G7 call for international Iraq reconstruction effort, cautious on debt relief

14 April 2003
The G7 group of the richest industrialised countries on 12 April issued a statement supporting a multilateral approach to Iraqi reconstruction, but finance ministers sent conflicting signals on the issue of debt relief. Meeting in Washington, finance ministers and central bankers from the UK, the US, Canada, France, Germany, Italy and Japan added Iraqi reconstruction to their agenda at the last moment, and their conclusions were set out at the end of the final communique. 'We recognise the need for a multilateral effort to help Iraq,' it said. 'We support a further UN Security Council resolution. The IMF and the World Bank should play their normal role in rebuilding and developing Iraq, recognising that the Iraqi people have the ultimate responsibility to implement the right policies and build their own future. It is important to address the debt issue and we are looking forward to the early engagement of the Paris Club.'

Iraq's foreign debt is estimated at between $60,000 million and $100,000 million, and US deputy defence secretary Paul Wolfowitz on 10 April called on France, Russia and Germany to forgive Iraqi debt so that revenues could be directed towards reconstruction. Speaking to reporters at the G7 meeting, German Foreign Minister Hans Eichel said that: 'Any speculation about debt forgiveness is very, very premature, to put it in cautious terms.' Germany's debt is about $4,000 million. Eichel also pointed out that the Paris Club of international creditors, whose members are owed about $25,000 million in total, generally deals with debt restructuring rather than debt relief. French Foreign Minister Francois Mer said that other indebted countries were equally in need of assistance, and that Iraqi debt could be 'progressively renegotiated' but that 'one does not clear the slate'. Moscow sent a similar message. 'The rules that will apply are the same as for any other foreign debt,' said Russian Foreign Minister Alexei Kudrin. 'We will not give more than any of the other countries.' UK Chancellor Gordon Brown called for the involvement of the Paris Club in addressing both the interest payments, which have not been paid for many years, and the debt principle.

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