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US, France Agree on Need to Reduce Iraqi Debt - 2003-12-16

U.S. special envoy James Baker says France and the United States agree on the need to reduce Iraq's massive foreign debt. Tthe announcement marks a first victory in Mr. Baker's effort to reduce Baghdad's debt.

Mr. Baker's statements followed a meeting between the former secretary of state and French President Jacques Chirac at the Elysee presidential palace in Paris.

Mr. Baker said France and the United States agreed it is important to slash the $40 billion Baghdad owes to the 19 so-called Paris Club creditor nations, ideally by the end of next year.

"I got an extraordinarily warm and friendly reception here, as I always have when I have come here," he said. "And as I think you would gather from what I just told you about the views of the French government and the United States government, that we want to do what we can to reduce the oppressive debt burden on the Iraqi people, so that they can enjoy freedom and prosperity."

The day before, French Foreign Minister Dominique de Villepin announced France would work with the Paris Club to get part of the Iraqi debt canceled.

The French government's help marks a promising beginning to Mr. Baker's trip to France, Germany and Russia, to persuade these nations to forgive part of Iraq's debt. The three countries headed international opposition to the war in Iraq, and count among Iraq's biggest creditors.

Altogether Iraq owes about $120 billion to foreign countries, including $80 billion to Arab and other nations outside the Paris Club.

Russian Deputy Foreign Minister Yury Fedotov was quoted as saying his country would consider restructuring Iraq's debt. And the German Foreign Ministry referred reporters to an interview given last month by Chancellor Gerhard Schroeder, in which the German leader suggested Berlin, too, might partially forgive the Iraqi debt.

The news appears to mark new warming in trans-Atlantic relations, after months of sparring over Iraq's war and reconstruction. A Tuesday visit to Paris by members of Iraq's Governing Council supports this perception.

The head of the council, Abdel Aziz al-Hakim praised France for "having always been at the side of the Iraqi people."

French newspapers also offered upbeat reports of a meeting between the Iraqi delegation and French business leaders. Despite a Pentagon ban on France and other non-war allies from bidding for Iraqi contracts, Baghdad's delegation noted that French businesses could subcontract for lucrative deals, and bid for those using non-U.S. funds.

Mr. al-Hakim was even quoted in French newspapers as urging French businessmen to come to Iraq and work.