Iraq urges Arab nations to forgive debt

Iraq on Monday called on its Arab neighbours to join Western nations and forgive their share of Baghdad's outstanding foreign debts that total up to $80 billion.

Foreign Minister Hoshiyar Zebari also said that several Arab nations were now ready to reopen their embassies in Baghdad as they had promised.

"I think the atmosphere is much better and we have positive commitments from Saudi Arabia, the United Arab Emirates, Bahrain, Kuwait and Egypt to reopen their embassies, to name ambassadors," he told Reuters in Bahrain.

"I think this meeting will be a watershed for them. This meeting, it will be their commitment."

Zebari was speaking on the sidelines of a meeting of the Gulf Cooperation Council plus Jordan and Egypt hosted by Bahrain ahead of a conference of Iraq's neighbours in Kuwait on Tuesday.

He warmly embraced the Saudi foreign minister as he entered the meeting, which he called a "qualitative leap for Iraq".

U.S. Secretary of State Condoleezza Rice, who made an unannounced visit to Iraq on Sunday, is attending both meetings.

Washington argues that a strong Arab diplomatic presence in Iraq would bolster the Shi'ite-led government of Prime Minister Nuri al-Maliki and help counter the influence of Shi'ite Iran.

Several Arab countries have said they plan to reopen their Baghdad embassies say delays are logistical rather than political, but Zebari said it was possible to operate in the country despite the violence.

Egypt, whose ambassador to Iraq was kidnapped and killed in 2005, has said it will not send an envoy until security improves. Many Arab diplomats have stayed away since a suicide car bomber attacked the Jordanian embassy in 2003, killing 17 people.

"Regarding the danger, we now have over 45 foreign missions working under difficult conditions but it is doable," Zebari said.

DEBT RELIEF

Zebari said his country would also be asking for debt relief at the meeting in Kuwait on Tuesday.

"Debt relief is a standard request for Iraq. The foreign non-Arab countries have forgiven Iraq its debts so, of course, Iraq will expect from its brothers to do more," he said.

"Still they have not yet given any firm commitment."

Rice has said she will push hard for Arab neighbours to "meet their obligations" and step up financial and diplomatic support that has not been forthcoming since the 2003 invasion.

About $66.5 billion of Iraq's debt has been forgiven, with the bulk of that by the Paris Club members, according to State Department estimates this month. Of $56 billion to $80 billion of the estimated remaining debt, more than half is owed to Gulf countries, the department said.

While Washington wants the Bahrain meeting to focus on Iraq, drawing attention to U.S. demands for more Arab representation, Gulf ministers appear to be more focused on Middle East peace.

Washington relaunched the Israeli-Palestinian peace process at a conference in Annapolis, Maryland, last November.

With the United States consumed by Iraq, Arabs have been critical of what they see as U.S. lack of interest until recently in trying to resolve the Israeli-Palestinian conflict.

The United States counters that Arab states have not done enough to push talks forward.

A Bahraini official who attended the morning meeting at which the final communique was drafted, said for the GCC the discussions would focus on the Palestinian situation.

"The crux of the whole issue in the Middle East is the Palestinian issue and therefore we want to reaffirm our stand. This meeting comes right after the Annapolis conference and therefore we want to be adamant about pursuing the peace process," the official said. "We do not feel that Iraq is at the top of the agenda."

The U.S. administration wants to see a Palestinian statehood deal by the time President George W. Bush leaves office in January 2009, but talks have been moving slowly.

There is also concern that no deal can be implemented while the Palestinian territories are divided between Hamas-run Gaza and the West Bank controlled by pro-Western Palestinian President Mahmoud Abbas who is in talks with the Israelis.