posted 12-16-2003 11:11 PM            

France pledges to help reduce Iraq debt

By JAMEY KEATEN
The Associated Press
12/15/2003, 5:31 p.m. CT

PARIS (AP) — France said Tuesday it will work with other nations to cancel billions of dollars in Iraqi debt and that Saddam Hussein's capture will open the way toward mending relations with Washington.

Foreign Minister Dominique de Villepin of France, one of the most persuasive and persistent critics of the U.S. decision to wage war in Iraq, said he hopes the capture will allow the international community to "regain its unity."

France's commitment toward reducing the outstanding debt came a day before U.S. special envoy James A. Baker was to arrive in Paris, one of five European capitals he will visit this week as part of an effort to encourage such moves.

Words of cautious congratulations also arrived from China, Germany, and Russia — also among the main opponents of the war. They praised the seizing of Saddam as a way to help establish a stable, independent government in Iraq.

"We hope that the latest development of the situation in Iraq is conducive to the Iraqi people taking their destiny into their own hands, and to realizing peace and stability in Iraq," Chinese Foreign Ministry spokesman Liu Jianchao said Sunday.

World leaders also reiterated their calls for a quick hand-over of power to Iraqis.

"The establishment of a sovereign government will allow international solidarity to fully express itself," French President Jacques Chirac said, according to spokeswoman Catherine Colonna. "We now need to look to the future."

Mending relations with Washington and persuading the Bush administration to hand decision-making power over to the Iraqis could also bolster France's ability to influence Iraq's future — and its chances of participating in the lucrative reconstruction of Iraq.

France, in the most concrete gesture to Washington, will join other members of the Paris Club of creditor nations to look for ways of restructuring or forgiving huge debts Iraq owes them, de Villepin said.

"France could envisage the cancellation of appropriate debts," he said at a news conference after meeting a delegation of visiting Iraqi ministers. He did not provide any figures.

Iraq owes some $40 billion to the United States, France, Germany, Japan, Russia and others in the 19-nation Paris Club. Other countries are owed at least an additional $80 billion.

The Paris Club's rules allow it to forgive the debt only of internationally recognized governments. The current U.S. plan is to hand over control of Iraq to an independent government by July 1.

At the United Nations, U.S. Ambassador John Negroponte said Saddam's capture could help speed the political transition in Iraq, something other nations would like to see.

"We certainly hope that his capture will contribute to the promotion of stability and the acceleration of the political process and also hopefully the halting of attacks on the Iraqi people," Negroponte said.

Russia's diplomatic point man on Iraq, Deputy Foreign Minister Yuri Fedotov, reiterated Moscow's position that Iraq's foreign debt can only be restructured though the Paris Club.

Forgiving Iraq's debt would be an unusual step for the Paris Club, which said it has never forgiven the debt of an oil-rich country.

France has also said the kind of relief offered to Iraq can be decided only after the International Monetary Fund studies how much the country can sustain in debt payments.

Still, French and Paris Club officials said privately that Iraq's debt is more than its war-battered economy can bear, and that some cancellations will be necessary.

Despite the goodwill, it is not clear what sort of reception Baker will face. His mission was complicated by a U.S. decision last week to lock out Russia, Germany and France from bidding on $18.6 billion in U.S.-financed reconstruction projects in Iraq.

De Villepin insisted that France's willingness to forgive Iraqi debts was unrelated to the tussle over contracts, saying, "let's not mix up the different subjects."

He acknowledged that there was a "quarrel" over the issue of contracts, and said that France and other nations are examining the breadth of the American decision.

Referring to Baker's tour, Bush appeared especially conciliatory toward Europe — especially longtime allies France and Germany — at a news conference in Washington on Monday.

"We had a disagreement on this issue about Saddam Hussein and his threat," Bush said. He insisted that the disagreement was not a "dividing line" between the countries.

Speaking on French radio on Monday, the U.S. ambassador to France, Howard Leach, said Saddam's capture would "reinforce" French-American relations.