Friday, December 5, 2003

President Bush yesterday tapped former Secretary of State James A. Baker III as his “personal envoy” to head up international efforts to restructure and reduce Iraq’s foreign debt, estimated to be as much as $125 billion.

“Secretary Baker will report directly to me and will lead an effort to work with the world’s governments at the highest levels, with international organizations and with the Iraqis in seeking the restructuring and reduction of Iraq’s official debt,” the president said in a statement read by White House spokesman Scott McClellan.

The appointment came after a request from the Iraqi Governing Council for assistance, and Mr. Bush said that Mr. Baker, 73, was selected because of his long governmental experience.

“James Baker’s vast economic, political and diplomatic experience as a former secretary of state and secretary of the Treasury will help to forge an international consensus for an equitable and effective resolution of this issue,” the president said.

Mr. Baker served as secretary of state in the administration of Mr. Bush’s father, former President George Bush, helping to assemble a broad international coalition that backed the use of force to end the Iraqi occupation of Kuwait in 1991.

Before that, Mr. Baker served as President Reagan’s first chief of staff, and as Treasury secretary in Mr. Reagan’s second term. He also oversaw the presidential campaigns of Mr. Bush’s father in 1980, 1988 and 1992.

More recently, he headed up Mr. Bush’s legal team during the 36-day election recount in Florida in 2000, which eventually ended up in the Supreme Court and delivered the presidency to Mr. Bush. Mr. Baker currently holds a senior partner position in the law firm of Baker Botts and is a senior counselor to the Carlyle Group, an influential merchant banking firm in the District.

“He has unique experience as a former secretary of state and of Treasury,” said White House Deputy Press Secretary Trent Duffy. “This is a specialized mission and it’s important to the overall mission in Iraq.”

The president appointed Mr. Baker because he “felt it was a necessary move in order to get the job done in the way that he wants … while keeping the other Cabinet members able to do their important missions as well,” Mr. Duffy said.

Mr. Baker will serve as a volunteer, working out of an office at the White House and traveling to other countries, the White House spokesman said.

Mr. Bush said the massive debt held by Iraq will dramatically affect how quickly the war-torn nation can rebuild. Iraq’s debt carries annual servicing charges of $7 billion to $8 billion.

The president blamed ousted Iraqi dictator Saddam Hussein for plunging the nation into debt.

“The regime of Saddam Hussein saddled the Iraqi people with the debt because they were more interested in building palaces and torture chambers and mass graves than helping the Iraqi people,” Mr. Bush said in his statement.

“This debt endangers Iraq’s long-term prospects for political health and economic prosperity. … The issue of Iraq’s debt must be resolved in a manner that is fair and does not unjustly burden a struggling nation at its moment of hope and promise,” he said.

Dan Senor, a spokesman for the U.S.-led Coalition Provisional Authority, said in Baghdad that estimates of Iraq’s foreign debt range as high as $125 billion.

Reducing Iraq’s foreign debt is a high priority both of the coalition and of the U.S.-appointed Iraqi Governing Council, he said.

Of the total Iraqi foreign debt, some $40 billion is owed to the United States, France, Germany, Japan, Russia and other countries who are among 19 nations belonging to the Paris Club, an umbrella organization that conducts debt negotiations.

At least $80 billion more is owed to other Arab countries and nations outside the Paris Club.

World Bank President James Wolfensohn has said that at least two-thirds of Iraq’s foreign debt will need to be written off to rebuild the country properly.

Treasury Secretary John W. Snow said he met with Mr. Baker Thursday in Washington and spent Thursday night and yesterday morning talking with international financial leaders on the phone and informing them of the move.

They had a “very positive response,” Mr. Snow said in St. Louis. “They said it was a positive step, a good step and they all looked forward to working with Mister Baker.”

Meanwhile, 16 nations, including the United States, Japan and some European countries, agreed yesterday to insure payment of up to $2.4 billion worth of exports to Iraq in an effort to jump-start the country’s economy.

Iraq’s interim trade minister, Ali Abdul-Amir Allawi, said the deal would do for Iraq what the Marshall Plan did for Europe after World War II.

Countries participating in the deal include: Australia, Austria, Belgium, Britain, Czech Republic, Denmark, Germany, Italy, Japan, Luxembourg, Netherlands, Poland, Spain, Sweden, Switzerland and the United States.

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