Iraq Economy

Ewa Jasiewicz
ewa@platformlondon.org
The Guardian Unlimited
May 15, 2007
For information on Iraq’s oil law: PLATFORM and Hands Off Iraqi Oil

Today, shareholders are converging in London and The Hague for Shell’s annual general meeting. As investors hobnob in the Champagne Suite of the Hammersmith Novotel, those working in the oilfields that the company seeks to control are ready to strike over an oil law that Shell has helped to craft.

The focus is the culmination of four years campaigning by the Iraqi Federation of Oil Unions (IFOU). Demands range from bread and butter issues such as land allocation, unpaid wages, holidays, health and safety and full-time status for temporary workers, to wider political issues which have been the founding bedrock of the union: protection of Iraq’s oil wealth from foreign companies and a say in the future of the oil industry. Shell is one of the companies that the union has cautioned against entering Iraq “under the guise of so-called production sharing agreements”.

By Jeff Leys, jeffleys@vcnv.org
Voices for Creative Nonviolence
September 18, 2006

This week, the International Monetary Fund will be holding its annual meeting in Singapore. No doubt, the economic restructuring and forced leveraging of Iraq will be a key component of talks surrounding the meeting. In these past few months, free trade zones have been established along the borders with Syria and Iran; foreign investment laws have been vetted and approved; and laws governing investment in the oil sector have been drafted and introduced. Iraq continues to move forward in implementing conditions imposed upon it through the Stand By Arrangement with the International Monetary Fund (IMF) in December of 2005. While the command economy established under Saddam Hussein’s regime was unsustainable, it is also highly probable that the benefits of the economic restructuring under way at present will accrue to the benefit of an elite segment of Iraq and of the international community. It is improbable that ordinary Iraqi citizens will be the beneficiaries of these changes.

When Saddam Hussein grabbed power in 1979, Iraq had no long-term foreign debt. Cash reserves were $36 billion. Iraq had high literacy and public universities; it had extensive socialized health care. It was becoming a “first world” nation.

Soon, however, this violent, cunning despot began squandering that wealth. Borrowing tens of billions of dollars, he built up a vast military and security apparatus. In 1980 - with the United States’ blessing - Saddam invaded his neighbor, the Ayatollah Khomeini’s oil-rich Iran. To Saddam’s utter surprise, that war wasn’t over in a few weeks. It became an eight-year long quagmire. Hundreds of thousands on each side were maimed and killed.

By Greg Muttitt, November 2005
(Published by PLATFORM with Global Policy Forum, Institute for Policy Studies, New Economics Foundation, Oil Change International, and War on Want)

Read the full report

Executive Summary

While the Iraqi people struggle to define their future amid political chaos and violence, the fate of their most valuable economic asset, oil, is being decided behind closed doors.

This report reveals how an oil policy with origins in the US State Department is on course to be adopted in Iraq, soon after the December elections, with no public debate and at enormous potential cost. The policy allocates the majority (1) of Iraq’s oilfields – accounting for at least 64% of the country’s oil reserves – for development by multinational oil companies.

Written by Justin Alexander of Jubilee Iraq
September 2005

Debt - Introduction

Iraq has an outstanding debt load of around $115bn (reduced this year from around $125bn in the first trance of Paris Club relief) on top of $33bn of unpaid war reparations. This means that the ratio of debt and reparations to export earnings is around 750%, way beyond the IMF’s recommended maximum ratio of 162%. The Paris Club, which holds $42bn, about a quarter of the total debt and reparations, agreed in November 2004 to reduce their claims by 80% in three trances linked to economic conditionalities. The US is topping this up to 100% relief but no other countries have followed suit. Even if all creditors match the Paris Club terms, and this looks far from certain, Iraq will still be left with $25bn debt along with the $33bn reparations. Additionally there is a very large reparations claim from Iran, although this has little international backing.

They are asking us to pay for the knives

they gave Saddam to slaughter us.

— Dr. Hasim al Hassani, Iraqi Islamic Party

When Saddam Hussein grabbed power in 1979, Iraq had no long-term debt. Its cash reserves were $36 billion. It had high literacy and public universities; it had extensive socialized health care. Iraq was becoming a “first world” nation.

During the 1980’s, however, as a US ally, Saddam squandered that wealth. Borrowing tens of billions of dollars, he built up a vast military and security apparatus.

Who Established the War Reparations Claims Process?

In April 1991, the United Nations Security Council passed Resolution 687. This Resolution established the legal foundation to file, examine, determine and impose war reparations claims against Iraq. These claims arise from the invasion and occupation of Kuwait by Saddam Hussein’s regime in 1990-1991. Resolution 687 established the foundation for creating a fund out of which to pay for war reparations claims and for creating the United Nations Compensation Commission (U.N.C.C.).

Resolution 687 states that:

“Iraq…is liable under international law for any direct loss, damage, including environmental damage and the depletion of natural resources, or injury to foreign governments, nationals and corporations as a result of Iraq’s unlawful invasion and occupation of Kuwait.”