Iraq's Odious Debts

Russia links Iraq debt relief, companies

Vladimir Isachenkov
The Sun Herald (South Mississippi)
December 19, 2003

Moscow: The fate of Russian companies and economic interests in Iraq will affect Moscow’s position in talks on relieving Baghdad’s massive international debt burden, a top diplomat said Friday.

Deputy Foreign Minister Yuri Fedotov spoke a day after President Vladimir Putin told a U.S. envoy that Russia is willing to start negotiations on relieving Iraq’s $8 billion in debt to Moscow, its largest creditor.

While the debt talks and the participation of Russian companies in postwar Iraq are separate issues, “progress in settling one of them will undoubtedly help reach success in talks about the other,” Fedotov told a news conference.

After meeting Thursday with President Bush’s special envoy on Iraq, James A. Baker III, Putin said he was ready to discuss relieving Iraq’s debt in the Paris Club, an informal group of official creditors that coordinates debt repayment.

Putin stressed, however, that Moscow would negotiate on the issue “taking into account the economic interests of Russia and Russian companies in Iraq,” a point Fedotov repeated more directly.

Russia’s agreement to negotiate on debt came after Baker won similar promises from France and Germany – two other key critics of the U.S. invasion of Iraq – and despite the U.S. decision to bar companies from countries that opposed the war from bidding on $18.6 billion in reconstruction contracts.

As a permanent U.N. Security Council member, Russia had sought for years to remove U.N. sanctions it said hurt its economic cooperation with Baghdad, mostly in oil and heavy industry projects.

Putin reiterated his vocal public criticism of the war in a televised call-in show hours before meeting with Baker on Thursday, and Fedotov emphasized Thursday that Moscow would stand up for the right of Russian companies to be involved in Iraq’s rebuilding.

He said big contracts signed by Russian oil companies with Saddam’s regime had been “left suspended” after the war, voicing hope that the new Iraqi leadership elected after the current transition period will uphold them.

“That creates a good potential for implementing (Russian) contracts that would be mutually beneficial and help rebuild Iraq,” Fedotov said.

Fedotov said the Russian government was looking forward to a planned visit to Moscow by Abdel-Aziz al-Hakim of Iraq’s U.S.-appointed Governing Council. “We are interested in such contacts, and they will be continued,” he said. The Interfax news agency reported that al-Hakim was expected to arrive Sunday.

Fedotov reiterated Russia’s call for a key U.N. role in postwar Iraq, noting that Saddam Hussein’s capture has not tempered the violence there.

“The arrest of Saddam Hussein has not led to any significant change for the better in the situation in Iraq, and everyone sees it,” Fedotov said.

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