In 2005, as coalition forces struggled against a resourceful insurgency in Iraq, a team of bankers and lawyers strove to draft the country's first-ever disclosure documents for its commercial debt-for-debt exchange offer. A member of the group, frustrated at its inability to write conventional risk factors, (1) wryly suggested that enclosing an IED (the infamous "improvised explosive devices" raging through Baghdad at the time) would be more to the point. Morbid as the comment was, it illustrates that Robert Cover's maxim, that "[l]egal interpretation takes place on the field of pain and death," applies also to contexts other than adversarial dispute. (2) Not every client, sovereign debtor or otherwise, comes with trouble as dramatic as Iraq's. But every lawyer must craft a client's trouble into a morally persuasive narrative that includes not only the detached, rational, and deductive emphasis of modern law, but also the swirls of anger, love, and other emotions that advocates from the mythical Atticus Finch to ordinary law-firm junior associates sense are indispensable to their mission. (3) While legal scholarship often contrasts these two aspects as "law" versus "narrative," in fact, legal narratives meld rational and emotional logic, albeit in language that is ideologically inflected to suppress the emotional features. Lacking the centralized decisionmaking forum, adversarial format, and final arbiter that structure litigation narratives, transactional lawyers must mobilize other media to make a persuasive case. For example, a speech crafted by counsel and given by Iraq's then-Minister of Finance in 2004 demonstrates how reason and emotion are blended together into a story of suffering and a plan to resolve it. The speech became important both for negotiating the legal resolution of Iraqi and, arguably, creditors' suffering when parties gathered at the bargaining table, and for transforming that table talk into substantive provisions of Iraq's debt restructuring deal.
IRAQ AND PROJECT 688
Between seizing absolute power in 1979 and losing it in 2003, Saddam Hussein not only squandered a reserve of forty billion dollars but also accumulated a mountain of debt to other governments and private creditors--ranging from huge construction companies to morn-and-pop trade suppliers. (4) That debt was thrown into default when United Nations sanctions severed Iraq's financial ties to the world after its 1990 invasion of Kuwait. Following the overthrow of Saddam, the new Iraqi government's accountants eventually reconciled breach-of-contract claims against Iraq totaling approximately $140 billion (including late interest). Next to the country's ongoing violence, this debt was the biggest problem facing the new government. The World Bank estimated that even fantastical 33% annual growth would have left Iraq's debt-to-GDP ratio at 600% to 900%, many times higher than other, less-devastated middle-income borrowers such as Argentina and Russia had recently faced. Uncertainty about the fate of this debt stirred political contention inside and outside Iraq, notably through an attempt to revive the doctrine of "odious debts," (5) and obstructed normalization of Iraq's economic and financial operations, especially rehabilitation of its all-important petroleum sector. As with other distressed sovereign debtors, lenders hesitated to provide new money that might be drained to service old claims. Unlike others, Iraq's debt stock consisted not of a few series of notes or bonds, or a handful of large syndicated loans, but of thousands of individual claims held by hundreds of varied creditors. Soon after the U.S. administrator ceded power to a sovereign Iraqi government on June 28, 2004, the new authorities hired accountants, lawyers, and no fewer than four financial institutions to restructure Iraq's debt to manageable levels. The senior law partner on the deal nicknamed the assignment "Project 688," inspired by a randomly generated law-firm code and 633 Squadron, a classic film about the odds facing fighter pilots ordered to destroy a Nazi fortress. …