Iraq's Odious Debts

France urges maximum 50 percent Iraq debt cancellation

June 22, 2004

Paris: France does not want more than half of Iraq’s debts written off, a Foreign Ministry spokeswoman said on Tuesday, confirming Paris’ resistance to U.S. pressure to scrap almost all of $120 billion owed by the oil-rich state.

“We don’t think it’s possible to cancel more than 50 percent, which already represents a considerable effort by the international community,” spokeswoman Cecile Pozzo di Borgo told a regular media briefing.

Washington, which has led the war in Iraq, wants a write-off of around 90 percent, while Japan and Britain were talking of about 80 percent, Russia around 65 percent, officials say.

Officials have previously said in private that Paris and Berlin have agreed to jointly push for a limit of about 50 percent on the basis that Iraq has vast oil reserves and will one day return to greater prosperity.

“France is in favour of a substantial cancellation of Iraq’s debt,” Pozzi di Borgo said.

“Regarding the extent of this reduction, the situation of Iraq, which has considerable potential resources, cannot be compared to that of other poorer and more indebted countries.”

There was no solution to the dispute over how much of Iraq’s debt should be written off after talks earlier this month between the Paris Club of creditor states, officials said.

The 19 mainly rich member nations of the Paris Club met after receiving a report from the International Monetary Fund on Iraq’s debt situation, but the document did not state simply what would be a bearable debt level for oil-rich Iraq.

Group of Eight (G8) leaders also failed earlier this month to bridge the gap between those who want a near total debt write-off and those who believe just half should be cancelled.

Iraq owes about $40 billion dollars to the Paris Club, a group of sovereign creditors including all of the world’s industrialised economies.

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