France and Germany Join U.S. in Effort to Reduce Iraq’s Debt

US President George W. Bush's envoy on Iraqi debt relief, James Baker III, seems to have already proved his credentials. After talks with officials in the French and German governments, Baker received assurances that those two countries would do what they can to lessen Iraq's debt burden, which is estimated at $120 billion. $40 billion of that is owed to nations within the so-called 'Paris Club', an organization formed to help alleviate the debt burden of overly-indebted countries. France and Germany have not stated exactly how large a proportion of the debt will be cancelled, but there is hope that with their leadership, the Paris Club will make significant inroads towards helping Iraq gain financial stability. Most of the remaining debt is owed to Arab countries, including Kuwait and Iran, which are demanding reparations. Despite the awkward transatlantic relations that were only made worse last week when the two nations were excluded from bidding on lucrative Iraqi contracts, US officials are hoping the compromise reached with France and Germany will persuade Arab nations to be more willing to forgive debt. – YaleGlobal