Iraqi Debt -- Never Mind

By GotDesign
While researching an upcoming piece on the U.N., I found an article -- Why Iraq's Debt Does Not, in Fact, Even Exist by Damien Millet of L’Humanite -- claiming that Iraq should not have to pay back any debt it incurred under Saddam Hussein’s regime. There are so many holes in the reasoning of this article there is no doubt that it was originally published in France.

The author cites recent negotiations to reduce the debt of the newly freed Iraq by as much as 95% of the over $300 Billion (in debt and 1991 Gulf War reparations) owed by Iraq. However, Mr. Millet claims that a “clear legal doctrine was conceived in 1927 by Alexander Nahum Sack, Nicholas II’s [Tsar of Imperial Russia] former minister and professor of law in Paris:
If a despotic power contracts a debt not for the needs and interests of the state, but to strengthen his despotic regime, to repress the population fighting him, etc., this debt … does not encumber the nation; it is a debt of the regime, a personal debt of the contracting power, and consequently, it falls with the fall of that power.
What both Millet and Sack overlook is the deleterious effect that this “legal doctrine” would have on the validity of contract law worldwide. First off, who decides who is a despot? As the Greeks argued, it is possible for a tyranny to be benevolent in nature. While I am not arguing in favor of tyranny or despotism, the question still stands — who decides? Contracts are drawn for the very important purpose of defining financial, political and legal agreements. What would keep a party to a contract from declaring itself a despotic regime, or having a third party make a similar declaration? All contracts would become subjective. You could even claim that the people or government of the United States no longer owe any debt to any nation so incurred under the “regime” of President George W. Bush, since there have been scurrilous and completely baseless accusations that President Bush is a despot on par with Hitler. So you can see how such a “legal doctrine” could disrupt all contract law based on little or no evidence, or evidence that is completely subjective.

Sack claims that despotic debt “does not encumber the nation.” While in practice, Hussein’s Iraq was a despotic tyranny, it exercised contracts in the name of the “democratic” government of Iraq. As was the case with the former Communist governments of the Soviet Union and its client states, Iraq was a titular democracy. Iraq held elections, however rigged, which installed a government. How can any lender be sure that they will receive payment in full from any government empowered to be a party to contractual relationships? Under Sack’s doctrine, no one can be assured of payment.

Millet makes another odious assertion — “Today, the Iraqi government is illegitimate: it was imposed by the United States as the result of a war launched in violation of international law, without the approval of the Iraqi people, to say the least.” First, the current government of Iraq was duly elected by the People of Iraq. The United States and the Provisional Authority only established the general guidelines for the elections and then turned over sovereignty to the elected provisional authorities of Iraq.

On the second point — a “war launched in violation of international law — the Coalition invasion of Iraq acted in full accord with international law. Iraq was in material breach of the conditions of the 1991 Gulf War cease fire agreement established by the U.S.-led coalition and backed United Nations Security Council [insert chuckle here]. This fact alone — Iraq’s breach of its cease fire agreement — opens the door for any member of the original 1991 coalition to reopen hostilities. As if this were not enough, the U.N. Charter itself allows for the March 2003 U.S.-led invasion of Iraq. Article 51 of the United Nations Charter reads:
“Nothing in the present Charter shall impair the inherent right of individual or collective self-defense if an armed attack occurs against a Member of the United Nations….”
As a result of the 1962 blockade of the island of Cuba during the Cuban Missile Crisis, it has been the customary interpretation of international law (and Article 51) to allow for anticipatory (or preemptive) self-defense. Article 38 of the Statute of the International Court of Justice provides that international law consists of international conventions, international custom, and “general principles of law accepted by civilized nations.” Anticipatory self-defense (as demonstrated in the Cuban Missile Crisis, Reagan’s Air Raids on Libya, etc.) has been generally accepted by the international community. Therefore, anticipatory self-defense becomes international law by reason of both “international custom” and “general principles of law.”

As for the “approval of the Iraqi people,” no one asked them for approval of Saddam Hussein’s assumption of power. No one asked them for approval of Saddam’s depredations. And now that the Iraqi people have a voice — a free voice — they are overwhelmingly giving their approval of the ouster of Saddam Hussein ex post facto. The Iraqi people will once again give their approval to the Coalition actions of the past year-and-a-half on January 30th, 2005 — Election Day.

Damien Millet is credited as the President of the Committee for the Cancellation of Third-World Debt. It would seem that his article is not truly reasoned, but is in fact support for an a priori assumption. Third-world debt is bad and here is the proof. To my knowledge, there is no legal basis for Millet’s assertions, apart from the dubious “clear legal doctrine” of Alexander Nahum Sack. Just because it is convenient doesn’t mean it is either just or legally sound.

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