Liz Austin
The Guardian (U.K.)
April 2, 2004

Dallas: Iraq’s debt is “simply unsustainable” and must be reduced if the country’s economy and government are to be rebuilt, former Secretary of State James A. Baker III said Thursday.

President Bush appointed Baker in December to serve as a special envoy in seeking an international deal to lower and refinance Iraq’s staggering foreign debt – it owes an estimated $125 billion to other countries, excluding war reparations.

“These debts can never be paid in full, even under the most optimistic circumstances,” Baker told about 500 people at a lunch sponsored by the University of Texas at Dallas and the World Affairs Council of Greater Dallas.

Efforts to enforce the debts could “sink the Iraqi economy and, with it, all practical hope for a successful transition to a government of, by and for the Iraqi people,” he said.

Several countries have signaled they would forgive some of the debt accumulated by Iraq during the rule of Saddam Hussein.

Saudi Arabia and Kuwait said, however, they would reach deals only with a sovereign Iraqi government. Baker is insisting debt relief must come now.

“It cannot wait, as is the usual practice, until there is a new government in place, or we will never get the job done in the year 2004,” he said.

Baker said he plans to begin discussions in the next few weeks regarding the exact amount of debt each country would forgive.

Baker, secretary of state from 1989 to 1992, served under President Reagan as White House chief of staff and then as treasury secretary. He managed Bush’s father’s 1980, 1988 and 1992 presidential campaigns.