August 1, 2009: Billions of dollars in Iraqi weapons purchases are at risk, because Iraq has a lousy credit score. Despite all that oil revenue, and a large chunk of global oil reserves, Iraq has a very bad credit rating with international banks. So the country cannot finance the huge weapons purchases. The U.S. weapons firms will not extend credit, and expect to be paid.

While Iraq paid cash for billions of dollars in weapons and ammo during their war with Iran in the 1980s, they defaulted on over $10 billion in loans from Arab neighbors. Russia was stiffed for over $5 billion in military material, and recently wrote off those debts (in return for access to oil field development deals and other opportunities). In the last decade of Saddam's rule, he burned up what little fiscal credibility Iraq still had. When Saddam was overthrown in 2003, Iraq was not only broke, but possessing one of the lowest credit ratings on the planet. Saddam screwed everyone, and the international banks have a long memory for that sort of thing.

If Iraq really wants it's American weapons (M-1 tanks, Stryker armored vehicles, helicopters and lots of other equipment), they can pay cash. But they haven't got that kind of cash. This is very inconvenient, as Iraq also wants to order up dozens of F-16 fighters. That's out of the question as well, considering the current financial condition.

The only alternative is to take the low (price) road, and buy Russian or Chinese gear, or second had U.S. stuff (like pre-owned F-16s). Many attractive deals are available, and the only neighbor Iraq really has to worry about is Iran (which has a ramshackle military after decades of embargoes.) Russia and China probably won't offer credit, although they might accept a deal providing control over some of Iraq's oil reserves.