15 May 2003
Taylor: Creditor Countries Agree Debt Handling Critical to Iraq Future
(Treasury Under Secretary expects different views on details) (700) By Andrzej Zwaniecki Washington File Staff Writer Washington -- Creditor countries agree that Iraq's foreign debt needs to be addressed in a way that ensures the successful reconstruction of Iraq and the recovery of its economy, a senior U.S. Treasury Department official says. Speaking to reporters May 15, Under Secretary of the Treasury John Taylor said that dealing with Iraq's debt will be difficult because multiple parties have interests in resolving it and the exact amount is unknown. Private estimates cited by news reports put Iraq's external debt at $400,000 million. But Kenneth Rogoff, the International Monetary Fund (IMF) chief economist, views that figure as too high. Taylor denied news reports about major disagreements between the United States and other countries, including European nations, concerning repayment of foreign debt by Iraq and possible conditions of such a process. "I haven't picked up a lot of dissension in these discussions," he said, referring to his talks with officials from other countries. Nevertheless, Taylor cautioned that "we are going to have different views on details" and that no one should expect Iraq to start repaying any debt before the end of 2004. He said the Bush administration will have a better sense of what the stakes are when it gets better data on Iraq's financial obligations and Iraqi assets from U.S. officials in Iraq, other countries, the informal group of official creditors known as the Paris Club, and the IMF. Taylor said the Bush administration will want to stress to other governments the importance of tracking down and freezing Saddam Hussein regime's assets so that the Iraqi people can use the money. He said he expects a donors' conference, similar to the one that took place shortly after the Taliban regime had been defeated in Afghanistan, to take place some time in the future to help accelerate Iraq's reconstruction. But first, Taylor said, potential donor countries must have a clear sense of what the costs of reconstruction will be. The United States would like the World Bank to assess Iraq's needs before the Bush administration brings donors together, he said. Taylor noted that the Bank has agreed to do such an assessment. "The sooner the World Bank is there in Iraq to do needs assessment, the sooner we will be proceeding" with plans for donors' conference, he said. Taylor said pre-war Iraqi contracts with Russian and other foreign companies will be reviewed case by case. "There is no blank-check policy," he said. Russia, which was one of the most outspoken critics of the U.S.-led war in Iraq, is one of Iraq's largest creditors, with claims estimated at $60,000 million, according to news reports. Taylor was speaking to reporters on the day Treasury Secretary John Snow was leaving Washington for the Group of Eight finance ministers' meeting to be held May 16-17 in Deauville, France. In addition to plenary sessions, Snow is scheduled to have bilateral meetings with his counterparts from Germany, Japan and the United Kingdom. Taylor highlighted issues the Treasury secretary will be bringing up for discussions with finance ministers from G-8 countries -- Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States. Earlier in the day Snow said in a prepared statement that economic growth remains the "top priority" for the world's economies and that the most advanced countries must complement U.S. efforts to revive the global economy by taking "immediately ... their own steps, appropriate to their own circumstances, to spur growth, create jobs and contribute to global prosperity." Taylor said these steps should include structural reforms such as combating deflation and restructuring the banking sector in Japan and implementing labor market changes pushed by Chancellor Schroeder in Germany. Among the finance ministers "there is a growing sense that economies need more flexibility" to unleash their potential, Taylor said. He said that the Treasury secretary will also discuss with his G-8 partners issues related to financial stability in emerging markets and President Bush's initiatives on sustainable development. President Bush will attend the G-8 Summit in Evian-les-Bain, France, scheduled for June 1-3. (The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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