Weapons of Mass Destruction (WMD)

DATE=12/16/2003

TYPE=CORRESPONDENT REPORT

TITLE=GERMANY / IRAQ DEBT (L-O)

NUMBER=2-310923

BYLINE=RUTH ELKINS

DATELINE=BERLIN

CONTENT=

VOICED AT:

INTRO: U-S special envoy James Baker won French and German backing Tuesday for plans to reduce Iraq's foreign debt. From Berlin, Ruth Elkins reports on Mr. Baker's three-day European tour to help relieve Baghdad's debt.

TEXT: In a statement issued shortly after Mr. Baker's meeting with German Chancellor Gerhard Schroeder Tuesday, the chancellor said Germany, like France, was ready not only for debt restructuring but also for a substantial write-off of Iraq's debt.

Earlier Tuesday, Mr. Baker had met with French President Jacques Chirac at the Elysee presidential palace in Paris. There, he also gained French agreement that France and the United States would write off part of the 40-billion dollars Baghdad owes the 19 so-called Paris club creditor nations, ideally by the end of next year. Mr. Baker was upbeat about the result:

/// BAKER ACT ///

I got an extraordinarily warm and friendly reception here, as I always have when I've come here. And as I think you would gather from what I just told you about the views of the French government and the United States government, that we want to do what we can to reduce the oppressive debt burden on the Iraqi people, so that they can enjoy freedom and prosperity.

/// END ACT ///

While agreeing to cooperate with the United States on the debt issue, Germany made it clear the capture of the former Iraqi dictator, Saddam Hussein, on Saturday didn't mean it would now send troops to help stabilise Iraq.

Germany is still angry at Washington's decision to ban it and other opponents of the war from bidding for reconstruction contracts worth about 18-point-six billion dollars.

In Washington, caution remained despite the successful negotiations. The White House said this week's talks with five U-S allies were just the beginning of a process to reduce Iraq's debt. Iraq owes not only 40 billion dollars to the Paris Club countries, but an additional 80 billion to its neighbours and other countries.

Mr. Baker is due to head to Italy for talks with Italian Prime Minister Silvio Berlusconi, before he travels on to Russia and Great Britain later this week. (SIGNED)

NEB/RE/MAR/KL