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Carlyle Covers Up


Less than twenty-four hours after The Nation disclosed that former Secretary of State James Baker and The Carlyle Group were involved in a secret deal to profit from Iraq's debt to Kuwait, NBC was reporting that the deal was “dead.” At The Nation, we started to get calls congratulating us on costing the Carlyle Group $1 billion, the sum the company would have received in an investment from the government of Kuwait in exchange for helping to extract $27 billion of unpaid debts from Iraq.

Reparations in Reverse

Next week, something will happen that will unmask the upside-down morality of the invasion and occupation of Iraq. On October 21, Iraq will pay $200-million in war reparations to some of the richest countries and corporations in the world.

If that seems backwards, it’s because it is. Iraqis have never been awarded reparations for any of the crimes they have suffered under Saddam, or the brutal sanctions regime that claimed the lives of at least half a million people, or the U.S.-led invasion, which United Nations Secretary-General Kofi Anan recently called “illegal.” Instead, Iraqis are still being forced to pay reparations for crimes committed by their former dictator.

James Baker's Double Life

When President Bush appointed former Secretary of State James Baker III as his envoy on Iraq's debt on December 5, 2003, he called Baker's job "a noble mission." At the time, there was widespread concern about whether Baker's extensive business dealings in the Middle East would compromise that mission, which is to meet with heads of state and persuade them to forgive the debts owed to them by Iraq. Of particular concern was his relationship with merchant bank and defense contractor the Carlyle Group, where Baker is senior counselor and an equity partner with an estimated $180 million stake.

Until now, there has been no concrete evidence that Baker's loyalties are split, or that his power as Special Presidential Envoy—an unpaid position—has been used to benefit any of his corporate clients or employers. But according to documents obtained by The Nation, that is precisely what has happened. Carlyle has sought to secure an extraordinary $1 billion investment from the Kuwaiti government, with Baker's influence as debt envoy being used as a crucial lever.

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