Saudis to forgive most of Iraq's debt
( LatWp ) - Saudi Arabia has agreed to forgive 80 percent of the more than $15 billion that Iraq owes the kingdom, Iraqi and Saudi officials said Tuesday, a major step given Saudi reluctance to provide financial assistance to the Shiite-dominated government in Baghdad.
But Iraqi finance minister Bayan Jabr said in an interview that Russia was holding out on debt forgiveness until negotiations begin on concessions Russian oil and gas companies had under Saddam Hussein. Russian Embassy officials in Washington declined comment late Tuesday.
The Bush administration has been working for months to persuade other governments to follow the U.S. lead and write off all of their shares of Iraq's debts, which Jabr said total $140 billion. Most of those loans date to Iraq's war with Iran from 1980 to 1988, when the United States, Saudi Arabia and other governments saw Iraq as a buffer against Iran.
Iraq also owes $199 billion in compensation for the Gulf war that followed Iraq's 1990 invasion of Kuwait, analysts said.
The Bush administration wants to make debt restructuring for Iraq a centerpiece of an ``international compact'' at a meeting of Iraq's neighbors and international aid organizations to be held May 3 and 4 in the Egyptian resort of Sharm el-Sheikh, diplomatic sources said. So far 52 countries, including the Paris Club of creditor nations, have cancelled between 80 percent and 100 percent of Iraq's debts, Jabr said.
Russian President Vladimir Putin in December 2003 announced that he would cancel 65 percent of Iraq's debt and Jabr said that five months ago Russia said it would cancel 80 percent. But Iraq's ambassador to the United States, Samir Sumaidaie, said that recently Russian officials had backtracked from that pledge.
``They said that discussions would be based on economic relations,'' the ambassador said. ``Those are code words for whether we let them continue with their oil contracts.''
Jabr, who was in Washington for World Bank meetings, said that he met with Saudi officials here and pressed them to write off 100 percent of the debt owed by Iraq. But he was unable to secure that pledge.
A senior Saudi official who spoke on condition of anonymity said the kingdom would forgive 80 percent, in line with Paris Club creditors.
Iraq and Saudi Arabia can't agree on how much money Iraq owes the kingdom. During the early 1980s, Saudi Arabia sold $7 billion worth of oil on Iraq's behalf and lent Baghdad another $9 billion.
Jabr said that Saudi officials told him that unpaid interest brought that amount up to $39 billion; Jabr said that the original agreements said no interest would be owed. The Saudi official estimated the debt at $15 billion to $18 billion.