Riyadh waives most Iraq debt

Washington: Saudi Arabia has agreed to forgive 80 per cent of the more than $15 billion (about Dh55 billion) that Iraq owes the kingdom, Iraqi and Saudi officials said on Tuesday, a major step given Saudi reluctance to provide financial assistance to the Shiite-dominated government in Baghdad.

But Iraqi finance minister Bayan Jabr said in an interview that Russia was holding out on debt forgiveness until negotiations begin on concessions Russian oil and gas companies had under Saddam Hussain. Russian Embassy officials in Washington declined comment late Tuesday.

The Bush administration has been working for months to persuade other governments to follow the US lead and write off all of their shares of Iraq's debts, which Jabr said total $140 billion (about Dh513 billion). Most of those loans date to Iraq's war with Iran from 1980 to 1988, when the United States, Saudi Arabia and other governments saw Iraq as a buffer against Iran.

Iraq also owes $199 billion (about Dh730) in compensation for the Gulf War that followed Iraq's 1990 invasion of Kuwait, analysts said.

The Bush administration wants to make debt restructuring for Iraq a centerpiece of an "international compact" at a meeting of Iraq's neighbours and aid organisations to be held May 3 and 4 in the Sharm Al Shaikh in Egypt, diplomatic sources said.