Iraq's Odious Debts

Putin says Russia may forgive Soviet-era Iraq debt

Reuters
April 11, 2003

ST PETERSBURG, Russia (Reuters) – Russian President Vladimir Putin said Friday Moscow was ready to consider Washington’s call for it to forgive Baghdad some $8 billion in Soviet-era debt.

“On the whole the proposal is understandable and legitimate. In any event, Russia has no objection to such a proposal,” Putin told a news conference alongside German Chancellor Gerhard Schroeder and French President Jacques Chirac.

“I believe that we could begin to discuss the principles of this issue at the G8 summit in Evian. In any case, we are ready to do so,” he said, referring to a June meeting of the Group of Eight leading industrial nations in France.

U. S. Deputy Defense Secretary Paul Wolfowitz said Thursday Russia, France and Germany could contribute to rebuilding Iraq by writing off some or all of the loans they made to Iraq under President Saddam Hussein.

Most estimates put Iraqi debts to Russia and France at about $8 billion each, mostly for contracts concluded in the 1980s, but some analysts say Moscow could be owed up to $12 billion.

Germany’s Finance Ministry said Friday Iraq owed Berlin a sum just short of $4.3 billion.

Germany and France, members of the Paris Club of creditor nations alongside Russia, have said it is to early to discuss debt.

“It is clear that a legitimate government must be in place and in contact with the Paris Club,” Schroeder told reporters. “Then this issue can be discussed, but not before.”

Putin, however, said Russia was open to the U.S. proposal.

“We are ready to examine this issue, but there is a specific procedure in accordance with the World Bank and the International Monetary Fund. It involves talks conducted within the context of the Paris Club,” Putin said.

Putin’s largess is unlikely to be welcomed by the Russian parliament or by the Russian Finance Ministry, which said earlier Friday Iraq should fulfill its obligations. Russia itself faces a debt repayment peak of $17 billion in 2003.

“The problem of Iraqi debt is a subject for international, multilateral talks which should take into account Iraq’s real economic potential,” Deputy Finance Minister Alexei Ulyukaev said earlier Friday.

“In a nutshell, it is necessary to ensure Iraq fulfills the obligations it took upon itself.”

The Paris Club is an informal forum for 19 creditor nations to discuss rescheduling debts to developing countries.

Iraq is though to face some $142 billion in enforceable debt claims as well as up to $300 billion in reparations outstanding from the invasion of Kuwait.

Russia may seek easier conditions for repaying foreign debts

MOSCOW, April 12 (Kyodo) – Russia is considering asking other countries to ease conditions for repaying its debts in exchange for giving up part of the country’s loans to Iraq, the Kommersant newspaper reported Saturday.

Russia plans to discuss the issue at a meeting of the Paris Club, a body representing 19 governments, including Russia, with large claims on various other governments throughout the world, the major Russian paper said, quoting government sources.

Russia has loan claims against Iraq of about $8 billion, one of the world’s largest. The United States is asking Russia to give up part of the loans to help rebuild the war-torn country.

Russia inherited from the former Soviet Union a total of $63 billion in external debts.

Russia believes it will have no choice but to give up its Iraq-bound loans related to sales of weapons to the administration of Iraqi President Saddam Hussein, which U.S. President George W. Bush said has collapsed during the U.S.-led war on Iraq, according to the paper.

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