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Germany Will Join France in Forgiving Some Iraqi Debt - 2003-12-16

U.S. special envoy James Baker won French and German backing Tuesday for plans to reduce Iraq's foreign debt.

In a statement issued shortly after Mr. Baker's meeting with German Chancellor Gerhard Schroeder Tuesday, the chancellor said Germany, like France, was ready not only for debt restructuring but also for a substantial write-off of Iraq's debt.

Earlier Tuesday, Mr. Baker had met with French President Jacques Chirac at the Elysee presidential palace in Paris. There, he also gained French agreement that France and the United States would write off part of the $40 billion Baghdad owes the 19 so-called Paris club creditor nations, ideally by the end of next year. Mr. Baker was upbeat about the result:

"I got an extraordinarily warm and friendly reception here, as I always have when I've come here," said Mr. Baker. "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."

While agreeing to cooperate with the United States on the debt issue, Germany made it clear the capture of the former Iraqi dictator, Saddam Hussein, on Saturday didn't mean it would now send troops to help stabilise Iraq.

Germany is still angry at Washington's decision to ban it and other opponents of the war from bidding for reconstruction contracts worth about $18.6 billion.

In Washington, caution remained despite the successful negotiations. The White House said this week's talks with five U.S. allies were just the beginning of a process to reduce Iraq's debt. Iraq owes not only $40 billion to the Paris Club countries, but an additional $80 billion to its neighbours and other countries.

Mr. Baker is due to head to Italy for talks with Italian Prime Minister Silvio Berlusconi, before he travels on to Russia and Great Britain later this week.