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Cablegate: Dutch Agree to Partial Debt Cancellation for Iraq;

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS THE HAGUE 001840

SIPDIS

DEPT FOR EB/IFD/OMA AND NEA/I

E.O. 12958: N/A
TAGS: EFIN EAID NL IZ
SUBJECT: DUTCH AGREE TO PARTIAL DEBT CANCELLATION FOR IRAQ;
WANT FOCUS ON ARREARS, NEAR-TERM FLOWS

1. DUTCH DEVELOPMENT AID MINISTER AGNES VAN ARDENNE ANNOUNCED
JULY 16 THAT CANCELLATION OF PART OF IRAQ'S 245 MILLION EURO
(APPROX USD 300M) DEBT TO THE NETHERLANDS WOULD BE NECESSARY.
MINISTER VAN ARDENNE'S STATEMENT, WHICH CAME IN RESPONSE TO
A PARLIAMENTARY INQUIRY, NOTED THAT THE IMF'S DEBT
SUSTAINABILITY ANALYSIS ON IRAQ, PRESENTED TO PARIS CLUB
CREDITORS IN JUNE, INDICATED THAT FULL REPAYMENT OF THE DEBT,
EVEN ON A DEFERRED BASIS, WOULD BE IMPOSSIBLE, NECESSITATING
A PARTIAL WRITEOFF. VAN ARDENNE ADDED THAT THE EXACT AMOUNT
OF THAT WRITEOFF REMAINED TO BE DETERMINED.

2. MINISTER VAN ARDENNE'S STATEMENT WAS THE FIRST PUBLIC
ACKNOWLEDGEMENT OF DUTCH GOVERNMENT SUPPORT FOR PARTIAL DEBT
CANCELLATION FOR IRAQ, ALTHOUGH FINANCE AND FOREIGN MINISTRY
CONTACTS HAD TOLD ECONOFFS EARLIER THAT THE NETHERLANDS WOULD
GO ALONG WITH SUCH A DEAL PROVIDED (A) THAT IT WAS DONE IN
THE PARIS CLUB FRAMEWORK, AND (B) THAT NON PARIS CLUB
CREDITORS PROVIDED COMPARABLE TREATMENT. REGARDING TERMS,
PAULINE EIZEMA OF THE MFA'S PARIS CLUB OFFICE (WHICH FALLS
UNDER THE DEVELOPMENT MINISTER'S JURISDICTION, SINCE DEBT
CANCELLATIONS ARE CHARGED ON A STRAIGHT EURO-FOR-EURO BASIS
TO THE DEVELOPMENT BUDGET) TOLD ECOUNS THAT THE NETHERLANDS'
PREFERENCE AT THE PARIS CLUB WOULD BE FOR A CONSOLIDATION
FIRST OF ACCUMULATED ARREARS AND SECONDLY OF NEAR-TERM DEBT
SERVICE FLOWS, STRETCHING OUT TO PERHAPS THREE YEARS. THE
DUTCH WOULD NOT BE IN FAVOR OF A STOCK OF DEBT TREATMENT AT
THIS POINT, SHE INDICATED.
RUSSEL

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