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Iraq seeks Arab debt forgiveness as summit opens

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Iraq seeks Arab debt forgiveness as summit opens


Reuters

10:35 a.m. CDT, March 27, 2012

* Paris Club already cancelled Iraqi debt

* But most Arab countries have yet to do so

* Iraq hosting first Arab League summit in two decades

By Mariam Karouny and Serena Chaudhry

BAGHDAD, March 27 (Reuters) - Iraq asked countries at an
Arab League summit on Tuesday to forgive its pre-invasion debts,
urging others to follow the United Arab Emirates and Algeria
which have already agreed to write off what they were owed by
their fellow OPEC member.

"We've asked Saudi Arabia, Kuwait, Qatar, Libya, Jordan,
Sudan, Egypt and Morocco to help Iraq in closing up its debt
situation," Iraqi Finance Minister Rafie al-Esawi said on the
first day of the summit, the first to take place in post-war
Baghdad.

The Paris Club of 19 rich creditor nations agreed in 2004 to
write off 80 percent of some $40 billion debt to help Iraq
recover from the 2003 U.S.-led invasion that ousted President
Saddam Hussein but triggered years of violence and insecurity.

Debt forgiveness talks with non-Paris Club nations are still
under way.

"It needs more cooperation from Arab countries regarding the
cancelling of debt," Esawi said, thanking the UAE and Algeria
for agreeing to cancel 100 percent of debts.

Finance minister talks opened the three-day Arab League
Summit in Baghdad, the first to be held in the Iraqi capital in
two decades and the first to be hosted by a Shi'ite Arab leader,
Prime Minister Nuri al-Maliki.

Tight security has locked down the capital and the
government declared a five-day holiday to help ease congestion
caused by checkpoints and roadblocks, with tens of thousands of
extra troops drafted in.

Leaders from the 22-member group are due to meet on Thursday
in talks likely to be dominated by the crisis in Syria.


IRAQ'S RETURN

Iraq's external debt was between $130 billion and $140
billion in 2003, much of which was settled through the 2004
Paris Club agreement.

That deal required Iraq to seek similar settlements with all
its other creditors. But some commercial creditors won legal
judgements and have refused to comply with the settlement.

Saudi Arabia last year was owed $30 billion by Iraq and
Kuwait is owed around $22 billion in additional to war
reparations for the 1991 Iraqi invasion of Kuwait.

Iraq's security and its oil-driven economy have improved
since the bloodier days of 2006-2007 after the 2003 invasion
sparked years of sectarian conflict that drove the country close
to civil war.

But Iraqis still struggle with daily power shortages,
unemployment and a crumbling infrastructure, despite huge oil
revenues from exports of 3 million barrels a day.

Iraq hopes the summit will mark its return to the diplomatic
stage in the Arab region, where many of its Sunni Arab
neighbours are wary of the rise of Iraq's Shi'ite majority since
the fall of Sunni dictator Saddam Hussein.

Maliki has sought a detente with Arab Gulf neighbours in an
attempt to allay fears his government has moved too close to
Shi'ite power Iran in a region increasingly split along
sectarian lines.

Saudi Arabia recently named its first envoy to Baghdad in
two decades and neighbouring Kuwait earlier this month reached a
$500 million agreement with Iraq to resolve a stand-off over
Gulf-war era debts.


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