10.3 |
Reconstruction: oil, commercial interests, debt relief, asylum and
stabilisation policy
839.
The IMF
released the final elements of its Debt Sustainability Analysis
(DSA)
for Iraq on
25 May.510
The DSA
assessed that Iraq’s debt stock was US$124.8bn, of
which
US$42bn was owed to Paris Club creditors, US$67.3bn to non-Paris
Club official
creditors,
US$15bn to the private sector and US$0.5bn to multilateral
institutions.
840.
A Treasury
official briefed Mr Brown on the DSA two days
later.511
He
estimated
that, on
the basis of the DSA assessment, Iraq required debt reduction of at
least
80 percent
and preferably 90 to 95 percent; the higher figures would deliver a
robust exit
from debt
unsustainability and enable Iraq to cope with economic
shocks.
841.
Mr Blair
spoke to President Chirac on 1 June, and suggested that the UK
and
France
should make a joint approach to the US on debt relief for Iraq and
HIPCs.512
President
Chirac did not support the proposal.
842.
The US sought
to broker a deal on debt relief for Iraq at the 8 June 2004
G8
Summit at
Sea Island, but without success.513
The Summit
did agree to extend the HIPC
Initiative
for two years until 31 December 2006 and to provide the necessary
financing
to complete
the initiative, and to provide additional debt relief “where
appropriate”.514
843.
During a press
conference at the end of the Summit, President Chirac was
asked
whether he
still thought that 50 percent was the right level of debt relief
for Iraq.515
He
replied:
“It is
absolutely the right one … Iraq is potentially a rich country even
though she has
a
substantial debt. How will you explain to the very indebted poor
countries … that
we’re going
to do for Iraq in three months more than we’ve done in ten years
for the
world’s
thirty-seven poorest and most indebted countries? That … isn’t
right.”
844.
Treasury
officials commented the following month that the Sea Island
agreement
had not
gone as far as they had hoped, in part because there had been no
concomitant
agreement
on debt relief for Iraq.516
They
reported that Mr Brown still believed that
the UK
should maintain a linkage between debt relief for Iraq and “a
better deal for …
HIPCs”.
845.
Discussions
continued over the summer between the Iraqi Government, the
IMF
and
creditors on debt reduction and the terms of an IMF programme for
Iraq.517
510
International
Monetary Fund, 25 May 2004, Iraq –
External Debt Sustainability Analysis.
511
Minute
Habeshaw to Chancellor, 27 May 2004, ‘Iraq Debt: IMF Debt
Sustainability Analysis’.
512
Letter
Rycroft to Adams, 1 June 2004, ‘Prime Minister’s Conversation with
Chirac, 1 June’.
513
Paper
Treasury, 7 July 2004, ‘Iraq Debt and HIPC’.
514
Sea Island
Summit 2004 Communiqué, 10 June 2004, Debt
Sustainability for the Poorest.
515
Présidence
de la République, 10 June 2004, Sommet du
G8 – Conférence de Presse de M. Jacques
CHIRAC
Président de la République, a l’issue du Sommet.
516
Paper
Treasury, 7 July 2004, ‘Iraq Debt and HIPC’.
517
Minute
Habeshaw to Chancellor, 6 September 2004, ‘Iraq Debt:
Update’.
499