February 11, 2008

Russia has finally signed a bilateral agreement to write off $12bn (93%) of Iraqi debt in line with the Paris Club agreement of 2004. The deal was signed by the Russian Finance Minister, Alexei Kudrin, and the Iraqi Foreign Minister, Hoshyar Zebari, who is visiting Moscow. Kudrin said the debt will be cancelled in several stages. In the first stage, 65% of the debt will be written off. The remaining $4.5 billion will be cancelled in two stages, subject to further negotiations. The Russian finance ministries press release noted that: "Iraq's remaining debt to Russia to be paid in 2011-2028 will stand at around $1.13 billion, including the capitalization of interest for 2005-2008. Iraq is expected to make the first payment in early 2009."

Although Iraq made no public promises regarding the Lukoil West Qurna contract, earlier in the day, Russian Foreign Minister Sergei Lavrov and Zebari signed a memorandum of cooperation in the trade, economic, scientific and technical spheres. "The memorandum which we have just signed will open doors to Russia for fully fledged participation in all projects and tenders to be held in Iraq," Zebari said. Lavrov said Russia could invest up to $4bn in Iraq.