- The Washington Times - Monday, December 29, 2003

BEIJING — Japan agreed yesterday to cut billions of dollars of Iraqi debts and China said it would consider the idea, boosting the U.S. campaign to ease Baghdad’s financial burden.

Both governments announced the decisions after U.S. envoy James A. Baker III met with their leaders on a lightning trip to Tokyo and Beijing as part of a global U.S. lobbying effort.

Japan, which along with Russia says it is Iraq’s biggest creditor, abandoned earlier reluctance to join debt relief. It offered to forgive “the vast majority” of Iraqi debt if other members of the Paris Club of major creditor nations do so as well.

“Japan is committed to provide substantial debt reduction for Iraq in the Paris Club in 2004, and will work closely with other countries, including the U.S., to achieve this objective,” said a Japanese Foreign Ministry statement after talks between Mr. Baker and Prime Minister Junichiro Koizumi.

Japan said earlier this month that Iraq owes it $4.1 billion, or $7.76 billion with interest and penalties.

Mr. Baker earlier won agreements from Russia, Germany and France — which had opposed the war in Iraq — to cooperate in debt reduction.

The United States praised the Japanese announcement.

“This very forthcoming position is further evidence of Prime Minister Koizumi’s and Japan’s global leadership on Iraqi reconstruction,” said Sean McCormack, a spokesman for Mr. Baker.

In Beijing, Prime Minister Wen Jiabao said after meeting Mr. Baker that China “will consider reducing the debts owed by Iraq out of humanitarian concern,” the official Xinhua news agency reported.

China says Baghdad owes it at least $1.1 billion — much of it for work by two state-owned construction companies before the 1991 Persian Gulf war — though the total isn’t clear. The state newspaper China Daily has put the figure at “several billion” dollars.

China was part of the group of nations that had opposed U.S. military action against Iraq.

There was no indication whether China was offered concessions such as more access to Iraqi reconstruction contracts, or whether Beijing’s lack of a commitment was an attempt to extract them.

Beijing has criticized Washington’s decision to limit reconstruction work for countries that had opposed the war. Yesterday, the Communist Party newspaper People’s Daily said the United States “wants to monopolize the big cake of Iraq’s reconstruction … to make it hot for those countries which sang a different tune.”

Mr. McCormack said Beijing’s offer was especially significant because China is outside the Paris Club of creditors. As for access to Iraqi reconstruction work, “lines of communication are still open on the issue,” he said.

Iraq owes about $40 billion to Paris Club members and $80 billion to Arab governments.


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