Iraq's Odious Debts

Russia may agree to restructure Iraq’s debt

Deborah Seward
Associated Press
April 29, 2003

MOSCOW – Russia’s finance minister said Tuesday that Moscow may be willing to consider a restructuring of Iraqi debts contracted by Saddam Hussein’s regime but stressed that the government opposed a complete write-off, Russian news agencies reported.

Finance Minister Alexei Kudrin emphasized that the issue of Iraq’s massive debt must be handled within the framework of the Paris Club of creditor nations, the ITAR-Tass and Interfax news agencies reported.

Russian officials initially bristled at suggestions by U.S. Deputy Defense Secretary Paul Wolfowitz earlier this month that Russia should simply write off the Iraqi debt to help in the country’s postwar reconstruction. However, President Vladimir Putin said Moscow was willing to consider the proposal.

The 19 members of the Paris Club are owed an estimated $26 billion by Iraq. That amount includes only principal, not interest that has gone unpaid on most of the debt since the 1970s. Iraq owes more than $8 billion to Russia.

The Paris Club is an informal group of official creditors whose role is to find ways for debtor nations to make good on their payments.

“There will be big debate on the issue, and I do not rule out that a decision will be made to reschedule part of Iraq’s debt and write off another part,” the ITAR-Tass news agency quoted Kudrin as saying.

Paris Club creditors had preliminary talks about Iraq’s debts last week at a meeting in Paris. They agreed to a comprehensive study of the extent of Iraq’s debts to club members and “will review this issue in the coming months,” the group’s statement said.

Russia opposed the U.S.-led war in Iraq, but Moscow is being encouraged by Washington to play a constructive role in rebuilding the country. A flexible Russian attitude on debt repayment could be interpreted positively by the United States.

“Iraq must be given a grace period in repaying its debt because postwar reconstruction there is an urgent need,” Kudrin was quoted as saying. However, he added that Russia was against a “complete write-off.”

Speaking last week on Russia’s ORT television channel, Alexander Shokhin, the head of the finance and credit committee of the lower house of the Russian parliament, suggested that Iraq’s debt to Russia, some of which was for arms purchases, could be reduced by 80 percent.

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