U.S. Wants 'Most' Iraq Debt Forgiven

[Dionysos]

http://news.yahoo.com/news?tmpl=stor..._iraq_usa_dc_2

SAVANNAH, Ga. (Reuters) - The Bush administration believes most of Iraq (news - web sites)'s debt must be forgiven to ensure the country's stability but will not specify a percentage, a U.S. official said on Tuesday.

The official, speaking on condition of anonymity at the Group of Eight summit, said the International Monetary Fund (news - web sites) had circulated to creditors "a very detailed debt sustainability analysis" for Iraq.

Iraq's debts are estimated at about $120 billion, and Washington was expected to press Iraq's foreign creditors to forgive at least 80 percent of it as an Iraqi caretaker government prepares to take up the reins at the end of June.

"In our view, I think it's clear it shows the need for the reduction of the vast majority of Iraq's debt," considering its future oil revenues and costs of rebuilding the war-wracked country, said the official.

Iraq can potentially generate about $20 billion of oil revenues annually, but it has little other economic capacity currently, the official noted.

"Just the numbers show that in order to get a sustainable debt situation in Iraq, you're going to have to reduce the vast majority of that debt," said the official, who spoke as G8 leaders arrived for a three-day summit 80 miles away at Sea Island, Ga.

The IMF has given members of the Paris Club -- a group of sovereign creditors that meets in Paris to consider requests by debtors to postpone debt repayments or reduce service obligations -- a detailed study of Iraq's financial condition.

"When you think about it, you've got about $120 billion in debt for Iraq and you have an economy that can produce about $20 billion in oil and that, for the near term, is its GDP (news - web sites) (gross domestic product) so the debt-to-GDP ratio is staggering," the U.S. official said.

Exactly how far the political leaders at Sea Island can carry the discussion about Iraqi debt forgiveness forward at this week's summit was unclear, since the IMF analysis is still a recent one that is under study.

"There's a (G8) commitment ... to work to resolve the Iraqi debt issue by the end of this year and we'll be working with the Paris Club and with non-Paris Club countries to reach that goal," the U.S. official said.

"That's the timeframe we're on," he added.

UNITY LACKING

But there are divisions among the rich nations over Iraq's debts. The biggest creditors, France and Russia, favor a smaller reduction in Iraq's obligations since they want to be repaid and because Iraq's oil resources are seen by some as substantial enough to warrant it paying a larger portion.

The U.S. official played down the idea that one way to smooth the way for Iraqi debt forgiveness would be more generous treatment for developing nations that qualify for help under an expiring program called the Highly Indebted Poor Countries initiative, or HIPC.

The Bush administration is still considering how to handle HIPC, including the option of extending it beyond its scheduled expiration in December, said the U.S. official who added it was not linked with the drive to reduce Iraq's debt.

"We are working on both initiatives and we think both initiatives are important," the official said.

[Tortures Dionysos]

Ok... so... here is what I THINK I read:

Iraq owes us $120 billion... but they only bring in around $20 billion in revenue... all that coming from oil.

So... we are looking at writing off 80% of that $120 billion... and... I am reading into things here... we are forgiving the debt of a country who can potentionally supply us with *cheaper* oil in the near future?


Now, am I just dense... and I will admit that I not a political savy person... or does everything America does that involves foreign countries... The Gulf War and this war... all seem to revolve around us continuing to acquire oil?

I think, as I am sure many do... that we need to wean ourselves off of mass oil consumption.

[Element4040]

You read it wrong Karen. The US is asking that foreign countries relieve Iraq of debt. I.E. Iraq was in debt for over 100 Billion dollars to numerous countries before we invaded. The two main players that are owed money by Iraq are Russia and France. Remember both of those countries opposed the war. It fits into the bigger picture. I am not going to give my opinion on that, I am just pointing something out to you that you may not have realized.



IMO Bush has got to be crazy if he thinks that other nations are going to forgive Iraqi debt while not doing the same. I didn't see any mention of reconstruction debt.

Of course Iraq has importance because of oil.

We need it to run our economy.

But it would be a mistake to think that we invaded solely to create a complicated method to "take" their oil.

We did it to try to stabilize Iraq, put the fear of the US in their likewise inclined neighbors, stabilize the region, etc etc - for the benefit of the US and others.

[Dionysos]

Originally posted by Karen EpiK
Ok... so... here is what I THINK I read:

Iraq owes us $120 billion... but they only bring in around $20 billion in revenue... all that coming from oil.

So... we are looking at writing off 80% of that $120 billion... and... I am reading into things here... we are forgiving the debt of a country who can potentionally supply us with *cheaper* oil in the near future?

Now, am I just dense... and I will admit that I not a political savy person... or does everything America does that involves foreign countries... The Gulf War and this war... all seem to revolve around us continuing to acquire oil?

I think, as I am sure many do... that we need to wean ourselves off of mass oil consumption.

It's a method to kickstart their economy & provide them with funds to improve infrastructure, health care, etc. Someone else mentioned this, but the $120 billion is owed to an assortment of countries. Forgiving even half of it would help keep them from being submerged by their own debt.

We wouldn't get cheaper oil directly, as they are a member of OPEC and have to set their production by OPEC guidelines. However, it would be nice to have another friend in the OPEC clan.

[Tortures Dionysos]

Iraq's debts are estimated at about $120 billion, and Washington was expected to press Iraq's foreign creditors to forgive at least 80 percent of it as an Iraqi caretaker government prepares to take up the reins at the end of June.

I misread it... sorry.

[Adam D]

Unless the US maintains strict control over the Iraqi government, what's likely going to happen is that the new government will have to accept IMF or World Bank loans to cover the remaining debts.

Then Iraq will suffer the same fate as every other country under the thumb of these organizations. Any hope for social programs will disappear, weak infrastructure, the absence of political and labor rights, state violence, the absence of a domestic economy, forced open doors to foreign capital, and all the other wonderous effects of having to institute neoliberal programs to secure IMF/WB loans to repay their debt.