Global Policy Forum

Iraqi Reparations Could Take a Century to Pay


By Brian Whitaker

The Guardian (London)
June 16, 2000

Iraq faces a series of gigantic claims for Gulf war damage - so large that there is almost no way to recover the money, short of extending sanctions for well over 100 years.

Although Iraq has so far paid about Dollars 7bn, further claims amounting to Dollars 276bn are in the pipeline at the United Nations Compensation Commission (UNCC) in Geneva. Until now, the commission has processed the smallest and most straightforward claims. But this week it turned to the first of the big ones: a Dollars 21.5bn demand from Kuwait.

The scale of the claims has put experts and officials in a quandary. Some argue that future generations of Iraqis cannot reasonably be expected to continue paying for Saddam Hussein's folly. Others insist that war victims are entitled to compensation and that to let Saddam off the hook would set a dangerous precedent.

Altogether, about 100 governments have lodged 2.6m separate claims, on their own behalf and on behalf of individuals and companies. Of the claims processed so far, many have been reduced substantially by the UNCC. One from Egypt sought Dollars 491m for 915,000 workers but was settled at just Dollars 84m.

Although Iraq agreed 10 years ago to pay compensation for losses caused by the invasion and occupation of Kuwait, there was no practical way to recover the money until December 1996 when the UN's oil-for-food programme started. Since then, 30% of revenue from Iraq's oil sales under the programme has been deducted to pay for war damage and the cost of running the UN commission. The amount collected varies with oil prices but is currently Dollars 400m a month. At that rate, if all the outstanding claims were approved, it would take Iraq 58 years from now to pay off the debt.

But as soon as the main debt is paid Iraq will be required to pay interest, at a rate still to be decided, for the delays in compensation since 1990. Even at a very modest rate of 3% a year, interest charges could amount to a further Dollars 320bn - in which case Iraq would still be paying for the invasion of Kuwait in the year 2125.

But Iraq's compensation payments are dependent on continuation of the oil-for-food programme, and, unless an alternative mechanism is found, the UN may eventually have to choose between abandoning hope of compensation and continuing sanctions into the next century.

Arthur Rovine, president of the American Society of International Law and an expert on Gulf war compensation, said that when the oil-for-food programme ends "the chances of the claimants collecting all the monies due them would be reduced severely and perhaps to nil". He continued: "Unless Iraq agreed to a mechanism and process similar to the UNCC, the only alternative would be lawsuits by claimants around the world in places where they can attach Iraqi assets, including oil assets. Whether or not such lawsuits represent a viable alternative is open to serious question."

The UNCC has already awarded Dollars 2.9bn to Kuwaiti oil companies for the destruction of property and the cost of putting out fires in oil wells set alight by Iraq during the war. The Dollars 21.5bn claim now under consideration is for lost revenue and for oil spilled or destroyed during the war. Khaled al-Mudaf, chairman of Kuwait's Public Authority for Assessment of Compensation, urged the UNCC to "con firm Iraq's responsibility before the international community and its liability to compensate for all consequential damage and loss". But independent experts who evaluated the claim are understood to have recommended reducing it to Dollars 15.9bn.

Although the UNCC has so far always accepted expert recommendations, this claim is seen as an issue of principle and could go to a vote. Yesterday, the commission members postponed their decision for two weeks.

Dr Kamil Mahdi, an economist of Iraqi origin at Exeter University, said: "We haven't got to the position yet where these very large claims have been awarded, and it's important that they should not be awarded. Jordan, for example, is claiming Dollars 8bn and its economy is minute. It's astounding. We're talking of many, many generations of Iraqis to pay this burden. The whole issue has to be solved politically."

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