Posted on 12/22/2003 10:31:56 AM PST by Shermy
MOSCOW (AFP) - The head of the Iraqi Governing Council said after talks with President Vladimir Putin that Moscow was ready to forgive a large portion of Iraqi debts in return for favorable treatment for Russian oil and other companies.
The two sides "discussed the question of writing off Iraq's debt and we received a generous promise to write off the debt, or at least a part of it," Abdul Aziz al-Hakim told reporters after meeting Putin for the first time in the Kremlin.
In return "we will be open to all Russian companies," he added.
Officials in the Iraqi delegation said the debt owed by Iraq would be reduced to 3.5 billion dollars.
The sum represents debts owed by Baghdad to Moscow from the Soviet era and means that Russia has agreed to write off interest payments that reach at least five more billion dollars according to various estimates.
"Russia said it is willing to consider the write-off of the rest of the debt if it received beneficial treatment in terms of oil contracts," said Kurdish leader Jalal Talabani.
Russian deputy foreign minister Alexander Saltanov said earlier that Moscow was ready to consider easing Iraq's debts to Russia.
"As far as debts are concerned, this problem was obviously also discussed. We are ready to consider this issue constructively, understanding the importance of easing the debt burden which the Iraqi people now faces," he said.
"Contacts over these issues will continue," Saltanov added.
The negotiation on the debt are expected to continue through the Paris Club of mainly Western creditor nations.
An unidentified Kremlin source told the Interfax news agency that the final size of Russia's writeoff depended on how Iraq takes "Russian economic interests into account" -- a direct reference to participation in the country's reconstruction and right to future oil contracts.
Some analysts speculate that one possibility is that Russia will write off Iraqi debt in exchange for winning back rights to Iraq's oil fields.
Moscow signed contracts worth billions of dollars with Saddam Hussein to develop Iraq's vast reserves -- the world's second largest after Saudi Arabia.
But Russian companies' chances of fulfilling these contracts have been in doubt because of Moscow's fierce opposition to the US-led war on Iraq along with Germany and France.
The Iraqi delegation met with the head of Russia's oil giant LUKoil -- which is trying to win back rights to the West Qurna oil field that is believed to hold reserves of at least 15 billion barrels of oil.
The old Iraqi leadership tore up the contract last year amid reports that LUKoil was secretly negotiating with the Iraqi opposition in expectation of Saddam Hussein's imminent fall.
LUKoil chairman Vagit Alekperov said that the high-profile Iraq visit had boosted chances of holding on to the huge contract.
"This makes us certain that talks will begin soon with the Iraqi oil minister and will be successful," he was quoted as saying by the Interfax news agency.
But Hakim was non-committal when asked by reporters about the West Qurna deal.
"The question must be discussed between our energy ministers. This is a technical question," he said.
"We do not want to save every contract that was signed for political reasons," Interfax further quoted Iraqi delegation member Samir Sumaidai as saying.
Russian Energy Minister Igor Yusufov for his part said the Iraq leadership and Putin had agreed to launch negotiations on the status of the oil contracts.
"The Iraqi side proposed to resume talks at the level of experts on Russian contracts which have already been signed," Yusufov told reporters after the Kremlin talks.
"This proposal was accepted by Russian President Vladimir Putin and he ordered the government to work in this direction," he added.
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