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Russia Writes Off $12 Billion Iraqi Debt

Russia has agreed to write off most of Iraq's multi-billion-dollar debt as Moscow expresses hope for increased economic relations between the two countries. VOA Correspondent Peter Fedynsky reports from the Russian capital.

The deal to write off $12 billion, more than 90 percent of Iraq's nearly $13 billion debt to Russia, was reached in Moscow during a visit by Iraqi Foreign Minister Hoshyar Zebari. Russian Finance Minister Alexei Kudrin said Baghdad's remaining $900 million arrears to Moscow would be restructured over the next 17 years.

Referring to the situation in Iraq, Foreign Minister Zabari said his country is making progress.

The Iraqi official says security has obviously improved, and the government is developing a national reconciliation policy. Zabari also claims positive changes with neighboring countries.

His Russian counterpart, Sergei Lavrov, said the debt-forgiveness agreement makes a real contribution to the restoration of the Iraqi economy and finances.

Lavrov says both sides also signed a memorandum to develop trade, economic, technical, and scientific relations between the two countries.

In addition, Lavrov expressed hope for joint Russian-Iraqi oil, gas and power generation projects. Lukoil, a large Russian oil producer, is one of several international companies seeking to develop Iraq's abundant oil fields.

But Vladimir Isayev, a Middle East specialist at the Russian Academy of Sciences told the VOA that foreign companies consider Iraq too dangerous to risk the lives of their worker's and the sabotage of equipment. Isayev says the decision to forgive the Iraqi debt is based mostly on Moscow's recognition of reality.

Isayev says the new Iraqi government clearly has no intention of accepting any responsibilities inherited from the Saddam Hussein regime. So interest on the debt could have grown, but realistically, there was also an understanding that Russia would not receive any money.

The United States has been asking other countries to forgive Iraq's foreign debt to help the country stabilize its finances.