Raid Qusti, Riyadh Bureau Chief

RIYADH, 22 January 2004 — US envoy James Baker wrapped up a four-nation Gulf tour yesterday by securing a promise from Saudi Arabia to negotiate a “substantial” reduction of Iraq’s estimated $28 billion debt to the Kingdom.

The promise came after Baker won pledges from Kuwait, the United Arab Emirates (UAE) and Qatar to write off most, or at least a substantial part of, Iraq’s debts to the three Gulf states.

Crown Prince Abdullah, deputy premier and commander of the National Guard, told the US envoy on the Iraqi debt during a meeting that Riyadh was ready to “enter into negotiations with other principal Iraqi creditors to substantially reduce the Iraqi debt,” said Foreign Minister Prince Saud Al-Faisal.

“The results of these negotiations would have to be endorsed by the internationally recognized Iraqi government, hopefully in 2004,” he said, according to a Foreign Ministry statement.

“What constitutes ‘substantial debt reduction’ is subject to agreement among the creditors,” Prince Saud added.

The statement said Prince Abdullah and Baker agreed that Iraq’s economic reconstruction after the overthrow of Saddam Hussein “necessitates a substantial debt reduction as soon as possible following the emergence of an internationally recognized Iraqi government.”

“Regarding the Iraqi debt to the Saudi Arabian government, the crown prince affirmed the readiness of the Kingdom to enter into negotiations to substantially reduce the Iraqi debt, along with the other principal Iraqi creditors,” the statement said.

Under a plan agreed last November, an Iraqi interim government is due to take over sovereignty in Baghdad from occupying forces by the end of June.

A US official, speaking anonymously, also said Saudi Arabia had “agreed on the necessity of debt reduction for Iraq in 2004 to ensure successful reconstruction” of the war-torn country.

“Saudi Arabia agreed that debt reduction must be substantial, and this is a significant step forward,” the official said in a statement, describing Baker’s talks in Riyadh and earlier yesterday in Kuwait as “very successful.”

Iraq is estimated to owe Gulf Arab states up to $55 billion, mostly money given it during its 1980-1988 war with Iran.

Baghdad insists the money from Saudi Arabia and other Gulf states was given as grants.

The Gulf Arab states of Qatar and the United Arab Emirates have said they would waive most of the more than $7 billion they are owed.