Germany and France to cut Iraqi debt

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Last updated at: (Beijing Time) Thursday, December 18, 2003

Germany and France to cut Iraqi debt

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After winning agreements from Germany and France, US president's envoy to Iraq arrived here and met yesterday with Italian Premier Silvio Berlusconi - a staunch US ally on Iraqi policy - seeking Italian assurances to help relieve Baghdad's huge debt burden.

Former Secretary of State James A. Baker was upbeat after winning agreements from Germany and France - the first concrete co-operation in rebuilding Iraq from two nations that fiercely opposed the US-led war.

Baker made no comment to reporters as he was whisked into talks with Berlusconi, who supported the US-led war and sent troops and aid workers to help in the reconstruction of Iraq.

According to figures from the Paris Club, Iraq owes Italy US$1.73 billion, excluding interest, No 6 on the list of the 19-member group of creditor nations.

Baker overcame serious German misgivings during a meeting on Tuesday with Chancellor Gerhard Schroeder about the US exclusion of German firms from Iraqi reconstruction. Baker earlier had what he called "very fruitful" talks with French President Jacques Chirac in Paris.

France, Germany and the United States agreed that Iraq should get substantial debt reduction from the Paris Club, the leaders of the three nations said in a joint statement issued by the White House on Tuesday.

"Debt reduction is critical if the Iraqi people are to have any chance to build a free and prosperous Iraq," according to the statement by US President George W. Bush, French President Chirac and German Chancellor Schroeder. The three said they will "work closely with each other and with other countries to achieve this objective."

"The exact percentage of debt reduction that would constitute 'substantial' debt reduction is subject to future agreement between the parties."

The three nations have agreed that having a new government in place - possibly by next summer - is not a precondition for moving forward on debt forgiveness, a senior Bush administration official said.

Baker will go to Moscow and London.

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