BBC News
January 21, 2004

The Saudi Government made the offer in a statement after talks in Riyadh between de facto ruler Crown Prince Abdullah and US envoy James Baker.

The statement did not say how much of Iraq’s estimated $30 billion debt the Saudis might forego.

Earlier, Kuwait said it was prepared to waive a “significant proportion” of the estimated $16bn owed to it by Iraq.

The United Arab Emirates, Qatar, Germany, France and Japan have also agreed to write off much of Iraq’s debt owed to them.

Saudi ‘participation’

The Saudi statement said: “What constitutes ‘substantial debt reduction’ is subject to agreement between the creditors.”

The Saudi Government is believed to be owed about $9bn, and private Saudi firms and banks about $19bn – making the country Iraq’s biggest creditor in the region by far.

Unnamed Saudi officials were quoted as saying the kingdom would be willing to reduce the debt only once a “legitimate, elected Iraqi Government” was in place.

The officials said Saudi Foreign Minister Prince Saud al-Faisal told Mr Baker the money would be written off if “Saudi companies are allowed to participate in the reconstruction of Iraq,” Associated Press news agency reports.

Mr Baker is touring countries to try to erase as much of Iraq’s $120bn foreign debt as possible – an essential step towards rebuilding its shattered economy.

Debt target

Kuwaiti Prime Minister Sheikh Sabah al-Ahmad al-Sabah said the reconstruction of Iraq was a matter which concerned the whole world.

“The state of Kuwait will strive with other countries to achieve a significant reduction of Iraq’s debts in the course of this year,” said Sheikh Sabah.

He added: “A significant reduction of Iraqi debt will provide an opportunity to rebuild a free and prosperous Iraq.”

Yet Sheikh Sabah was quick to stress that any debt write-off would not include the $170bn in war reparations Kuwait is still claiming from its one-time occupier.