December 05, 2003

Iraq's Debt

President Bush appointed James Baker as the point man in restructuring Iraq's debt. Why should Iraq even bother paying back this debt? There is a new regime in charge. The money lent to Iraq by other nations was to Saddam's government. That one is no more. The $120 billion owed is Saddam's debt, not the New Iraq's. Besides the crushing effect on the Iraqi economy, paying off this debt wouldn't change international lending behavior. There should be a disincentive to not lend money to dictators. Paying off the debt is a form of moral hazzard. Lending money to dictators only encourages these brutal people to continue on violating the rights of their citizens. There should be more risk for lenders who lend to dictators. If thug become a pariah toward the rest of the world, they risk being toppled and the debts vanishing. In Iraq's case, the people shouldn't need to suffer because of Saddam's economic policies. Operation: Iraqi Freedom wiped the slate clean. That includes international debt. "Bush Picks Friend Baker as Iraq Debt Envoy"