UAE agrees to drop Iraqi debt

2004-01-21 08:28

Abu Dhabi - The United Arab Emirates said on Tuesday it was willing to forgive most of Iraq's $14bn debt to the Gulf state. The announcement followed similar concessions from European and Asian countries.

Sheik Khalifa bin Zayed, Crown Prince of Abu Dhabi, the capital of the United Arab Emirates, made the announcement on Tuesday evening after a visit from former US Secretary of State James Baker.

Baker is travelling around the world on behalf of US President George W Bush in an effort to persuade countries to forgive Iraqi debt.

Sheik Khalifa said the government would enter into negotiations with a new Iraqi government that is scheduled to assume sovereignty from the US-led occupying power by July 1. He said most of the debt would be forgiven if those talks go well.

Iraq owes about $40bn to the so-called Paris Club of major creditor nations and another $80bn to Arab governments, including $45bn to the Emirates, Saudi Arabia and Kuwait. A senior Emirates official, said Iraq owes the Emirates about $14bn.

During Baker's tour, which will also take him to Saudi Arabia, Qatar and Kuwait, he will try to persuade oil-rich countries in the Middle East to forgive billions of dollars in debt accumulated by Iraq during the rule of Saddam Hussein, who was deposed by a US-led invasion in April.

Baker began his campaign with agreements from Russia, Germany and France - which opposed the war in Iraq - to co-operate in debt reduction. Later, Japan agreed to cut billions of dollars of Iraqi debts and China said it would consider the idea.

Iraq owes the United States more than $4bn. That includes $1.9bn in principal and $1.1bn in interest on guaranteed loans.

- AP