Late last year, former Secretary of State James Baker was appointed by President Bush, despite serious conflicts of interest, to a strange mission to convince Iraq's creditors to forgive Iraq's massive national debt. I say "strange" because it seemed to me at the time that many of Iraq's creditors had already telegraphed their intent to do just that, and a special envoy seemed superfluous, let alone one whose law firm, Baker Botts, represented Iraq's biggest creditor, Saudi Arabia.
Perhaps not content with its smaller share of conflict of interest, James Baker's investment firm, the Carlyle Group apparently cooked up a plan to profit directly from Baker's mission. Naomi Klein, reporting in both The Nation and The Guardian, uncovers this secret proposal, which sought to use James Baker's mission to pressure Kuwait into investing billions in a risky gambit to protect Kuwait's share of Iraq's debt from Baker's "noble mission".
It's a long, complex story, but it is well written and I urge you to read it all. I'm not confident that I fully understand all the nuances of this scheme, but I'll attempt a thumbnail sketch of it here:
Former Secretary of State Baker was a chief architect of both the first Gulf War and of Iraq's huge reparations debt, while his successor, Madeline Albright, helped author the UN-administered mechanism to pay off the debt as part of the sanctions and oil-for-food program. Today, not only is Baker the US envoy in charge of Iraqi debt forgiveness, both former Secretaries are associated with a scheme to use his mission to effectively scare Kuwait into investing billions into a project involving the Carlyle Group, the Albright Group and other investors.
How was it to work? According to Klein, Kuwait was to invest its reparations money in various foundations, which, in turn, would use part of the funds to buy and develop the very Iraqi industries that were devastated by the wars, the sanctions, and the debt repayments. The foundations would be managed by a cosortium of investors including the Carlyle Group and the Albright Group. By investing in Iraq's reconstruction, and by leveraging their own political clout, the consortium would make the case to the rest of the world that making Iraq continue to pay Kuwait nearly $30 billion in reparations would actually benefit Iraq, essentially undermining Baker's Presidential mission.
Amazing.