  Effective type I string models allow stabilization of the dilaton and moduli
fields with only a single gaugino condensate. We show that, as well as breaking
supersymmetry, the stabilization can spontaneously break CP. We find that this
source of CP violation hints strongly at a natural solution to the
supersymmetric CP and flavour problems. Even though the CP violation generates
physical phases in the Yukawa couplings, all the supersymmetry breaking terms
are found to be automatically real and given by the U(1) charges of the
associated Yukawa couplings. These can be chosen to have a structure
(degenerate or non-universal) which suppresses FCNCs and EDMs. We examine the
phenomenological implications, including the generation of the $\mu$-term, and
the effect of higher order terms.
