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I was having lunch yesterday with my friend, photographer Adam Taylor, who asked why the other countries of the world haven’t contributed more financially to the war in Iraq. I responded that it’s in part because they have far less discretionary funds available than we do. However, it appears that they may be about to make some contribution:
Iraq May Be Relieved of 80 Percent of Debt
PARIS—The Paris Club of creditor nations on Saturday was debating a plan to write off as much as 80 percent of the debts Iraq owes them, a key step in the United States’ push to ease the financial burden on the nation as it tries to rebuild.
U.S. Treasury Secretary John Snow and German Finance Minister Hans Eichel sealed the agreement, Eichel said earlier Saturday, adding that expected the Paris Club would approve the deal.
Iraq owes around $42 billion to the members of the Paris Club, a grouping of 19 countries including the United States, Japan, Russia and European nations.
An agreement by the Paris Club to forgive its Iraqi debt would be a significant step toward freeing the country from paying interest on the money owed just as it struggles to put its economy back on its feet.
Still, Iraq owes another $80 billion to various Arab governments.
“We agreed that there should be a write-off of debts in several stages amounting to 80 percent in total,” Eichel told reporters on the sidelines of a meeting of finance officials from the Group of 20 industrial and developing countries.
German Chancellor Gerhard Schroeder later stressed that “there is no final outcome—there are discussions, particularly with France,” which opposed last year’s U.S.-led war in Iraq and previously had called for a lower level of debt relief.
Still, the German-U.S. agreement was being discussed by the Paris Club and “our expectation is that it will be accepted,” said Eichel’s spokesman, Joerg Mueller.
In a sense, the creditor nations are just giving up what they are unlikely to get back anyway. This is somewhat like a bankruptcy court settlement in which the creditors agree to take 20 cents on the dollar.
But it is a first step toward the welcoming of a reconstituted Iraq to the family of nations.
