Iraq's Odious Debts

Iraq debt relief talks deadlocked

Gulf Daily News
September 9, 2004

Paris: The United States’ campaign for a rapid write-off of almost all of Iraq’s foreign debt is going nowhere for now, sources said ahead of talks among representatives of creditor governments in Paris today.

“It’s total stalemate,” one European official said on the eve of a meeting involving nearly 20 industrialised countries that are owed $40 billion by Iraq – a grouping known as the Paris Club.

Washington and the US-appointed interim government in Iraq want industrialised countries to agree to a 95-per cent write-off of Iraqi debts to them.

Iraq’s foreign debts – resulting from loans contracted before the first Gulf war – amount to about $120 billion or perhaps $125bn, according to Jean-Pierre Jouyet, the French official who chairs meetings of the Paris Club.

A debt cancellation before the November US Presidential election would be good news for President George W. Bush as he campaigns for a second White House term, but there is little prospect of such, sources said.

France, which opposed the US-led war in Iraq, is insisting that a 50pc write-off is the most that should be offered in the first instance. It argues that Iraq has the world’s second largest oil reserves and should not be better treated than impoverished African nations with no such reserves.

“[French President Jacques] Chirac’s not going to want to be giving Bush any pre-election presents I imagine,” one European source said.

“Today’s basically a review of the situation so we don’t expect anything to change and the Iraqis are not there,” another source said.

Iraqi representatives paid a discrete visit to Paris last weekend for talks with representatives of the International Monetary Fund, the Washington-based lending agency which has been charged with drawing up a post-conflict recovery programme for the country.

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