US embassy cable - 04THEHAGUE1840

UNCLAS THE HAGUE 001840 
 
SIPDIS 
 
DEPT FOR EB/IFD/OMA AND NEA/I 
 
E.O. 12958: N/A 
TAGS: EFIN, EAID, NL, IZ 
SUBJECT: DUTCH AGREE TO PARTIAL DEBT CANCELLATION FOR IRAQ; 
WANT FOCUS ON ARREARS, NEAR-TERM FLOWS 
 
1. DUTCH DEVELOPMENT AID MINISTER AGNES VAN ARDENNE ANNOUNCED 
JULY 16 THAT CANCELLATION OF PART OF IRAQ'S 245 MILLION EURO 
(APPROX USD 300M) DEBT TO THE NETHERLANDS WOULD BE NECESSARY. 
 MINISTER VAN ARDENNE'S STATEMENT, WHICH CAME IN RESPONSE TO 
A PARLIAMENTARY INQUIRY, NOTED THAT THE IMF'S DEBT 
SUSTAINABILITY ANALYSIS ON IRAQ, PRESENTED TO PARIS CLUB 
CREDITORS IN JUNE, INDICATED THAT FULL REPAYMENT OF THE DEBT, 
EVEN ON A DEFERRED BASIS, WOULD BE IMPOSSIBLE, NECESSITATING 
A PARTIAL WRITEOFF.  VAN ARDENNE ADDED THAT THE EXACT AMOUNT 
OF THAT WRITEOFF REMAINED TO BE DETERMINED. 
 
2.  MINISTER VAN ARDENNE'S STATEMENT WAS THE FIRST PUBLIC 
ACKNOWLEDGEMENT OF DUTCH GOVERNMENT SUPPORT FOR PARTIAL DEBT 
CANCELLATION FOR IRAQ, ALTHOUGH FINANCE AND FOREIGN MINISTRY 
CONTACTS HAD TOLD ECONOFFS EARLIER THAT THE NETHERLANDS WOULD 
GO ALONG WITH SUCH A DEAL PROVIDED (A) THAT IT WAS DONE IN 
THE PARIS CLUB FRAMEWORK, AND (B) THAT NON PARIS CLUB 
CREDITORS PROVIDED COMPARABLE TREATMENT.  REGARDING TERMS, 
PAULINE EIZEMA OF THE MFA'S PARIS CLUB OFFICE (WHICH FALLS 
UNDER THE DEVELOPMENT MINISTER'S JURISDICTION, SINCE DEBT 
CANCELLATIONS ARE CHARGED ON A STRAIGHT EURO-FOR-EURO BASIS 
TO THE DEVELOPMENT BUDGET) TOLD ECOUNS THAT THE NETHERLANDS' 
PREFERENCE AT THE PARIS CLUB WOULD BE FOR A CONSOLIDATION 
FIRST OF ACCUMULATED ARREARS AND SECONDLY OF NEAR-TERM DEBT 
SERVICE FLOWS, STRETCHING OUT TO PERHAPS THREE YEARS.  THE 
DUTCH WOULD NOT BE IN FAVOR OF A STOCK OF DEBT TREATMENT AT 
THIS POINT, SHE INDICATED. 
RUSSEL