China and Japan consider writing off Iraq debt

30 December 2003
Tokyo and Beijing are considering writing off Iraqi debt, the two governments announced on 29 December. The news comes as the US President Bush's personal envoy on Iraqi debt, James Baker, met with senior officials in the two countries as part of his world tour to discuss Iraq's estimated $120,000 million debt.

In Japan, Baker met with Prime Minister Junichiro Koizumi, who said that Japan had a responsibility to help Iraq in any way possible. 'Japan would be prepared to eliminate the vast majority of its Iraqi debt if other Paris Club creditors are prepared to do so,' said a statement from Japan's Foreign Affairs Ministry after Baker's visit. Japanese firms were owed $4,100 million by Saddam Hussein's regime - a figure that rises to $7,000 million with penalties and interest. In October, Tokyo offered to donate about $5,000 million in aid to Iraq. 'We cannot be absorbed in ourselves,' Koizumi said in mid December before announcing the deployment of Japanese soldiers to Iraq. 'We must lend our strength for the reconstruction and peace of other countries.'

On leaving Tokyo, Baker flew to China for talks. After meeting with Baker, Prime Minister Wen Jiabao said his government would consider dropping Iraq's debt as a humanitarian gesture. 'The Chinese government fully understands the difficulties surrounding the reconstruction of Iraq and the plight of the Iraqi people,' Wen told Baker. 'Out of humanitarian considerations, we will actively consider a relatively large cut in the debt owed to China by Iraq. Iraq owes China about $1,100 million from prior to the 1990-91 Gulf War. Chinese President Hu Jintao said that Beijing wanted to 'foster the development of a constructive partnership' with Washington.

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