The Report
of the Iraq Inquiry
820.
The official
advised that the UK estimated that Iraq had debts of at
least
US$108bn,
over 700 percent of GDP or 900 percent of exports. That level of
debt was
unsustainable,
especially when it was combined with Iraq’s commitment to meet at
least
US$85bn in
compensation claims from the Kuwait war. Preliminary Treasury
analysis
was that a
reduction of almost 80 percent in the net present value of Iraq’s
external debt
would be
required to restore sustainability.
821.
Mr Brown
discussed debt relief for Iraq with Secretary Snow on 18
November.499
Mr Brown’s
Private Secretary reported that Secretary Snow had agreed that
Iraq’s debt
should be
dealt with through the Paris Club, though the terms would have to
be more
generous
than usual.
822.
On 5 December,
President Bush appointed Mr James T Baker III, former
US
Secretary
of State, as his personal envoy on Iraqi debt.500
Mr Baker
embarked on
a series
of meetings with key creditors.
823.
President
Bush, Mr Jacques Chirac (the French President) and
Mr Gerhard
Schröder
(the German Chancellor) issued a joint statement on debt relief for
Iraq on
16
December.501
It
confirmed that France, Germany and the United States
agreed
that there
should be substantial debt reduction for Iraq, but stated that:
“The exact
percentage
of debt reduction that would constitute ‘substantial’ debt
reduction is subject
to future
agreement between the parties.”
824.
Mr Baker
called on Mr Blair on 18 December.502
825.
The Treasury
advised Mr Blair that Mr Baker was expected to ask the UK
to:
•
advocate
publicly for significant debt relief, perhaps as much as 90
percent;
•
lobby other
key creditors; and
•
act with
the US in providing bilateral debt relief, should the Paris Club
not look
like
producing a sustainable solution.
826.
In response,
the UK should:
•
Commit to
advocating for “significant debt relief”, but not to a specific
figure.
The US
figure of 90 percent was an “extreme case”.
499
Email
Bowman to Treasury [junior official], 18 November 2003, ‘Iraq Debt:
CX Meeting with Secretary
Snow’.
500
Minute
Cannon to Blair, 17 December 2003, ‘Iraqi Debt: Meeting with James
Baker’ attaching Paper
Treasury,
[undated], ‘Brief on Iraq’s International Debt’.
501
Statement
President Bush, President Chirac and Chancellor Schroeder, 16
December 2003, Joint
statement
on Iraq and debt reduction.
502
Minute
Cannon to Blair, 17 December 2003, ‘Iraqi Debt: Meeting with James
Baker’ attaching Paper
Treasury,
[undated], ‘Brief on Iraq’s International Debt’.
496