May 28, 2007

The Sydney Morning Herald in Australia has been deeply critical about the government's accounting for Iraqi debt relief. It has counted the relief as development aid in its budget and used it to claim an increase in generosity in general and specifically to Iraq. This is based on a report by AidWatch.

"IRAQ is the top recipient of Australia's official aid this financial year, but only one dollar in every $14 of the $358 million being given will be used for development and reconstruction, parliamentary documents reveal. The greatest chunk - more than $330 million - is to relieve Iraq of the debt it owes Australia, and most of that is for interest that accumulated even when Iraq was subject to United Nations sanctions and could not have repaid the money. This aid - and another $334 million in debt relief to Iraq last year - goes no further than a set of books in Canberra and Sydney. Building the Iraq debt into official aid means that poor people who could have benefited from the largesse Australia claimed to be spreading did not see a cent, said Ian Wishart, the national executive director of Plan Australia. It has delayed a rise in real aid by two years, he said. Counting the debt relief enabled the Foreign Minister, Alexander Downer, to boast that Australia was dramatically increasing its global foreign aid contribution by $455 million in last year's budget. This brought Australia's "official development assistance" to $2.946 billion, lifting the proportion of our gross national income that we give in aid from 0.25 per cent to 0.3 per cent, marginally closer to the Government's pledge of 0.7 per cent... Fifty-seven per cent of Iraq's total $1 billion debt to Australia was for interest, AusAID revealed recently in answers to questions raised in a Senate estimates committee."

May 18, 2007

The AP reports that: "Iraq's main creditors, including Saudi Arabia, will not write off billions of dollars in debt or provide financial assistance to the war-torn country unless it make progress on national reconciliation, economic reform, and improving security, U.S. Ambassador Zalmay Khalilzad said Friday." It quotes Khalizad as saying: "The Iraqis have committed themselves to a set of decisions on the economic front, on the political and security front. In exchange for that, the international community has committed to assist Iraq. The assistance, including debt relief, is conditional on progress." He went on to specify passage of the oil law and other US benchmarks.

The South African Cabinet has agreed to cancel 80% of the Iraqi government's total debt of $160m to the Export Credit Insurance Corporation (ECIC). Briefing the media on Thursday after the Cabinet's fortnightly meeting on Wednesday, government spokesperson Themba Maseko said it also had been agreed to reschedule the balance of 20% in accordance with the terms of the agreement between the ECIC and Iraq. "This decision is in line with Paris Club commitment to ease the debt burden of the Iraqi government," he said.

Jubilee Iraq notes that a previous report gave the South African debt as being R160 million ($24m) and wonders if this figure quoted above is a mistake. In any case the South African debt almost entirely relates to military loans and it is likely that almost all of it should be classified as odious and written off.

May 16, 2007

The Sofia Echo ("Debt Confusion in Bulgaria", 16 May) follows up on the Iraqi finance minister's announcement at Sharm al-Sheikh that Bulgaria had agreed to the 80% Paris Club terms, which appears to have been premature. "Media reports that Bulgaria would waive the debt spurred controversy among critics in the country. When in 2003 Bulgaria decided to participate in the Iraq-US war on the side of the US, one of the key factors that affected this decision was the assurance that Bulgaria would get preferential treatment when it comes to Iraq’s debt repayments after the war."

Judicial and parliamentary affairs minister Mufid Shehab told Egyptian MPs: "Iraq announced unilaterally at the Sharm El Sheikh conference that Egypt had forgiven its debt, something which never happened. The Egyptian constitution does not authorize the executive to conclude loan or debt forgiveness agreements without the authority of parliament. These debts belong to the Egyptian people and not to the government. In any case, writing them off will only benefit the US occupier and not the Iraqi people." Shehab also took issue with Iraqi Finance Minister Solagh's estimate of the size of the debt, insisting that claims for compensation from Egyptian migrant workers in Iraq also needed to be taken into account. "The total Iraqi debt owed to Egypt amounts to $1.6 billion, including $553 million in debt to the government, $222 million in debt to private Egyptian firms, and $784 million in damages owed to Egyptian workers in Iraq." The last category refers to UNCC reperations. (AFP)

May 14, 2007

Speaking at the International Compact for Iraq meeting in Sharm al-Sheikh on 3 May, Takatoshi Kato, Deputy Managing Director of the International Monetary Fund said: "The IMF Executive Board completed the third and fourth reviews under the Stand-By Arrangement in early March 2007. At that meeting, the period covered by the arrangement was also extended by six months through September 2007, in order to provide more time for the program to achieve its growth and inflation objectives. Looking ahead, the discussions on the fifth and final review under the current Stand-By Arrangement and on the 2007 Article IV consultation are scheduled to begin this summer. The Iraqi authorities have also indicated that they intend to request a successor arrangement to cover the period needed to reach the last stage of the Paris Club debt reduction agreement by December 2008. In the meantime, it will also be important to make further progress in reaching debt reduction agreements with non-Paris Club creditors."

May 10, 2007

Zaman reports ('Iraq takes steps to settle YTL 2 bln debt with Turkish CB", 10 May) that: "The Iraqi government has taken a constructive step in efforts to settle its YTL 2 billion ($1.5 billion) in debt to Turkey's Central Bank, nominating US accounting and consulting firm Ernst & Young to negotiate its amount outstanding with the Turkish Treasury... The central bank’s latest activity report for 2006 once more included the amount owing from Iraq in its “bad and irrecoverable debts” item. Of the bank’s YTL 2 billion in receivables, YTL 1.83 billion stems from notes, while the remainder originates from uncollected loans that resulted from the central bank providing funds for Enka Construction for the Bekhme Dam project that the Iraqi government couldn’t cover. The amount of this loan was YTL 130.12 million." The article notes that Iraq also owes $900 million to the state-owned Turkish Pipeline Company (BOTAق) is also owed a significant sum by Iraq, totaling as much as $900 million. This debt stems from transportation costs through the Kirkuk-Yumurtal‎k oil pipeline.

May 08, 2007

KUNA reports that Ibrahim Gambari, the Special Advisor to the UN Secretary-General on the International Compact with Iraq said he is planning to visit Saudi Arabia "soon" to sort out the Iraqi debt. He told a press conference that he will be accompanied on the trip by Sinan Al-Shibibi, the Governor of the Iraq Bank. "The Saudi-Iraq relation is very complicated. There are elements of the debts that need to be reconciled because the Saudis have a sense of how much is owed, and the Iraqis have a slightly different sense of how much is owed," he said. "Also there are official debts and there are debts owed to private people," he added. "They have to sort all that out". He said he and Al-Shibibi will see how "we can promote a reconciliation of some of these issues where there is difference of opinion between Iraq and the Saudis".

May 06, 2007

Reporting on Sharm al-Sheikh, the AP writes under the heading "Blueprint on stabilizing Iraq stalls on debt issue". It notes that: "Saudi Arabia said it is still negotiating with Iraq... and major creditors Kuwait and Russia failed to offer immediate debt relief -- a key goal of an ambitious blueprint launched to stabilize Iraq. The absence of major commitments to reduce Iraq's burdensome debt was a disappointment... and a sign that some, particularly Sunni Arab, nations are still keeping their distance from Iraq's Shiite-led government.... Iraq's finance minister put the total remaining [debt] at roughly $50 billion, but the numbers vary and in some cases are still not resolved -- with some estimates as high as $62 billion. Al-Maliki opened the conference urging ``all our friends ... to forgive our debts and allow us to launch our reconstruction and development.'' But the foreign minister of Saudi Arabia made no immediate public pledge. Saud al-Faisal said only that his country was in talks with Iraq "to have an appropriate solution to debts in line with rules of the Paris Club," which calls for forgiving at least 80 percent of Iraq's debts."

The LA Times adds adds that: "Saudi delegates at the conference insisted that debt relief be tied to guarantees to protect the Sunni minority in Iraq. " Malaki said: "We call on you to write off debts which are from the old regime."

May 04, 2007

Jihad el-Khazen appeals to the idea of odious debt in the pan-Arabic Dar al-Hayat newspaper "Perhaps the only positive thing that will result from the Sharm El-Sheikh conference is exempting Iraq from most of its debts... I ask the Iraqi government to refuse payment of any Iraqi debt from the days of Saddam Hussein, as international law is firm in this area. It stipulates that the legitimate government that follows a dictatorial government that was not freely chosen by the people is not obliged to pay the debts of the illegitimate government. This is the law, and there have been known cases where the US supported democratic governments that refused to pay previous debts."

Since 2003 it has been implied that Russia wanted to link the relief of Saddam era debt with a quid pro-quo for access to oil fields. Now Petroleum Intelligence Weekly has reported that Iraq said no to a Russian proposal to erase the entire $10 billion bill in exchange for rights to the Rumaila oil field, the country's largest producer.

May 03, 2007

The Christian Science Monitor reports on comments by Finance Minister Bayan Jabr Solagh who said on the sidelines of Sharm al-Sheikh that: "Any country that is not scrapping debt or does not respect Paris club recommendations will not be allowed to invest in Iraq." Solagh's warning was chiefly aimed at Russia, Moscow has reportedly said it was ready to scrap the debt in exchange for investment in the major southern Iraqi oil field of Rumaila. "I don't think Russia should link [debt reduction] with investment in oil." Solagh said.

He said 54 out of 65 countries that had granted loans to Saddam Hussain's regime had agreed to write off Iraq's debt, which amounted to around $140 billion. "We still have $40 to 50 billion," he said.

A Bulgarian news sources gives debt figures of $15bn for Kuwait, $13bn for Russia and $8bn for China. "The Chinese foreign minister noted that Beijing is ready to partly or completely remit the Iraqi."

An AP report gave Iraq's debt to Bulgaria as $4bn, more than double the official figure of $1.7bn. Bulgaria's Foreign Minister Ivaylo Kalfin, who is attending the conference on Iraq in Sharm el-Sheikh, has denied any commitment to waive off Iraq's debt. The Bulgarian minister reacted to Thursday's statement of Iraq's Finance Minister Bayan Jabr, who announced that three Eastern European countries - Bulgaria, Slovenia and Poland have agreed to write off 80% of the Iraqi debt.according to Bulgarian news agency Novinite. "Technical talks are currently underway, but no decision has been reached yet," Kalfin told the state-owned national radio. He reacted to Thursday's statement of Iraq's Finance Minister Bayan Jabr, who announced that three Eastern European countries - Bulgaria, Slovenia and Poland have agreed to write off 80% of the Iraqi debt.

Iraqi Finance Minister Bayan Jabor said that Iraq had accepted an Egyptian offer to forgive $800 million in debt.

Concluding the International Compact meeting, the UN SG said "Iam pleased that a number of countries have made concrete commitments under the Compact today. In particular: There was broad support for the terms of the Paris Club on Iraq's outstanding debt. Specific financial commitments made by particular countries are estimated at over $30 billion. This includes commitments of debt relief on the Paris Club terms, from Bulgaria, China, Saudi Arabia and Greece. It also includes new financial commitments from the United Kingdom, Australia, Spain, China, Denmark and Korea, and other key participants."

May 01, 2007

The Wall Street Journal writes "Efforts to secure debt forgiveness for Iraq also have met some resistance. In Kuwait, the chairman of the Parliament's foreign affairs committee, Mohammed al-Sager, said "the majority in Parliament is against forgiving the Iraqi debt." The International Monetary Fund estimates Iraq owes about $56 billion in external debt, down from about $113 billion in 2004."