Global Policy Forum

By Paul Koring

Russia, France and Germany, all opponents of President George W. Bush's war to oust Saddam Hussein, agreed yesterday to write off vast amounts of debt incurred by Baghdad, a move that will lift a crushing burden from future Iraqi governments.

The agreement by the Paris Club of 19 mostly Western industrialized countries, represented a major diplomatic victory for Mr. Bush's administration, which has been pushing hard to win sweeping debt relief for the nascent Iraqi democracy. The pact also came as Baghdad announced Jan. 30 as the date for its eagerly anticipated countrywide elections — a day of rare good news for the U.S. effort, although the vote could yet be derailed by the stubborn and bloody insurgency that continues to plague Iraq.

The Paris Club creditors agreed to forgive 80 per cent of the $40-billion (U.S.) owed them by Baghdad, president Jean-Pierre Jouyet said. The deal will reduce Baghdad's current debt of $38.9-billion to $7.8-billion by 2008. U.S. officials had been seeking even more generous terms, a write-off of more than 90 per cent, but the deal still represents significant concessions by the French, German and Russian governments — all of which were reluctant to reward the new regime in Iraq after opposing the war to overthrow its predecessor.

Interim Iraqi Finance Minister Adel Abdul-Mahdi called yesterday's concessions a "historic agreement," saying the money "is needed for Iraq not only because Iraq is a ruined country, but because Iraq is an important player internationally." Russia, France and the numerous Arab countries that are collectively owed another $80-billion had balked at forgiving Iraq's debts, arguing that the oil-rich country is capable of paying off what it owes. Most of ousted president Saddam Hussein's borrowing was used to finance arms purchases.

Washington is still pushing Arab capitals to follow the Paris Club's lead, arguing that all of Baghdad's rising stream of oil revenues should go to rebuilding the country after decades of wanton neglect, oppression and war. Saudi Arabia, Kuwait and other Arab states are expected to follow the 80-per-cent model in the coming months. Ottawa, which also opposed the war in the absence of an explicit UN Security Council go-ahead, belongs to the Paris Club but agreed to write off all of its relatively modest Iraqi debt, $750-million, last January.

The 80-per-cent write-off is to be structured in three stages. The first stage, effective immediately, will deal with 30 per cent of the debts. Another 30 per cent will be cancelled when Iraq agrees on a reform program with the International Monetary Fund, which is expected next year. The remaining 20 per cent will be cancelled in 2008, after Iraq completes the three-year IMF program. France and Russia are among Iraq's biggest creditors. Baghdad owes Paris about $3-billion, although some estimate the amount at more than double that, and another $8-billion to Moscow, which had already agreed to forgive about half of that amount.

French President Jacques Chirac, who feuded openly with the U.S. President during Mr. Bush's first term, may have agreed to the debt deal to help mend relations with Washington following Mr. Bush's resounding election victory earlier this month. Mr. Bush has said that restoring the transatlantic alliance is high on his list of priorities.

Yesterday's declaration of the Jan. 30 election date came despite a sharp rise in violence over the past month. But officials said they had no legal authority to push the date back beyond January under their interim constitution. Political entities will have until 3 p.m. Monday to register themselves, said Abdul-Hussein Hindawi, who heads the election commission. So far, 198 entities have registered, 44 of them individuals, he said. Campaigning will begin on Dec. 15 and end 48 hours before the actual voting begins. Iraqis will be choosing members of a 275-seat national assembly, which will then install an executive government and draft a permanent constitution. Elections for a full-term government are planned for the end of 2005. Expatriate Iraqis in at least 14 countries, including Canada, are expected to be able to take part on Jan. 30.

Throughout most of Iraq, families are receiving sheets with names of eligible household voters when they collect their food rations in November. If something is incorrect, they can go to a registration centre to fix the mistake.

In other developments yesterday:

In Fallujah, marines shot and killed an insurgent who opened fire on a patrol after pretending to be dead. The U.S. military is investigating a Nov. 13 incident in which an NBC videotape showed a marine shooting a wounded man lying in a Fallujah mosque. Separately, marines said U.S. troops had found nearly 20 "atrocity sites" where insurgents imprisoned, tortured and murdered hostages.

Prime Minister Ayad Allawi's office announced that his cousin, Ghazi Allawi, 75, had been released by his kidnappers, nearly two weeks after he was abducted along with his wife and pregnant daughter-in-law.

In Ramadi, insurgents ambushed an Iraqi National Guard patrol, killing eight guardsmen and injuring 18 others, according to police.