U.S. Enlists Germany, France on Iraq Debt

WASHINGTON — In the strongest sign yet that antiwar European leaders are prepared to help rebuild Iraq’s devastated economy, France and Germany issued a joint statement with the United States on Tuesday, saying the three nations would work together to provide “substantial” debt relief for Iraq.

None of the countries said how much of Iraq’s estimated $120-billion debt might be restructured or forgiven. Crucial negotiations on that issue will take place next year within the Paris Club creditors organization, whose 19 member nations are owed about $40 billion.

But the agreement was welcomed in Washington and Europe as evidence that the three countries are trying to put their wartime rift behind them. The agreement reflected quick results for presidential envoy James A. Baker III, a former secretary of State and friend of the Bush family. The president tapped Baker this month to persuade Saddam Hussein’s creditors to forgive much of the debt that could otherwise cripple the new Iraqi government.

Germany’s response was particularly magnanimous, given that Berlin is still seething over the U.S. decision to bar nations that did not participate in the Iraq war from bidding on $18.6 billion in reconstruction contracts and is pushing Washington to reverse the decision.

The timing of the Pentagon’s contract policy announcement was widely seen as undercutting Baker’s mission. Apparently Berlin did not make its support for Iraqi debt relief contingent on its ability to bid on reconstruction contracts.

“Germany and the USA are in agreement that the solution to the debt question is essential for the reconstruction of Iraq,” government spokesman Bela Anda said in a statement after Baker’s meetings with French President Jacques Chirac in Paris and German Chancellor Gerhard Schroeder in Berlin.

“Germany and the United States, like France, are not only ready for debt rescheduling but also for substantial debt relief for Iraq,” Anda’s statement said. “Germany’s opinion with regard to the contracts for reconstruction of Iraq has been clearly expressed in these talks.”

Iraq owes Germany more than $5 billion. Last month, Schroeder became the first leader of a Paris Club nation to endorse a substantial debt write-off for Iraq, although several indicated they would be prepared to discuss the idea once a sovereign government is in place. The club, composed mostly of European nations, has forgiven debt of very poor countries but not nations such as Iraq, which has substantial oil resources.

Germany also was the first nation to congratulate President Bush on the capture of Hussein, former U.S. Ambassador to Germany Robert Kimmitt told Fox News. “I think they’re looking for a way to get this vitally important bilateral relationship back on track,” Kimmitt said.

Still, some German officials bristled at Washington’s proposals for debt relief. “This is coming from a country which a short time ago was saying Iraqi rebuilding could be financed all by itself” through oil sales, Karsten Voigt, Schroeder’s special advisor on U.S. relations, told German radio Tuesday.

Chirac, another leader of the antiwar camp, also has been signaling a new willingness to cooperate with the United States.

France and the U.S. “are in agreement to find the means to reduce the Iraqi debt in 2004,” Chirac spokeswoman Catherine Colonna said after his meeting with Baker. “We are also in agreement about the importance of working together on the reconstruction of Iraq.”

A day earlier, Foreign Minister Dominique de Villepin had discussed debt relief with leaders of the Iraqi Governing Council. The notably warm tone of Villepin and the Iraqis afterward pointed to an evolving French attitude toward involvement in Iraq’s transition. French diplomats have questioned the effectiveness of some prominent members of the Governing Council who were longtime exiles with reputations for having closer ties to U.S. neoconservatives than to ordinary Iraqis.

Although Hussein’s capture and Baker’s visit may be opening a door to transatlantic rapprochement, Villepin and other French officials said the tyrant’s fall only increased pressure on the U.S. to turn sovereignty back to the Iraqis earlier than the White House’s target of July 1.

In comments Tuesday to French legislators in the National Assembly, Villepin linked debt reduction to a turnover of power. He said the debt reduction could occur “when a sovereign government is installed in Baghdad,” according to media reports. Neither Baker nor Colonna mentioned such a condition, however.

Sen. Joseph R. Biden Jr. (D-Del.), who met with Chirac last week, told Bush in a letter this week that “the French understand that our failure in Iraq would be bad and possibly worse for them.”

“They also believe the rift with us has gotten out of hand and needs to be repaired. Even if they are taking some satisfaction from our difficulties -- which they deny -- I’m convinced they are prepared to be more helpful.”

Biden said Chirac told him that France would not object to having the North Atlantic Treaty Organization take over the military mission in Iraq once the U.S. leaves. Chirac indicated that France might also be willing to send police to help train Iraqis, Biden said Tuesday.

“ ‘If we are asked to do something, we will, but it can’t be just anything,’ ” Biden quoted Chirac as saying. “ ‘Schroeder and I have already [Secretary of State Colin L.] Powell we’re ready to help train the army and the police. France is ready to help, but it will not be easy.’ ”

Biden said the White House responded by saying Baker was on the way to meet with Chirac. It was not known whether Baker discussed military matters with the French president.

Baker and Bush spoke by telephone Tuesday, the White House said.

White House Press Secretary Scott McClellan said Washington appreciates the commitment by France and Germany to reduce Iraq’s debt burden “because the Iraqi people should not be saddled with the debt of the former regime that was more interested in using money to build palaces and torture chambers and rape rooms than it was in helping the Iraqi people.”

Privately, Bush administration officials were cheered by the positive response from European allies with whom relations remain touchy.

“After our disagreements with Germany and France, I don’t know how you could characterize concessions on debt as ‘expected,’ ” one official said.

Still, debt relief for Iraq is by no means a done deal. The Paris Club always has made its debt decisions by the unanimous consent of its 19 permanent members, raising a high hurdle for a controversial subject.

One member is cash-strapped Russia. It is owed more than $3.5 billion in country-to-country debt by Iraq and $52 billion in pending contract obligations -- and has expressed no willingness to forgive any of it.

Russian Defense Minister Sergei B. Ivanov said last week that Moscow would not write off the debt because “Iraq is not a poor country.” Baker will be meeting with President Vladimir V. Putin this week.

Baker also is scheduled to meet with Prime Ministers Silvio Berlusconi of Italy today and Tony Blair of Britain later in the week, McClellan said.

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Efron reported from Washington and Rotella from Paris. Times staff writers Jeffrey Fleishman in Berlin and Maura Reynolds in Washington contributed to this report.