The IGC foreign minister Hoshyar Zebari told Al-Rai Al-Aam daily that "We have offered a treaty of guarantees for the future that will declare respect for Kuwait’s sovereignty and international borders." The treaty will also include a commitment to search for “the POWs, accept the principle of reparations and commitment to all international conventions and treaties, in addition to respecting international law."

"Japan would be prepared to eliminate the vast majority of its Iraqi debt if other Paris Club creditors are prepared to do so in the context of a Paris Club agreement,'' a statement by the Foreign Ministry said after James Baker's meeting with Prime Minister Junichiro Koizumi.

Bill Day, the business editor of the San Antonio Express-News welcomes Baker's diplomacy, but argues: "What largely was ignored during the debate, though, was that a good portion of Iraq's debt is what political scientists call “odious” debt — amounts run up by despots for use in lining their pockets, building ostentatious palaces, filling jails and the like... Forgiving Iraq's debt is one thing, but the United States should have worked with the United Nations to define exactly what is odious debt."

A poll of 1000 Iraqis in eight cities by the Iraq Center for Research and Strategic Studies showed that Iraqis overwhelmingly opposed Saddam's eight-year war with Iran in the 1980s and his invasion of Kuwait in 1990. Most, however, did not support reparations for victims of those conflicts.

James Baker has called off his planned visit to South Korea said Ra Jong-Yil, national security adviser for Roh, over Seoul-based radio CBS. He said South Korea's relatively "small amount of public debt" owed by Iraq may have led Baker to cancel the visit originally set for next week, and "Now is not an opportune time for us to discuss the rescheduling of the Iraqi debt because we are assuming the expenses of our troop dispatch to Iraq." An anonymity offical, was quoted by South Korean Yonhap News Agency as saying: "Baker decided not to visit Seoul because of our government's position not to reduce debt on $65m in loans to Iraq."

Korean debt claims are reported as being about $2bn, of which $68m is governmental, while company loans account for more than $1.9bn.

Foreign Minister Prince Saud al-Faisal said live on Saudi TV that "This (debt) has to be discussed with a government with total sovereignty, so ... this issue is now premature. There is an international dialogue and we are willing to take part and discuss, but I don't think there is scope for a serious dialogue unless there is an Iraqi government."

Jalal Talabani, the leader of the Patriotic Union of Kurdistan told the Farsi-language weekly newspaper Kayhan in London: "Iran didn't ask for one cent of us. On the contrary, they provided huge assistance for the reconstruction of Iraq. They offered a lot of help for reconstruction and to reoperate the factories, build cities and towns, many issues. They did not discuss with us, in any of our meetings, or in any of the ministries, the subject of the reparations."

According to Qasem Sho'leh Sa'di, a lawyer and scholar, the recent declarations by Iranian officials concerning the trial of Saddam or the payment of war damages are "for domestic consumption only".

The AFP news agency Tuesday quoted an unnamed Kremlin official as saying no decision has been made on forgiving Iraq's debt. The official called Abdul Aziz al-Hakim's remarks yestarday "premature."

The two-day GCC summit in Kuwait did not discuss the debt said Kuwait's foreign minister, Sheikh Mohammad al-Sabah: "The issue of the Iraqi debt was not discussed by the summit because there was no formal Iraqi request for that."

"(President Vladimir) Putin has made an offer of Russia exempting Iraq from 65% of their debts. That is a decision made by Russia to be confirmed within the Paris Club," Samir Sumaidy told reporters after attending a meeting on Monday at the Kremlin.

Abdul Aziz Al Hakim reported "We discussed the question of writing off Iraq's debt and we received a generous promise to write off the debt, or at least a part of it." He also said, "We will be open to all Russian companies," raising the question of whether some horse trading had been done.

Jalal Talabani said: "Russia said it is willing to consider the write-off of the rest of the debt if it received beneficial treatment in terms of oil contracts."

An Interim Governing Council delegation, including Abdel Aziz al-Hakim and Jalal Talabani has arrived in Moscow for high-level talks. "The entire gamut of relations between our two countries will be on the agenda, in particular the issue of debt," said Iraq's acting ambassador.

The editoral of New Orleans newspaper the Times-Picayune today argues:
"Oppression isn't cheap. Ousted Iraqi dictator Saddam Hussein borrowed vast amounts of money during his tenure in office. And rather than spend it for the betterment of his country, he wasted it on military operations, weapons development, extravagant palaces and other expenses that served his purposes rather than his subjects."

"Over time, though, an accepted mechanism for canceling odious debt could help promote the spread of democracy around the developing world. If Saddam Hussein's creditors knew years ago that they were running the risk of losing any money they lent him, they might have cut him off long ago -- and his regime might have fallen long before this spring."

Gulf leaders will debate the debt at a two-day summit in Kuwait from Sunday, Kuwait's prime minister Sheikh Sabah al-Ahmad al-Sabah said in Asharq al-Aswat. But he cautioned that his country's position was not to waive all debts owed it. "Baker will not enforce anything on anyone. Each country will decide how to deal with the debt. We (the GCC) will discuss the debts. Kuwait's stand is not for cancelling all debts because Iraq is a capable nation. But what concerns us primarily is Iraq's stability. When it comes to the debt owed Kuwait, we'll follow the Paris Club, we'll prepare for it and accept the decisions."

Naomi Klein draws attention to a declassified State Department transcript of a meeting on Oct. 7, 1976, between Henry Kissinger, then-secretary of state under president Gerald Ford, and Argentina's foreign minister under the military dictatorship, navy admiral Cesar Augusto Guzzetti.

Kissinger encourages Mr. Guzzetti to apply for as many loans as possible — and fast, before Argentina's “human-rights problem” ties the hands of the U.S. administration. Mr. Kissinger instructs the minister, “Proceed with your Export-Import Bank requests. We would like your economic program to succeed and will do our best to help you.”

The World Bank estimates that roughly $10-billion of the money borrowed by the generals went to military purchases, used to build the prison camps from which thousands never re-emerged, and to buy hardware for the Falklands War. It also went into numbered Swiss bank accounts, a sum impossible to track because the generals destroyed all records relating to the loans on their way out the door.

We do know this: Under the dictatorship, Argentina's external debt ballooned from $7.7-billion in 1975 to $46-billion in 1982. Ever since, the country has been caught in an escalating crisis, borrowing billions to pay interest on that original, illegitimate debt, which today is only slightly higher than that held by Iraq's foreign creditors: $141-billion.

Marek Belka, the Polish finance minister who headed the Madrid donor conference told Reuters yestarday: "The G7, or even the G8 states (including Russia) will probably allow for a quite substantial write-off. But it could be made conditional on preparing an economic programme," Belka said in an interview. Belka said an initial write-off of Iraq's Paris Club debt could be followed by another reduction if, for example, the International Monetary Fund backed Baghdad's economic plan. "Iraq has to carry out an economic programme which is in line with current economic thinking and tested standards, not the kind of things that are going on now," he said.

Interview on Fox News yestarday:
CAVUTO: What is substantial, Secretary?
SNOW: Well, I am not going to define it for you in dollars, but it is bigger than a breadbasket.
CAVUTO: All right. Now, we, of course, have been pushing for almost total forgiveness of debt. I guess that is not in the cards.
SNOW: Well, substantial. What we need...
CAVUTO: Substantial would be tens of billions?
SNOW: ... is substantial. Sure, substantial is tens of billions of dollars of debt reduction here. And the commitment is to do it soon, to move it forward in `04.
SNOW: But let me just say that I think we have made real progress, real understandings, and it is important to see the rest of the world, France, the U.K., Germany, Russia, where the secretary is now, all embracing this idea of the need for substantial debt relief. Without substantial debt relief, the Iraqi people will not have the opportunity for the peace and prosperity that they deserve.

James Baker is expected to meet with Japanese Prime Minister Junichiro Koizumi and Finance Minister Sadakazu Tanigaki, probably on Dec. 29.

Deputy Prime Minister Yuri Fedotov spoke a day after President Vladimir Putin told Baker that Russia is willing to start negotiations on the debt. He said that while the debt talks and the participation of Russian companies in postwar Iraq are separate issues, "progress in settling one of them will undoubtedly help reach success in talks about the other."

A thought provoking article by Johann Hari in the Indepenent on Wednesday says Saddam's trial should be a rebuke to the political elites which armed him.

"The coalition could establish an international truth and reconciliation process where our politicians would confess and apologise to the Iraqi people for their complicity in Saddam's crimes. The genocidal tyrant will, if he is smart, take great delight in reminiscing in the witness box about his old friends Donald Rumsfeld and Jacques Chirac. He will thank them for the weapons they so generously provided. He will talk fondly of his courtship with Ronald Reagan, and remember the sweet words and gifts offered by Margaret Thatcher. Once the infected wound of Saddam is squeezed, a great deal of pus will come seeping out..."

"We cannot wish this history away. It is time our governments confront it and make amends. This has been achieved partly by liberating Iraq, but the process must be far more extensive. They must cancel the tens of billions of dollars in debt that Iraqis have inherited from Saddam immediately. If Western banks suffer, good. They should not have loaned money to a man who was butchering innocent people. (If you want to support the movement to ensure that Iraqis are not forced to pick up the tab for their own repression, visit www.jubileeiraq.org.) We should be talking about reparations, not making yet more money from Iraqis..."

"A process of confessing crimes against Iraq will help to identify our backing of criminals elsewhere - and make it politically harder to back fresh tyrants. This is, alas, one reason why an international investigation along these lines is extremely unlikely."

Uncovered by the media focusing on Baker's tour of Europe, the UN Compensation Commission completed the three days of its 50th session by awarding a further $1.41bn of reparations against Iraq, the vast majority of this going to governments and corporations. The next meeting will be 9-11 March 2004. This is on top of about $28.4bn of exisiting unpaid awards.

Reuters reports that Paris Club President Jean-Pierre Jouyet "dismissed demands by non-governmental groups that Iraq's debt be classified as "odious" debt contracted by an illegitimate leadership, a concept implying the debts would not even be considered as debts.
"That's not quite the Paris Club's view," he said of demands voiced by groups such as the Jubilee Iraq campaign, a successor to the global Jubilee movement that fought successfully through the 1990s for big debt write-offs in the Third World."

The Gulf Daily News, based in Bahrain, wrote approvingly of our criticisms of the Paris Club process ("Paris Club process rapped by Iraq debt campaigners).

Paris Club President Jean-Pierre Jouyet told BFM radio: "The Paris Club will agree a deal with Iraq as soon as there are Iraqi authorities in place, when they are internationally recognized and when the International Monetary Fund has analyzed what scale of debt relief is necessary. The sooner the authorities are in place, the sooner we can do this," he said, adding that he hoped an accord could be wrapped up in 2004. IMF experts in Amman and staff at IMF headquarters in Washington have to establish how much debt they think Iraq could live with and get a grip on estimates for non-Paris Club debts. "The IMF must tell us what it considers a sustainable level of debt in the long-term," one source said. The next time the issue will be broached by the Paris Club as a group is when delegates hold a regular meeting in January, but that is too early for any serious negotiating, sources said. Jouyet said the total debt was estimated at $115-120 billion

Japanese government officials said yestarday that Japan has begun looking into forgiving part of the $4.1bn claimed by Japan. The government plans to take a constructive role at the Paris Club of creditor nations, which will discuss and decide on the concrete size of debt reduction.

One issue is that Japan has a general principle of not extending new loans to countries that have had their debts reduced. At Madrid Japan pledged $5bn, mainly in loans, which it may not extend in the event of debt reduction. However, Finance Ministry officials believe that, despite this principle, it would not be impossible for the government to reduce Japan's credits to Iraq and extend new loans.

Zaman newspaper puts Turkey's claims at $1.8bn ($800m principal plus $1bn interest). It states that "Most of the debt due to the guarantees given to Iraq during Iran-Iraq war. During Saddam Hussein's rule, Iraq became indebted to other countries by acquiring armament and infrastructure."

James Baker met with Tony Blair this morning, who's spokesman said: "We do support a significant reduction in Iraq's debt. The precise figures will emerge for discussion in the Paris Club - the network of creditor countries. We also believe as a result of James Baker's meetings that there is a growing consensus behind a substantial reduction and we welcome that." Total debt was given as £1.145bn (£620m plus £525m interest).

Baker met Vladimir Putin in Moscow this evening. Russia "expressed its readiness to in the near future start negotiations on settling the debt within the framework of the Paris Club with the goal of relieving Iraq's debt burden,'' according to a Kremlin statement.

Treasury Secretary John Snow commented on Fox News "I talked to former Secretary Baker just about an hour ago and the reports are excellent. There is now a broad-based agreement that we'll use the Paris Club to achieve substantial reduction in Iraqi debt levels."

"According to the U.N., Iran deserves reparations. She must be satisfied. Whether we will pay or not is something which we need to discuss further." Abdel Aziz al-Hakim told a news conference after meeting Tony Blair. Another member of the Iraqi Governing Council delegation visiting London, Jalal Talabani, told the news conference that Iran has so far not asked for any money during his visits there. "Instead they offered a lot of help. They did not discuss with us in any of our meetings the subject of reparations." Al-Hakim, leader of the Supreme Council for Islamic Revolution in Iraq (SCIRI), was an exile in Iran for many years and during the Iran-Iraq war led the Badr Brigade of Iraqi exiles which fought on the Iranian side.

Some Iranian officials have calculated the real cost of the war, including its impact on Iran's economy, at one trillion dollars. The $100 billion claim is based on estimates of physical damage to cities, oil installations and infrastructure, particularly in the worst-hit southwestern provinces. "I believe that asking for compensation is Iran's national right and it's the government's national duty to ask for it," reformist parliamentarian Ali Shakourirad told Reuters. But he acknowledged that the state of Iraq's economy and its considerable other debts made payment of Iran's claims unlikely in the short term.

Political analyst Mahmoud Alinejad said "For the time being, Iran will be very happy with this symbolic recognition and gesture by Iraq," but Iran may use the acceptance of financial responsibility as a bargaining chip for gaining political and economic influence there once an independent government takes over in Baghdad.

Italy said on Wednesday it agreed with the United States on the need for a "substantial reduction" of Iraq's debt and wanted a wide range of countries to be involved. James Baker met Italian Prime Minister Silvio Berlusconi today. The statement from Berlusconi's office said action should be taken through the Paris Club, but also cast the net further, which analysts say is key to resolving Iraq's debt problem. "Berlusconi and Baker agreed on the need for an agreement with other creditor nations to reduce the debt caused by a dictatorial regime that has reduced Iraq to poverty."

Baker is visiting Tony Blair and Vladimir Putin tomorrow.

"Lets hope this Baker Plan is more successful": economist and investigative journalist James Henry explains the background of the Baker Plan. Launched in 1985 when Baker was Regan's Treasury Secretary, and managed by David Mulford (who has recently argued, like Jubilee Iraq, for an Iraq debt arbitration process), it was the first of many ultimately unsucessful attempts to tackle Third World debt, of which the HIPC initiative is the current incarnation. The Baker Plan provided new loans to repay old ones in return for countries following IMF structural adjustment programs. James Henry argues that if Iraq's debt had been properly resturctured in 1990, when Baker was Secretary of State, the invasion of Kuwait and the sanctions and two Gulf Wars which have followed could have been avoided. There is a very interesting section on Baker's involvement with the US loans to Iraq:

"The other interesting fact to know about James Baker’s experience with Iraq’s foreign debt is that he was deeply involved in making it larger. While he was Secretary of State from 1988-92, our very own US Department of Agriculture's Commodity Credit (CCC) Program loaned Saddam nearly $5 billion, with James A. Baker III's knowledge and active encouragement. Under the US Department of Agriculture's "GSM-102" export credit program, the CCC underwrote private loans that were extended by US banks to foreign banks or US exporters, supposedly for purchasing US commodities like wheat and rice. The DOA had approved Iraq’s participation in the “GSM-102” program early in the Reagan Administration, in December 1982. In 1983 the CCC guarantee $385 million in Iraqi credits to import American grain, the first in a long series of such guarantees. By 1990, these CCC credit guarantees were being issued to Iraq at the rate of $1 billion per year, and accounted for more than 20 percent of the entire GSM-102 program. These loans were made, not just to feed Iraq’s people and support US farmers, or certainly not because Iraq had good credit, but as part of an effort to cultivate a close relationship with Saddam’s regime -- and especially in the late 1980s, at a point when his oil revenues were collapsing and no one else would lend him any more money, in order to help him continue buying arms.

In June 1989, for example, US Secretary of State James A. Baker III wrote to the US Secretary of Agriculture, Clayton Yeuter, asking him to boost the CCC’s loan guarantee program to Iraq to $1 billion a year. Yeuter promptly did so. Even in September 1989, when a major scandal surfaced that involved lending to Saddam by Italy's largest state-owned bank (privatized in 1998) Banco Nazionale del Lavoro (BNL), the record shows that Baker lobbied hard to continue this lending, with the State Department commenting in February 1990 that “the CCC program is a key component of the (Iraq) relationship….we need to move quickly to repair the damage to the US-Iraqi relationship by getting this critical program on track.”

Many prominent US and foreign banks helped to arrange these Iraqi credits under the CCC program, including BNL, JPMorgan, Midland Bank, Chase, First City Bank of Houston, Bank of New York, DG Bank (Germany), Bank of America, Arab Banking Corp. (Bahrain), Gulf International Bank (Bahrain), Girozentrale (Austria), and UBAF. All told, from 1983 to 1990, the USDA’s CCC program extended more than $5.5 billion of credits to Iraq – of which $2 billion was still outstanding when it invaded Kuwait in August 1990."

German firms will face losses if Germany writes off Iraqi debts, the business daily Handelsblatt reported on Wednesday. The companies, particularly those in the construction industry, would have little chance of getting money they earned, as many projects were only partially covered by credit insurance, the report said. The newspaper said Saddam owed Germany $5.8bn, including $1.4bn to German firms involved in infrastructural projects. It said many unpaid claims dated back to the 1970s. A spokesman for the construction company Strabag said: "We are fundamentally opposed to debt forgiveness."

Scott McClellan appeared to dodge the question about whether the debt should be divided into odious and legitimate categories, something Jubilee Iraq and many others - including recently Jack Kemp and the Heritage Foundation - have insisted upon.

"REPORTER: And on my first question, are you differentiating between how the money was spent? In other words, money spent, for example, on palaces, or weapons programs, you want that forgiven first -- that debt forgiven first?
MR. McCLELLAN: Well, I think, again, this is -- I don't know if I would necessarily differentiate. Let's let the meetings take place."

James Baker has met with Gerhard Shroeder and Jacques Chirac today.

"France, Germany and the United States agree that there should be substantial debt reduction for Iraq in the Paris Club in 2004, and will work closely with each other and with other countries to achieve this objective," the three nations said in a joint statement issued in Berlin, Paris and Washington. They also agreed that having a new government in place is not a precondition for moving forward on debt restructuring, a senior Bush administration official said. "What specifically constitutes 'substantial' debt reduction will be determined by future agreement between the parties," said White House spokesman Scott McClellan

"Germany and the United States, like France, are ready not only for debt restructuring but also for substantial debt forgiveness toward Iraq," German Chancellor Gerhard Schroeder's spokesman Bela Anda said in a statement after the talks with Baker.

Former Republican vice-presidental candidate Jack Kemp argues that "nothing will give [Iraqis] more hope, restore greater pride and fulfill the promise of something better than removing an illegitimate and crushing debt burden... It is my hope that Baker presents America's position to Saddam's debtors this way: Much, perhaps an overwhelming amount, of Iraq's debt falls under the category of "odious debt" - debt contracted not for the needs and benefit of the people but to strengthen and support a despotic regime. Bankruptcy is a fundamental concept of capitalism that wipes the contractual slate clean. There is a political analogy to bankruptcy - today it's called "regime change" - in which the country begins de novo. It occurred in Nazi Germany, imperial Japan, Soviet Russia and Warsaw Pact Europe. It has now occurred in Iraq. Tabula rasa: The slate has been wiped clean; things begin de novo. Thus, rather than going to France, Germany and Russia hat in hand asking for debt "forgiveness," I hope Baker presents them with the stark reality that a free and sovereign Iraq will be perfectly justified in repudiating much, if not the overwhelming majority, of the debt contracted by Saddam. Better for those countries to step up to the plate on their own now than play the role of Shylock later."

Reuters reports that "Saddam Hussein's capture has given new impetus to countries to write off some of the billions of dollars owed by Iraq and that process could boost the value of some private sector loans by up to 50 percent."

Does this seem strange - that the value of the debt should increase with a write off? The reason is that the creditors previously had little hope of recieving payment, and now the Paris Club is beginning to reach a common position which will force Iraq to pay. Yes the amount to be serviced will be less than the "paper value" - Richard Segal of brokerage Exotix predicts a reduction to around $51.5-$57.3 billion, - however the result will be that instead of paying nothing, Iraq will be paying up to $5bn in debt service a year. The creditors will flaunt the altruism of their debt "forgiveness" but in fact the reverse is true - they will be extracting unfair payment from the Iraqi people for loans which harmed them. Many of the Iraqis we interviewed in Baghdad recently told us that it is the creditors who are in need of forgiveness - from the Iraqi people for the financial support they gave to Saddam.

What is needed is a fair process of arbitration to examine the origins of debt that benefited Saddam but not the Iraqi people - the creditors can now sue Saddam himself for these debts.

Treasury Undersecretary for International Affairs John Taylor told Reuters that "substantial debt reduction is needed ... well over half... What we want is for everybody to agree to do as much as possible. We certainly hope some do 100 percent." However he would not say whether the United States planned a wholesale forgiveness of Iraq's debt to America. Taylor said Baker's visit to Germany, France, Italy, Russia and the United Kingdom to discuss the debt restructuring was aimed at getting as much forgiveness "as we possibly can."

"Under international law - the same law once cited by Europeans to encourage Latin American nations to repudiate their U.S. debts - any debts incurred without the consent of the people or not spent in their interests are considered "odious." Well, if any nation's debts are odious, Iraq's are."

The AP reports: "First and foremost, Iraqi debt involves Iraqis," State Department spokesman Richard Boucher said. "His mission remains focused on Iraqi debt, and he will report back to the president as he thinks appropriate." The US administration has refused to say how much of the debt Iraq owes the United States will be forgiven.

Iranian Government spokesman Abdollah Ramazanzadeh told reporters "Regarding war reparations, the future of relations between the two countries will be determined by how we are going to deal with them." He also said an international court should try Saddam and "should determine who equipped this dictator to disrupt our region" a reference to the support Saddam Hussein once enjoyed from Western countries.

Julie King argues strongly in the Beirut Daily Star today:

Repayment would absorb all Iraq’s oil revenue for the next 20 years. Even if debt repayments were rescheduled, the demands of creditors would divert resources from vital reconstruction and poverty alleviation and would lead to a heavy dependence on aid, to the detriment of governance and accountability. Burdening Iraq with a load it cannot service will perpetuate the poverty that is already providing an army of recruits for those who are orchestrating instability in post-Saddam Iraq. Saddam’s regime was uniquely evil and known, to all to be uniquely evil. Creditors who financed weapons systems, internal oppression and military adventurism must now pay for their recklessness. The lenders, and not the victims, must be held responsible for funding the monster. By accepting this, the international community will acknowledge that lending to corrupt and oppressive regimes is morally unacceptable and, in the long run, economically self-defeating. If Baker feels a tad defensive as he goes into battle this week, still scarred by the Pentagon’s grapeshot, he could consider beefing up his own arsenal with a young Iraqi called Mohammed Kamil. Kamil, quoted by the debt relief lobby Jubilee Iraq, has a very clear message: “When Saddam executed people, he used to charge their families for the bullets used. This is what the creditor countries who financed Saddam are asking of Iraqis today.” Exactly.

Japan has not yet indicated whether it would go along with any debt restructuring [in fact Jubilee Iraq has learnt that it is particularly resistant to a Paris Club treatment, and prefers a moratorium until 2008 followed by full debt payment]. A senior Japanese envoy, former Prime Minister Ryutaro Hashimoto, will meet with President Jacques Chirac of France on Tuesday to discuss the issue. He is also visiting the UK and Germany.

Russian deputy foreign minister, Yuri Fedotov, told the Russian news agency Interfax that it suported settling Iraq's debt "through the Paris Club." He said "it is a modern and civilized system of settling foreign debts that is applied everywhere, and Russia wants the same mechanisms to be applied to Iraq," As for writing off the Iraqi debt, Fedotov said, "Iraq is not one of the poorest countries. I want to stress once again that Paris Club mechanisms are rather flexible and provide ways to reschedule and ease the debt burden."

French foreign minister, Dominique de Villepin told reporters that "France, together with other creditors, believes there could be an agreement in 2004." If various conditions regarding Iraq's sovereignty and stability were met, France "could then envisage cancellation of debts in line with Iraq's basic financing capacity." He is referring to a debt restructuring through the Paris Club cartel of creditors - the methodology also favoured by the US - something which would legitimise odious debt and impose harsh economic conditions on Iraq.

Mr. de Villepin's statements came after a meeting with members of Iraq's interim Governing Council, including current President Abdul Aziz al-Hakim, and a day before James Baker is scheduled to meet President Chirac to discuss the debt. Jalal Talabani called Mr. de Villepin's announcement a "gift."

Dominique Moisi, an American expert at the French Institute for International Relations, said that by making the announcement with the Iraqi representatives de Villepin "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.' " Mr. Moisi said the French offer might reflect a realization that in the wake of Mr. Hussein's capture, President Bush appeared to have a stronger chance of winning re-election next year and so Paris would most likely have to deal with his administration for the next five years.

de Villepin brushed aside questions about whether debt forgiveness would be linked to participation in $18.6 billion in American-financed reconstruction contracts in Iraq, saying the two issues were separate and should not be mixed.

"Secretary Baker is leaving today on a mission. He'll be in a number of countries. The first meetings are tomorrow in Paris. The first meetings are actually with the Iraqis. He's meeting with the Iraqis, the Iraqi Interim Minister of Finance and Central Bank governors because, first and foremost, Iraqi debt involves Iraqis. He'll also see French leaders, German, then he'll go on to Germany, Italy, United Kingdom and Russia. All this week." (Richard Boucher, State Department)

Ahead of James Baker's visit to Germany next week, Development Aid Minister Heidemarie Wieczorek-Zeul told Der Spiegel: "James Baker cannot expect any results in the debt question if the US does not change regarding the awarding of contracts. You can't spread the risks around, but then keep the economic advantages for your own country,"

Jubilee Iraq welcomes the capture of Saddam Hussein. Now he is in custody his creditors can come to him for payment of their debts and reparations. He can spend the rest of his life doing hard labour, with all his earnings going to pay the creditors.

The Iraqi people should not now be expected to pick up the bill for his crimes - they have suffered far too much already because of him. This is the message Jubilee Iraq will be presenting at our demonstration at the UN Compensation Commission in Geneva this week

Chris Kenny, spokesman for Australian Foreign Affairs Minister Alexander Downer said yesterday: "There is a debt owed to Australia, including the Commonwealth Government and wheat growers, and it all relates to the export of food items, mainly wheat, before the first Gulf War." Mr Kenny said the AU$635 million of pre-1991 outstanding debt would not be waived by Australia and that the US had no ability to ask it be waived. "There are multilateral discussions going on over this; we are in the preliminary stages of discussions." Asked if the US had specifically asked Australia to forget the debt, Mr Kenny said: "We were part of the action to get rid of Saddam Hussein. We've had this dispute with Iraq over debt for many, many years, prior to the removal of Saddam Hussein. It's not for anybody else to ask us to do anything. We believe that money should be paid to Australia."

Australian Wheat Board spokesman Peter McBride said the Federal Government was owed AU$513 million in wheat sales it had paid for through the Export Finance and Insurance Corporation. Australian wheat growers were owed a further AU$121 million -- the uninsured amount of sales it had made before 1991.

Action for Australians: write to Andrew Lindberg, Managing Director of the Australian Wheat Board. In October he met Iraqi interim Trade Minister Ali Allawi and said "The trust and goodwill that has been built up between the people of Iraq and Australia through our 50 year trading relationship in trading wheat should stand Australia’s trade in good stead into the future." However that relationship is threatened by the inistance that the battered Iraqi people pay this AU$635m debt left over from Saddam's regime. In 2000 Australia accounted for 22% of Iraq's imports, second only to France. Explain that it is in Australia's own self-interest to continue this close relationship, rather then threatening it through demanding this debt.

Write to: Andrew Lindberg, Managing Director, AWB Limited, Ceres House, 528 Lonsdale Street, Melbourne 3000, Victoria
Email: alindberg@awb.com.au or Fax: 03 9209 2350
Call (head office switchboard) 03 9209 2000

Also write to Prime Minister John Howard. Please let us know what response you recieve. New Australia page here

Selina Williams of Dow Jones interviewed Richard Segal, research at debt brokerage Exotix, which puts the total debt figure at about $114bn.

Around $67.8 billion, or 60% of the debt estimated by Exotix, is likely to involve funding for arms-related purchases and includes loans or grants from members of the Paris Club group of sovereign creditors. Arab states in the Persian Gulf, Russia and Eastern and Central European countries are also owed some of this sum. "The general view among creditors is that loans for arms aren't as favorably treated for debt servicing as other loans," Segal said.

The remainder, or $45.2 billion, comprises mostly loans for commercial goods from the Paris Club and countries in Eastern Europe, the Middle East and two U.S. commercial banks. These creditors are likely to get back around two-fifths of what they are owed - or a total of $20 billion to $25 billion - but it will take about 20 years with payments starting roughly two years from now, Segal said.

Iraq would likely be paying off only the interest for the first four or five years, with payments amounting to around $2.25 billion annually. After five years, payments of some $2.75 billion on the principal would be added, bringing Iraq's yearly debt repayments to over $5 billion. "This should be sustainable," Segal said.

According to a source close to the Paris Club, the group hasn't ruled out canceling part of Iraq's debt, though it's unlikely it will be the 90% writeoff that has been granted to some very poor countries such as Mali. The most likely scenario is a 70% write off, Segal said.

English language newspaper the Saudi Gazette's editorial today refers to Jubilee Iraq's campaign and says "Iraqis cannot effectively rebuild their country and rejoin the global community unless they can get out from underneath their government's staggering debt. It, and the war reparations, need to be forgiven."

Most of the discussion at Scott McClellan's daily press briefing yestarday was about debt and contracts. Journalists asked whether countries which cancelled debt would join the list of those elligible to bid for US reconstruction contracts - to which McClellan hinted "I'm saying that we welcome the opportunity to discuss this decision with other countries, that if other countries want to participate in the ongoing efforts, then circumstances can change"

He did say "The Iraqi people should not be saddled with the debt of a brutal regime that was more interested in helping itself by building palaces and building weapons programs and so forth than helping the Iraqi people have a better future." If this is the case, as Jubilee Iraq also contends, then the debts should be completely written without conditions, rather than being "restructured or reduced".

An editorial in the New York Times today explains that "Mr. Baker has agreed to forgo earnings from clients with obvious connections to Iraqi debts, a process that Baker Botts attorneys would supervise for the law firm and that the White House would oversee for the Carlyle Group." However the paper argues "That is not good enough. Businesses like Carlyle and Baker Botts make their living by flaunting their connections to the politically powerful. To perform honorably in his new public job, Mr. Baker must give up these two private ones."

James Baker, the new special envoy on Iraqi debt, will be leaving on Monday for France, Germany, Italy, Russia and Britain.

Jubilee Iraq invites him to meet with us and discuss what sort of resolution of the debt would be "fair and not unjustly burden a struggling nation at its moment of hope and promise" (Bush).

US President George Bush called French President Jacques Chirac, Russian President Vladimir Putin, and German Chancellor Gerhard Schroeder to talk about Iraqi debt, late on Wednesday, White House officials said. The calls were aimed at asking the leaders to welcome James Baker as the special envoy on Iraqi debt. He likely got a frosty reception, since the US's recent decision to exclude corporations from countries that opposed the US-led war on Saddam Hussein's regime in Iraq from bidding on any of the reconstruction projects was also discussed.

Chirac agreed to meet with Baker in Paris, probably next Tuesday.

Russian Defence Minister Sergey Ivanov told reporters on Wednesday that Russia had no intention of writing off Iraq's debt to Russia. "As far as I know the position of the Russian government, we do not intend to write off any debts. Iraq is not a poor country. Let us recall: when the USSR collapsed, did anyone write off Russia's debts? So why should we write off any debts? There is the Paris Club, and that is where the matter will be discussed - when this debt can be repaid and whether it can be restructured."

This seems to be a hardening in the Russian position in response to the announcement that reconstruction contracts will be barred to countries which have not supported the Coalition.

"[coverage of] James A. Baker III and the attempt to thrash out the Iraqi debt muddle, avoided an agonizing question. Isn't a world society in which a bloody tyrant can be showered with such enormous sums of money utterly intolerable? Most people have never murdered, robbed, raped, tortured or enslaved anybody, and they have trouble getting a car loan. Saddam Hussein and his henchmen committed these crimes many thousands of times over for three decades and they were bankrolled by the international community to the tune of hundreds of billions of dollars. The lenders shouldn't be worrying about how much of this dirty money they'll get back; they should be worrying about being indicted for complicity in crimes against humanity."
- Gilbert Dewart, Pasadena, Calafornia (LA Times)

Greg Palast, author of The Best Democracy Money Can Buy writes about potential conflicts of interest. He says that James Baker is close to Saudi Arabia, through his law firm, Baker Botts of Texas, which has been "working day and night to prevent the families of the victims of the 9/11 attack from seeking information from Saudi Arabia on the Kingdom's funding of Al Qaeda fronts." Palast writes that Saudi Arabia, is claiming $30.7 billion debt from Iraq (of which $7bn was given to Saddam to build an "Islamic bomb")plus $12 billion in reparations from the First Gulf war.

Jubilee Iraq hopes that Baker's closeness to Saudi Arabia may in fact bolster efforts to get that country to drop its claims (which are illegitimate in the eyes of most Iraqis), but we will be keeping watch to see whether this is indeed the case.

The Calcutta Telegraph reports that India's claims against Saddam are estimated at $2 billion (twice the level state in The Hindu back on 14th April).

The article reports that a considerable portion of Saddam’s dues to Indian firms have already been taken over by the government. For example, earlier this year the Indian government issued seven-year bonds at 6 per cent interest to three firms which had an Iraqi debt burden of Rs 298 crore. Two similar tranches of bonds had been issued earlier to relieve Indian firms of their dues from projects, in the implementation of which the Indian government had a persuasive role during the years when a secular Saddam was projected as a good friend of Delhi and rewarded with liberal grants and credits.

Between 1983 and the occupation of Kuwait in 1990, the Baathist regime did pay $701 million it owed Indians. Even after the Gulf War, Delhi and Baghdad negotiated an arrangement under which Iraq’s Central Bank certified dues to Indian companies and settled some of it through an account operated by India’s Exim Bank.

President Bush today appointed a close family friend, and one of the most powerful figures of the Reagan and Bush Senior years to take the lead on Iraqi debt diplomacy. His appointment signals that the US Administration appreciates how serious this issue is to Iraq's future.

In a statement read by Press Officer Scott Mclean, President Bush said:

"Iraq is moving toward freedom, stability and prosperity. In order to support this effort, I am pleased to announce today that in response to a request from the Iraqi Governing Council for assistance, I have appointed James A. Baker III to be my personal envoy on the issue of Iraqi debt. Secretary Baker will report directly to me and will lead an effort to work with the world's governments at the highest levels with international organizations and with the Iraqis in seeking the restructuring and reduction of Iraq's official debt. The future of the Iraqi people should not be mortgaged to the enormous burden of debt incurred to enrich Saddam Hussein's regime. This debt endangers Iraq's long-term prospects for political health and economic prosperity. The issue of Iraq debt must be resolved in a manner that is fair and that does not unjustly burden a struggling nation at its moment of hope and promise. James Baker's vast economic, political and diplomatic experience as a former Secretary of State and Secretary of the Treasury will help to forge an international consensus for an equitable and effective resolution of this issue."

Mr Baker, 73, will serve as a volunteer, working out of an office at the White House and traveling to other countries. Mr Baker served as White House chief of staff and then treasury secretary under Ronald Reagan and secretary of state under George H.W. Bush, covering the period that included the Gulf war. He was recruited in November 2000 to lead George W. Bush's fight in the Florida recount, which secured his victory in the election against Al Gore. He is also a well-known multilateralist, who urged the White House to pursue Saddam Hussein through the United Nations. This year, Mr Baker was sent by Mr Bush as his special envoy to Georgia, the former Soviet republic where Eduard Shevardnadze was overthrown as president last month.

Jubilee Iraq welcomes the appointment of James Baker and is ready to dialogue with him. His diplomacy should represent the overwhelming view of Iraqis that almost all of Saddam's debt and reparations are personal obligations of his regime, and no responsibility of the Iraqi people. They will not accept a standard Paris Club restructuring package which (a) ignores the odious nature of much of the debt (b) links debt "relief" to economic conditionalities and (c) does not tackle the Gulf War reparations. We invite Mr Baker to join us in persuading creditors of the justice of Iraqi feelings on this, and working towards a fair and transparent arbitration process which involves Iraqis as equal parties in assessing the legitimacy of debt and deciding on reduction and rescheduling terms for any valid debt.

Iraqi newspaper Al-Manar says the Egyptian companies have decided "to postpone their entry into the Iraqi markets" pending the resolution of the issue of Iraqi debts that are due to the Egyptian companies, which used to provide Iraq with food during the oil-for-food programme.

Herve Ladsous, spokensman for the French Foreign Ministry, told reporters at a breakfast meeting that the Paris Club has "never signed a rescheduling deal with an entity that was not an independent and sovereign state. For the time being, I cannot see a solution on this, which is an issue of principle." For the Paris Club to be able to act to forgive or reduce Iraq's staggering financial obligations, it would require some kind of "formal" action on Iraqi sovereignty, he said. "To our mind, ideally, that would have been recognition (of Iraq) by the international community through a (United Nations) Security Council resolution, and I cannot see anything very short of that." Ladsous reaffirmed that "when the time comes [France]... will be ready to be very generous." Members of the Iraqi Governing Council may visit Paris in mid-December, and if so the issue of debt will be discussed.

Khaled Yacoub Oweis of Reuters reports that a senior Iraqi delegation will meet with World Bank and IMF officials in Jordan next week to discuss a mechanism for reducing the debt. The World Bank projects 2003 GDP of $12-$16bn, and oil revenue of just $2bn.

"The payments have been like tearing off our skin. We cannot afford more," a senior Iraqi official told Reuters. "The debt is hanging around our necks. Iraq cannot do business and the banking sector cannot recover while Iraq faces claims left and right. The issue has to be settled."

"Demands by Kuwait's rulers on Baghdad to settle its debt were a factor behind Iraq's 1990 invasion of Kuwait and the Gulf War in 1991. Iraqi officials privately say it is unthinkable for Gulf states to expect Iraq to pay debts accumulated to guard the eastern flank of the Arab world against the Islamic revolution in Iran -- the same position as the former Baathist government."

Jubilee Iraq is currently at the Eurodad conference in Prague, bringing together about 100 debt and development groups from across Europe. We had three meetings yestarday to debate and strategise on campaigning on Iraqi debt, and there was an incredibly enthusiastic response. We even learnt about existing campaigns we'd been unaware of! For example the Swedish Jubilee movement lobbied their government at the time of the Madrid conference for recognition that much of the $200m of Swedish claims against Iraq are odious. It's been a really inspiring 24 hours here, and a great deal of ideas and contacts have been generate which should give a huge boost to the campaign.

Saudi Arabia announced that it will withhold the $1 billion in loans/credits that it pledged at Madrid last month for Iraq's reconstruction until the security situation is stabilized and a sovereign government takes office, reports the LA TImes. The article finishes by quoting an Arab diplomat, speaking on condition of anonymity, about the supposed $50 billion to Saudi Arabia, Kuwait and other Arab nations: "These obligations are real."

"The Governing Council calls on Iraq's sovereign creditors and the international community to recognise the importance of urgently resolving Iraq's external financial obligations and to rapidly advance the resolution process." said a statement by the IGC.

The statement especially urged the Paris Club to help alleviate the financial burden. It warned that "normal international banking relationships, which are vital for the recontruction of Iraq, will be impeded until the massive external debt accumulated by the previous regime is addressed. The Governing Council further requests that the United States and its coalition partners lend advice and assistance to Iraq with respect to the rapid resolution of external financial claims."