July 27, 2007

An interview with Central Bank Governor Sinan al-Shabibi was published today by al-Hayat newspaper (extracts translated by BBC Monitoring):

"The Iraqi debts was some $120bn... approximately $70bn have been cancelled... The rest of these debts are debts to the Arab countries, specifically the Gulf countries. Saudi Arabia has agreed to reduce the debts owed to it by 80%. The other countries are showing amicable stances, and we hope to reach agreement with each of them through bilateral dialogue and negotiation. If we reach agreements with the other Arab countries, we will be able to cancel 100 billion dollars of the debts."

"The Iraq we are establishing is different from the old Iraq; Iraq will not engage in wars. What we want is to change the entire previous legacy into better relations with the neighbouring countries. This means that we want to turn the relations, which are based now on debts and compensations, into trade relations, investment relations, and good financial relations."

"Please do not forget that many of the government banks, despite the fact that they are leading banks, are burdened with many commitments in which the previous regime involved them. These banks also need to get rid of these commitments in order to develop their operations and perform their duties in a good way. For instance, the Al-Rafidayn Bank suffers from crises because of its many debts; it is capable of entering the world markets, but first it has to get rid of its previous commitments and of the debts that stem from them."

July 23, 2007

Iraq appealed today to the UN Security Council to temporarily suspend or reduce the compensation payments resulting from the invasion of Kuwait.

"Iraq, in putting this matter before the Security Council, appeals to the council to take the necessary steps, to ensure the temporary suspension of the obligation to make payments, or to reduce those payments to an amount that Iraq can bear, and further requests that the matter be discussed either at an international conference bringing together Iraq and the relevant states, or on a bilateral basis between Iraq and each rele-vant state," Iraqi Prime Minister Nuri al-Maliki said in a letter to the council president, China.

He explained that the idea of compensation was introduced as a result of the "reckless and unjustified actions of the previous dictatorial regime. The Iraqi people, naturally, have borne the consequences, even though they had no part in those actions. As a result, they have suffered for many years, and continue to suffer, paying dearly with their many hopes and aspirations and with the sustenance and health of their children." He noted that the Iraqi people, not the regime, "have been victimized by the obligation to pay compensation all these years."

Noting that the payments made to the Fund have increased as a result of the increase in the price of oil and in Iraq's production capacity, Al-Maliki suggested that Iraq and the Fund "should arrive at an understanding on the establishment of a new and just compensation mechanism," recalling that Iraq has already paid a "considerable" amount. "The time has come for the Governing Council of the Fund to make an objective presentation to the Security Council on the need to temporarily suspend the obligation to make payments (at five per cent) in order that a new mechanism for negotiating with the relevant states still owed compensation by the Fund can be established and a settlement reached in the matter, along the lines of the debt reductions granted them in accordance with the principles of the Paris Club." The continued payment by Iraq, at this critical juncture, of about USD one billion a year to the Fund is a "burden that it cannot bear in view of its numerous basic needs as well as its reconstruction efforts."