Gulf states reject talks with Governing Council, says Riyadh




By Mark Huband in Riyadh

Financial Times, 24 December 2003

Iraq’s main Arab creditors will only negotiate debt relief with a sovereign government in Baghdad and not the US-appointed interim Governing Council, Saudi Arabia’s foreign minister said yesterday.

No decision was taken regarding debt relief to Iraq at a meeting of the Gulf Co-operation Council (GCC) in Kuwait this week. However, Saud al-Faisal appeared to dismiss the credibility of the Governing Council as representative of Iraq and to make it clear that GCC states would not negotiate with it.

“The indebtedness of the Iraqi government entails that we discuss this issue with a government that is sovereign. It’s a question of dialogue among nations, and I don’t think that an effective dialogue can take place unless there’s a sovereign Iraqi government. When that government comes, we are ready to discuss these issues,” Prince Saud said.

Of Iraq’s $120bn ( €97bn, £68bn) debt, as much as $81bn is owed to the Gulf states of Kuwait, the United Arab Emirates and Saudi Arabia, according to highest calculations by the Jubilee debt campaign.

Separately, Iraq also owes $28.4bn in unpaid reparations agreed with states affected by its 1990 invasion of Kuwait, and a compensation claim by these states of $97.9bn is also unresolved.

Kuwait’s prime minister, Sheikh Sabah al-Jaber, said this week that Iraq should not be freed from repayments, “because it is a country that can repay its debts”.

Saudi Arabia is owed $25bn from loans made prior to the 1991 Gulf war. The foreign minister’s statement is being seen as a sign that a forthcoming visit by James Baker, the former US secretary of state and President George W. Bush’s special envoy charged with negotiating debt reduction for Iraq, could be marked by tough talks that are unlikely to be resolved until the restoration of Iraqi sovereignty – scheduled for June 2004.

Prince Saud said that any attempt by Iraq to join the GCC, which groups Saudi Arabia, Bahrain, the UAE, Kuwait, Oman and Qatar, would also only be considered once a representative government was in place.

Mr Baker last week won pledges of support from European nations, including Russia, France and Germany, to forgive portions of the Iraqi debt they hold. He is scheduled to meet leaders from Japan, South Korea and China next week.

The US debt reduction mission has required delicate diplomacy, following the Pentagon’s decision to bar companies from countries that opposed the war from bidding for $18.6bn in new rebuilding contracts.



© Copyright The Financial Times Ltd 2008