U.N. talks on Iraq end with no debt relief

updated 2:54 p.m. ET May 29, 2008

UPPLANDS VASBY, Sweden - A U.N. conference on Iraq issued a declaration on Thursday encouraging debt forgiveness for the war-ravaged nation, but without firm commitments from the Arab states that are Iraq's biggest lenders.

Iraqi Prime Minister Nouri al-Maliki had called on neighboring countries to forgive debt and compensation payments, saying they are hindering Iraq's road to recovery, despite a reduction in violence.

Iraq has at least $67 billion in foreign debt — most incurred during the rule of Saddam Hussein and owed to fellow Arab countries Saudi Arabia, Kuwait, the United Arab Emirates and Qatar.

In addition, the Geneva-based U.N. Compensation Commission says $28 billion remains to be paid for Saddam Hussein's 1990 invasion of Kuwait. Iraq gives 5 percent of its oil revenue to meet the compensation claims.

The declaration issued at the end of the one-day meeting outside Stockholm encouraged creditors to "consider resolving outstanding debts to Iraq." However, there were no vows to do so from Arab states, most of which did not send any senior officials to the conference.

Al-Maliki: No 'negative impact'
"Of course we would have wished to have senior representation of the Arab states ... because Iraq is an Arab state," al-Maliki told reporters. "But this has not affected us, and we did not consider that there was any negative impact of the conference."

Last year, Saudi Arabia announced it would forgive Iraq's debt but so far has failed to implement that decision. Kuwait still insists that Iraq pay compensation for damages from the invasion.

"Compensation has been forced on Iraq as a state, not on the previous Iraqi regime, so legally they are obliged to pay," Kuwait's representative, Undersecretary Mansour Al Otaibi, told The Associated Press. He added that Kuwaiti and Iraqi officials need to meet to agree on exactly how much is owed.

The Iraqi government maintains it should not be obligated to repay debts incurred by Saddam's dictatorship, which denied basic rights to its own citizens, including any say over government policy.

More than 500 delegates from dozens of countries and international organizations were attending the conference outside Stockholm, including U.S. Secretary of State Condoleezza Rice, U.N. Secretary-General Ban Ki-moon and Iranian Foreign Minister Manouchehr Mottaki.

"I'm encouraged that the participants reiterated their commitment to support Iraq," Ban said after the conference ended.

The delegates also agreed to hold yearly meetings through 2012. Iraq's government offered to host next year's conference in Baghdad, which al-Maliki said would "crown our efforts" and show that Iraq has emerged from chaos.

The conference came as the U.S. military says violence in Iraq is at its lowest level in more than four years, following a series of crackdowns on Sunni and Shiite extremists.

But attacks continue. An Iraqi official said Thursday that 16 people were killed and 14 wounded in a suicide bombing at a police recruiting center in the northwest of the country.

U.S. sees need for support, not 'large sums'
Rice told reporters before the conference that Iraq needs technical assistance and support rather than "large sums of money."

U.S. Treasury Deputy Secretary Robert Kimmitt said the U.S. Treasury will double the size of its presence in Iraq from 12 to 24 experts in the next six to nine months.

Later, Rice urged Arab neighbors to support Iraq through official visits and by opening embassies in Baghdad.

Kuwait last month said it was looking to buy a building for an embassy in Baghdad's U.S.-guarded Green Zone. It would be the first Kuwaiti Embassy in Iraq since Saddam invaded his tiny oil-rich neighbor in 1990.

Ban told the conference there was new hope for the Iraqi people to rebuild their country after war but called for reconciliation among the country's Sunni Arabs, Shiites and Kurds.

"I urge Iraqi communities to work together in a spirit of national unity to resolve fundamental issues that continue to divide them," Ban told the conference.

Iraq's Sunni Arab minority has long felt it is being sidelined by the majority Shiites and the Kurds, who dominate the Iraqi parliament and al-Maliki's government.

The largest Sunni Arab political bloc pulled its members out of Iraq's 39-member Cabinet in August, saying it was not getting enough say in decision-making. Sunni politicians have been negotiating a possible return, but said Wednesday they suspended talks due to a dispute over ministry posts.

The conference is the first annual review of the International Compact with Iraq, a sweeping five-year economic and political reform package that Ban helped broker last May in Egypt.

The compact defined international help for Iraq — including debt relief — but also set tough commitments on the Baghdad government, particularly carrying out reforms aimed at giving Sunni Arabs a greater role in the political process.

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