Germany,France cool on Iraq debt write-off call
Fri April 11, 2003
BERLIN/PARIS, April 11 (Reuters) - Germany and France, two leading opponents of the U.S.-led war in Iraq, gave a cool response on Friday to Washington's call for them to forgive Baghdad billions of dollars in debt.
German Finance Ministry spokesman Joerg Mueller declined to say whether Berlin would forgive some of the debt bilaterally as suggested by U.S. Deputy Defense Secretary Paul Wolfowitz.
"It only makes sense to address this question with other countries in the Paris Club (of creditor nations)," Mueller told a news conference.
"I don't think we have reached the point yet when we can carefully look at and answer this question."
Mueller said Iraq owed Germany around four billion euros -- roughly the amount Baghdad owed the United States -- but that it made no sense to speculate now on what might happen to the debt on a bilateral basis.
The U.S. appeal also met with a lukewarm response from France, another major creditor.
"These issues must be solved on a multilateral level," said French Foreign Ministry spokesman Francois Rivasseau.
French diplomatic sources said that according to the International Monetary Fund (IMF), minus interest charges, Iraq owes around $1.7 billion to France, $2.2 billion to the United States and $2.25 billion to Germany.
On Thursday Wolfowitz -- a leading hawk in the U.S. administration -- said France, Germany and Russia could contribute to rebuilding Iraq by writing off some or all of the loans they made to Iraq under President Saddam Hussein.
"I hope for example they'll think about the very large debts that come from money that was lent to the dictator (Saddam Hussein) to buy weapons and to build palaces and to build instruments of repression," Wolfowitz said.
U.S. Treasury Secretary John Snow said on Thursday that "some debt relief is in order", adding that the issue would come up during a weekend meeting of finance ministers from the Group of Seven (G7) rich nations and International Monetary Fund.
German Finance Minister Hans Eichel and French Finance Minister Francis Mer are due to take part in the talks in Washington. Russia, not a member of the G7, is owed around $8 billion by Iraq.
The Paris Club (www.clubdeparis.org) is an informal forum for 19 creditor nations to discuss rescheduling debts to developing countries. It is based at the French treasury.
Iraq is thought to face some $142 billion in enforceable debt claims as well as up to $300 billion in reparations outstanding from the invasion of Kuwait.
(Additional reporting by Jean Jolly in Paris)