The Heritage Foundation

WebMemo #386 on Iraq

December 16, 2003

December 16, 2003 | WebMemo on Iraq

Saddam Captured: Now Follow the Money

The capture of Iraqi dictator Saddam Hussein is a breakthrough that will:

  • discourage his followers,
  • raise the morale of coalition forces in Iraq, and
  • lift a dark shadow that has deterred many Iraqis from overtly cooperating with the coalition.

Saddam's capture already has produced leads that have triggered more arrests and the further unraveling of his network of supporters. Hopefully, the capture of Saddam will also yield intelligence on the location and movement of Saddam's financial assets.

Funding the Resistance

Significantly, Saddam was captured with only two associates and without communications gear that would have allowed him to communicate with the remnants of his regime. This indicates that he probably was not playing an important operational role in the resistance, but rather was more of a symbolic figurehead. 

 

But Saddam was found with $750,000 in crisp American one hundred dollar bills, which hints at a major source of his power: the billions of dollars of assets that he stole from the Iraqi people. Some of this loot now reportedly is used to pay Iraqi mercenaries for attacks on coalition forces and the anti-Saddam Iraqis who are cooperating with the occupation authorities. 

 

Shortly before the war started, Saddam's son Qusay raided the Iraqi national treasury and hauled away up to 900 million American dollars and about $100 million of Euros in three trailer trucks. This nest egg undoubtedly helped Saddam hide for more than eight months and probably was an important source of financial support for the resistance.

 

The "Tikriti Mafia"

Seizing or freezing such assets would go a long way to undermining the active resistance of the remnants of Saddam's Baathist party, which has long profited in the loot that Saddam extracted from Iraq. 

 

Saddam is best understood not as a national leader (he really did not care about the welfare of most Iraqis) but as the leader of a gang that held Iraq hostage. His regime was dominated by the "Tikriti mafia"-- loyalists who came from his hometown of Tikrit, near where he was ultimately captured. Now that Saddam has been apprehended, the glue that holds many members of this mafia together is the money looted from the Iraqi people. If these assets can be recovered, many Saddam supporters are likely to eventually abandon armed resistance and seek a safer means of making a livelihood. 

 

This does not mean that the resistance will collapse. Islamic radicals, including several hundred foreign militants, will continue their attacks on the coalition and Iraqis cooperating with it. But following the money to eliminate an important source of support for Saddam's followers ultimately would help reduce the intensity and frequency of anti-coalition attacks.

 

One important branch of the money trail leads to Syria. Iraq's western neighbor, which is ruled by the world's only remaining Baathist dictatorship, is believed to be harboring up to three billion dollars in Syrian bank accounts controlled by Iraqi Baathists. But the Syrians are dragging their feet on cooperating with the United States and the provisional Iraqi government in recovering these funds. The Bush Administration should ratchet up pressure on Syria to cooperate by threatening economic sanctions if it fails to do so. 

 

Forgive Iraqi Debt

In addition to pressing for greater cooperation in recovering Saddam's looted billions, Washington also should seek greater international support for reducing the huge debt that Saddam saddled on the Iraqi people. Saddam's regime ran up more than $125 billion in foreign debt. Iraq's annual debt service, estimated to cost up to $8 billion per year, will become a major obstacle to reviving Iraq's limping economy. James Wolfensohn, the President of the World Bank, has stated that at least two-thirds of Iraq's debt needs to be written off to enable Iraq's reconstruction efforts to succeed.

 

James Baker, the Bush Administration's newly-appointed "diplomatic point man" for resolving Iraqi debt issues, should press Iraq's creditors to forgive or reschedule much of Iraq's debt. (See also: Forgive the Iraqi Debt by Dr. Nile Gardiner, and Marc Miles, Ph.D.)

 

Although the United States generously plans to spend more than 18.6 billion to revive the Iraqi economy in the next year, many of Iraq's creditors, including France and Russia, not only have spurned Iraqi requests for economic aid, but continue to insist on full repayment of Saddam's odious debt. Such demands unfairly penalize the Iraqi people and make it much harder to build a stable post-Saddam government.

About the Author

James Phillips Senior Research Fellow for Middle Eastern Affairs
Douglas and Sarah Allison Center for Foreign and National Security Policy

Related Issues: Iraq