Iraq's Odious Debts

Japan wants vast majority of Iraq’s debt forgiven

Reuters
The San Diego Union-Tribune
October 14, 2004

Tokyo: Japan’s top financial diplomat on Thursday said Tokyo wants the vast majority of Iraq’s debt to be written off, but did not specify an exact percentage.

“We want (a write-off of) a vast majority of debt,” Hiroshi Watanabe, vice finance minister for international affairs, told reporters.

Asked whether “a vast majority” means supporting the U.S. proposal of a 90 to 95 percent debt write-off for Iraq’s debt, he said: “A vast majority means a vast majority. But that does not mean 50 percent.”

But he added that Tokyo wanted to keep debt relief at the minimum amount needed for Iraq as Japan’s tax payers’ money is involved.

The U.S. proposal of a 90 to 95 percent debt write-off has faced opposition from France, which argues that Iraq should not expect the same treatment as impoverished African nations since it has the world’s second largest oil reserves.

France, host country for the 19-member Paris Club of creditor nations, has proposed forgiving half of Baghdad’s debt and revisiting the issue in three years.

Russia, Germany and Italy all supported France’s proposal, French Finance Minister Nicolas Sarkozy said in Washington earlier this month.

The IMF puts Iraq’s total pre-war debt at $120 billion, some $40 billion of which is debt and arrears to the 19-member Paris Club of creditor nations.

Japan is the largest creditor to Iraq among Paris Club member nations. Iraq’s debt to Japan totals around $4.1 billion excluding arrears.

Watanabe said some creditor countries at the Paris Club wanted to start forgiving part of Iraq’s debt as a preliminary measure and revisit the issue in a few years, but Tokyo disagreed.

“We should have a specific number for what would be the total amount for debt relief,” Watanabe said. “We should not leave any uncertainties.”

Watanabe said the Paris Club member nations are currently holding Iraq debt talks in Paris, adding that they were still trying to reach a deal by the end of the year as planned.

He said that Iraqi representatives might attend planned Paris Club meetings in November and December.

An accord on Iraq debt forgiveness at the Paris Club, to which all the Group of Seven states belong, could serve as a benchmark for relief deals with other creditors such as Saudi Arabia, Kuwait and eastern European states.

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