US, Germany and France in deal on Iraq debt

Eighty per cent of Iraq’s foreign debt is set to
be written off under a deal between US, France and Germany.
The move signals a more pragmatic European approach to
Iraq.

 

Iraq’s foreign debt will be reduced
by 80% after a compromise deal was brokered
between France, Germany and the USA in the
framework of the Paris Club of creditors on
21 November.

The deal is the first
concrete sign since the second Bush
victory earlier this month of a more
pragmatic European approach to the Iraq conflict.
Germany and France had called for a maximum debt
relief of 50% while the US aimed for 90%. Under
the compromise, 80% of Iraq’s debts to
the Paris Club creditors will be cancelled in
three stages: 30% immediately, a further 30% in
2005 and a final 20% in 2008.

US Treasury Secretary John Snow gave
credit for the move particularly to his
German counterpart, Finance Minister Hans Eichel:
“Germany has taken the lead on the Iraq debt
and they get a lot of credit. It is a good
arrangement for Iraq and it will also show how
the world community can come together in a very
co-operative way to address a
problem”. 

Both France and Russia have confirmed the
deal, which is expected to serve as a
benchmark for other international creditors. The
Paris Club’s 19 members hold one third of
Iraq’s total foreign debt of 95.7 billion
euros.

The deal comes just before the start on
22 November of the international conference on
Iraq in Sharm el-Sheikh in Egypt.

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