Iraq debts may overshadow G8 meeting

France, host of this year's annual Group of Eight (G8) summit, said Africa’s economic development will be at the top of the agenda. But some analysts believe the Iraq crisis may overshadow the French agenda.

    Washington is believed to support
    cancelling Iraq's debts.

    Finance ministers of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States wrapped up a meeting this weekend in Deauville, France aimed at preparing for the June summit.

    G8 ministers agreed at the meeting to defer Iraq’s debts payments until 2005, after the United States won commitment from the grouping.

    Iraq’s debts, which may be as high as $383 billion, are among the post-war issues that continue to divide Washington from countries which opposed the US-led invasion.

    Washington is believed to favour cancelling Iraq’s debts. But Germany ruled out the option at the Deauville meeting.

    “Debt cancellation is not a topic of discussion,” German Finance Minister Hans Eichel told reporters.

    France, Germany and Russia, which spearheaded the anti-war camp, are among Iraq’s biggest creditors.

    US Treasury Secretary John Snow said “there was general recognition that we cannot expect Iraq to make service payments on that debt at least through the end of 2004”.
    However, Eichel said it was too early for detailed talks on postponing Baghdad’s debts until international bodies completed debt assessment of the country.

    The German finance minister also said the issue would be tackled when a “legitimate Iraqi government” is installed.

    The grouping asked the International Monetary Fund (IMF) and World Bank to calculate how much Baghdad owes countries that are not members of the Paris Club of creditor nations. 

    Reconstruction Funds

    Finance ministers agreed on “the importance of beginning a process for countries to donate funds for reconstruction in Iraq,” said Snow. They did not say when a meeting aimed at drumming up finances would take place.

    France’s Finance Minister Francis Mer said donations would have to be put on hold until the IMF and World Bank declared how much money is needed to help Iraq get back on its feet.

    Washington is trying to secure funds to help rebuild Iraq, ravaged by over a decade of UN-imposed sanctions and the latest US-led war.

    In the 1991 Gulf War, Washington’s allies at the time picked up the majority of the tab. Conn Hallinan, a political analyst for Foreign Policy in Focus, wrote recently "the  '

    coalition of the willing’ is flat broke”. 

    It could take between $20 and $100 billion to begin rebuilding Iraq, according to Yale University economist William Nordhaus.

    The White House has allocated $2.4 billion to the Office of Reconstruction and Humanitarian Assistance, a US Department of Defence office billed at rebuilding post-war Iraq.


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