Iraq saddled with Gulf war reparations

By Brian Whitaker

LONDON: 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 US$7 billion, further claims amounting to $276 billion 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 $21.5 billion 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 2.6 million 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 the Egyptian government, sought $491 million for 915,000 workers but was eventually settled at just 84 million.

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 program started.

Since then, 30 percent of the revenue from Iraq's oil sales under the program has been deducted to pay for war damage and the cost of running the UN commission.

The amount that can be collected in this way varies with oil prices but is currently 400 million dollars 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 percent a year, interest charges could amount to a further $320 billion -- in which case Iraq would still be paying for the invasion of Kuwait in the year 2125.

Iraq's compensation payments are, however, dependent on continuation of the oil-for-food program. A Foreign Office spokesman confirmed last week that the UN has no way of enforcing payments if sanctions are lifted.

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 program 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. In my judgment, it would be a completely disorganized alternative."

The UNCC has already awarded $2.9 billion to Kuwaiti oil companies for the destruction of property and the cost of putting out fires in hundreds of oil wells set alight by Iraq during the war.

The $21.5 billion claim now under consideration -- which Kuwait has backed up with a million documents -- is for lost revenue and for oil spilled or destroyed during the war. "This is the big one we've all been waiting for," a diplomat said.

Khaled al-Mudaf, chairman of Kuwait's Public Authority for Assessment of Compensation, called on the UNCC to "confirm Iraq's responsibility before the international community for its criminal acts and its liability to compensate for all consequential damage and loss". He said Iraqi occupying forces had mined Kuwait's oilfields so as to destroy the emirate. "Just before its forces withdrew from Kuwait, Iraq ordered the complete blowing up of Kuwait's oilfield infrastructure: production, refining and export."

But independent experts who evaluated the claim are understood to have recommended reducing it to $15.9 billion.

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

Dr Kamil Mahdi, an economist of Iraqi origin at Exeter University, said: "There's no indication yet how the commission is going to deal with this.. "

"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 $8 billion and its economy is minute. It's astounding."

He added: "We're talking of many, many generations of Iraqis to pay this burden. The whole question has to be solved politically."

-- Guardian News Service