The airplanes and missiles locked on Iraq are not the only signs pointing to an upcoming confrontation. They are joined by certain financial indicators, which most analysts tend to overlook. However, these indicators are very significant: the price of Iraq's unpaid debts has doubled since last September. Bloomberg quotes an investment fund, Emergent Alternative Fund, which has bought rights during the past year to $6m of defaulted loans to Saddam Hussein's regime. Some money managers who invest in high-risk securities are so confident that Iraq will pay its bills that they are now offering 16 cents for one dollar of this debt. Last September, the $11 billion of Iraq's $62 billion debt that is on the market was trading at 8 cents on the dollar. Iraq owes 2,600 dollars per person in foreign debt, second only to Argentina, with a little over 4,000 dollars per capita, according to the CIA.
There are some 265,000 American and British soldiers massed on the Iraqi border, ready to go into battle and change the entire political class, if Saddam's team can be called that. At the same time, Iraq's creditors, among which Romania, are wondering how they are going to get their money back. According to government sources, this issue was discussed during the meeting between Romanian Premier Adrian Nastase and his British counterpart Tony Blair and during the visit of the American Trade Secretary to Bucharest. The Premier argued that Romania was in a great position to participate in the reconstruction of Iraq, from which the Government can get some money back, but not the debts. The experience of other countries in the same situation, such as Yugoslavia, shows that a change of regime does not necessarily mean that debts are paid - most of the times, the new governments prefer to start from scrap and turn the debts into bonds with extended maturity. This was the case of Bosnia, which exchanged some of its debts into 20-year bonds in 1996.
Even so, Romanians still hope to get some reconstruction contracts, especially since they do have something to offer: about 3,000 Romanians have worked in Iraq, have experience and speak the Arab language. Romanian companies ran big contracts with Iraq for more than a decade, but then had to sever all ties with this country in 1990, when the embargo was enforced. Iraq is Romania's biggest debtor, with 1.7 billion dollars. All these debts were contracted before the Revolution.
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