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Cablegate: Bulgaria Settles Iraq Debt

VZCZCXRO4923
OO RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHSF #1304 3171615
ZNR UUUUU ZZH
O 131615Z NOV 07
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4506
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHGB/AMEMBASSY BAGHDAD PRIORITY 0150
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

UNCLAS SOFIA 001304

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN IZ BU
SUBJECT: BULGARIA SETTLES IRAQ DEBT

REF: 06 SOFIA 1562

1. (SBU) The Ministry of Finance announced November 11 that
Bulgaria had agreed to cancel Iraq's 3.5 billion USD debt in
exchange for a Paris Club comparable payment of 360 million
USD in cash. In a press conference announcing the deal,
Minister of Finance Plamen Oresharski said the deal makes
Bulgaria the first country to settle its Iraq debt with a
one-time lump sum payment, which will be made in the first
half of 2008. Oresharski explained that Bulgaria's other
option would have been to forgive 80 percent of Iraq's debt
and collect the remaining 20 percent in obligation bills over
a period of 23 years. The deal with Iraq was signed, but
publicly embargoed, in October in Washington, and was
approved by the Bulgarian Council of Ministers on November 8.


2. (SBU) Explaining the deal, FM Ivailo Kalfin said the
settlement should be viewed in the context of Bulgaria's
overall policy of support for the Iraqi Government's efforts
to stabilize the country. Initial reaction to the settlement
has been positive, with financial commentators calling the
cash deal astute, considering the alternative of collecting
20 percent of the debt over 23 years. Without criticizing
the deal, opposition MP Martin Dimitrov from the Union of
Democratic Forces expressed regret that the agreement had not
been discussed by Parliament before it was approved.
Predictably, the xenophobic Ataka Party attacked the deal,
but its statements got little airplay.
Beyrle

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