PARIS, 17 December 2003 — France and the United States agreed yesterday that Iraq’s crushing national debt had to be reduced to aid reconstruction efforts, amid signs that a thaw is finally happening in Paris-Washington relations.
The conciliatory note was struck during a meeting between French President Jacques Chirac and a US envoy, James Baker, who has embarked on a European tour to urge countries to forgive Iraq’s estimated $120 billion debt.
Baker, a former US secretary of state close to US President George W. Bush, said the debt-alleviation would be worked out within the Paris Club of 19 creditor nations.
“I think that we all agreed that it is important to reduce this debt within the Paris Club if at all possible in the year 2004 and I think that we basically have agreement on the parameters of that stake,” Baker told journalists after seeing the French president.
“We want to do what we can to reduce the oppressive debt burden on the Iraqi people so they can enjoy freedom and prosperity,” he said, adding that Chirac had been “extraordinarily warm and friendly” during the talks.
Chirac’s spokeswoman, Catherine Colonna, at his side confirmed the agreement and said: “We are also in agreement on the importance of working together for the reconstruction of Iraq.” French officials stressed, however, that the Paris Club can only change debt terms with internationally recognized governments.
Iraq does not have such an administration yet, but the occupying US forces have said an independent Iraqi government should be formed by July 1, 2004.
Of the $120 billion Iraq owes, $40 billion is due to the Paris Club and $80 billion is owed to other countries, most of them Arab.
Within the Paris Club, Japan is the biggest creditor, owed $4.1 billion, followed by Russia, owed $3.5 billion, France $3 billion, Germany $2.4 billion, the United States $2.2 billion and Italy $1.7 billion. Overdue interest payments almost double those sums in some cases.
France’s diplomatic turn-around came after the weekend capture of deposed Iraqi President Saddam Hussein, which handed the US a rare symbolic victory.
French Foreign Minister Dominique de Villepin said Monday that, if a Paris Club agreement was reached, “France could then envisage debt cancellations that are appropriate and compatible with Iraq’s financing capability.” Baker also has encouraging indications from the anti-war countries on his trip, which will take him to Germany later, then Italy, Russia and Britain.
Russia said on Monday it would be willing to look at ways of restructuring Iraqi debt, markedly softening its previous stance.
And Germany has said a previous comment by Chancellor Gerhard Schroeder that he did “not want to exclude a partial forgiveness” of Iraq’s debt still held.
The strongest indication of a rapprochement was the presence of Baker, a 73-year-old troubleshooter for several US administrations who is known as a firm multilateralist.
Political observers, including Fred Kaplan for the online Slate magazine and yesterday’s Financial Times, suggested Baker’s real mission was much broader than the debt issue — that it was to negotiate with France and Germany to bring them into postwar Iraq.
On arriving in Paris, Baker immediately held talks with visiting members of the Iraqi Governing Council who were also in town to press Chirac for debt relief.
Another visitor to Chirac’s office late Monday was a Japanese envoy — former Prime Minister Ryutaro Hashimoto, whose country is Iraq’s biggest Paris Club creditor.
One of the strongest signs of fence mending, though, has come from Bush himself.
At a media conference on Monday dominated by the arrest of Saddam, Bush said he wanted greater cooperation with Europe. “France and Germany — I have reached out to them, they’ve reached out to us,” he said. “It’s in our national interest that we work together.”
