"The issue of Iraqi debt is essentially different from that of war reparations. For that, Kuwait totally rejected to discuss the issue,"  Kuwait Foreign Minister, Shaikh Muhammad was quoted as saying by newspapers on Thursday. 

The minister said he had laid out Kuwait's position to US debt envoy for Iraq, James Baker, who visited Kuwait on Wednesday as part of a tour of the Gulf region.

"There is an international decision from the UN on compensation and Baker showed understanding to it."

He told Baker Kuwait was willing to begin talks on reducing debts owed by Iraq and that the issue would need parliament's approval. But Kuwait and Saudi Arabia - both key regional US allies - said they wanted to see a sovereign Iraqi government in place before any debt deal could be reached.

Not up for discussion

"War reparations are an international decision and not up for discussions at all. Debt, however, is a bilateral issue which was the result of agreement between Iraq and Kuwait," the Kuwaiti foreign minister said.

The UN Compensation Committee has so far awarded around $48 billion, of which some $18 billion has been paid out, much
of it to the government, citizens and companies of Kuwait.

Kuwaiti Parliamentarians reacted angrily in September to a US suggestion Kuwait drop demands for reparations. US civil administrator for Iraq, Paul Bremer, said then out of Iraq's total debt of $200 billion, Baghdad owed $98 billion in reparations to Kuwait and Saudi Arabia for losses during the 1990-91 Iraqi occupation of Kuwait and the Gulf War.

Parliament's Legal Committee last year approved a draft law banning the government from forgoing the reparations.

Parliament approval

"War reparations are an international decision and not up for discussions at all. Debt, however, is a bilateral issue which was the result of agreement between Iraq and Kuwait."

Shaikh Muhammad,
Kuwait Foreign Minister

Regardless of what decision the Paris Club of creditor states takes regarding the reduction of Iraqi debt, the minister said his government had to obtain the approval of parliament.

"According to the constitution no one has the right to reduce debts on any country except the National Assembly," he said. "Accordingly we consider this issue as premature."

Kuwait has agreed to go to the Paris Club and "when we arrive at any decision we will come and explain to the National Assembly the international position," the minister added.

Iraq is estimated to owe Gulf states $45 billion, mostly dating from its 1980-1988 war with Iran. Estimates about the size of the debt owed to Kuwait range to around $15 billion.

Iraq insists the money from Riyadh and other Gulf states was given as grants.