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Expand chart
Data: Simon Hinrichsen / LSE; Chart: Axios Visuals

When the U.S. invaded Iraq in 2003, it was taking control of the most indebted nation in the world.

Why it matters: Iraq's debt at the time was an astonishing $130 billion, and the eradication of that debt was a rare example of international unity and cooperation in the interests of a debtor country.

  • The full story is told in "Tracing Iraqi Sovereign Debt Through Defaults
    and Restructuring," a new paper from the London School of Economics' Simon Hinrichsen, who has also created the astonishing chart above.
  • To put these numbers in context: Japan's current debt-to-GDP ratio is 238%, while the U.S. is at 106%. Iraq, in the mid-1990s, had a ratio well above 1,000%.

The big picture: Iraq had very few debts before the Iran-Iraq war of 1980–1988. Western countries armed Iraq during that war, and accepted IOUs for their weapons despite knowing that Iraq was already insolvent.

  • In 1990, Iraq invaded Kuwait and, in so doing, lost the support of the West. Subsequent sanctions prompted Iraq's economy to implode, sending its debt-to-GDP ratio into the stratosphere.
  • After 1997, the United Nations' oil-for-food program helped to get Iraq's economy back onto its feet, and the debt-to-GDP ratio started falling. But the total amount of debt only fell after the U.S. invasion of Iraq in 2003.

After the war, the UN took the extraordinary step of immunizing all of Iraq's assets from attachment by creditors. That put Iraq in an extremely strong negotiating position, and ultimately the country managed to persuade creditors to accept a reduction of 80% in the value of their debts.

Where it stands: Iraq today may be facing political turmoil, but its sovereign finances are in good shape, with a low debt-to-GDP ratio, substantial foreign reserves, and a healthy fiscal surplus.

Go deeper: U.S. to send "additional forces" after embassy in Baghdad attacked by protesters

Go deeper

Updated 1 hour ago - World

U.S. releases report finding Saudi prince approved Khashoggi operation

Photo: Bandar Algaloud / Saudi Kingdom Council / Handout/Anadolu Agency via Getty Images

The Office of the Director of National Intelligence (ODNI) has released an unclassified report assessing that Saudi Crown Prince Mohammed bin Salman (MBS) approved the operation to "capture or kill" Washington Post journalist Jamal Khashoggi in 2018.

Driving the news: The White House also announced sanctions on entities implicated in the murder, though not on MBS directly. Officials also announced a new "Khashoggi ban" under which individuals accused of harassing journalists or dissidents outside their borders can be barred from entering the U.S.

About 20% of U.S. adults have received first vaccine dose, White House says

Joe Biden speaks during an event commemorating the 50 million COVID-19 vaccine shots. Photo: Doug Mills-Pool/Getty Images

Nearly 1 in 5 adults and nearly half of Americans 65 and older have received their first dose of the coronavirus vaccine, White House senior adviser Andy Slavitt said on Friday.

The big picture: The Biden administration has previously said it has secured enough doses to vaccinate most of the American population by the end of July.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Most COVID-19 survivors can weather risk of reinfection, study says — "Twindemic" averted as flu reports plummet amid coronavirus crisis
  2. Vaccine: Employers mull COVID vaccine requirements — New data reignites the debate over coronavirus vaccine strategyPfizer begins study on 3rd vaccine dose as booster shot against new strains.
  3. Economy: What's really going on with the labor market.
  4. Local: All adult Minnesotans will likely be eligible for COVID-19 vaccine by summer — Another wealthy Florida community receives special access to COVID-19 vaccine.
  5. Sports: Poll weighs impact of athlete vaccination.

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