Paris Club Cancels 80% of Iraq's Debt
The Paris Club- an informal group of creditor nations including the G8 have finally agreed to cancel 80% of Iraq's debt owed to the Paris Club - $38.9 bn. Iraq's total debt stands at $122 billion.

The US campaigned for 95% cancellation but France have long argued that slashing Iraq's Paris Club debt by more than half would be unfair to other poorer nations that also are saddled with debts but do not have the potential wealth of oil-rich Iraq.

``How would you explain to these people that ... we are going to do more for Iraq than we have done in 10 years for the 37 poorest and most indebted countries in the world?'' Chirac said. In the end though it appears as if France have conceded to the US demands.

The way that the debt will be cancelled is as follows; 30% will be written off immediately, another 30% will be cancelled when Iraq agrees on an IMF programme in 2005. The third 20% will be canceled in 2008, if Iraq completes the 3-year IMF programme. The IMF plan will be drawn up in the next few weeks.

Why should Iraq have its debt cancelled?
The justification for the debt relief was to provide a stable economic environment in Iraq. The US in particular were convinced that debt relief would create the basis for economic reconstruction and prosperity. However, another justification made by the US in the past as well as persistenly by organisations such as Jubilee Iraq is that Iraq's debt is odious debt - that money borrowed under the dictatorship of Saddam Hussein should not have to be paid back by the people.

What does this mean for the Debt Campaign?
The idea that Iraq's debt can be cancelled due its 'odious' nature (eg.that it was accumulated under a dictatorship) raises questions over debt relief for other nations in similiar situations but who have not recieved 'odious' debt relief.
Most famously perhaps is South Africa which has continuously campaigned for the cancellation of debts built up under the appartheid regime

Other countries with odious debt include;
Phillipines
Haiti
Indonesia
Nigeria
Nicaragua
Lesotho
Congo

For more information on odious debt please visit: www.odiousdebts.org/odiousdebts/index.cfm

For information on Iraq's odious debt please visit:
www.jubileeiraq.org/odiousdebt.htm