A row between Iraq and Kuwait

AN OLD row between Iraq and Kuwait has flared up again, and has manifested itself in an unusual form: Iraqi Airways has stopped flights from Baghdad to London and Sweden. Last month Kuwait tried to have the first Iraqi plane to fly to London for 20 years impounded. Kuwait Airways says the Iraqi airline owes $1.2 billion for planes and parts taken during Saddam Hussein's invasion of Kuwait in 1990, a war for which Iraq is still paying the price. The Iraqi government has now declared Iraqi Airways bankrupt in an effort to avoid paying Kuwait.

This is the latest episode in a long-running argument between the two countries about war reparations. The Iraqi government thinks that reparations worth billions of dollars owed to Kuwait should be forgiven or at least reduced. Until it settles its accounts, relations between the two supposed allies will be strained.

After Saddam was booted out, the UN Security Council ruled that Iraq should pay for any economic losses and damage. The reckoning was $53 billion in reparations, with the biggest chunk, $37 billion, going to Kuwait. Nearly two decades later Iraq still owes Kuwait around $25 billion and gives its neighbour 5% of its oil revenues each year to pay off the debt.

Last year Iraq’s ambassador to the UN asked the Security Council to reduce the payments, saying that Iraq sorely needed the money at home. Though no figure was cited, an adviser to Nuri al-Maliki, Iraq’s prime minister, later suggested that Iraq could cut its payments to 2.5%, while wistfully adding that Iraq hoped for the debt to be forgiven entirely. The Iraqi oil minister has said that the current rate of repayment is unsustainable. Iraq’s budget deficit in 2009 was around $3.6 billion (though a budget surplus of about the same about is forecast for 2010). In contrast, Kuwait has hundreds of billions of dollars to spare. Most of Iraq’s income is from oil, so the fall in the oil price means its receipts are a lot smaller than they were a year or two ago.

But principles are at stake. Iraq’s government says it is not accountable for Saddam’s dictatorship. Kuwait disagrees. According to diplomatic doctrine, it argues, today’s government is responsible for whatever yesterday’s did, however nasty it may have been. If the row is to end, Kuwait may have to accept other things from Iraq. It still wants clarity on the cases of Kuwaitis missing since the war of 1990; it still wants some bodies back; and it wants to settle a long-festering dispute over borders.

At the moment Iraq still falls under Chapter Seven of the UN charter, which empowers the Security Council to maintain peace there and to impose sanctions, so any deal on reparations must be negotiated through the UN. Iraq says it has met the conditions for it to be released from sanctions, which would leave the two countries to resolve their differences between themselves. Ban Ki-moon, the UN’s secretary-general, has in the past hinted that this might be the best way.

As the reparations row drags on, some Iraqi MPs have suggested that Kuwait should be paying reparations for letting America use it as a base for its invasion of Iraq in 2003. That seems unlikely. But such demands ensure that the bad blood lingers.