#17 - JRL 7251
Russia aggrieved over lost investments in Iraq - TV comment
Source: Channel One TV, Moscow, in Russian 2000 gmt 14 Jul 03
Russian interests in Iraq are well-known. They include not just major projects of our oil companies but also Iraq's debt to the tune of 8bn dollars. Up until yesterday there had been confidence that the Paris Club would resolve the problem in Russia's favour but today we have no longer such confidence. In Tokyo, Iraq's creditors decided not to demand any money back until the end of 2004. Moreover, Moscow will receive from Baghdad one-sixth of what it expected. Here is Aleksey Fokin.
[Correspondent] [Passage omitted: how bad debts are] You can imagine what you will feel like if your neighbour tells you that instead of R1,000 he has borrowed from you he will return just R150 - and in some 10 years at that. That is the situation in which Russia has now found itself. It invested its enormous resources in Iraq's economy in the past. Iraq's direct debt to Russia today exceeds 8.5bn dollars, excluding the lost benefit from joint projects for the extraction of Iraqi oil. The estimate of these losses stands at more than 40bn dollars. We have not managed to get the Iraqi debts to Russia acknowledged with the help of the UN. The US winners had and have no intention of sharing anything with anybody. Back in April they proposed that Iraqi debts should be written off. However, both Russia and Iraq's other main creditors, France and Germany, were resentful. Money likes counting while the beauty of debt is in its payment. This issue had been proposed for the agenda of the Paris Club of Creditors. What is more, over the three months since the deposition of the Saddam regime, the creditors have cooled off somewhat and stopped insisting on the return of all the debts. It is clear that new Baghdad has no budget. So, it is pointless expecting any sort of repayment. Going to the Paris Club yielded miserly results.
First, the generous Europeans decided not to demand the return of the money invested in Iraq until 2005. Second, all the creditors have forgiven Iraq over 21bn dollars in accumulated credit interest. That is literally half the actual debt. So, for Russia, the Paris Club's decision is no good news. Out of over 8bn dollars of the Iraqi debt to Russia, the Club acknowledged just 3.5bn dollars. What is more, Russia will not be repaid the money that was lent to Saddam for the purchase of arms. That is about 2.5bn dollars. In other words, Russia will receive one-sixth of what it invested in Iraq in the past. And the money will not be coming in right away. The payments are likely to be spread over many decades.