Weapons of Mass Destruction (WMD)

DATE=12/22/03

TYPE=CORRESPONDENT REPORT

NUMBER=2-311120

TITLE=RUSSIA / IRAQ (L)

BYLINE=BILL GASPERINI

DATELINE=MOSCOW

CONTENT=

VOICED AT:

INTRO: Russian President Vladimir Putin has agreed to write off more than half the eight-billion-dollars that Iraq owes Russia. Mr. Putin met with senior leaders of Iraq's Governing Council, who are in the Russian capital to discuss future economic ties with Russia. Bill Gasperini has more from Moscow.

TEXT: The visiting Iraqi officials say President Putin, who met them at the Kremlin, has agreed to write off up to 65-percent of the debt, bringing it to three-and-one-half-billion dollars.

The head of the Iraqi Governing Council, Abdul Aziz al-Hakim, says he told Mr. Putin that Russian companies are welcome to take part in reconstruction work in Iraq.

The Iraqi delegates made it clear they welcome Russia's active participation in Iraq, despite close ties that Moscow had with former leader Saddam Hussein. Mr. Al-Hakim told reporters that, in his words, "Russia will help Iraq restore its economy and support the Iraqi people in their aspiration for sovereignty and termination of the occupation," by the U-S-led coalition troops now in Iraq.

The Russian president also told the visiting Iraqis he would consider reducing the debt burden even further, "if there are contracts for Russian companies" in Iraq.

Much of Iraq's debt to Moscow is for military equipment that the Soviet Union delivered to Iraq in the 1980s, during Baghdad's war with Iran. It is part of the 40-billion dollars Iraq owes to the Paris Club group of creditor nations.

Other European countries in the 19-nation Paris Club have also pledged to reduce or reschedule Iraq's debt burden to ease its economic problems.

In addition to President Putin, the visiting Iraqis also met Russian oil company executives to discuss lucrative contracts made with the previous regime to develop Iraqi oil fields.

Saddam Hussein suspended one major contract with the Russian Lukoil company last year, reportedly due to political differences as pressure on Saddam's regime began to mount.

The delegates told Lukoil that they want to renegotiate the contract to develop the Western Qurna oil field, in addition to exploring others. (SIGNED)

NEB/BG/MAR/RAE/FC