US and France quarrel over Iraq

* Washington wants 95% write-off while Paris proposes 50%

WASHINGTON: Differences between France and the United States over how much of Iraq’s debt to cancel hardened on Saturday as the two attended a meeting aimed at promoting international harmony.

A day after US President George W Bush took a jab at Paris over its opposition to the Iraq war, France said it had amassed an alliance behind its proposal that leading creditors initially forgive just half of their share of Iraq’s $120 billion debt load, and revisit the issue after three years.

This may leave the United States, which wants a 90-95 percent write-off for the country, isolated. “It’s up to (the United States) not to block a possible deal,” one French official said ahead of Saturday’s meeting of the International Monetary Fund in Washington.

Russia, Germany and Italy all supported France’s proposal, French Finance Minister Nicolas Sarkozy told reporters.

Other European countries also appeared to back France. Luxembourg Prime Minister Jean-Claude Juncker said the euro zone looked to be united in its stance on Iraq debt forgiveness and he expected the matter to be formally discussed soon.

Britain stood between the United States and France.

“The British said ‘we’ll agree to this position if you go up to 80 percent’. I said ‘no’,” Sarkozy said. France, which opposed the US-led war in Iraq along with Russia and Germany, argues that Iraq has the world’s second-largest oil reserves and should not be treated like impoverished African nations without such natural resources.

US Treasury Secretary John Snow, who wants “very substantial” debt relief to get Iraq back on its feet, said on Saturday creditor countries were moving toward an agreement.

“We’re making progress,” Snow said as he sat down to meet German Finance Minister Hans Eichel. Asked whether a deal on Iraqi debt could be reached by year end, Eichel said: “It’s quite clear we’ll have a solution.” But US officials showed little sign of compromising.

“There is no negotiation, so when you mention proposals that are out there for 50 percent or something like that, there is no negotiation,” a senior US Treasury official said.

“Anything like 50 percent is completely unworkable and financially irresponsible because even the most elementary analysis of Iraq’s debt shows that it has to be reduced by much more than that if Iraq’s going to be put in a sustainable position,” the official added.

Iraqi Finance Minister Adil Abdul Mahdi said on Saturday Iraq needs a “substantial amount” of debt forgiveness but declined to specify how much. He was speaking to reporters after meeting with Snow and Federal Reserve Chairman Alan Greenspan.

The debt dispute revived lingering tensions between Washington and Paris over the US-led Iraq war, which France opposed along with Russia and Germany.

Bush took a stab at French opposition to the war on Friday, telling a campaign rally: “The use of troops to defend America must never be subject to a veto by countries like France.” reuters

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