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U.S., France, Germany Agree to Help Ease Iraq’s Debts

Baker told reporters outside the presidential Elysee Palace in Paris after meeting with Chirac, ”The French and the U.S. government want to reduce the debt burden on Iraq so that its people can enjoy freedom and prosperity.”

If successful, Baker’s European trip will rally support for debt relief in Iraq and help ease tensions over the Pentagon’s recent announcement that it would exclude countries that opposed the U.S.-led war in Iraq, including France, Germany and Russia, from being allowed to bid on $18.6 billion worth of contracts that the U.S. Congress approved.

According to the International Monetary Fund, Iraq’s debt is about $120 billion, $40 billion of which is owed to the 19 countries in the Paris Club — an informal group of creditors who try and find solutions for countries having a hard time repaying debt.

Baker and Chirac “agree on (the need for) finding the means to reduce Iraq’s debt in 2004 in the Paris Club, in accordance with the appropriate conditions,” an official at Chirac’s office said.

“They also agree on the importance of working together in the reconstruction of Iraq,” the official said.

There was no comment, however, on whether Baker would offer France an opportunity to bid on the Iraq reconstruction contracts.

Baker’s trip to Germany also proved successful on Tuesday.

“Germany and the United States agree that a solution to the debt question is essential for the reconstruction of Iraq,” German government spokesman Bela Anda said after talks between Schroeder and Baker.

“Germany and the United States are — like France — ready not only to restructure the debt but also to engage in substantial debt forgiveness,” Anda said.

Baker’s trip to Germany was expected to be more difficult. The German government has openly criticized the restricted U.S. Iraq contract policy.

Another German spokesman said that Germany and the United States would remain in talks about the contracts, Reuters reported.

Russia said after learning of its ban from the reconstruction contracts that it would not write off the $8 billion Iraq owes the country.

The European Union is planning to investigate whether the ban on contract bidding violates international trade laws.

White House spokesman Scott McClellan did not say whether the United States will cancel Iraq’s debt to the United States when asked why the Bush administration is not setting an example, Reuters reported.

“That process is just beginning. We are looking at restructuring and reducing the debt,” McClellan said.

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