Paris Club agrees to cancel 80% of Iraqi debt
PARIS/BERLIN: The Paris Club of creditor nations agreed on Sunday to cancel 80 percent of the debt Iraq owes its members, ending a trans-Atlantic dispute and probably setting the framework for debt pardons from other creditors.
Paris Club President Jean-Pierre Jouyet told reporters in Paris that the deal, which will slash Baghdad’s debt to Club creditors to $7.8 billion from $38.9 billion, would be put into effect in three steps over the next four years.
The deal came shortly after Russia, in talks on the sidelines of a meeting of Group of 20 developed and emerging market countries in Berlin, agreed to forgive up to 80 percent of Iraq’s debt.
Other creditors who are not in the Paris Club, but could now follow its lead, include Saudi Arabia, Kuwait and Eastern European states. The Club’s members include most Western European states, Japan and Russia.
“The Paris Club creditors have just signed an agreement on restructuring Iraq’s debt,” Jouyet said after the negotiations. Jouyet also urged other creditors of Baghdad to follow suit.
He said the Paris Club would pardon 30 percent of Iraq’s debt to it immediately, an additional 30 percent in 2005 and the final 20 percent in 2008.
The final deal ended a dispute between the United States and France over how much of Iraq’s debts they should waive, and could serve as a benchmark for relief deals with other creditors such as Saudi Arabia, Kuwait and Eastern European states.
The United States had been pushing for a 90 percent to 95 percent reduction, but France had argued that, with the world’s second-largest oil reserves, Iraq should not be treated like impoverished African nations that lack such natural resources. agencies