Odd Lots How Iraq Pulled Off One Of The Biggest Sovereign Debt Restructurings Of All Time
Mar 2, 2020
Simon Hinrichsen, a PhD candidate at the London School of Economics, shares his expertise on Iraq's tumultuous journey through sovereign debt. He delves into how Iraq shifted from a creditor to a borrower during the Iran-Iraq War, unearthing unusual funding sources including CIA-linked money. The discussion highlights critical lessons from Iraq's significant debt restructuring, ethical dilemmas surrounding odious debt, and the broader implications for future sovereign negotiations. Hinrichsen's insights shed light on the complexities of debt management and its moral dimensions.
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Iraq's Debt Explosion
- Iraq's debt ballooned from almost nothing in 1979 to over five times its GDP in 2003.
- This massive accumulation stemmed from war financing, shady loans, and political maneuvering.
Debt Origins
- Iraq's initial debt accumulation was fueled by political support for its war against Iran.
- Lenders included Gulf countries, Western governments, and murky sources like a CIA-linked Italian bank.
The B&L Loan
- The B&L bank, Italian state-owned, loaned $2 billion to Iraq via a small Atlanta branch.
- These loans, underwritten by the US Department of Agriculture, were later revealed to have CIA involvement.