by Brian Whitaker 
1 August, 2000

For nine years now, 200 people in Switzerland have been totting up what promises to be the world’s largest bill: compensation that Iraq must pay for invading Kuwait. The final tally will not be known for three more years but is likely to be hundreds of billions of dollars.

With a filing system that would cover half a football pitch, and running costs of $40m a year, the task of assessing the damage is enormous. But if the history of war reparations is anything to judge by, it is almost certainly futile.

Like sanctions, Gulf War compensation is a well-intentioned idea gone wrong. The sums involved are so big that either Iraq will be burdened with the cost long after Saddam Hussein has gone or, more likely, Iraq will stop paying and victims will see no more than a fraction of the total money.

Either way, deciding who should be compensated, and by how much, has turned into a bureaucratic and legal minefield for the United Nations Compensation Commission, the body set up specially to process claims.

Nobody disputes that hundreds of thousands of innocent people suffered injuries or lost money as a result of the invasion - among them poor families in Egypt, India and elsewhere who had depended on remittances from relatives working in Iraq or Kuwait.

Thousands of businesses were hit and governments suffered, too. Jordan, for instance, which did not participate in the war, provided emergency medical facilities at its taxpayers’ expense.

When the war ended in 1991, Iraq agreed to pay compensation. Claims poured in to the UNCC headquarters in Geneva from as far afield as Bolivia, Iceland, Nepal, Panama, Thailand, Uruguay and Vietnam - 2,600,000 in all. They totalled $322 billion.

Among the more creative claims were several for backs allegedly injured by people packing their belongings to flee Kuwait, and another for burns from a candle sustained during a power cut.

The commission rejected those, but did decide that heart attacks suffered outside Kuwait or Iraq could be compensated if they occurred up to six months after a war-related "traumatic event".

The Pakistani government claimed $179 million in lost tax revenue because it had allowed evacuees to bring their cars home without paying the normal import duty.

That, too, was rejected, but when Israeli farmers claimed for flowers and fruit which could not be picked because of curfews and border closures they were awarded $8 million.

The Canadian government claimed $47 million, including $50,000 allegedly given to the Red Cross set up an information bureau in Canada. Despite a request from the commission, it failed to provide evidence that the Red Cross had actually received the money.

Similarly, British government claims totalling $6 million were reduced to $499,000, mainly for lack of supporting evidence.

The problem is not simply one of greedy claimants sniffing a honey pot; there are also losses clearly attributable to the war which fall outside the rules of compensation.

Hotels and travel companies in several countries lost money during the conflict, through disrupted flights and cancelled bookings. The commission ruled that those in Cyprus, Egypt, Tunisia, Morocco and Turkey could not be compensated, but awarded $14.7 million to hotels and travel firms in Israel.

The reasoning behind this was that there had been "an actual and credible threat" to Israel (in the form of 40 Scud missiles and statements by the Iraqi deputy prime minister, Tariq Aziz) which was "intimately connected" to the invasion of Kuwait, whereas the other countries – regardless of their losses – had not faced a similar threat.

The huge volume of claims and, in some cases, the lack of documentation because of the war, means that verification can be difficult. Sources say that smaller claims are subjected to only random checks, while larger claims are examined by professional loss adjusters.

In 1994 the commission reported that some duplicate claims for personal injuries had been found, though it did not say how many. It admitted that the ability of its computer system to detect these was limited and urged governments (who distribute the compensation to their citizens) to take their own precautions to avoid double payment.

Iraqi officials believe there have also been some duplicate claims relating to businesses in Kuwait, where foreign investors are obliged to have a Kuwaiti partner. They say that if both partners claimed from different countries for the same business loss, this would be particularly difficult for the system to detect.

So far, the commission has dealt with 2,588,014 claims and awarded $15.5 billion compensation. The remaining 13,000 are mainly large government claims, including $111 billion sought by the government of Kuwait and $48 billion for environmental damage. If approved in full, they would bring Iraq’s total bill to almost $284 billion, but interest charges could easily double that.

Iraq is currently paying the compensation, together with all the commission’s running costs, by means of a 30% deduction from its revenue under the oil-for-food programme. The amount paid in this way varies with oil prices but is around $400 million a month. Once sanctions are lifted, however, there will be no sure way to collect the money.

War reparations in general have a unfortunate history. In ancient times, conquering armies simply took what they fancied as booty, and that was the end of it. Following the Thirty Years’ War (1618-48), booty took on a more respectable form, in the shape of money "indemnities", to be paid by the vanquished as part of a settlement.

By the first world war, indemnities had become discredited as essentially punitive. The victorious allies therefore resorted to a new term, "reparations", which they justified by forcing Germany to accept sole responsibility for starting the war. Germany proved unable to pay and the accompanying resentment contributed to the rise of Hitler.

There were similar problems after the second world war, when efforts to collect reparations from Germany, Japan and other axis powers were, once again, only partly effective.

In 1991, with the term "reparations" also discredited, the UN decided that Iraq should pay "compensation" for the Gulf war. The aim was not to punish Iraq, but simply to ensure that those who had suffered losses would be recompensed.

Iraqis are already complaining about the way claims have been dealt with. Others, not just Iraqis, say the sums involved look punitive, even if they are not meant to be. They ask why future generations of Iraqis should bear the cost of Saddam’s desert folly.

On the other hand, western governments argue that letting Saddam off the hook would encourage other military adventurers and be unfair to the victims. But history suggests that one way or another Iraq will avoid paying the full amount.

An edited version of this article appeared in The Guardian on 1 August, 2000

United Nations Compensation Commission: www.unog.ch/uncc