IRAQ: The Egypt Conference

January 27, 2005

Backgrounder
Current political and economic issues succinctly explained.

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What was the outcome of the international conference on Iraq?

World leaders meeting in Egypt to discuss the future of Iraq November 22-23 expressed support for Iraq’s political process and the upcoming elections scheduled for January 30, 2005. While few concrete actions emerged from the session, experts say the meeting was significant because it brought together the United States, European countries, and Iraq’s neighboring states for the first time since the Iraq war began in March 2003. One major achievement came in the days before the conference, when the Paris Club of creditor nations agreed to forgive as much as 80 percent of Iraq’s debt. However, Arab countries—Iraq’s other major creditors—said they would not negotiate debt relief until a sovereign Iraqi government is elected.

What were the conference’s main results?

Participants unanimously approved a 14-point communiqué. In its main points, the document:

  • Affirmed Iraq’s sovereignty, territorial integrity, the right of its people to democracy, and their control over natural resources.
  • Stressed the “leading role” of the United Nations in Iraq’s political process, welcomed its support in the upcoming elections, and called for increased security for U.N. election workers in Iraq.
  • Encouraged the Iraqi government to hold a broad-based political conference to widen Iraqi participation in the elections.
  • Condemned all acts of terrorism in Iraq and urged all parties to avoid civilian casualties and excessive use of force.
  • Condemned all kidnapping and assassinations, including those of civilians, foreign contractors, aid workers, diplomats, and journalists.
  • Reiterated that the mandate of the multinational force in Iraq will eventually come to an end, though no date was given.
  • Stressed that Iraqi security forces must play an increasing role in ensuring the country’s security.

Were there disagreements?

Yes, over a range of issues:

  • Representatives from France, Syria, and Iran pushed to set a date for the withdrawal of U.S. forces from Iraq. The U.S. delegation, led by Secretary of State Colin Powell, rejected the idea. Under the terms of U.N. Resolution 1546, which endorses Iraq’s interim government and the election plans, the U.S.-led multinational force’s mandate in Iraq expires at the end of 2005, but it can be extended.
  • Iran and Syria dismissed charges from Iraqi officials that they supported violence and terrorism inside Iraq.
  • Some Arab nations suggested Iraq’s interim government should delay the January elections until violence subsides in Sunni areas of the country. Iraqi and U.S. officials rejected this idea and said elections will take place as planned.

Was the issue of improving Iraqi border controls discussed?

Yes. This is a central issue because of allegations that Syria and Iran, among other neighbors, are allowing arms, cash, and fighters to stream into Iraq to aid insurgents. All conference participants agreed that increased border security was needed, but no definite steps were taken. Some experts say tightening the borders against foreign insurgents will have only a marginal effect. “Don’t forget [the United States] found [in Falluja] that there aren’t that many foreign fighters—they’re mostly home-grown,” says, Lawrence J. Korb, senior fellow at the Center for American Progress and a former assistant secretary of defense in the Reagan administration.

How much debt does Iraq owe?

Estimates vary, but experts say Iraq’s external debt is roughly $125 billion, or about five times its gross domestic product. The International Monetary Fund (IMF) estimates Iraq owes roughly:

  • $42 billion—$21 billion in debt, plus interest—to the Paris Club, which includes the United States and many European countries.
  • $67.4 billion to non-Paris Club states, mostly from the Gulf region.
  • $15 billion to private contractors, including commercial banks.
  • $500 million to the IMF and World Bank.
  • $29 billion in reparations from the 1990-91 Gulf War.

Brad Setser, a former visiting scholar at the IMF and an expert on Iraqi debt, says Iraq has paid some Gulf War reparations; in fact, they are the only obligations Iraq is currently paying down. Most of the payments go to Kuwait and Saudi Arabia. So far this year, Iraq has paid 5 percent of its oil revenues, or some $800 million, toward the U.N.-administered reparations.

How much debt was forgiven?

On November 21, Paris Club nations meeting in Paris agreed to forgive up to $33 billion, or nearly 80 percent, of Iraq’s outstanding debt to them. Under the deal, 30 percent of the funds will be forgiven immediately, with another 30 percent scheduled to be erased after Iraq negotiates an economic reform package with the IMF next year. If Iraq has implemented the IMF reforms, the Paris Club will forgive a further 20 percent in 2008. Iraq was given 23 years to repay the remaining debt, with no payments or interest due for the next six years. President George W. Bush hailed the deal, calling it “a major international contribution to Iraq’s continued political and economic reconstruction.” He called on other creditor nations to agree to comparable terms.

Which countries attended the Egypt conference?

The Group of Eight developed nations: the United States, Britain, Germany, France, Italy, Canada, Japan, and Russia; the Netherlands, which currently holds the European Union (EU) presidency; Egypt, the host nation; China; and Iraq’s neighbors Saudi Arabia, Kuwait, Jordan, Syria, Turkey, and Iran. Iraqi Foreign Minister Hoshyar Zebari represented the Iraqi Interim Government. No representatives of the Iraqi insurgency were present.

Which organizations attended?

Representatives from the International Monetary Fund (IMF), the United Nations, the Arab League, the Organization of the Islamic Conference, and the EU.

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