James Baker's Double Life (Page 8)

A Special Investigation

By Naomi Klein

This article appeared in the November 1, 2004 edition of The Nation.

October 12, 2004

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.

Click here to read documents detailing James Baker's conflict of interest.

Research support for this article was provided by the Investigative Fund of The Nation Institute.

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But now, the negotiations are not only stalled, they seem to be going backward. 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 negotiations.

"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 from 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 clear.

About Naomi Klein

Naomi Klein is an award-winning journalist and syndicated columnist and the author of the international and New York Times bestseller The Shock Doctrine: The Rise of Disaster Capitalism (September 2007); an earlier international best-seller, No Logo: Taking Aim at the Brand Bullies; and the collection Fences and Windows: Dispatches from the Front Lines of the Globalization Debate (2002). more...
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