US embassy cable - 05WARSAW1520

C O N F I D E N T I A L WARSAW 001520 
 
SIPDIS 
 
 
STATE FOR EUR/NCE TARA ERATH AND MICHAEL SESSUMS 
TREASURY FOR OASIA MATTHEW GAERTNER AND KAREN MATHIASEN 
 
E.O. 12958: DECL: 03/17/2015 
TAGS: EFIN, EAID, PREL, PL, Iraq Debt Forgiveness 
SUBJECT: POLAND SUBMITS DETAILS OF IRAQ'S DEBT 
 
REF: WARSAW 797 
 
Classified By: Classified by DCM Cameron Munter; reasons 1.5b and d. 
 
1.  (C)  The Iraqi Embassy in Warsaw provided us with a copy 
of a letter Finance Minister Gronicki sent to his Iraqi 
counterpart, Adil Abdul Mahdi, detailing Iraq's outstanding 
debt to Poland.  According to the Ministry of Finance (MOF), 
Iraq owes Poland USDOLS 786,225,209.93 (including USDOLS 
309,570,799.67 in interest).  MOF broke the total down into 
eight separate loans concluded between 1972 and 1990, all 
held by the Ministry of Finance, six of which are commodity 
credits, and two of which are rescheduling credits. 
 
2.  (C)  The Iraqi Ambassador confirmed that he has received 
no instructions to approach the Polish government on this 
issue.  He does not expect to receive any until after a new 
government in Baghdad is formed. 
 
3.  (C)  U/S Wieslaw Szczuka told Econoff on March 15 that 
the Polish government is still considering its options, and 
has made no final decision on how to treat its Iraqi debt. 
Minister Gronicki and other MOF officials have earlier noted 
that Poland would likely follow Paris Club consensus and 
forgive 80 percent of the outstanding debt, although PM Belka 
will have to make the final decision. 
 
4.  (C)  Comment:  We are optimistic that the Polish 
government will make a decision on how to handle the 
outstanding Iraqi debt before it leaves office later this 
year.  It fits in with this government's broader policy of 
resolving as many pending transition issues as possible. 
Before Finance is prepared to take this decision to PM Belka, 
however, we believe the Ministry is waiting on three issues 
to be resolved.  First, Finance is focused on finalizing 
early repayment of Poland's outstanding Paris Club debt, 
which it hopes to complete by March 31.  Second, should 
Poland agree to forgive 80 percent, GOP officials are still 
debating how best to use the remaining 20 percent of the 
outstanding debt.  Resolving this issue will depend in part 
on the third item, which is the formation of a new Iraqi 
government.  An active approach by a friendly new Iraqi 
government is likely to influence the GOP's ultimate 
decisions. 
Munter 
 
 
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 2005WARSAW01520 - Classification: CONFIDENTIAL