The following is an archived copy of a message sent to the CASI Analysis List run by Cambridge Solidarity with Iraq.

Views expressed in this archived message are those of the author, not of Cambridge Solidarity with Iraq (CASI).

[Main archive index/search] [List information] [CASI Homepage]

[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

[casi-analysis] casi-news digest, Vol 1 #152 - 3 msgs

[ This message has been sent to you via the CASI-analysis mailing list ]

This is an automated compilation of submissions to

Articles for inclusion in this daily news mailing should be sent to 
Please include a full reference to the source of the article.

Today's Topics:

   1. Naomi Klein: James Baker & Iraq's debt (ppg)
   2. FW: Focus: Iraq in turmoil (Muhamed Ali)
   3. Saddam undergoes hernia operation (Muhamed Ali)


Message: 1
From: "ppg" <>
To: <>
Cc: "ppg" <>
Subject: Naomi Klein: James Baker & Iraq's debt
Date: Wed, 13 Oct 2004 01:19:35 -0400

James Baker's Double Life

[from the November 1, 2004 issue]

The Nation

When President Bush appointed former Secretary of State James Baker III as
his envoy on Iraq's debt on December 5, 2003, he called Baker's job "a noble
mission." At the time, there was widespread concern about whether Baker's
extensive business dealings in the Middle East would compromise that
mission, which is to meet with heads of state and persuade them to forgive
the debts owed to them by Iraq. Of particular concern was his relationship
with merchant bank and defense contractor the Carlyle Group, where Baker is
senior counselor and an equity partner with an estimated $180 million stake.

Until now, there has been no concrete evidence that Baker's loyalties are
split, or that his power as Special Presidential Envoy--an unpaid
position--has been used to benefit any of his corporate clients or
employers. But according to documents obtained by The Nation, that is
precisely what has happened. Carlyle has sought to secure an extraordinary
$1 billion investment from the Kuwaiti government, with Baker's influence as
debt envoy being used as a crucial lever.

The secret deal involves a complex transaction to transfer ownership of as
much as $57 billion in unpaid Iraqi debts. The debts, now owed to the
government of Kuwait, would be assigned to a foundation created and
controlled by a consortium in which the key players are the Carlyle Group,
the Albright Group (headed by another former Secretary of State, Madeleine
Albright) and several other well-connected firms. Under the deal, the
government of Kuwait would also give the consortium $2 billion up front to
invest in a private equity fund devised by the consortium, with half of it
going to Carlyle.

The Nation has obtained a copy of the confidential sixty-five-page "Proposal
to Assist the Government of Kuwait in Protecting and Realizing Claims
Against Iraq," sent in January from the consortium to Kuwait's foreign
ministry, as well as letters back and forth between the two parties. In a
letter dated August 6, 2004, the consortium informed Kuwait's foreign
ministry that the country's unpaid debts from Iraq "are in imminent
jeopardy." World opinion is turning in favor of debt forgiveness, another
letter warned, as evidenced by "President Bush's appointment...of former
Secretary of State James Baker as his envoy to negotiate Iraqi debt relief."
The consortium's proposal spells out the threat: Not only is Kuwait unlikely
to see any of its $30 billion from Iraq in sovereign debt, but the $27
billion in war reparations that Iraq owes to Kuwait from Saddam Hussein's
1990 invasion "may well be a casualty of this U.S. [debt relief] effort."

In the face of this threat, the consortium offers its services. Its roster
of former high-level US and European politicians have "personal rapport with
the stakeholders in the anticipated negotiations" and are able to "reach key
decision-makers in the United Nations and in key capitals," the proposal
states. If Kuwait agrees to transfer the debts to the consortium's
foundation, the consortium will use these personal connections to persuade
world leaders that Iraq must "maximize" its debt payments to Kuwait, which
would be able to collect the money after ten to fifteen years. And the more
the consortium gets Iraq to pay during that period, the more Kuwait
collects, with the consortium taking a 5 percent commission or more.

The goal of maximizing Iraq's debt payments directly contradicts the US
foreign policy aim of drastically reducing Iraq's debt burden. According to
Kathleen Clark, a law professor at Washington University and a leading
expert on government ethics and regulations, this means that Baker is in a
"classic conflict of interest. Baker is on two sides of this transaction: He
is supposed to be representing the interests of the United States, but he is
also a senior counselor at Carlyle, and Carlyle wants to get paid to help
Kuwait recover its debts from Iraq." After examining the documents, Clark
called them "extraordinary." She said, "Carlyle and the other companies are
exploiting Baker's current position to try to land a deal with Kuwait that
would undermine the interests of the US government."

The Nation also showed the documents to Jerome Levinson, an international
lawyer and expert on political and corporate corruption at American
University. He called it "one of the greatest cons of all time. The
consortium is saying to the Kuwaiti government, 'Through us, you have the
only chance to realize a substantial part of the debt. Why? Because of who
we are and who we know.' It's influence peddling of the crassest kind."

In the confidential documents, the consortium appears acutely aware of the
sensitivity of Baker's position as Carlyle partner and debt envoy.
Immediately after listing the powerful players associated with
Carlyle--including former President George H.W. Bush, former British prime
minister John Major and Baker himself--the document states: "The extent to
which these individuals can play an instrumental role in fashioning
strategies is now more limited...due to the recent appointment of Secretary
Baker as the President's envoy on international debt, and the need to avoid
an apparent conflict of interest." [Emphasis in original.] Yet it goes on to
state that this will soon change: "We believe that with Secretary Baker's
retirement from his temporary position [as debt envoy], that Carlyle and
those leading individuals associated with Carlyle will then once again be
free to play a more decisive role..."

Chris Ullman, vice president and spokesperson for Carlyle, said that
"neither the Carlyle Group nor James Baker wrote, edited or authorized this
proposal to the Kuwait government." But he acknowledged that Carlyle knew a
proposal was being made to the government of Kuwait and that Carlyle stood
to land a $1 billion investment. "We were aware of that. But we played no
role in procuring that investment."

Asked if Carlyle was "willing to take the billion but not to try to get it,"
Ullman answered, "Correct."

Iraq is the most heavily indebted country in the world, owing roughly $200
billion in sovereign debts and in reparations from Saddam's wars. If Iraq
were forced to pay even a quarter of these claims, its debt would still be
more than double its annual GDP, severely undermining its capacity to pay
for reconstruction or to address the humanitarian needs of its war-ravaged
citizens. "This debt endangers Iraq's long-term prospects for political
health and economic prosperity," President Bush said when he appointed Baker
last December.

But critics expressed grave concern about whether Baker was an appropriate
choice for such a crucial job. For instance, one of Iraq's largest creditors
is the government of Saudi Arabia. The Carlyle Group does extensive business
with the Saudi royal family, as does Baker's law firm, Baker Botts (which is
currently defending them in a $1 trillion lawsuit filed by the families of
September 11 victims). The New York Times determined that the potential
conflicts of interest were so great that on December 12 it published an
editorial calling on Baker to resign his posts at the Carlyle Group and
Baker Botts to preserve the integrity of the envoy position.

"Mr. Baker is far too tangled in a matrix of lucrative private business
relationships that leave him looking like a potentially interested party in
any debt-restructuring formula," stated the editorial. It concluded that it
wasn't enough for Baker to "forgo earnings from clients with obvious
connections to Iraqi debts.... To perform honorably in his new public job,
Mr. Baker must give up these two private ones."

The White House brushed off calls for Baker to choose between representing
the President and representing Carlyle investors. "I don't read those
editorials," President Bush said when asked by a reporter about the Times
piece. Bush assured reporters that "Jim Baker is a man of high integrity....
We're fortunate he decided to take time out of what is an active
step forward and serve America." Carlyle was equally adamant: Chris Ullman
assured a Knight-Ridder reporter that Baker's post "will have no impact on
Carlyle whatsoever."

In fact, several months earlier, on July 16, 2003, Carlyle had attended a
high-level London meeting with Kuwaiti officials about the deal. According
to the document, the Kuwaitis asked Carlyle and the other consortium members
to "prepare a detailed financial proposal for the protection and
monetization" of reparation debts from Iraq. But at the time Baker was
appointed envoy, the consortium had not yet submitted its proposed plans to
the Kuwait. That means that the Carlyle Group could have pulled out of the
consortium, citing the potential conflicts of interest. Instead, Carlyle
stayed on and the consortium proceeded to use Baker's powerful new position
to aggressively pitch a deal that positioned the consortium as the Kuwaiti
government's chief lobbyist on Iraq's debts and that gave Carlyle a clear
stake in the fate of Iraq's debts.

However, several changes were made in the way the consortium presented
itself. The documents state that, "Prior to [Baker's] appointment [former US
Secretary of Defense Frank] Carlucci had played a convening and guiding role
on behalf of Carlyle." But after the appointment, according to Carlyle's
Chris Ullman, the firm's role was scaled back. "When James Baker was named
special envoy...Carlyle explicitly restricted its role to only investing
assets on behalf of Kuwait." Shahameen Sheikh, chairman and CEO of
International Strategy Group, a company created by the consortium to manage
this deal, said that Carlyle told her that "they are not a lobbying firm."
Days before Baker's appointment, the consortium reached out to another
high-profile Washington firm, the Albright Group, which eventually signed on
as the leading political strategists and lobbyists for the consortium.

Moreover, Ullman said that Carlyle put "controls in place" that would insure
that Baker "would play no role in nor benefit from" the proposed $1 billion
investment--an amount that would constitute nearly 10 percent of Carlyle's
total equity investments.

But it's not clear that Carlyle has been straightforward about its dealings
so far. The day before Baker's appointment was announced, John Harris,
managing director and chief financial officer of Carlyle, submitted a signed
statement to White House Counsel Alberto Gonzales. "Carlyle does not have
any investment in Iraqi public or private debt," he wrote. He didn't mention
that Carlyle had for months been in negotiations with Kuwait to help secure
its unpaid war debts from Iraq. Asked if the White House had been informed
of the Carlyle Group's dealings with Kuwait at any point, Ullman replied,
"I'll get back to you on that." He did not.

According to Kathleen Clark, the consortium's activities may be in violation
of both criminal and regulatory statutes that prohibit government officials
from participating in government business in which they have a financial
interest--including matters that affect an outside company that employs the
official. Clark notes, "even if Baker is somehow being screened from
profiting from this deal, Carlyle is using Baker's government position to
benefit themselves." She says it's time for Carlyle and the White House to
come clean. "There's a tremendous need for transparency here." The White
House and James Baker's office did not respond to repeated requests for

Baker occupies a complicated place in the consortium's January proposal--he
is both problem and solution, stick and carrot. In the documents, Baker's
name comes up repeatedly, usually in tones of high alarm. "Mr. Baker's new
role and the likely emergence of what will be understood as a new round of
global negotiations over Iraqi debt--casts all of these issues in a new
light and gives them a new, perhaps even intense, sense of urgency," states
a letter signed by Madeleine Albright; David Huebner, chairman of the
Coudert Brothers law firm (another consortium member); and Shahameen Sheikh.

But after establishing Baker's envoy job as the embodiment of the threat
that Kuwait will lose its reparations payments, the proposal goes on at
length about the powerful individuals connected to the consortium who will
"have the ability to gain access to the highest levels of the United States
Government and other Security Council governments for a hearing of Kuwait's
views." According to Levinson, "What they are proposing is to completely
undercut Baker's mission--and they are using their connection with Baker to
do it."

On January 21, 2004, James Baker's dual lives converged. That morning Baker
flew to Kuwait as George Bush's debt envoy. He met with Kuwait's prime
minister, its foreign minister and several other top officials with the
stated goal of asking them to forgive Iraq's debts in the name of regional
peace and prosperity.

Baker's colleagues in the consortium chose that very same day to
hand-deliver their proposal to Foreign Minister Mohammad Sabah Al-Salem
Al-Sabah--the same man Baker was meeting. The proposal "takes into account
the new dynamics that have developed in the region," states the cover
letter, signed by Albright, Huebner and Sheikh--dynamics that include
"Secretary Baker's negotiations" on debt relief. If Kuwait accepts the
consortium's offer, they explain, "we will distinguish Kuwait's
claims--legally and morally--from the sovereign debt for which the United
States is now seeking forgiveness."

Was it a coincidence that the consortium submitted its proposal on the same
day Baker was in Kuwait? And which James Baker were Kuwait's leaders
supposed to take more seriously--the presidential envoy calling for debt
forgiveness or the businessman named in the proposal as a potential ally in
their quest for debt payment?

Ahamed al-Fahad, undersecretary to the prime minister of Kuwait, told The
Nation, "I have seen it [the proposal] and I am fully aware of the
situation." But when asked about Baker's dual role in Kuwait, he said, "It's
hard to comment on that issue, especially now. I hope you fully understand."

Shahameen Sheikh, the consortium head who made the delivery, says the timing
was a coincidence. "It had nothing to do with Mr. Baker's visit.... I was in
the region so I thought I would stop over on the way to Europe and deliver
the proposal."

We do know this: After meeting with Baker on January 21, Kuwait's foreign
minister told reporters that Baker had shown "understanding of Kuwait's
position on war reparations," confirming that the subject did come up. He
also said that, while sovereign debt might be forgiven, reparations would
not, because "there is an international decision from the UN."

Three days later, when Baker was back in Washington giving a speech, he made
this distinction for the first time. "My job is to deal with Iraqi debt to
sovereign creditors, not with war reparations," he said. He also echoed the
exact line of the Kuwaiti government: that reparations are outside his
purview because they are "under the jurisdiction of the United Nations
Security Council and subject to resolutions it has passed."

This was a curious statement: Why would such a large portion of Iraq's debts
be off the table? It also seemed to contradict other things Baker said in
the same speech. He said that "any reduction [in Iraq's debt] must be
substantial, or a vast majority of the total debt." That is impossible
without addressing reparations, which by some measures account for more than
half of Iraq's foreign debts. The Center for Strategic and International
Studies, the center-right think tank hosting Baker's speech, has said it is
"unwise" to make any debt relief plan "that does not include reparations."

Baker's statement on reparations also placed him at odds with several other
members of the Bush Administration, including former chief envoy to Iraq
Paul Bremer. "I think there needs to be a very serious look at this whole
reparations issue," Bremer said in September 2003. He compared the Iraq
situation to that of Germany after World War I, when the 1921 Reparations
Commission forced the Weimar Republic to pay $33 billion. The massive
reparations "contributed directly to the morass of unrest, instability and
despair which led to Adolf Hitler's election," Bremer warned.

Yet Iraq continues to make regular reparations payments for Saddam's 1990
invasion of Kuwait. In the eighteen months since the US invasion, Iraq has
paid out a staggering $1.8 billion in reparations--substantially more than
the battered country's 2004 health and education budgets combined, and more
than the United States has so far managed to spend in Iraq on

Most of the payments have gone to Kuwait, a country that is about to post
its sixth consecutive budget surplus, where citizens have an average
purchasing power of $19,000 a year. Iraqis, by contrast, are living on an
average of just over $2 a day, with most of the population dependent on food
rations for basic nutrition. Yet reparations payments continue, with Iraq
scheduled to make another $200 million payout in late October.

This arrangement dates back to the end of first Gulf War. As a condition of
the cease-fire, Saddam Hussein agreed to pay for all losses incurred as a
result of his invasion and seven-month occupation of Kuwait. Payments
started flowing 1994 and sped up in 1996, with the start of the UN's
oil-for-food program. According to UN Security Council Resolution 986, which
created the program, Iraq could begin to export oil as long as the revenue
was spent on food and medicine imports, and as long as 30 percent of Iraq's
oil revenues went to the United Nations Compensation Commission (UNCC), the
Geneva-based quasi-tribunal in charge of Gulf War reparations.

Some of the claims that have been awarded by the UNCC are huge: the cost of
cleaning up Kuwait's and Saudi Arabia's coastlines from oil spills and
fires, or the Kuwait Petroleum Corporation's controversial award for $15.9
billion in lost oil revenues. So far, the UNCC has paid out $18.6 billion in
war reparations and has awarded an additional $30 billion that has not been
paid because of Iraq's shortage of funds. There are still $98 billion worth
of claims before the UNCC that have yet to be assessed, so these numbers
could rise steeply. That's why there are no accurate estimates of how much
Iraq owes in war reparations--the figure ranges from $50 billion to $130

But the fate of these debts is now highly uncertain. On May 22, 2003--two
months after the United States invaded Iraq--the Security Council decided to
cut the percentage of Iraqi oil revenues going to war reparations to 5
percent. This past May, an Iraqi delegation went to the UN to ask for the
percentage to be reduced even further, to accommodate Iraq's own
reconstruction needs. There is growing sympathy for this position. Justin
Alexander of the debt relief group Jubilee Iraq says that many of the claims
before the UNCC are inflated and that "even for genuine claims, this is
Saddam's responsibility, not the Iraqi people's, who themselves suffered far
more than anyone."

This is where the Carlyle/Albright consortium comes in. The premise of its
proposal is that Iraq's unpaid debts to Kuwait are not just a financial
problem but a political and public relations problem as well. Global public
opinion is no longer what it was when Kuwait was promised full reparations.
Now the world is focused on reconstructing Iraq and forgiving its debts. If
Kuwait is going to get its reparations awards, the cover letter argues, it
will need to recast them not as a burden on Iraq but "as a key element in
working toward regional stability and reconciliation."

Several parties involved in the consortium emphasized that the proposal
concerned only reparations debts. Albright Group spokesperson Jamie Smith
said, "We were asked to join a proposal to secure justice for victims of
Saddam's invasion of Kuwait and ensure that compensation to Kuwaiti
victims--which was endorsed by the US government and the United Nations--be
used to promote reconciliation, environmental improvements and investment in
Kuwait, Iraq and the region."

In fact, the proposal does not restrict itself to reparations debt. The
consortium also asks the government of Kuwait to give the consortium control
over $30 billion in defaulted sovereign debts to be used as political
leverage to secure reparations claims. Furthermore, most experts on debt
restructuring agree that Iraq's debts must be looked at as a whole: There is
little point forgiving Iraq's sovereign debts if the country is still going
to be saddled with an unmanageable reparations burden. This understanding is
reflected in the documents, which repeatedly state that Kuwait's reparations
payments are endangered by the moves to forgive Iraq's debts.

To avert this threat to Kuwait, the consortium proposes a three-pronged
strategy of aggressive backroom lobbying, clever public relations and
creative investing and financing. "Any solution for payment of the Unpaid
Awards...must be politically sellable as reinforcing stability and growth in
the Gulf and in Iraq. This Proposal provides the strategy, the architecture,
and the talent to achieve this goal," the document states.

Lobbying: Since the UNCC exists entirely at the discretion of the Security
Council, which can vote to reduce, suspend or eliminate reparations at any
time, the part of the proposal dealing with power-brokering is
straightforward: It suggests a full-on lobbying offensive directed at
Security Council members, using Albright's connections, but also other
"eminent" people associated with the consortium like former US Senator Gary
Hart and former US ambassador to the UN Jeane Kirkpatrick. "We will first
seek to preserve the five percent of the revenues from Iraqi oil allocated
as funding for payment of the UNCC awards," the proposal says. To achieve
this, the consortium will make "discreet contacts at top levels in key
capitals of Security Council member states and with influential
representatives," and "interventions with United Nations senior staff to
shape presentations to the Security Council." The proposal further notes
that "Germany and Romania may be pivotal, and The Albright Group has very
close ties to each."

Public Relations: The consortium also has a detailed plan to address the
perception that reparations are "diverting resources from rebuilding Iraq to
a more wealthy neighbor." First, Kuwait must assign its unpaid debts from
Iraq to a private foundation controlled by the consortium. The foundation
will manage an investment fund that will invest a portion of reparations
payments from Iraq to Kuwait back into Iraq. As examples of the types of
investments the foundation would make, Albright, Huebner and Sheikh suggest
in their letter that the reparations funds could be used to buy Iraq's
state-owned companies. "In the near future, 40 state-owned Iraqi enterprises
in a range of sectors will be available for leasing and management
contracts," they write. By demonstrating that Kuwait is investing part of
its reparations proceeds back into Iraq's economy, the consortium-run
foundation "establishes a humanitarian rationale for the United States and
other counties to continue their support" for the reparations. The
consortium appears to see privatization--a highly controversial proposal in
Iraq--as part of a humanitarian mission.

The proposal also suggests more direct public relations strategies. It calls
for Kuwait to dedicate $1 billion of the reparations awards it has already
been paid by the UNCC to a Kuwait Environmental Restoration Fund, which the
consortium would create. The purpose of this fund would be to remind the
world of "the gravity of the environmental legacy facing Kuwait" and to
"position Kuwait as the region's environmental leader." The fund would be
headed by Carol Browner, former head of the US Environmental Protection
Agency and a principal in the Albright Group.

Investment/Financing: The proposal predicts that on their own, lobbying and
PR will not be sufficient to secure the amounts that the Kuwaiti government
hopes to receive in reparations. For the consortium to "maximize the value
of Kuwait's compensation," Kuwait will have to part with even more of the
reparations payments it has received. In addition to the $1 billion for the
environmental fund, the proposal calls for another $2 billion of Kuwaiti
money to be invested in a Middle East Private Equity Fund. Of that $2
billion, "$1 billion would be invested, by way of special agreement, in The
Carlyle Group equity funds" for a period of at least twelve to fifteen
years. At the end of that period Kuwait will get the return on these
investments, as well as whatever the consortium has been able to negotiate
in reparations payments.

For the consortium, it is an excellent deal: Its members get to manage a $2
billion investment portfolio, collecting healthy management fees as well as
a percentage of interest. They also will be paid a "retainer" and 5 percent
of any debts the consortium gets repaid, and "a negotiated percentage of the
value returned to Kuwait exceeding" the pre-arranged amount.

Other consortium members sharing in these benefits include Fidelity
Investments; BNP Paribas, a European bank embroiled in the oil-for-food
scandal; Gaffney, Cline & Associates, an energy company specializing in oil
and gas privatization; Nexgen Financial Solutions, a financial engineering
firm partly owned by the government of France; and Emerging Markets
Partnership, an AIG affiliate headed by a former senior vice president of
the World Bank, Moeen Qureshi.

In addition to the financial windfall, the arrangement would give this group
of private companies tremendous power. Whoever holds Iraq's debt has the
ability to influence policy in Iraq at a moment of extreme political
uncertainty. Yet for the government of Kuwait the proposed deal is fraught
with risk. It's true that the fate of its Iraqi reparations looks grim. The
consortium estimated that if Kuwait tried to sell those debts on the market,
its $27 billion would be worth only $1.5 billion. But the consortium is
asking Kuwait to risk $3 billion of reparations money it has already
received in the hope that it can be used to leverage some of the rest.
However, as Jerome Levinson points out, "There are absolutely no guarantees
of even that."

It is clear that the consortium is extremely eager to seal a deal with
Kuwait. Consortium CEO Shahameen Sheikh writes of making five trips to
Kuwait in four months; Albright met with Kuwait's foreign minister about the
issue on April 2, 2004; and the Albright Group's Carol Browner is reported
to have "personally delivered a copy" of the proposal to his hotel when he
was in Washington. Yet Kuwait appears reluctant: It took four months to
reply to the proposal and then it would only say, in a letter dated August
10, that the proposal "will be taken into deep consideration and is
currently being studied by the appropriate authorities." According to Ahamed
al-Fahad, "The issue is now in the hands of the under secretary of foreign
affairs," who was unavailable for comment. But Salem Abdullah al Jaber
al-Sabah, Kuwait's ambassador to the United States, said, "As far as my
information is concerned, my government is not considering such proposals."

Even if the deal falls through, the fact that the Carlyle Group and the
Albright Group have been engaged in these negotiations may already have
damaged debt relief efforts, hurting both Iraqi and US interests. Levinson
points out that the Bush Administration has made commitments that Iraq's oil
revenues will be spent on reconstruction. Yet the failure to deal with the
reparations issue means that "part of those resources instead are being
diverted to Kuwait. Who pays for this? It's the people of Iraq who continue
to make reparations payments, and it's US taxpayers, who are asked to foot
the bill for reconstruction, because Iraq's money is going to debt

Levinson says this is all the more remarkable because of who is involved.
"Here you have two former Secretaries of State seemingly proposing to use
their contacts and inside information to undercut the official US government
policy." Washington University's Kathleen Clark says the proposal "lays bare
how former high-level government employees use their access in order to reap
financial benefits that appear to be enormous."

A case can certainly be made that James Baker and Madeleine Albright have
had more direct influence over Iraq's debts and reparations payments than
any politicians outside Iraq, with the possible exception of the forty-first
and forty-third Presidents of the United States.

As Secretary of State, Baker played a role in running up Iraq's foreign
debts in the first place, personally intervening in 1989 to secure a $1
billion US loan to Saddam Hussein in export credits. He was also a key
architect of the first Gulf War, as well as of the cease-fire that required
Saddam to pay such sweeping reparations. In his 1995 memoirs, The Politics
of Diplomacy, Baker wrote that after seeing the oil-well fires in Kuwait he
cabled President George H.W. Bush and said, "Iraq should pay for it." Now,
through the consortium, Carlyle could end up controlling $1 billion of those

The role of the Albright Group raises similar questions. As Secretary of
State and Ambassador to the UN, Madeleine Albright participated personally
in drafting UN Resolution 986, which created the oil-for-food program,
diverting 30 percent of Iraq's revenue from oil sales to war reparations.
"It's a great day for the United States because we were the authors of
Resolution 986," she said on The NewsHour With Jim Lehrer on May 20, 1996.
Now, as a private citizen, Albright is a leading member of a consortium that
is exploiting her connections to try to profit from the very reparations she
helped secure. Albright also enforced the brutal sanctions campaign against
Iraq, one of the effects of which was the hobbling of Iraq's state
companies. Now, she is part of a plan to use Iraq's reparations payments to
buy the very firms that her sanctions program helped to debilitate.

But it is Baker's envoy post that raises the most serious questions for the
White House, especially because a Special Presidential Envoy is the
President's personal representative, meeting with heads of state in the
President's stead and reporting back directly to the President. If a
President's envoy has a conflict of interest, it reflects directly on the
highest office. Clark says, "There is absolutely a conflict of interest.
Baker is aligned with two parties--the US government and Carlyle--that are
not aligned with each other."

As envoy, Baker's job is to do his best to clear away Iraq's debts,
lessening the burden on Iraqis and on US taxpayers. Yet as a businessman, he
is an equity partner in a company that is part of a deal that would achieve
the opposite result. If Baker the envoy succeeds, Baker's business partners
stand to fail--and vice versa.

Have these conflicts influenced Baker's performance as envoy? Has he pushed
as hard as he could have for debt forgiveness? We know that Iraq's steep war
reparations to Kuwait have largely escaped public scrutiny--if Baker has
steered the Bush Administration away from the reparations issue, for whom
was he working at the time? The White House? Or Carlyle? Clark says
questions like these are precisely why conflict-of-interest regulations
exist. "We have reason to doubt that Baker is doing everything he could be
doing on behalf of the United States because he has an interest in another
side of the transaction."

This issue is all the more pressing because the file that President Bush
handed to Baker is in disarray--ten months on, there is significantly less
goodwill toward forgiving Iraq's debt than when Baker arrived. When
President Bush appointed him, he praised Baker's "vast economic, political
and diplomatic experience." And at first, Baker seemed to be making fast
progress: After top-level meetings, France, Russia and Germany appeared open
to canceling a large proportion of debt owed to them by Iraq, and Saudi
Arabia and Kuwait seemed ready to follow.

But now, the negotiations are not only stalled, they seem to be going
backwards. Kuwait, for its part, has hardened its position. "Debts remain
debts," Foreign Minister Mohammad Sabah Al-Salem Al-Sabah said recently. And
it has intensified its demands for Gulf War reparations, joining with Saudi
Arabia, Iran, Jordan and Syria to claim an additional $82 billion from Iraq
in environmental damages.

And the Europeans? At a Senate Foreign Relations Committee hearing on
September 15, Senator Joseph Biden Jr. asked Ronald Schlicher, Deputy
Assistant Secretary of State for Iraq, about the status of the international

"Has a single nation in the G8...formally said or requested of their
parliaments to forgive Iraqi debt?" Biden asked.

"Not yet. No sir," Schlicher replied.

Not only has Baker failed to deliver any firm commitments for debt
forgiveness, at the annual meeting of the International Monetary Fund on
October 2, it emerged that France had done an end run around Washington and
was pushing a debt-relief deal of its own. French Finance Minister Nicolas
Sarkozy announced that he had lined up Russia, Germany and Italy behind a
plan to cancel only 50 percent of Iraq's debts--a far cry for the 90-95
percent cancellation Washington had been demanding. Yet Baker was nowhere to
be found.

Busy negotiating the rules of the presidential debates, Baker has been MIA
on the debt issue. Since he returned from his trip to the Middle East in
January, the President's envoy has issued only two public statements on
Iraq's debt, and he has been completely silent on the topic for the past six
months--despite having publicly committed to getting the debt issue sewn up
by the end of the year.

While this is bad news for Iraqis and for US taxpayers, it could be good
news for Carlyle. A swift resolution to Iraq's debt crisis works against its
financial interest: The longer the negotiations drag on, the more time the
Consortium has to convince the reluctant Kuwaiti government to sign on the
dotted line. But if Iraq's debt is successfully wiped out, any proposed deal
is off the table.

Baker's position as envoy has certainly been useful to his colleagues in the
consortium. Whether Baker has helped solve Iraq's debt crisis is far less


Message: 2
Subject: FW: Focus: Iraq in turmoil
Date: Wed, 13 Oct 2004 10:12:07 +0100
From: "Muhamed Ali" <>
To: <>

[ Presenting plain-text part of multi-format email ]

Dear colleagues,

                             Enclosed below are the URL links for the
above titled articles.

I used the word "Attached" in my previous text, meaning enclosed. There
is no physical attachment to my e-mail.



-----Original Message-----
From: Muhamed Ali
Sent: 11 October 2004 12:57
To: ''
Subject: Focus: Iraq in turmoil

Dear colleagues,

Attached below for your perusal are:

1)Everyday terror of my chaotic city
Violence is always at hand - but still we have hope
Amal Al-Muddaris
Sunday October 10, 2004
The Observer <>

"I suspect that the terrorist are deliberately targetting women and
children. Just before I came to London, there was an explosion in an
area where children had gathered to get free sweets during a religious
celebration. The terrorists knew the children would be there, and they
came by car and turned it into catastrophe.",2763,1323981,00.html

"And for some people - officials in work and people like me - salaries
have gone up and we do live a better life now. That is especially true
for women."

 2) Focus: Last days of a tyrant


Facing defeat, Saddam clung to his fantasies

The Iraq Survey Group report paints a remarkable picture of the
ex-dictator and reveals why he went to such lengths to maintain the
fiction of WMD

Peter Beaumont
Sunday October 10, 2004
The Observer <>,2763,1323994,00.html



London Borough of Hackney may exercise its right to intercept any communication on its networks - 
for more information see


Message: 3
Subject: Saddam undergoes hernia operation
Date: Wed, 13 Oct 2004 16:18:56 +0100
From: "Muhamed Ali" <>
To: <>

[ Presenting plain-text part of multi-format email ]

Dear colleagues,

1. Ex-Iraqi leader Saddam Hussein has had an operation to treat a hernia
at a Baghdad hospital, officials say.

2. Babies found in Iraqi mass grave

A US investigator said bodies were bulldozed into the graves

A mass grave being excavated in a north Iraqi village has yielded
evidence that Iraqi forces executed women and children under Saddam



London Borough of Hackney may exercise its right to intercept any communication on its networks - 
for more information see

Content-Description: image001.jpg

[ image001.jpg of type image/jpeg removed by -
   attachments are not permitted on the CASI lists ]

End of casi-news Digest

Sent via the CASI-analysis mailing list
To unsubscribe, visit
All postings are archived on CASI's website at

[Campaign Against Sanctions on Iraq Homepage]