroy Iraq and guarantee an occupation of its territory until 31st December 2003. Apparently the financial costs of the damage inflicted by this intervention have not been taken into account.

This neo-colonial aggression once again made use of a humanitarian pretext: the wish to offer the Iraqi people a democratic regime and to save humanity from weapons of mass destruction. This pretext is one more in the long list of humanitarian justifications used to cover up disgraceful operations of territorial conquest and economic rape and pillage. From the evangelisation of the Americas by the conquistadors to the fight against terrorism, via the fight against slavery which screened Leopold II’s colonial campaign in the Congo….

Who will really pay the price of this aggression? The war was not yet over when the finance ministers of the 7 most industrialised countries met in Washington on 10th/11th April 2003 to prepare the Spring meeting of the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

and the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
and the annual G8 G8 Group composed of the most powerful countries of the planet: Canada, France, Germany, Italy, Japan, the UK and the USA, with Russia a full member since June 2002. Their heads of state meet annually, usually in June or July. summit (due to take place in Evian, France at the beginning of June). They agreed to set Iraq’s foreign debt at 120 billion dollars, higher than that of Turkey (which has almost three times the population of Iraq). This does not include the compensation owed by Iraq for the invasion of Kuwait in 1990. If the finance ministers of the G7 are to be believed, were this compensation taken into account, Iraq’s debt would be increased to 380 billion dollars. Post-Saddam Iraq would thus have the unhappy privilege of being the most indebted country in the Third World, far surpassing Brazil, which currently holds the record of 230 billion dollars. The arbitrary agreement on this amount is directly aimed at justifying the take-over of Iraq’s oil resources on the pretext of ensuring the repayment of the debt. Fixing the debt so high has the enormous advantage of subjecting the new Iraqi authorities to the demands of the creditors for decades. Even if the military occupation were of limited duration, and even if the UN undertook the management of reconstruction, the country’s politics would still be determined by the creditors and by the oil multi-nationals which will obtain the concessions.

This is why the demand to cancel Iraq’s foreign debt is not only legitimate but also a condition sine qua non for re-establishing Iraq’s sovereignty after the ignominious military aggression which it has suffered. In international law, the doctrine of odious debt can be applied perfectly to Iraq. According to this doctrine, “if a despotic power (= Saddam Hussein’s regime, Ed.) contracts a debt that is not used to meet the needs and interests of the State, but to strengthen the despotic regime and oppress the population which opposes it, this debt is odious to the population of the State as a whole. This debt is not binding for the nation; it is the regime’s debt, a personal debt of the authorities which contracted it. Consequently, it becomes null and void with the fall of the regime.” (Alexander Sack, Les effets des transformations des Etats sur leurs dettes publiques et autres obligations financières, Recueil Sirey, 1927). The USA have applied this doctrine at least twice in the past. In 1898, after their victorious attack on the Spanish Armada off the coast of Cuba to “liberate” Cuba from Spanish domination, the US government used it to get Madrid to give up its financial claims on Cuba.

25 years later, in 1923, the US Supreme Court rejected the claims of the creditors of Costa Rica after the fall of the dictator Tinoco [1] , arguing that they should be addressed to the deposed dictator and not the new regime. In 2003, you can bet that the members of the G8, not only the four who supported the war (USA, UK, Italy, Japan) but also the four who were opposed to it (Germany, France, Canada, Russia) will come to an agreement not to apply the doctrine of “odious debt” to Iraq.

It is up to the movement for an alternative globalisation to promote the demand for cancellation of Iraq’s foreign debt, along with other demands such as the withdrawal of the occupying forces, the payment of reparations to the Iraqis for the destruction and pillage caused by the war started by the US/UK/Australian Coalition, and the full and complete exercise of sovereignty by the Iraqis themselves (including the benefit of their natural resources).

Clear differences divided the members of the G8 before the beginning of the aggression against Iraq. They will undoubtedly try to minimise their differences and unite again, ready for the next stage in pushing neo-liberal globalisation even further. They will try to reach agreement on tackling the global financial crisis (rampant stock market crashes, financial instability, massive debts in the private sector in the most industrialised countries) and on their approach to the inter-ministerial meeting of the WTO WTO
World Trade Organisation
The WTO, founded on 1st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

, planned for the beginning of September 2003 in Cancun (Mexico). They have learnt the lesson of Seattle: they are aware that the lack of an agreement between the USA and the EU on a commercial agenda could lead to the failure of Cancun. They will be meeting in Evian from 1st to 3rd June 2003 to harmonise their points of view.

The alternative globalisation and anti-war movements will be there too.

Translated by David and Barbara Forbes.


[1See Damien Millet, Eric Toussaint, “50 questions /50 réponses sur la dette, le FMI et la Banque mondiale”, joint edition CADTM / Syllepse, Bruxelles / Paris, 2002, pp. 163-179 and 184-187. This book will be published soon in English by Zed Books.

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

Other articles in English by Eric Toussaint (587)

0 | 10 | 20 | 30 | 40 | 50 | 60 | 70 | 80 | ... | 580




8 rue Jonfosse
4000 - Liège- Belgique

00324 60 97 96 80