Posted on 12/17/2003 6:22:12 AM PST by prairiebreeze
WASHINGTON (Talon News) -- The Bush Administration took another major step forward this week in its plan to rebuild Iraq when it persuaded 18 other creditor nations to back off on debts owed to them by the former Iraqi regime. The move is expected to encourage foreign investments and expedite the reconstruction of Iraq's economy.
France and Germany, who opposed the war and were excluded from any prime rebuilding contracts, agreed to the measures despite a pessimistic forecast by Democrats who just recently denounced the rebuilding contract restrictions as detrimental to America's foreign policy.
Sen. John Kerry (D-MA) called the reconstruction contract policy a diplomatic blunder.
"It borders on stupid," said Kerry. "It is the exact opposite of what we should be doing."
Sen. Joseph Biden (D-DE) ranking member of the Senate Foreign Relations Committee called the rebuilding contract policy a "totally gratuitous slap" that "does nothing to protect our security interests and everything to alienate countries we need with us in Iraq."
Anti-war Democrat candidate Howard Dean said the policy was an example of the Bush administration's "confrontation" approach "all over the world."
Former Secretary of State Madeleine Albright said, "I think it's petty. I really do think we should not be in the business of alienating people."
United Nations Secretary General Kofi Annan described the controversy as "unfortunate" and "not unifying."
Despite naysaying by the Democrats and others on the left, an agreement to restructure Iraq's debt was reached after former Secretary of State James Baker III was sent as a special envoy to meet with the creditor nations earlier this week.
"Debt reduction is critical if the Iraqi people are to have any chance to build a free and prosperous Iraq," said President Bush, French President Chirac, and German Chancellor Schroeder in a joint statement. "Therefore, France, Germany, and the United States agree that there should be substantial debt reduction for Iraq in the Paris Club."
According to the statement, the exact percentage of debt reduction that would constitute "substantial" debt reduction is subject to future agreement between the parties.
Iraq owes $40 billion to the United States, France, Germany, Japan, Russia, and other nations within a 19 nation group known as the Paris Club. Other countries and private creditors are owed at least $80 billion in addition.
Russia, which is owed $8 billion by Iraq, initially said it had no intention of writing off debt after learning it could not participate in the U.S.-funded reconstruction projects.
But Russian Deputy Foreign Minister Yury Fedotov is now saying that Russia is for settling the debt of Iraq by using mechanisms proposed by the Paris Club of creditors.
"This is an up-to-date, civilized, and commonly used mechanism for settling problems with foreign debts", said Fedotov. "Iraq is not a poor country, and mechanisms of the Paris club are quite flexible and include proven measures of restructuring and facilitating debentures."
World Bank President James Wolfensohn has said that at least two-thirds of Iraq's foreign debt will need to be written off to rebuild the country properly.
In a related development, a coalition of 16 countries has agreed to insure payment of up to $2.4 billion in exports to Iraq to help stimulate the country's economy. Iraq's interim trade minister, Ali Abdul-Amir Allawi, said the deal would do for Iraq what the Marshall Plan did for Europe after World War II.
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