US blocks IMF debt proposal
From Gary Duncan in Washington
PLANS to set up a radical process for countries in financial distress effectively to declare “bankruptcy” were shelved indefinitely at the weekend after being undercut by opposition from Washington.
The far-reaching proposals, drawn up by the International Monetary Fund, were backed by a large majority of IMF members, including Britain, which supported the scheme.
The Sovereign Debt Restructuring Mechanism would have created a procedure under which financially troubled countries could call a moratorium on servicing their private and public sector debt. Restructuring without obstruction by individual creditor institutions or countries would then have been possible.
The scheme would have acted as a curb on the activities of “vulture funds” that seek to exploit countries facing debt crises.
But the plans ran up against resistance from the US Government. Wall Street’s big institutions, led by investment banks, were opposed to the concept on the ground that they could potentially incur heavy costs. The reluctance of the US Treasury and the White House to confront the Wall Street lobby ensured that the plans were suspended, although British and other officials insisted that they may be resurrected and that background work would continue.
Finance ministers from the Group of Seven industrial countries agreed an alternative system that allows emerging-market countries issuing government bonds to include provisions designed to make agreement with creditors on restructuring easier to achieve.
The IMF also set a limit on the amount that it is prepared to lend to countries in trouble.
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ECONOMY
The country has been subject to UN sanctions since the invasion of Kuwait. These sanctions have not yet been lifted. The "oil for food" agreements which is the only way in which the United Nations allows Iraq to sell its oil. Those exports represent only $5.5 billion a year.
Iraq has been crippled by the Gulf War and the United Nations sanctions have made of the country an example of absolute poverty, degradation and the lack of primary elements such as foodstuffs, medical equipment and medicines. The Iraqi standard of living is very low and social indicators show a high child mortality rate and a declining life expectancy in the country. Inflation has reached 45 percent in 1999 and the foreign debt of Iraq represents $113 billion.
According to estimates, the embargo on oil exports represented around $130 billion of loss in terms of revenues.
Iraq has strong potential: it holds the world’s second largest crude oil reserves and the slow rhythm of production means that their stock could last longer than neighboring countries. It has the seventh largest natural gas reserves. Refinements in Iraq are used for domestic purposes now. The only oil production that took place was in the context of the "oil for food" program.
The agricultural situation of Iraq is unique. It is the only Gulf country gulf which has two important rivers running through it: Tigris and the Euphrates. The land is fertile and the country produces a lot of cereals, fruit and vegetables as well as large numbers of livestock.
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So they spend billions on an infrastructure.
We turn it into rubble.
The Iraqis continue to service the debt on their piles of rubble.
Iraq hasnt serviced its debt properly for years under saddam. Sanctions have made those oil reserves into a pot of gold.
A nice by product of freedom, will be the ability to repay creditors stretching back to the 1980s, totalling up to $150 billion.
France and Russia have say 20 billion between them, so whos got the rest?
Cute.
From Gary Duncan in Washington
PLANS to set up a radical process for countries in financial distress effectively to declare “bankruptcy” were shelved indefinitely at the weekend after being undercut by opposition from Washington.
The far-reaching proposals, drawn up by the International Monetary Fund, were backed by a large majority of IMF members, including Britain, which supported the scheme.
The Sovereign Debt Restructuring Mechanism would have created a procedure under which financially troubled countries could call a moratorium on servicing their private and public sector debt. Restructuring without obstruction by individual creditor institutions or countries would then have been possible.
The scheme would have acted as a curb on the activities of “vulture funds” that seek to exploit countries facing debt crises.
But the plans ran up against resistance from the US Government. Wall Street’s big institutions, led by investment banks, were opposed to the concept on the ground that they could potentially incur heavy costs. The reluctance of the US Treasury and the White House to confront the Wall Street lobby ensured that the plans were suspended, although British and other officials insisted that they may be resurrected and that background work would continue.
Finance ministers from the Group of Seven industrial countries agreed an alternative system that allows emerging-market countries issuing government bonds to include provisions designed to make agreement with creditors on restructuring easier to achieve.
The IMF also set a limit on the amount that it is prepared to lend to countries in trouble.
---------------------------------------------
-----------------------------------------------
ECONOMY
The country has been subject to UN sanctions since the invasion of Kuwait. These sanctions have not yet been lifted. The "oil for food" agreements which is the only way in which the United Nations allows Iraq to sell its oil. Those exports represent only $5.5 billion a year.
Iraq has been crippled by the Gulf War and the United Nations sanctions have made of the country an example of absolute poverty, degradation and the lack of primary elements such as foodstuffs, medical equipment and medicines. The Iraqi standard of living is very low and social indicators show a high child mortality rate and a declining life expectancy in the country. Inflation has reached 45 percent in 1999 and the foreign debt of Iraq represents $113 billion.
According to estimates, the embargo on oil exports represented around $130 billion of loss in terms of revenues.
Iraq has strong potential: it holds the world’s second largest crude oil reserves and the slow rhythm of production means that their stock could last longer than neighboring countries. It has the seventh largest natural gas reserves. Refinements in Iraq are used for domestic purposes now. The only oil production that took place was in the context of the "oil for food" program.
The agricultural situation of Iraq is unique. It is the only Gulf country gulf which has two important rivers running through it: Tigris and the Euphrates. The land is fertile and the country produces a lot of cereals, fruit and vegetables as well as large numbers of livestock.
-----------------------------------------------
So they spend billions on an infrastructure.
We turn it into rubble.
The Iraqis continue to service the debt on their piles of rubble.
Iraq hasnt serviced its debt properly for years under saddam. Sanctions have made those oil reserves into a pot of gold.
A nice by product of freedom, will be the ability to repay creditors stretching back to the 1980s, totalling up to $150 billion.
France and Russia have say 20 billion between them, so whos got the rest?
Cute.
