Agence France-Presse
February 29, 2004

Beijing is ready to forgive a big part of the estimated 5.8 billion dollars owed to it by the previous regime of Saddam Hussein if Chinese companies are allowed into major rebuilding projects in Iraq.

“We are considering reducing and forgiving these debts owed by Iraq to China by a large margin,” Shen Gofang, China’s deputy foreign minister told AFP late Saturday on the sidelines of a meeting of Iraq’s donors in this Gulf emirate.

“The task is easier with government debt, but for the corporate debt we need to have the agreement of those companies concerned.”

Gofang explained that a large part of the debt owed by Iraq was to Chinese companies and that they would be more willing to forgive or reduce that debt if they could bid on oil, power and infrastructure projects.

“If they can take a greater part in this process they are more than ready to forgive part or all of their debts owed by Iraq,” he said.

“Many Chinese companies have advantages in oil field exploration, hydropower stations and telecommunications.”

Iraq has forecast debt forgiveness of some 60 percent of the 120 billion dollars owed after former US secretary of state James Baker visited Baghdad’s major creditors to press for waivers.

China pledged 25 million dollars towards Iraq’s rebuilding at a donor conference in Madrid in October, which had raised about 33 billion dollars from other countries and agencies.

The biggest pledge, 18.6 billion dollars, came from the United States, which has set up an office in Baghdad to award contracts for rebuilding projects against these funds.

The so-called Program Management Office is gearing up to award about 10 billion dollars worth of construction and non-construction projects by July 1 but half of that amount going for so-called “prime contracts” for big power and infrastructure projects is off-limits to non-coalition countries.

China opposed the US-led coalition’s spring war on Iraq that ousted Saddam’s regime.

Gofang said he was in talks with both Iraqi and US officials about the role of Chinese companies in Iraq and signalled that his country would be willing to contribute more money towards reconstruction if its companies were allowed into big projects.

The leading players in Iraq’s oil and power sectors are US companies such oil services giant Halliburton, engineering firm Bechtel and General Electric, which builds power stations.