Berlin downbeaton Iraqi debt

16 December 2003

BERLIN – Chancellor Gerhard Schroeder’s special adviser on the United States was downbeat Tuesday on forgiving Iraqi debt prior to talks between an envoy from US President George W. Bush and the German leader.

The US is seeking to reduce Iraq’s total debt of about USD 120 billion by winning debt forgiveness or restructuring from major creditors.

Former US secretary of state James Baker was due in Berlin later Tuesday, following talks in Paris, to meet Schroeder over calls for reducing some of the USD 2.5 billion Baghdad owes Germany.

“This is coming from a country which a short time ago was saying Iraqi rebuilding could be financed all by itself (through oil),” said Karsten Voigt, Schroeder’s special adviser for US affairs, in a Deutschland Radio interview.

Berlin, however, indicated earlier that it might support eliminating or restructuring some of Iraq’s debt.

A US embassy spokeswoman said there would be no statement after Baker’s meetings in the chancellery.

Germany sharply opposed the Iraq war and ties with the US were deeply chilled over the conflict. Berlin was angered last week by Washington’s decision to ban German firms from bidding for almost USD 19 billion in Iraqi rebuilding projects.

But a German chancellery official said the goal was to get away from acrimony over the tendering ban and look to improving German- American ties for the future.

Voigt admitted he could understand that American companies should win Iraqi contracts, given that funds were coming from US taxpayers.

But he expressed astonishment at the official US explanation that the ban was due to security concerns.

“In reality many politicians, including those in the US who have spoken out, view these remarks from (Deputy US Secretary of Defense) Wolfowitz as damaging to German-American relations,” said Voigt.

Voigt underlined that despite the capture of former Iraqi President Saddam Hussein, Germany was still not willing to send troops to aid Iraqi rebuilding.

Baker is on a five-nation trip to Europe to discuss cutting Iraq’s debt.

After ending his talks in Berlin, Baker is due to fly on to Rome on Wednesday for talks with Italian leaders, the US embassy said.

Following talks in France with French President Jacques Chirac, Baker said that Paris and the US had agreed on steps to relieve Iraq’s foreign debt within the framework of the Club of Paris group of creditor nations.

“I think we were all in agreement on the fact that it’s important to relieve (Iraq’s) debt within the Club of Paris, if possible in 2004,” Baker said.