Swiss to review Iraq debt

The Swiss government is to consider whether to cancel Iraq's past debts to help the country get back on its feet.

Last week the United States called on nations to write off Baghdad’s debts and ease the burden on a new Iraqi administration.

Kurt Schaerer, head of export finance at the State Secretariat for Economic Affairs (Seco), told swissinfo that Bern would review its position regarding some SFr300 million ($215 million) owed by Iraq.

“It’ll certainly have to be discussed,” said Schaerer, who added that the debt was accrued mainly through unpaid exports of machinery and building materials.

The Swiss government took care of firms’ unpaid bills under a special export guarantee agreement.

However, Schaerer stressed that the subject could only be addressed properly once Switzerland and other creditors had agreed with the International Monetary Fund (IMF) a common position on Iraq.

“If a debtor cannot pay, it has to meet up with its creditors under the framework of the so-called Paris Club [the organisation that brings together creditors and debtor nations],” he explained.

“The real discussion must take place based on concrete figures and facts, which can only be established once the situation is more stable and we [have a] perspective on Iraq,” he added.

Global focus

Iraq’s reconstruction dominated last week’s IMF spring session and a meeting between the leaders of France, Germany and Russia in St Petersburg, when it was stressed that the United Nations should head up efforts to rebuild the country.

This was flatly rejected by the US deputy defence secretary, Paul Wolfowitz, who instead suggested that the three countries – who all opposed the war – should contribute to post-war reconstruction by writing off Iraq’s debts.

“I think they ought to consider whether it might not be appropriate to forgive some or all of that debt so that the new Iraqi government isn’t burdened with it,” he said.

Russia, which is owed almost $8 billion (SFr11 billion) in Soviet-era debt by Baghdad, responded positively, saying it was ready to discuss the issue.

The IMF estimates that Saddam Hussein’s government is indebted to foreign powers to the tune of around $127 billion.

swissinfo, Vanessa Mock and Scott Capper

Key facts

Estimates put Iraqi debts to Russia and France at about $8 billion each and Germany at $4.3 billion, mostly for sales and contracts concluded in the 1980s.
Switzerland is owed $215 million by Baghdad.
Experts estimate that it will cost millions of dollars to rebuild Iraq.