The Balancing Act of Reparations: Punishing Iraq Without Ruining It

With Iraq’s troops reportedly setting Kuwait’s oil fields ablaze, detonating its oil producing facilities and torching its commercial centers, a grim picture is emerging of two nations--both the aggressor and the victim--ending the war in ruins.

The United Nations has vowed to make Iraq pay for the damage it has caused, not only to Kuwait but to thousands of other individuals, businesses and nations that have suffered as a result of Iraqi President Saddam Hussein’s invasion of his small neighbor.

Compensation “is the only sure means of enforcing the international law that Iraq has so blatantly violated, and thereby enhancing the chances of that law being more fully respected in the future,” said Charles N. Brower, a former State Department legal adviser who acted as a judge on the tribunal that continues to sort out U.S. claims that arose against Iran in 1979.

Iraq was $50 billion in debt even before the invasion of Kuwait and will probably be hard-pressed to rebuild itself to the point where it can meet even its own needs.

As a result, this war will prove a test of how to impose enough punishment to set an example, yet not crush a people under so much debt that their country becomes hopelessly unstable.

The dangers of excess are at least as serious as those of not going far enough: Most historians agree that the $132 billion in gold marks demanded of Germany after World War I helped destroy its economy and sowed the political seeds for Adolf Hitler’s rise.

“In the final analysis,” President Bush said earlier this month, “America and her partners will be measured not by how we wage war but how we make peace. . . . We will have before us an historic opportunity. From the confluence of the Tigris and the Euphrates, where civilization began, civilized behavior can begin anew.”

It will probably take well into the 21st Century for the rest of the world to sort out the damages it is owed by Iraq. The successful Iran-U.S. claims tribunal has been dealing with grievances that have been pending for a decade. The ones arising from the Persian Gulf War will make that earlier tribunal’s complex job seem simple.

First in line will be Kuwait.

“They must pay for the damage, for what they have stolen from Kuwait,” said Sheik Saad al Abdullah al Sabah, the Kuwaiti crown prince, in an interview published last week in a British newspaper, the Independent.

“They must make personal reparations where people have been killed,” he added. “Iraq is a rich country. I think they have got plenty of money to rebuild our buildings. Saddam Hussein started this war. He should bear all the responsibility for it.”

But Brower estimated that more than half the claims against Iraq will come from outside Kuwait.

Among those who can seek compensation from Iraq: foreign workers expelled from Kuwait or suffering there during Iraqi occupation; Saudi Arabia and Israel, targets of Iraq’s Scud missiles; businesses from around the world that were forced to abandon investments or break contracts in Kuwait and Iraq; countries such as Turkey--and even Jordan--that faced intense hardship due to the international sanctions against Iraq.

With renewed reports of Iraqi atrocities against Kuwaitis remaining in that country, allied officials have reminded individual Iraqis that they will be held responsible for any war crimes they commit. Experts say those cases probably would be handled separately from reparations claims.

Nuremberg-style tribunals could be set up by the coalition or by governments whose citizens were the victims. The most difficult task might be identifying and apprehending the individuals responsible.

Although there are no hard rules, governments in some cases have also paid reparations to compensate for human lives lost. Iraq itself paid $27 million to compensate the families of the 37 U.S. crewmen killed when an Iraqi air force jet fired two missiles into the frigate Stark in 1987.

Iran has gone before the U.N. International Court of Justice in The Hague seeking compensation from the United States for the downing of an Iranian passenger plane in 1988; the United States has agreed to pay relatives of those killed but says it has no obligation to the Islamic republic itself.

The Gulf War claims go far beyond the capacity of the international court, analysts said.

“The Security Council must decide how these reparations would be paid, how they would be collected, to whom they would be paid, how these claims will be handled,” said David J. Scheffer, a lawyer and senior associate of the Carnegie Endowment for International Peace.

Although that task raises formidable problems, the political ones may be even more daunting.

For starters, the Soviet Union, which holds veto power in the Security Council, has indicated that it might act to ease the reparations burden on Iraq. Its peace proposals had stipulated that after the complete withdrawal of Iraqi troops from Kuwait, all U.N. resolutions would lose their force--including the Oct. 29 resolution that makes Iraq liable for loss, damage and injury arising from its invasion of Kuwait.

Scheffer said that reaching agreement on reparations could be far more complicated if Hussein remains in power after the war. If a new government is in place, he said, the Security Council “may act with more forgiveness.”

Although Iraq may find itself financially strapped after the war, it has the world’s second-largest oil reserves, after Saudi Arabia. The U.N. may impose a lien on Iraq’s oil revenue that would provide a steady stream of funds to be used to resolve the claims against it. Further, some of the money may come from Iraq’s overseas assets, which were frozen by the United Nations shortly after the Kuwait invasion.

But policy-makers and analysts agree that they would not want the burden to be overwhelming. Severely crippled, Iraq might be rocked by internal revolts, or be rendered so weak that it becomes a target for aggression by its neighbors--a situation that could find the United States once again sending troops to the region.

“The time of reconstruction and recovery should not be the occasion for vengeful actions against a nation forced to war by a dictator’s ambition,” Secretary of State James A. Baker III said this month.

Ultimately, the question hinges on finding a difficult balance.

The lessons of World War I showed in the arrangements that governments worked out in World War II, Scheffer noted. Germany was not forced to pay heavy reparations--to the contrary, West Germany shared in the Marshall Plan funds that helped rebuild Europe. However, Germany continues to make large payments to Israel in reparation for Hitler’s murder of Jews, Scheffer said.

Analysts say how the world handles the reparations for this war could help shape what Bush likes to call the “new world order.”

“You drive the lesson home, and the only way to drive the lesson home is to hold Saddam Hussein responsible,” added Allan Gerson, former counsel to the U.S. ambassador to the United Nations. “President Bush has said that the world order is the main reason he went to war. The first rule of world order is that aggression doesn’t pay.”