New US taxpayer charge: Iraq's foreign debt

We have been assured the past year that any Iraq reconstruction costs would not be borne by US taxpayers. Supposedly, all such costs would be covered by Iraqi oil revenues.

There's one problem, Iraq's oil revenues amount to about $15 billion per year, not nearly enough to cover reconstruction costs and its debt service, which totals between $200 and 300 billion.

As a result, the US is trying to strong-arm creditor nations, like [cough] France and Germany to forgive Iraq's debts. Suddenly, the Administration's decision to demonize and alienate our allies appears particularly misguided, doesn't it?

But will Europeans and moderate Arabs want to help out, considering that they objected to the U.S.-led war? And if they do agree, what will they want in return? "In exchange for debt relief, France, Germany, Russia and others are very likely to ask for contracts to rebuild the country and sell Iraqi oil, as well as a voice in economic policy," points out Robert Hormats, vice chairman of Goldman Sachs International and a former State Department official in the Carter Administration. So far, the billions of dollars in contracts to rebuild Iraq are going to U.S. companies. And at least initially, U.S. officials are planning to make all decisions about Iraq's economy, with help from local advisers. If that doesn't change, debt relief may be a hard sell with the Europeans — and U.S. taxpayers will end up paying the price.

The Administration and the Chickenhawk Neocons would like to pretend the US can ignore the rest of the world and go at it alone. It can, but at what cost? For starters, $80 billion for a war no one needed (to find WMDs that didn't exist), with a bonus $200-300 billion in Iraqi foreign debt. And that's not counting other reconstruction costs that will likely add to the tally, as well as the expense of keeping hundreds of thousands of occupying forces in the country for the foreseable future.

For a tax-cut happy administration, these Republicans sure love to throw money away, huh?

Posted April 22, 2003 07:56 AM | Comments (94)