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Iraq (Debt)

I thank Mr. Speaker for granting me this Adjournment debate on the Paris club arrangements for Iraq's debt. It is a good time for the debate, with the G8 leaders meeting this week, although they will focus on Africa. I support the Government's aid, trade and debt relief programme to make poverty history on that continent, but the United Kingdom and, of course, the United States of America have an even more direct responsibility in Iraq. The sanctions and the war and its aftermath have deeply impoverished that country, and it is still on the way down. Several of the G8 countries were keen to ply Saddam Hussein with loans to fund his military machine to fight Islamicists in Iran. Until the invasion of Kuwait, they did not mind the weapons being turned on his own people. The UK gave loans for arms sales and, despite all the subsequent events—despite Saddam Hussein being vanquished—has not given up on retrieving that money. Many other states and private creditors who funded him have hung around as vultures in the same way. I express concern that the G8 leaders will not get to grips with Iraq's economic and debt crisis and will take the opportunity to shirk their responsibilities under the cloak of the Africa agenda. They may also pretend that the Paris club decision of last November has set the framework to meet those responsibilities and put Iraq on a sound footing. It has done no such thing. The headline figure was 80 per cent. debt relief, but that disguised much. First, the debt is hugely overblown by interest and arrears. Secondly, it takes no account of the massive ongoing reparation payments required by the United Nations Compensation Commission. Thirdly, there is debt owed to non-Paris club nations, which show no willingness to write it off. The same is the case with private creditors, to whom a large amount is owed. Put simply, the 80 per cent. does not cover the full $130 billion of Saddam-era debt. Furthermore, the Paris club relief, which will take place only in phases—over which time more interest will accrue—is highly conditional. After all that, Iraq would still be left with a debt and liabilities burden that would take half a century to pay off. Set against the priority of paying off Saddam's debts is Iraq's enormous social crisis. We are talking about the doubling of child malnutrition and the deterioration of health and education provision and, indeed, of the country's vital infrastructure. The debt hampers—that is too kind a word—any Iraqi Administration's ability to tackle those problems. That adds fuel to the poor security situation and leaves a burning resentment among Iraqis who are ill-treated and robbed of their resources. My hon. Friend the Minister will gather that I do not consider the Paris club deal agreed by his predecessor to be anything to proclaim. The morning after the debt package was announced, Saad Salih Jabr, the chairman of the Iraqi National Assembly's economic committee said in the Assembly:"““You heard yesterday's news. The world's media is marketing this as the deal of a lifetime. It is not. This is yet another crime committed against the Iraqi people.””" He was taking into account the factors that I have mentioned. The Foreign Minister, Hoshyar Zebari, said the reduction should have been higher"““because the Iraqi people are not responsible for the aggressive policies and misuse of funds of the former regime.””" Jubilee Iraq, which has campaigned on the issue and to which I pay tribute, stated that the Paris club's offer"““is inadequate on economic grounds alone. Assuming all other creditors agree to the 80 percent, which is far from certain, Iraq would still be shackled with over $25 billion of debt, on top of more than $31 billion in war reparations and new loans from the IMF, World Bank, and others. This compares with Iraq's meagre health budget this year of only $947 million and education budget of $544 million.””" The IMF is imposing conditions that are draconian and bullying, and it is neglecting the social consequences. The conditions include privatisation and foreign ownership, the end of food rations and fuel subsidies, and restrictions on salaries and pensions. What a time to do that, when unemployment is so high, malnutrition rising, fuel shortages considerable and many Iraqi families increasingly vulnerable. But the policy is even worse than that. It takes control over the economic situation away from any democratically elected Iraqi leadership. The Financial Times stated:"““Now from the very first day that the new Iraqi parliament sits it will find virtually every important economic decision predetermined by the coterie of rich countries that runs the IMF.””" Naomi Klein, the author of ““No Logo””, stated in The Big Issue in December last year:"““We don't know what Iraq should look like—that's up to the Iraqi people—but we do know what the preconditions for genuine democracy are: being free of the debt of your dictator and your occupier, being free of laws written by your occupier, being in control over your oil money and resources, and not being run by foreign corporations.””" The Paris club has spurned that consideration. The IMF is due to announce its stand-by agreement for Iraq soon. The agreement is required by the Paris club as a condition for debt relief. It should give details of the economic structural adjustment policies that are required. Can the Minister tell us what it contains and indicate the UK Government's position? For example, did they support the wholesale privatisation package? The reparations bill, which was not taken into account by the Paris club, is gross. About two thirds of the claims have been settled at $46 billion, of which $19 billion has been paid from the oil for food fund. Five per cent. of Iraq's oil revenue is still used for reparations, even after the end of the oil for food programme. There was the irony of the UN calling for $259 million to meet a shortfall in humanitarian relief while its compensation commission simultaneously announced that it would take a further $600 million from Iraq this year. Since the fall of Saddam, Iraq has paid more than $2 billion of reparations, much more than it has been able to spend on health care. Not reported in this country was the two-week fast outside the meeting of the United Nations Competitions Commission in Geneva recently to demand an end to unjust payments. One of the fasters, an Irishwoman named Caomihe Butterly, stated:"““We travelled to Geneva to fast, to go without food for 16 days, in the hopes that our small sacrifice would in some manner awaken the conscience of the international community to the economic warfare being waged against the Iraqi people . . . The Iraqi people had no choice when Saddam Hussein's regime invaded Kuwait. He was wrong to do so. It is equally wrong to continue to punish the Iraqi people for the crimes of Saddam Hussein.””" I pay tribute to those protestors. Then there is the odiousness of the debt, which consists of the personal debts of a particular regime, in this case Saddam's. There is legal precedent for debts to be classified in that way. They were contracted without the consent of the people, and the money was not spent in their interests. There was enough criticism of the regime over the years to ensure that all the creditors were well aware of what was being done with the loans that they provided. They bankrolled the regime's bullets, but now refuse to accept the consequences regarding the nature of the debt. Applying the odious debt law would send a clear message to those who would loan to dictators. George Soros has said that"““it would send a signal to the financial markets that it's dangerous to deal with oppressive regimes””." The law should apply. The Minister should not pray in aid the 2003 Madrid conference, at which aid promises for Iraq were made, as an excuse for there not being a full debt write-off. Few of the countries that attended that conference fully honoured their promises. In fact, the US led the backsliding by diverting funds promised for reconstruction to war fighting. All sorts of conditions have been added that have effectively halted allocations. Another quirk of the Paris club debt relief is the fact that it has been classified in Treasury accounts as overseas development aid. So, there we have it: loans for the sale of guns to the dictator Saddam Hussein end up in UK accounts as development aid. That is quirky indeed. Let me treat the Minister to four quotes from Americans whom I would not normally quote. The first is John Snow, the US Treasury Secretary, who said that"““the people of Iraq shouldn't be saddled with those debts incurred through the regime of the dictator””." Right-wing Republican Richard Perle said:"““If you loan to a dictatorship, don't expect to be repaid if a democracy emerges.””" Paul Bremer, the former US supremo in Iraq, said that the debt is a result of"““Saddam's incompetence and aggressive wars””," and that mountains of unpayable debt contributed heavily to the instability that paved Hitler's path to power. Finally, a US commanding General observed that last autumn there were up to 160 attacks a week in Sadr City, which is on the outskirts of Baghdad, but that in early 2005, the number levelled at less than five to zero a week. His point was that the key factor in that change was not winning battles, but cleaning the place up and restoring electricity, sewerage and water. They fought, but when they started delivering services that Iraqis in Sadr City had never had, the terrorist recruiting of 15 and 16-year-olds came up empty. The debt impedes the real way to achieve security. I have one final quote from a source whom I cannot disclose. In his e-mail to me from Iraq, he said:"““Last week . . . in Baghdad . . . I met a drunken American gentleman at a party who told me his sole job at the moment was to persuade the Iraqis to cut $1 billion of subsidies. He told me, ‘If they don't do what I want, The Paris Club will delay debt relief.'””" That is an example of the IMF drunk with the power facilitated by the Paris club nations. The debt and reparations still to be paid after the Paris club decision are not acceptable because they plunge the Iraqi people into poverty and hardship, because of their effect on Iraqi democracy and freedom, and because they do not give the post-Saddam Administration a clean slate and a clean start. The Minister, the G8 leaders, Paris club members and all creditor nations need to reconsider the Paris club formula. It simply is not good enough by a long way. There needs to be a 100 per cent. write-off of all of Saddam's debt. There should be no more reparations—indeed, there should be a UN resolution, pronto, to ensure that that is the case. There should be no more damaging conditionality of the sort that the IMF wants to impose, and there should be proper funding for reconstruction that involves, benefits and employs Iraqis. I say to the Minister, the Government and the G8 leaders, think again.