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China to write off 80 percent of Iraq debt
02/02/2010

By SINAN SALAHEDDIN

Iraq said Tuesday that China has agreed to write off 80 percent of Iraq's debt, a move that could further push Chinese business interests in the war-battered nation as Baghdad seeks international investments to fund reconstruction.

Iraq's Saddam Hussein-era debt to China stands at $8.5 billion, the Finance Ministry said in a statement posted on its Web site. A major portion of the Saddam regime's foreign debt has already been canceled by key creditor nations.

The Finance Ministry said the promise came after a meeting between China's ambassador in Baghdad and Iraq's Finance Minister Bayan Jabr. The statement, dated Jan. 31, quoted Jabr as saying the write-off "will enhance economic cooperation between the two friendly countries."

Jabr called on the Chinese government to send a delegation to sign the final deal in Baghdad.

The deal comes as the state-run China National Petroleum Corp. has secured two lucrative oil deals that reflects China's drive to seek new energy sources for its growing economy.

The two countries' trade volume reach a total of $3.8 billion during the first nine months of last year -- a 78 percent increase from the same period the previous year, the statement said.

The first Chinese-led oil deal was in 2008 to develop the 1 billion-barrel al-Ahdab oil field in central Iraq. The $3 billion pact was the first made by the new Iraqi government after the 2003 U.S.-led invasion, which China, which had strong ties with Saddam's regime, had opposed.

The second deal was made during Iraq's first postwar bidding round in June. CNPC and partner BP PLC won the rights to develop Iraq's biggest oil field, the 17.8 billion-barrel Rumaila field in Basra. The agreement was formally signed late last year.

In December 2008, the Paris Club of creditor nations concluded an agreement to cancel 80 percent of the $125 billion in Saddam-era debts to the 19-nation group.

The Paris Club describes itself as an informal group of creditors, that includes most European powers, Japan and the United States. China is not a member.

Iraq: China to write off 80 percent of Iraq debt -  Source


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