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Iraqi Debt?a 300 billion dollar empty bag!
As American and British troops consolidate the victory in Iraq, the focus is now turning to the future?rebuilding a devastated country and establishing a free government.
Overhanging the future is 120 billion in foreign debt, 60 billion in current pending contracts, and an expected additional 150 billion due in war reparations from the past. With future oil revenues of 20-25 billion per year, the debt is unmanageable. After oil field expenses, an amount of only about 10 billion dollars is available for rebuilding and debt payments.
Interestingly enough, about 50 billion of that is owed to other Middle East countries, loaned before the invasion of Kuwait with the balance being run up after the first Gulf War.
Russia, however, leads the debt parade with an estimated 70 billion owed for pending contracts and past debts, followed by France and Germany. You have to question the business judgment of doing that much business on credit with Iraq and Saddam Hussein!
From a business perspective, loaning this much money to a country with only oil revenue was imprudent at best. The money could not have been repaid. Add on the evident political risk of investing in Hussein’s Iraq and you must wonder what the banks, businesses, and countries were thinking.
The current screaming by France, Germany, and Russia for a UN leadership role is really a call for control over Iraqi future revenues to pay back as much of the loans as possible.
The world market has already discounted the value of Iraqi debt, paying about 17 cents on the dollar for their debt. The simple answer is for Iraq to declare bankruptcy, like any other business or individual, and pay 10-15 cents on the dollar and move forward. The losers would be those who were foolish enough to extend ridiculous amounts of credit.
The loans helped prop up the corrupt and oppressive regime. All prudent lending standards were ignored and now it is time to let those who participated in Hussein’s party hold the empty bag themselves, not balance these debts unjustly on the backs of a liberated people or the U.S. treasury.
Steve Marr is the former CEO of the fourth largest import-export firm in the U.S., a company which facilitated international trade for many of the largest companies in America. Currently, Steve consults with with businesses and ministries utilizing ancient Biblical principles for success in today’s marketplace. Contact Steve at [email protected].