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A debt of dishonour

Le Monde d.
Oct 2000


A debt of dishonour

During the Gulf war in 1991 the US deliberately
targeted Iraq's drinking water supply in violation of
the Geneva convention on war crimes. The media
have ignored recent research by a US academic
which confirms a deliberate strategy to destroy the
whole country. Ten years after the end of the
conflict the Iraqi people are still paying for the
intransigence of both the US and Saddam Hussein.
Despite the recent direct flights from Moscow,
Paris and Amman to Baghdad, flouting the
embargo, there is no sign of Washington yielding
any ground. On the contrary, the presidential
election campaign has raised the odds. Meantime,
the pillaging of Iraq continues, as shown by the
work of the UN Compensation Commission - a
secretive body which operates on a distinctly
shaky legal basis and creams off a third of Iraq's
oil revenue.

We know about the sanctions that have impoverished Iraq, claiming
many lives through lack of medicines and malnutrition, and leading to
the slow disintegration of one of the world's oldest civilisations. But
we haven't heard much about the money Iraq still raises through
exporting oil, other than the concept of "oil for food". This slogan
implies that all permitted oil exports fund necessary humanitarian
supplies for Iraq, but this is not true. For four years - since December
1996 - a third of Iraq's $11bn export income has been collected to
compensate companies and individuals claiming for losses during the
invasion and occupation of Kuwait, and the Gulf war: the collection
and awards are made discreetly by a UN organisation with a dubious
legal basis, the United Nations Compensation Commission (UNCC),
dominated by the US, which still believes that Iraq must pay endless
reparations for Saddam Hussein's ambitions a decade ago. The Kuwait
Petroleum Corporation, and a few others, were awarded this year, in
just a single payment, $15.9bn - which is double the amount the
Baghdad government received between 1996 and 2000 to feed and care
for 17m people. It is also almost equal to the total compensation due to
2.6m private claimants. 

But the UNCC's judgments have just been challenged from within. The
high-ranking diplomats from the 15 UN security council member
countries who make up the governing council of the UNCC were asked
to decide on that claim for compensation submitted by the Kuwait
Petroleum Corporation, and others, for $15.9bn. French and Russian
diplomats blocked the move, saying they couldn't allow an opulent
emirate to take so much from Iraq, which grows daily poorer. UNCC
meetings were adjourned repeatedly until 28 September last month,
when the claim was voted through unanimously, in exchange for which
cooperation the French and Russian objectors were conceded cosmetic
changes to the UNCC's functioning and the percentage of Iraqi exports
commandeered for compensation. 

How did the UN come to be running a compensation service which acts
as judge and jury and refuses to allow Iraq to spend any of its export
revenues to hire legal help to defend itself against the claims? The
UNCC was set up in 1991 (by resolution 692 passed on 20 May) after
the security council confirmed that Iraq was "liable under international
law for any direct loss, damage ... or injury to foreign governments,
nationals and corporations, as a result of Iraq's unlawful invasion and
occupation of Kuwait". There is no precedent for this procedure, at
least not since the Treaty of Versailles, which concluded the first world
war and paved the way for the second, by laying the full responsibility
for the war on Germany and forcing it to pay endless reparations - the
"Germany must pay" slogan ultimately led to Adolf Hitler taking
power. Now the slogan in the US (which failed to ratify the Versailles
treaty) is "Iraq must pay". 

A discreet body

The UNCC is a discreet body, with offices scattered around Geneva's
international quarter. It decides the amount of compensation on the
basis of a report by a panel of three commissioners - experts appointed
by the secretariat, a theoretically administrative body but in practice
the seat of real power. From the start, representatives of the US took
control of the secretariat and directed - or misdirected - all the UNCC
decisions. Every year $50m is deducted from Iraqi exports to fund the
UNCC itself, the business-class travel expenses of its experts, its
commissioners' hefty fees and so on. The most serious aspect of all
this, though, is that, for the first time in international law since the
second world war, a state has been allowed no right of appeal against a
procedure in which it is involved. Even a criminal is entitled to
defence lawyers, and is not required to pay for investigations, trials or

In 1991 the UN secretary-general recommended that Iraq should be
"informed of all the claims and will have the right to present its
comments to the commissioners". But later, the security council
decided that Iraq had only "a right to receive the summary reports of
the executive secretary and comment thereon" - more like the
Inquisition than modern legal practice; Norbert Wuhler, head of the
UNCC legal department, describes it as an "inquisitorial procedure"
(1). And the UNCC first secretary, Carlos Alzamora, says the
inconvenient legal safeguards "which generally encumber judicial
proceedings" have been eliminated. Michael E. Schneider, a former
professor of international public law, is a lawyer with a firm which
filed a request to defend Iraq, paid for from UNCC funds (2). The
request was rejected. He says the main flaw in the procedure is that Iraq
has not been recognised as "a defendant party and no attempt has been
made to obtain its agreement. Iraq, and only Iraq, must pay for every
penny of the procedure, the fees of the commissioners and their
experts, yet it cannot even consult the experts' findings." 

Muhammad al-Douri, Iraq's ambassador to the UN in Geneva and also
a former professor of international law, says he works "under an
embargo". Iraq has lost the right to vote at the UN because it has not
paid its dues (3), although the US, which is the organisation's largest
debtor and more than $1bn in arrears with its dues, has never been
penalised. Communication between the Iraqi ambassador and his
government is laborious: an envoy takes at least four days to make the
round trip from Geneva to Baghdad and back. Al-Douri doesn't even
have office equipment. Xerox has refused to sell him photocopiers:
perhaps the company is afraid he will use them as chemical weapons. 

He tries to explain how impossible the whole situation is: take two
claims which totalled $21.6bn, for the suspension of production and
sale of Kuwaiti oil during the Iraqi occupation, and loss through fires.
Tens of thousands of pages of claims were filed six years ago and
passed to the three commissioners. The secretariat gave the Iraqi
government a summary of their contents five years after the filing and
gave Kuwait only weeks to respond. As the Iraqi delegation explained
to the UNCC council, the claims "address too many legal, scientific,
technical, engineering and accounting aspects. How much time is
required to prepare a comprehensive, scientific and appropriate
response? The members should work out the time required for
communicating the voluminous documents, verifying, studying,
translating them from a foreign language to Arabic and back again to
English, and then prepare the response." 

Al-Douri adds: "We did submit our comments, to which Kuwait
replied, but we have no idea what it said in response. After much
procrastination we were at last allowed to state our case to the
commissioners - in no more than one hour." The commission awarded
$15.9bn to the claimants: this was the original handout that prompted
the French and Russian UNCC representatives to express misgivings.
Al-Douri says: "Iraq is responsible but there is no justification for
violating international law." 

Michael Schneider asks: "How can a case be judged unless
contradictory opinions are expressed and both parties are given an
opportunity to state their point of view? Kuwait organised an
international call for tenders to prepare and plead its case. To get to the
bottom of it would require painstaking work for which the commission
does not have time. Not only has Iraq been refused money to defend
itself, but all the major law firms have already been hired by the
claimants or by the UNCC itself." The UNCC hired Price Waterhouse
after it had worked for Kuwait, creating a conflict of interest. 

Some are more equal than others

The UNCC justifies its behaviour by the pressing need to refund
hundreds of thousands of ordinary people who suffered during the
invasion of Kuwait . Out of 2.6m claims, most were made by private
individuals, although these add up to only $20bn of a total of $320bn.
By speeding up procedures for dealing with individual claims (using
statistical models because of the impossibility of examining each claim
separately), the commission facilitated compensation through
short-cuts, many politically motivated. 

The claims are divided into categories. Category C claims group
(1,659,840) individual claims - for destruction of goods, mental
anguish, flight - for less than $100,000. The last C category claims
were settled in September: 97% were dealt with, but the claimants did
not all receive the same treatment. Almost all the Kuwaiti claims were
successful, and some claimants were given more than they had
demanded. But 40,000 Jordanians (mainly Palestinians) only received
40% of their claimed compensation. 

From the start, the whole procedure was guided. Michael F Raboin, the
UNCC deputy executive secretary, an American, in charge of handling
claims, set up the secretariat in 1991 and recruited Norbert Wuhler,
with whom he had worked on the Iran-US claims tribunal, founded in
the early 1980s and still at work in The Hague settling disputes
between the two countries. Both men say: "We are impartial. The
commission made allowance for Iraq's case. Particularly as we had to
deal with several hundred thousand claims in a very short time. Many
claimants have actually complained that we were too favourable to

Impartial is perhaps not quite the right word. Five years ago the head of
the category C claims unit, Erik Wilbers, told his team: "All this
abstract work that we do in this air-conditioned building in
Switzerland makes it very easy for us to forget what we are here to
achieve: to help the claimants." He added, in reference to the torture
Kuwaitis had suffered: "I think it is useful for us to remember the
luxurious position we are in. All of us are guilty of this to a smaller or
greater extent; the important thing is for you to realise when you may
be going a little too far." This was a fairly overt encouragement to cut

'Make the criteria generous'

A former Egyptian civil servant who worked in the unit remembers
that, in the course of his work, he was regularly asked to "make the
criteria as generous as possible", so as to make many awards. Another
civil servant was struck by recurrent references to "doctoring the
samples". The statistical models used to compensate victims more
quickly had been modified. The restricted number of documents
(receipts, invoices) provided by claimants made operations easier. The
Kuwaitis filled in 160,000 individual claims, some on behalf of
new-born babies. In many cases identical telephone numbers appeared
on separate claims for the same losses. Various documents reported
these duplicates. The Chinese representative protested several times,
and an audit criticised the sloppiness, but nothing changed. A European
civil servant said the Kuwaiti delegation lobbied "to ensure that the
process favoured its country. The victims played an active part in this.
Although it would be exaggerating to say that they were in our offices
every day. More like every two days." 

Many Kuwaiti business men were awarded compensation for
companies belonging to nationals of other countries, often Palestinians,
as Kuwaiti law requires foreign nationals to have a local sponsor to
start a company. In 1998 the US government officially asked the
governing council to review the criteria applied to payments to
Kuwaitis. According to an undisclosed document: "The US recalled
that it supported the use of the statistical model, considering it to be
fair way to process a large number of claims on an expedited basis.
However, the US reported that it was now concerned that there may be
an error in the model." The secretariat complied with the advice. 

The largest compensation claims are still being examined and $267bn
is outstanding as of 16 June. Many claims are unfounded and have been
or will be dismissed. Some countries filed for the cost of mobilising
troops. But US allies - in particular Kuwait, Saudi Arabia and Israel -
have qualified for special treatment because they were hit by Scud
missiles. Israeli businesses, including florists, greengrocers, cinemas
and hotels, have received millions of dollars to compensate for revenue
lost during the crisis (which is as if the UK had demanded
compensation from Germany because cinema attendance dropped
between 1939-45). 

Kuwaiti ministries filed claims of $2.2bn and were awarded $1.53bn.
The commission in charge of the case sent six missions to Kuwait and
the US to check claims, but Iraq was not given a chance to send a
representative or state its case to the commission. Only one member of
the commission actually made the trip, otherwise sending "experts"
provided by the secretariat. Issues raised by the gains or savings made
by Kuwait because of the war - increased oil prices, inactivity of its
institutions, renewal of capital assets - were ignored or scarcely

The UNCC has received claims worth $320bn, including $180bn for
Kuwait, equivalent to nine times the country's gross domestic product
in 1989. Even if we assume (as rumoured in UNCC corridors) that only
a third of this will actually be awarded, it would still add up to around
$100bn. To that must be added the interest, for periods from 10-15
years, bringing the total to about $300bn (5). At the current high price
of oil, this would absorb all Iraqi oil exports for 15-20 years. If the
country continues to spend one third of its revenue on compensation, it
would clear its compensation debt slate by 2050-60 - setting aside
debts contracted before 1990 (6). But by then, what would be left of
Iraq's schools, hospitals and infrastructure (7)? 

Iraq will pay until 2070

The security council last month decided that for the next phase of "oil
for food" (2000-2001), the percentage of Iraqi exports for
compensation will be 25%, not 30%, and UNCC procedures will
change to give Iraq a bigger say in the discussions. But instead of
paying compensation until 2060, Iraq will now have to pay until 2070. 

Is it legal to make a country pay without making allowance for its
resources or setting an upper limit? The 1951 peace treaty between the
US and Japan stated: "It is recognised that Japan should pay reparations
to the Allied Powers for the damage and suffering caused by it during
the war. Nevertheless, it is also recognised that the resources of Japan
are not presently sufficient if it is to maintain a viable economy, to
make complete reparation for all such damage and suffering and at the
same time meet its other obligations" (8). Remember that the then head
of state of Japan was Emperor Hirohito, a war criminal who could -
much as Saddam Hussein - have been judged by the International
Criminal Tribunal, had it existed. 

In this case, the original UN resolution (687) recognised that the
"requirements of the people of Iraq [and] Iraq's payment capacity"
should be taken into account in the calculation of compensation. But
does the UN abide by its own decisions? For many years the
International Law Commission, set up by the UN, has been studying
the rights and duties of states. It is preparing a convention which has
already won a broad consensus, and one article of the convention
(Article 42) will stipulate that in no case may reparations deprive a
people of its means of subsistence. 

Some legal specialists, such as Bernhard Gräfrath from Germany, have
gone further, questioning the right of the security council to decide the
amount of compensation due in a dispute between two parties (9). On
several occasions - for example, the Israeli attack on Beirut airport in
1968 - the security council decided that compensation was due to the
victims, but never set the amount. That is outside its prerogatives: in
one such case, the UK representative on the security council pointed
out that it is not a "court of law, nor is it the appropriate forum to
determine questions of restitution and compensation for damages". 

When asked about this, Raboin, with other members of the secretariat,
explained "we thought that the UN had drawn a line" after the invasion
of Kuwait, establishing the rule of law in international affairs. The
validity of this precedent, and the corresponding new world order,
became apparent soon after in Bosnia, South Lebanon and Palestine.
Will Israel be required to compensate Lebanon for occupying the
southern part of the country for 25 years? According to a European
diplomat, the UNCC's partial dealings must be seen in the
international context of 1991. "Now an institution of this type would
never be set up. The US would never get its way. Everyone would be
against it." 

1.Norbert Wuhler, "The United Nations Compensation
Commission: A new contribution to the process of international
claims resolution", Journal of International Economic Law,
Oxford University Press, Oxford, 1999 
2.The firm, Lalive & Partners, filed a request to defend Iraq, paid
for from UNCC funds. The request was rejected. The firm has
only been able to represent Iraq in one case, the Well Blowout
Control claim. See also Michael E. Schneider, "How Fair and
Efficient is the United Nations Compensation Commission
System?", Journal of International Arbitration, vol. 15, no 1,
March 1998. 
3.Iraq's proposal that the UN deduct what it owes from oil exports
was rejected. 
4.The claims, Nos. 4003197 and 4004439 were filed on 20 May
and 24 June 1994. 
5.On 18 December 1992, the governing council decided that
interest would be due. 
6.Compensation claims filed by UNCC do not curtail all legal
procedures against Iraq, for the competence of the commission is
not exclusive. Plaintiffs may also take Iraq to court to settle other
7.See Alain Gresh, "Iraq's silent agony", Le Monde diplomatique,
English edition, July 1999. 
8.Quoted by Bernhard Gräfrath, "Iraqi Reparations and the
Security Council", Heidelberg Journal of International Law,
Heidelberg, 1995,55/1. 

Translated by Harry Forster


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