US embassy cable - 05PARIS457

UNCLAS SECTION 01 OF 03 PARIS 000457 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/IFD 
TREASURY FOR DO/IDD AND OUSED/IMF 
SECDEF FOR USDP/DSAA 
PASS EXIM FOR CLAIMS -- EDELARIVA 
PASS USDA FOR CCC -- ALEUNG/DERICKSON/KCHADWICK 
PASS USAID FOR CLAIMS 
PASS DOD FOR DSCS -- PBERG 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, EAID, XM, XA, XH, XB, XF, FR 
SUBJECT: PARIS CLUB HOLDS INFO SESSION ON IRAQ DEBT 
 
SENSITIVE BUT UNCLASSIFIED.  NOT FOR INTERNET 
DISTRIBUTION 
 
REF: 04 Paris 8416 
 
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SUMMARY 
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1. (SBU) Following up on the November 21 restructuring of 
Iraqi debt, the Paris Club hosted an informational 
meeting for non-Paris Club creditors on January 13, 
explaining how the agreement achieves an 80 percent 
reduction of debt in three stages as well as the Iraqi 
obligation to seek comparable treatment from those 
creditors.  Creditor countries reported on the mostly 
limited contacts from the IIG to reconcile debt figures, 
and some provided data about debt totals.  End Summary. 
 
2. (U) NOTE: INDIVIDUAL CREDITOR POSITIONS REPORTED IN 
THIS MESSAGE SHOULD BE TREATED AS "PARIS CLUB 
CONFIDENTIAL" AND NOT/NOT DISCUSSED WITH DEBTOR COUNTRY 
 
SIPDIS 
REPRESENTATIVES, NOR WITH NON-PARIS CLUB PARTICIPANTS. 
 
3. (U) The Secretariat of the Paris Club invited certain 
non-Paris Club creditors to an informational session in 
Paris on January 13, on the margins of the regular Paris 
Club January session, to explain the agreement struck to 
provide debt relief to Iraq (reftel).  In attendance were 
representatives from the Embassies of Bulgaria, Cyprus, 
Czech Republic, Hungary, Poland, Romania, Slovakia, 
Slovenia, and Turkey, in addition to delegations from the 
Paris Club member countries. 
 
4. (SBU) The Secretariat made an extensive presentation 
on the Iraq debt relief agreement, highlighting the 
obligation imposed on Iraq to seek comparable debt relief 
from all its other creditors.  The Secretariat asked 
whether the IIG has contacted non-Paris Club members to 
discuss comparability of treatment (CoT).  Turkey stated 
it had nothing concrete to report, but the IIG has made 
some preliminary contacts.  Slovakia said nothing has yet 
been taken up nor done by the IIG.  Romania reported IIG 
officials had paid a visit to Bucharest in December, who 
had indicated that after the elections in Iraq, perhaps 
in February, they would arrange meetings to reconcile 
total debt amount.  Poland said no talks have been held, 
formal or technical.  Some political level discussions 
have been held, but not on debt issues.  Hungary said it 
had had no contacts yet from the IIG.  The Hungarians had 
requested confirmation of their debt claims but had not 
received an answer.  Hungary asked the Secretariat about 
the reactions of other creditors, particularly the Gulf 
States. 
 
5. (SBU) The Secretariat reported that Kuwait has 
indicated its agreement to comparability of treatment 
(e.g., 80 percent debt cancellation) on debt totaling 
around USD 10 billion.  Bahrain has also indicated its 
intention to go along with CoT, but there is nothing 
concrete yet.  The Saudis have made contact with the IIG, 
but have differences regarding the reconciliation of 
certain types of debt and so there is nothing more 
concrete yet.  Within the Paris Club, creditor countries 
agreed to a six-month time frame to sign bilateral 
agreements implementing the debt deal.  The USG signed 
its bilateral in December, which is the only one done 
yet.  The Italian representative reported that it also is 
in the process of finalizing its bilateral agreement.  It 
has prepared a draft, which is awaiting Iraqi signature 
after the election.  The Italy rep added that Italy had 
heard from Jordan that Poland had agreed to reduce the 
portion of its debt owed to Iraq.  The Polish rep denied 
bilateral talks on debt reduction had begun, and denied 
any knowledge of any such statement.  Italy inquired the 
Secretariat about China, and the Secretariat stated it 
 
SIPDIS 
had proposed setting up an informational session, but had 
not yet gotten a reply. 
 
6. (SBU) Germany, noting that it still has not finished 
reconciling its debt with the IIG, asked creditors about 
the size of their claims.  The Russia delegate observed 
that it too has not finished its reconciliation of 
claims, which is holding up its bilateral agreement. 
Responding to a query from Poland, Russia said the 
nominal value of its debt reduction is the same as other 
creditors, but due to the terms of its entry into the 
Paris Club, it grants an additional upfront reduction 
that translates into a larger discount. 
 
7.  (SBU) Turkey said its claims total USD 1.3 billion, 
of which over 1 billion is owed to the Turkish Central 
Bank and the rest (USD 300 million) to its export bank. 
Most of the debt is from a dam construction project. 
Including late interest and arrears, it has about 400 
million owed in private sector debt. 
8.  (SBU) Romania said its claims as of February 1990 
totaled USD 1.7 billion.  Including interest since 1993, 
as of December 2004 the outstanding claims total USD 2.6 
billion, which are all official government claims. 
 
9.  (SBU) Poland said total claims are close to USD 780 
million (500 in principal, 280 interest and late 
interest), which are all from government credit agencies 
and which all were reported to the IMF. 
 
10. (SBU) Hungary said its claims total USD 120 million, 
of which over 90 percent are guaranteed export credits. 
 
11. (U) Other creditors offered to provide data to the 
Secretariat at later dates.  In closing the meeting, the 
 
SIPDIS 
Secretariat noted it is available to help in reconciling 
 
SIPDIS 
claims, and will continue its efforts to educate other 
non-Paris Club creditors. 
 
Baghdad minimize considered. 
LEACH