Posted on 11/20/2004 6:58:00 AM PST by LesbianThespianGymnasticMidget
BERLIN (Reuters) - The United States, Germany and other G7 nations agreed on Saturday to write off up to 80 percent of Iraq's $120 billion foreign debt in a move that could pave the way for a wider international accord, officials said.
The breakthrough came in talks between German Finance Minister Hans Eichel and U.S Treasury Secretary John Snow on the margins of a meeting of finance ministers and central bank chiefs from the G20 group of rich and developing nations.
Officials from the Paris Club of creditor nations, meeting in Paris, have struggled for months to agree terms for an Iraq debt-off, which has remained a thorn in trans-Atlantic relations since the end of the Iraq war.
Eichel said the tentative agreement would be put to other Paris Club members, who have been meeting in Paris since Thursday, for approval but it was unclear if a deal was close.
Eichel told reporters the draft agreement foresaw up to 80 percent of Iraq's debts being written off in three stages.
"We both agreed that we have to be prepared to achieve a substantial reduction in Iraq's debt," Eichel told reporters.
However, G20 sources said there was still a disagreement about the timetable for debt reduction and conditions.
One G20 source said the debt write off would take place over eight years, but another said that was a timetable that was unacceptable to the United States.
"The Americans want something faster and don't want a long drawn out process. This is just an offer that is on the table," the source said.
Eichel said he agreed with Snow that the timing of the second and third debt write off tranches would depend on Iraq respectively concluding and completing an economic program with the International Monetary Fund (IMF).
A source close to the Paris Club negotiations in Paris said: "There's no deal yet."
Prior to the Paris Club talks that began on Thursday, France and Germany had signaled they did not want to write off more than half of Iraq's debts. The U.S. had been pushing for a 90-95 percent reduction.
France and Germany and other nations who benfitted from the oil-for-food program cry themselves to sleep every night because the gig is up. Their sugar daddy Saddam is in jail. To show their appreciation for what Iraq and the US coalition have accomplished in freedom without their help, they want to be reimbursed for what Saddam "owes" them, rather than give the Iraqis a break! High irony at work here.
Considering how much some of these "allies" stole from Iraq I'd call it more of payback then debt relief.
Mispelled "benefitted." But I always say that content tops spelling any day.
Why should we write ofF any of it. Let the new governmevt pay it off with OIL. I wish someone would write off 80% of my debts.
Question for any economists/currency traders/hedge funders out there:
Anyone want to hazard a guess on the true value of the Iraqi Dinar (ID), pro forma for an 80% debt reduction as outlined in the story? Current rate is 1460 ID to 1 USD.
I always appreciate the economic analysis of various topics here on FR, and would love to be able to look back on these guesses years from now and see who was closest to the mark.
This is bogus. This is just stall-for-time PR BS.
They had lots and lots of time already to write-off these debts. It ain't gonna happen (especially the French debt.)
I beg to differ..the U.S. has the hammer here, and other nations (like Japan, the U.K. and others) are very willing to participate. Even France has said in the past they would forgive 50%(as a starting point for negotiations). Besides, none of these countries wants to alienate a potential future economic dynamo with those kinds of oil reserves, especially when other countries are cooperating.
They can either write off 80% and collect the remaining 20% or have the Iraqis claim onerous debt and write off 100%. Especially as the OFF becomes more public. They are being given an opportunity to salvage a little pride (and 20%), if they're too stupid to take us up on it, so be it.
Obviously, we are just "going it alone" again.
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