Most creditors to provide substantial relief

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All of Iraq's major creditors, except China, have agreed in principle to reduce "substantially" the country's overall debt, and negotiations on the exact amount of debt forgiveness will begin soon, President Bush's special envoy James Baker said yesterday.

Mr. Baker, secretary of state in the administration of the previous President Bush, said in an interview that Iraq's future government, which is expected to assume power from the U.S.-led coalition by July 1, will finalize the agreements with the creditors.

"But we must begin [negotiations] now to have any chance to complete the project in 2004," he said.

When his mission began in December, he noted, its objective, in addition to the timeline, was to secure the creditors' pledge that "any reduction must be substantial, or a vast majority of the total debt."

"They all agreed to those principles, except the Chinese. Their agreement was a little bit less definitive than that," Mr. Baker said by telephone from Houston.

In the past two months, he visited 10 countries in Europe, Asia and the Persian Gulf -- France, Germany, Italy, Russia, Japan, China, Saudi Arabia, Kuwait, Qatar and the United Arab Emirates (UAE) -- that are owed the bulk of Iraq's estimated $120 billion debt.

"Getting some of the Middle Eastern countries committed to those principles wasn't easy, because they don't want to give their debt reduction to us. They'd rather give it to the new government to create political favor with it," Mr. Baker said.

"But we got them to do it," he added. "Now we have to go back at some point and get the exact percentage reductions."

Mr. Baker also said that he and his team "still have ... to deal with" some former communist nations in Eastern Europe that are owed "a surprising amount of debt."