The rise of Iraqi indebtedness, 1979–2003

In 1979 Iraq was a net creditor to the world. Fifteen years later, its government debt-to-GDP was over 1,000 per cent. At the time of the US invasion in 2003, Iraq was saddled with around 130 billion US dollars in external debt. How does a country incur so much debt, so fast? In answering this question, the article reconstructs the build-up of Iraqi debt through the 1980s and 1990s. This article is the first to create a debt series going back to 1979. The rise in Iraqi indebtedness was a consequence of global geopolitical trends in the 1980s where political lending trumped solvency concerns. It allowed Iraq to obtain financing on terms more favourable than the US government, without conditionality of reform.