France makes move toward forgiving some of Iraq's debt

Offer avoids appearance of answering U.S. call

The Capture Of Saddam Hussein


PARIS - Seizing the initiative a day after the announcement of Saddam Hussein's capture, France said yesterday that it would work with other nations to forgive an unspecified portion of Iraq's immense foreign debt.

The offer was a conciliatory gesture to Washington as much as it was a helping hand to Baghdad.

"France, together with other creditors, believes there could be an agreement in 2004," French Foreign Minister Dominique de Villepin told reporters after a meeting with members of the Iraqi Governing Council. He said that if various conditions regarding Iraq's sovereignty and stability were met, his country "could then envisage cancellation of debts in line with Iraq's basic financing capacity."

De Villepin's statements came a day before James A. Baker III, a former U.S. secretary of state, was scheduled to arrive in Paris to ask the French for help in relieving Iraq of its crushing financial obligations, estimated at more than $120 billion, excluding war reparations owed to Kuwait and Iran. The United States is eager to lift the debt burden, which would otherwise raise the cost of an Iraqi economic recovery beyond Washington's means.

Jalal Talabani, a Iraqi Kurdish leader and member of the delegation visiting Paris, called De Villepin's announcement a "gift."

But by announcing its intention to the Iraqis yesterday, De Villepin avoided the appearance of answering to Washington's call.

"This way he can say, `I'm not doing it because the Americans are asking for it but because I believe it's the responsible thing to do for the Iraqis,'" said Dominique Moisi, an American expert at the French Institute for International Relations.

The French foreign minister, one of the diplomatic world's sharpest critics of Washington's Iraq policy, seemed eager to strike a conciliatory note after Hussein's capture on Saturday. He brushed aside questions about whether debt forgiveness would be linked to participation in $18.6 billion in U.S.-financed reconstruction contracts in Iraq, saying the two issues were separate and should not be mixed. Washington has excluded France and other past opponents to the war in Iraq from lead roles in such contracts.

"The arrest of Saddam Hussein constitutes a chance that we all must take advantage of," De Villepin said. "France is ready to play a full role in these efforts and to follow the action already undertaken on a bilateral basis as Europeans in the humanitarian domain, of course, and in the cooperative domain, whether it be education, health or even archaeology."

France has been slow to extend financial aid to Iraq as long as it remains under U.S. occupation. The country was not among those that pledged billions of dollars for Iraqi reconstruction at a donors' conference in October and until yesterday it had been silent on the question of Iraq's debt, about $3 billion of which is owed to France.

Standing with the Governing Council members, de Villepin said that his country would work with the so-called Paris Club, an association of 19 industrialized nations, to negotiate a debt reduction plan for Iraq.

Paris Club members - which include the United States, France, Germany, Russia and Japan - collectively hold about $40 billion of Iraq's outstanding debt. The balance is held mostly by Arab states.

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