AP Photo LON136
By JOHN LEICESTER
Associated Press Writer
PARIS (AP) - Major economic powers agreed in principle to write off
billions of dollars of debt for Iraq, officials said Sunday, with France
in particular agreeing to compromise as it seeks improved ties with the
United States.
The deal was reached at the Paris Club of creditor nations after
overnight discussions that stretched into the early hours Sunday, said a
well-placed official who spoke to The Associated Press on condition of
anonymity.
Russia, the one country that still needed to sign off on the deal, gave
its approval after all-day talks to write off 80 percent of Iraq's debts
to Paris Club nations, a U.S. official in Berlin told Dow Jones Newswires.
The official said the Paris Club was expected to make an official
announcement Sunday evening.
Russian President Vladimir Putin has said his country would be willing
in principle to write off more than half of Iraq's $8 billion debt to
Moscow through the Paris Club of 19 creditor nations.
Putin told President Bush in a meeting Saturday ``that he was prepared
to work with the United States, the other members of the Paris Club, as we
review this issue in the next hours and days,'' said a senior U.S.
official. They met at a 21-nation economic summit in Chile of Pacific Rim
leaders.
Bush said a Paris Club agreement was close, and he ``wanted to work
with the Russians so that we could get the substantial debt reduction that
we're looking for - 80 percent write-off,'' said the U.S. official.
A large reduction in Iraq's debts to the group would mark a significant
step in U.S. efforts to put the Iraqi economy back on its feet and be a
boost for Bush as he embarks on his second term.
It also would represent a considerable concession from France, just as
French President Jacques Chirac's government is pushing to rebuild ties
with Bush's administration that were damaged by disagreements over the
U.S.-led Iraq war. France opposed the invasion that toppled Saddam
Hussein.
France had long argued that slashing Iraq's Paris Club debt by more
than half would be unfair to other poorer nations that also are saddled
with debts but do not have the potential wealth of oil-rich Iraq.
``How would you explain to these people that ... we are going to do
more for Iraq than we have done in 10 years for the 37 poorest and most
indebted countries in the world?'' Chirac said in June at a summit of the
Group of Eight powers that Bush hosted.
Germany, another opponent of the war, also had questioned whether a
country with rich oil reserves should benefit from huge debt reduction.
Iraq owes about $42 billion to Paris Club members, which include the
United States, Canada, Russia, Japan, European nations and Australia. Iraq
owes another $80 billion to Arab governments. Iraq has said that its
overall foreign debt of $122 billion is hindering postwar reconstruction.
The official who briefed the AP said the proposed 80 percent reduction
would be a compromise for the United States, too, because it had sought
support for wiping out as much as 95 percent.
Germany's Finance Minister Hans Eichel has said the proposed deal would
see 30 percent of Iraq's Paris Club debt written off immediately, another
30 percent in a second stage ``tied to a program of the International
Monetary Fund'' and a further 20 percent ``linked to the success of this
program.''
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AP White House correspondent Terence Hunt contributed to this report
from Santiago, Chile.
