Global Policy Forum

In the topsy-turvy world of international politics, Iraq, a nation in political and economic turmoil, has just paid more than $21.4bn (£11.3bn) in "war reparations" to some of the richest countries and corporations in the world. The payment is the latest tranche in a staggering $41.3bn so far paid out by the struggling Iraqi government in recompense for the first Iraq war in which Saddam Hussein invaded Kuwait.

And so it should, many might say. The damage done to Kuwait in that period needs to be made good. Those who lost relatives, limbs and property should be compensated. Yet most of the payments to those who suffered personal injuries or losses have now been made, and in fairly small sums.

Much larger amounts have gone - and continue to go - to big corporations. The chief beneficiaries are oil companies and contractors such as Halliburton, Bechtel, Mobil and Shell. But compensation has also gone to Nestlé, Pepsi, Philip Morris, Sheraton, American Express, Kentucky Fried Chicken and even Toys R Us - not because Saddam damaged their property in Kuwait , but because, they claim, they "lost profits" or experienced a "decline in business" because of the war. The payments announced yesterday also went to governments in Bosnia-Herzegovina, India, Russia, Saudi Arabia, Turkey and the United States.

Saddam Hussein is long gone from power and yet the down-trodden people of Iraq are still being forced to pay for the crimes of their former dictator. The amount they are paying is more than Iraq's annual health and education budgets combined. Payments are running well behind schedule, and will take years to complete. The country is being forced to borrow from the IMF, with all the additional constraints that brings.

The new Iraqi government has requested a change. There is no reason why it should not come. In 1991 Iraq was paying 30 per cent of its oil revenue in compensations. In 2000 this was reduced to 25 per cent. After the fall of Saddam it was cut to 5 per cent. Surely it is now time that it should end entirely.

The lesson of history, as with Germany post-1918, is that while war reparations do salve the past, they also store up trouble for the future. Things are bad enough in Iraq without this added burden. Every dollar sent as "reparations" is a dollar not spent on humanitarian aid and reconstruction. The vanquished have always paid the victor. But for the occupied to pay the occupiers - much of the "reparations" go to the United States and Britain - is little short of an obscenity. At a time when the battle for hearts and minds is being daily lost, it is patently a political absurdity too.