Iraqi Economists Network

شبكة الاقتصاديين العراقيين

Latest Economy News

Trump’s threat to ruin Iraq financially has a historical parallel

It is outrageous to expect Iraq, which has suffered the loss of hundreds of thousands of lives and the destruction of its infrastructure and economy, to pay for its own occupation.


When US President Donald Trump threatened to make Iraq pay for the sprawling US base west of Baghdad if it forced American troops to leave the country, I reached out to an old friend who was a professor of international development studies at George Washington University.

Did he see any parallels, I asked, between Trump’s demand for billions of dollars from Iraq and a despicable, long-ago international episode between France and Haiti?

After Haiti, the richest slave colony in the Americas, won independence in 1804, France demanded compensation. The former colony had to pay the modern equivalent of $21 billion, which France judged to be the monetary value of “lost” Haitian slaves as well as Haiti’s profitable sugar and coffee-producing plantations. In exchange, France would recognise Haiti’s independence.

Haiti’s gargantuan debt to France was only paid off about 70 years ago. The economic burden was considered to have severely depleted the former “pearl of the Antilles,” leaving it destitute and subject to a never-ending cycle of misgovernance, incompetence and the resulting despair.

My friend, Robert Maguire, who teaches his signature Bottom Up Development and Poverty Alleviation course at George Washington, has spent most of his life studying the Western hemisphere’s poorest country. If there was anyone who would see the parallel between Trump’s suggestion for Iraq and France’s compulsion for Haiti, it was Maguire. His answer to my question was both surprising and dispiriting.

If Iraq were forced by Trump to pay for Al Asad Airbase, it wouldn’t be like France’s outrageous demand for compensation from Haiti, Maguire suggested. It would be worse.

“I suppose,” he added, “one could say that at least the Haitians — in exchange for the ransom imposed by France — got their freedom and independence. In the Iraq case, the payback will have brought them nothing… except violence begetting violence and US actions that, in essence, delivered Iraq to its mortal enemy — Iran — which now seems to have made Iraq its virtual political colony or, as Colin Powell famously metaphored, lots of broken pottery that they will own.”

Indeed, the Trump administration continues to smash china at an amazing rate. It warned Iraqi Prime Minister Adel Abdul-Mahdi against acting on the Iraqi parliament’s vote to expel 5,300 US troops. Should Abdul-Mahdi do so, a key Iraqi government account at the New York Federal Reserve will be blocked, the United States warned. This would potentially wreck Iraq’s economy.

The Wall Street Journal reported that the Central Bank of Iraq’s most recent financial statement, at the end of 2018, said the New York Fed “held nearly $3 billion in overnight deposits.” Restricting Iraqi access to dollars could cause the Iraqi dinar’s value to fall precipitously. That would leave its financial system with no way to recharge.

The twisted political economy of reparations and financial penalties after war is usually revengeful and not conducive to peace. Trump’s threat to destroy Iraq, a supposed US ally, financially is tragic and immoral. It is outrageous to expect Iraq, which has suffered the loss of hundreds of thousands of lives and the destruction of its infrastructure and economy as the result of the 2003 US-led invasion, to pay for its own occupation. The nearest equivalent is France’s treatment of Haiti.

However, three other examples are worth citing because of their effect on international relations and the prospects for war or peace.

Germany, the victor of the Franco-Prussian war in 1871, exacted reparations from France amounting to approximately $5 billion at today’s prices. France was left bitter.

After World War I, the victorious Allies demanded $30 billion in reparations from Germany, which was about three times more than the German economy was thought capable of producing.

In contrast, after World War II, the United States’ Marshall Plan financed more than $13 billion worth of goods to Western countries that had been devastated. Though West Germany paid some reparations during the post-war transition period, it eventually received something like $5 billion worth of goods under the Marshall Plan.

After WWII, the United States took the high road and, it’s fair to say, that magnanimity created the conditions for 75 years of relative peace in Europe.

That was a different America.



Written ByRashmee Roshan Lall

Rashmee Roshan Lall is a regular columnist for The Arab Weekly.

Source: The Arab Weekly, Sunday 19/01/2020



Comment here

%d bloggers like this: