May 23
2003
There ain't no win, win
» Posted on May 23, 2003 03:00 PM » Category: General
Junius links to an interesting Economist piece on Iraq's debts.

I fully endorse his comments:

There are broadly three options, though, each with obvious downsides. In the first scenario, the Iraqis are forced to pay up (totally unjust). In the second, the creditors bear the loss (France and Russia get their just deserts for lending to Saddam in the first place, but lenders become less willing to lend to poor countries in the future and the cost of borrowing for such countries rises sharply to reflect the increased risk). The third possibility would be that the losses are somehow pooled and, indeed, that mechanisms are put in place to share the cost of future justified repudiations (why would the US and UK agree to that?). Of course, there could be some combination of these options to reflect the different considerations that bear on the issue, but the obstacles to getting agreement look formidable.

There's never an easy answer to these sort of things, but I do find the argument that the Iraqi people should not be forced to suffer for the actions of Saddam to be by far the most persuasive. There are ways of dealing with the problems this would raise (and there are upsides, too, if financial institutions - and some countries - become more judicious in their business dealings).

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