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Analysis

The true cost of Gulf war compensation

The Iraqi invasion of Kuwait caused financial hardship for businesses and individuals across the globe. But reparations come with their own price tag, writes Middle East editor Brian Whitaker

Wars never come cheap. Ten years after Saddam Hussein invaded Kuwait, the bills are still coming in - and they're enormous. Apart from the cost of all the bullets, bombs and missiles used, and the deaths and injuries, there are thousands - perhaps millions - of people who played no part in the war but suffered financially: the poor families in Egypt who depended on remittances from relatives working in Iraq are just one example.

Many companies who were peacefully doing business in the Middle East also lost money - and by no means all of them were rich oil firms. Governments suffered, too. Jordan, for instance, which refused to join the war and was punished by the west for it, provided emergency medical facilities at its taxpayers' expense.

Back in 1991, at the end of the war, the UN decided that Iraq should pay for "losses caused by the invasion and occupation of Kuwait". Iraq agreed to this and since then, 96 countries have presented their bills, which include claims for businesses and individual victims as well as for their governments.

Kuwait is the biggest claimant. Others, more surprisingly, include Bolivia, Iceland, Nepal, Panama, Thailand, Uruguay and Vietnam.We all know how tempting it is to add a few quid to an insurance claim in the hope that no one will notice. Some countries, sniffing a honey pot, have almost certainly done that and their claims are being whittled down by teams of expert assessors.

Even so, Iraq will face a bill running into hundreds of billions of dollars which, with interest, will take several generations to pay. The only sure way to collect this money from Iraq is to extend sanctions, in some form or other, well into the 22nd century. But it would, in the eyes of many, impose a huge burden on Iraq's economy, years after Saddam is gone and dead. Is that fair?

Recall, if you can, a school history lesson about the Treaty of Versailles at the end of the first world war. It forced Germany to pay massive compensation and succeeded in building up resentment which played a large part in starting the second world war.

The alternative to sanctions would be either a gentleman's agreement on the terms for payment (and Saddam Hussein is no gentleman), or an endless series of court cases around the world which would make lawyers very rich but probably achieve little else.

If none of this sounds feasible, the only other option is to forget about compensation. But that would be unfair to Saddam's victims. It would also send a signal to other would-be Saddams that they can wreck a neighbouring country without having to pay for the damage. Compensation, like sanctions, is one of the great moral dilemmas left over from the Gulf war. Unfortunately, Saddam has no need to face such ethical questions himself. But he does understand the problems they create for his foes - and exploits them at every opportunity.