And now for the hard part

19 December 2003
Abandoning the sober, statesmanlike tone he adopted after the capture of Saddam Hussein, President Bush said on 15 December that the public relations coup had 'changed the equation in Iraq'. European leaders echoed the sentiment, with much talk of pages of history being turned. 'Saddam's rule is now indeed history,' UK Prime Minister Tony Blair said on 15 December. 'The hope of a new Iraq is now clear and evident to all and the final victory will be theirs - the Iraqi people's.'

Before the Iraqi economy can turn over a clean sheet, however, an estimated $120,000 million of debt needs to be cleared from the government ledgers. It was with this aim in mind that US envoy James Baker visited Paris and Berlin in mid-December to rally European states to the economic cause. France and Germany remain implacably opposed to the coalition occupation of Iraq, but have agreed in principle to back plans for debt relief. 'Germany and the US, like France, are ready not only for debt restructuring but also for substantial debt forgiveness toward Iraq,' a spokesperson for German Chancellor Gerhard Shroeder said on 16 December.

It is rare that the three countries have been mentioned in the same breath since the invasion, let alone in agreement. Considerable work will be needed to repair transatlantic relations in order to secure a comprehensive debt relief programme. Chances of a rapprochement have been damaged by the recent US decision to exclude non-coalition members from $18,000 million of prime reconstruction contracts in Iraq, but European states have considerable leverage over the US on the issue of debt. France chairs the Paris Club of nations, to which Iraq owes about $40,000 million, and prominent members such as Russia have been calling for a more representative Iraqi government than the present US-appointed Governing Council, as well as for greater UN and IMF involvement in rebuilding the country's main institutions.

The UN for its part remains reluctant to re-engage with the reconstruction process, partly as a result of the August bombing of its Baghdad headquarters, but also because Washington has made it clear from the start that the world body should only play a minor role. Secretary-General Kofi Annan said on 16 December that the UN was ready to play its full part in helping Iraq, but 'much greater clarity' was still needed as to what was expected of the organisation.

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