CONCRETE MEASURES TO STABILIZE IRAQ
by Amir Taheri
Arab News
July 9, 2004

LONDON, 9 July 2004 — Judging by diplomatic statements the whole world is now eager to help Iraq. "We will do all that we can to help Iraq," says German Foreign Minister Joschka Fischer who had been in the forefront of the campaign to keep Saddam Hussein in power before liberation

"The international community must come together and help Iraq," echoes France's new Foreign Minister Michel Barnier, signalling a change of course in Paris.

Russia, China and India, too, have also indicated readiness to help Iraq. But how sincere are they all? We shall not know the answer until concrete measures are taken to help Iraq stabilize and speed up rebuilding its economy.

The first step toward helping Iraq is for those countries that have refused to recognize the interim government to do so immediately. This should be followed by the reopening of embassies in Baghdad. The interim Iraqi government should be allowed to reclaim that country's embassies abroad and to reopen them immediately.

These moves will send a signal that everyone now accepts that Iraq has a new legitimate government.

Next, those who say they want to help Iraq must stop their disinformation campaign in that country. A more dramatic version of that psychological war can be observed in the Arab satellite television's coverage of Iraq. In the very least, these channels should stop broadcasting the video messages of terror groups killing people in Iraq.

This does not mean censorship but proper journalistic treatment of material that must not be aired unedited and without comments to put it in context. The claim of impartiality cannot justify showing videos of beheadings as an act of "resistance to occupation."

Those who say they want to help can also contribute troops. Iraq is likely to need a foreign military presence for years. Regardless of who wins the next presidential election, the US is certain to provide the bulk of the troops. But others could help.

One way to do so could be described as "the Zapatero way".

Spain's new Socialist Prime Minister Jose Luis Zapatero won the election with a promise of withdrawing Spanish troops from Iraq. Now that he is in power he appreciates the consequences of that policy. He cannot, of course, eat humble tapas. But he is trying to mend things by sending Spanish troops to Afghanistan and Haiti to replace Americans, thus enabling the Pentagon to have more reserves for Iraq.

Germany and France could adopt similar positions, and send troops to replace GIs in some of the 22 peacekeeping missions in which the US shoulders the main burden. A good place to start would be in the heart of Europe, in the Balkans.

NATO could help by stopping to treat Iraq as a leper. Iraq needs NATO's help in training the new Iraqi Army and police force. This can best be done inside Iraq. French attempt at preventing this is bad for both Iraq and NATO.

Another way to help Iraq is for the OPEC members to allow the newly liberated nation to export more oil than allowed under its official quota.

Current Iraqi production averages at 1.8 barrels a day. This could quickly be increased to three million, and Iraq has the potential to reach seven million barrels a day within five years.

Even then, taking into account rising global demand, the price of oil per barrel is likely to stay above the $25 mark regarded by OPEC as ideal.

Why should Iraq, with a large population and greater need of money, have the same quota as the smaller OPEC members that do not need so much cash?

Much has been said about Iraq's missing billions. By some estimates the Saddamite regime has hidden some $30 billion of Iraqi money in tax havens around the globe. At least another $10 billion disappeared in corrupt deals involving the United Nations. The US should take the lead in tracing the missing funds and help return them to the Iraqis. Iraq should also get direct control of the estimated $14 billion that remains in an escrow account managed by the UN.

The measures mentioned above involve no significant financial cost to countries invited to take them. There are other measures that involve serious money.

The first concerns the American aid package of $18 billion. If properly spent this could give a boost to the Iraqi economy that is showing signs of revival. So far, however, the main part of disbursement has gone to legal fees, consultancies and managerial costs that benefit non-Iraqi, mostly American, big business.

The package should be redesigned away from big projects that might bear fruit in years. What Iraq urgently needs is thousands of small and medium projects to improve the average citizen's life quickly. At this time in Iraq, small is not only beautiful but good politics. It is also good politics for the US to give the Iraqis a real say in how and where the aid is used.

More important, perhaps, is the need to solve Iraq's debt problem. Iraq's foreign debt is around $120 billion, a huge burden for a crippled economy. Of these some $22 billion consists of arrears accumulated by Saddam Hussein over the past 13 years. A further $20 billion is owed to the Paris Club countries, notably Russia, France, Germany, Britain and the United States. The Arab states of the Arabian Gulf account for a further $60 billion of Iraqi debt. The rest is owed to other countries and banks.

As things stand Iraq would have to allocate a third of its oil income to servicing its debt. This translates into slower economic growth and cuts in social services.

The Arab part of the Iraqi debt consists of the money given to Iraq during the eight-year war against Iran. It would be both honorable and good politics to write off that debt. The Arab states do not need the money.

The Paris Club should write off at least 60 percent of the debt. The US has asked for a total write-off, while Russia proposes 50 percent. France, however, says it would not go beyond 30 percent.

The total Iraqi debt should be brought down to $50 billion, including the arrears, with a two to three years grace period and realistic rescheduling.

Iraq, with the world's second largest oil reserves, is a good medium and long-term investment for its creditors. Donors' conferences held during the past year have come up with a number of promises, but none has materialized so far. What is needed is an implementation schedule to ensure that at least part of the $5 billion pledged in Madrid is made available this year.

Helping stabilize Iraq and put it back on the path of economic development and democratization is a good investment in reshaping the Middle East, indeed the whole Muslim world, ensuring oil supplies, and enhancing the security of the Western democracies.