Iraq: Debt Relief Page: 2 of 6
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debt before the end of 2004."2 According to the U.S. Department of the Treasury, Iraq
owes Paris Club members approximately $40 billion. Of this amount, $21 billion is
principal and $19 million is interest. The International Monetary Fund (IMF) estimates
Iraqi debt held by non-Paris Club governments - primarily in the Persian Gulf - at $60
to $65 billion, and debt to commercial creditors at roughly $15 billion.3
According to most estimates, Iraq owed the United States approximately $4 billion
($2.2 billion in principal and $1.8 billion in interest). This debt was from commercial
credits guaranteed by the U.S. government. Between 1983 and 1990, the Commodity
Credit Corporation (CCC) - an agency of the U.S. Department of Agriculture (USDA)
- guaranteed about $5 billion in commercial credits for the sale of U.S. agricultural
products to Iraq.
In 1990, the United Nations (U.N.) imposed economic sanctions on Iraq after its
invasion of Kuwait. The Iraqi government subsequently defaulted on its U.S. and other
international debts. After the end of major combat operations in May 2003, the U.N.,
among other things, lifted sanctions and sheltered Iraq from a potential rush of debt
claims. U.N. Security Council Resolution 1483 prohibits any country from initiating debt
claims against the proceeds of Iraq's petroleum or gas industries until January 1, 2008.4
Until this time, the resolution requires any proceeds from these industries be deposited
in the Development Fund for Iraq, held by the Central Bank of Iraq. Furthermore, the
Resolution requires countries to freeze any funds or other financial assets and
immediately transfer them to the Development Fund for Iraq, unless they are themselves
the subject of legal dispute.
Debt Relief
Paris Club. After Secretary Baker was chosen by President Bush to head the Iraq
debt relief effort, he traveled to Europe, Asia, and the Middle East for discussions with
foreign government officials. His efforts have elicited public statements from various
countries expressing their willingness to support debt relief. Japan reportedly has stated
that it is willing to forgive "the vast majority" of the $7.75 million it is owed by Iraq, if
other Paris Club countries follow suit.s Russia, which holds around $8 billion in Iraq
debt, announced its willingness to forgive more than $4 billion in debt if its companies
are eligible to restart oil-contracts signed with the Hussein regime.6 Germany and France
are owed around $4.4 billion and $5.5 billion, respectively. In a joint statement issued
in December 2003, Germany, France, and the United States announced that they agree in
principal to debt forgiveness, but deferred disclosing any estimates of debt relief until
2 Statement of G-7 Finance Ministers and Central Bank Governors, September 20, 2003.
3 Interview with Lorenzo Perez, head of Iraq mission team, IMF Survey, Number 2, Volume 33,
February 2, 2004.
4 The text of United Nations Security Council Resolution 1483 is available at
[http://www.un/org/docs/sc].
s "Japan/Iraq: Tokyo Offers Debt Forgiveness," Oxford Analytica, December 29, 2003.
6 White, Gregory L. "Russia Offers Iraq Debt Relief," The Wall Street Journal Europe,
December 23, 2003, A2.
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Iraq: Debt Relief, report, March 11, 2005; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc816095/m1/2/: accessed March 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.