Malayala Manorama
November 22, 2004

Santiago: US President George W. Bush has applauded the decision by the so-called Paris Club of creditor nations to slash 80 per cent of the money Iraq owes them, and urged non-member countries to do the same. “I congratulate the Iraqi Interim Government and the Paris Club of creditor nations for today’s agreement to reduce dramatically Iraq’s international debt,” he said in a statement released by the White House on Sunday.

“I encourage non-Paris Club nations to agree to comparable debt reduction for Iraq,” said Bush, who has made wiping away the war-torn country’s 120-billion-dollar debt a key priority. Iraq owes the 19-member club some 40 billion dollars. If all conditions are met, Iraq’s debt to the club creditors at the end of a three-phase, three-year period would be reduced to about 7.8 billion dollars.

“The Paris Club agreement represents a major international contribution to Iraq’s continued political and economic reconstruction,” said Bush, who has argued that debt repayment syphons off money better used to rebuild Iraq. “The Iraqi people have an historic opportunity to build a free and democratic Iraq after more than two decades of political oppression and economic devastation under the brutal regime of Saddam Hussein,” he said.

Iraq’s other major creditors are its Gulf neighbours, China and former members of the Soviet bloc. Under the compromise, around 30 per cent of the debt will be waived immediately; in a second stage around 30 per cent will be waived provided Iraq complies with conditions set by the IMF programme; in the third stage, 20 per cent would be waived depending on the success of the overall programme.