10.3 |
Reconstruction: oil, commercial interests, debt relief, asylum and
stabilisation policy
•
Urge the US
to use the Paris Club. That offered Iraq the best chance of
a
sustainable
solution. Bilateral debt relief would need to be funded through
public
expenditure.
827.
At the
meeting, Mr Baker said that he hoped to secure 80 percent debt
relief for
Iraq,
though that might be optimistic.503
Mr Baker
agreed with Mr Blair’s proposal that
the US
should stick with the Paris Club mechanism. Mr Baker said that
President Chirac
was seeking
debt reduction of no more than 50 percent and that Chancellor
Schröder
was
starting from a position of 50 percent but was open to negotiation.
Russia was
giving
mixed signals.
828.
Mr Baker
met Russian President Vladimir Putin on 18 December. The
media
reported
that President Putin had told Mr Baker that Russia would join
talks on settling
Iraq’s
debt, but would negotiate on the issue taking into account the
economic interests
of Russia
and Russian companies in Iraq.504
829.
In January
2004, Mr Jon Cunliffe, Treasury Managing Director for
Macroeconomic
Policy and
International Finance, highlighted to Mr Gary Edson, US Deputy
Assistant to
the
President for International Economic Affairs, the UK’s need to
demonstrate broad
consistency
between debt relief for Iraq and debt relief under the Heavily
Indebted
Poor
Countries (HIPC) Initiative, in order to avoid charges of “aid
diversion” from poor
830.
Mr Edson
argued that Iraq was a special case, but acknowledged the need to
be
“creative”
in developing an acceptable debt relief agreement.
831.
Mr Blair
spoke to Mr Baker again on 18 May, at President Bush’s
request.506
832.
The Treasury’s
briefing for Mr Blair restated the UK’s “key
interests”:
•
debt relief
would facilitate Iraq’s economic development;
•
debt relief
through the Paris Club would strengthen that multilateral process;
and
•
financial:
the UK was Iraq’s 14th largest creditor, holding claims of
approximately
£1.15bn;
there was also a public expenditure issue.507
503
Letter
Cannon to Bowman, 18 December 2003, ‘Iraq Debt: Call on Prime
Minister by James Baker’.
504
The New
York Times, 19
December 2003, Russia
agrees to discuss debt relief for Iraq;
People’s
Daily
Online, 20
December 2003, Russia says
business interests crucial in Iraq debt relief.
505
Email
Treasury [junior official] to Cunliffe, 9 January 2004, ‘Iraq:
NSC-HMG Telecon 08-01-04’ attaching
Note,
[undated], ‘Note of NSC-HMG Telecon’.
506
Letter
Quarrey to Bowman, 18 May 2004, ‘Iraqi Debt: Prime Minister’s Phone
Call with James Baker,
18 May’
attaching Paper, [undated], ‘Contingent HIPC Proposal: Extend HIPC,
Accelerate Debt Reduction,
Increase
Grants’.
507
Minute
Quarrey to Blair, 18 May 2004, ‘Iraq Debt: Jim Baker, 18 May’
attaching Paper Treasury,
[undated],
‘Prime Minister’s Vidcon with Secretary Baker’.
497