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Cablegate: Demarche to Austria On Debt Relief --

VZCZCXRO1677
OO RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHVI #3248 3111042
ZNR UUUUU ZZH
O 071042Z NOV 06
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5432
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHSW/AMEMBASSY BERN PRIORITY 1084
RUEHBY/AMEMBASSY CANBERRA PRIORITY 0206
RUEHOT/AMEMBASSY OTTAWA PRIORITY 0470
RUEHUL/AMEMBASSY SEOUL PRIORITY 0159
RUEHTC/AMEMBASSY THE HAGUE PRIORITY 1007
RUEHKO/AMEMBASSY TOKYO PRIORITY 0354
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS VIENNA 003248

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EUR/AGS - SAINT-ANDRE

E.O. 12958: N/A
TAGS: ECON EFIN IZ AU
SUBJECT: DEMARCHE TO AUSTRIA ON DEBT RELIEF --
INTERNATIONAL COMPACT WITH IRAQ

REF: STATE 181094

1. (SBU) Charge delivered reftel demarche on November 6 to
Ralph Scheide, the Austrian MFA's Director for the Middle
East and Africa. Charge especially urged that Austria
forgive the remaining 20 percent of Iraq's debt.

2. (SBU) Scheide noted that Austria's forgiveness of 80
percent of Iraq's debt had represented debt relief amounting
to approximately one percent of Austria's GDP. He said it
would be extremely difficult for Austria to forgive more
debt, or to provide a grant in the amount of remaining debt.
He reported that Iraq expenditures were taking a large share
of Austria's available development funds, leaving Austrian
development authorities with very little discretion to fund
priorities elsewhere. (Note: As government coalition talks
enter their second month, the federal government cannot pass
a new budget. In each month, it can only spend one-twefth
of the previous year's budget. This leaves ery little room
for major new initiatives. End note.)

3. (SBU) However, Scheide said that if th Paris Club
discussed further debt relief for Irq, Austria would
naturally consider the issue agin in that cotext.

4. (SBU) Post will continu to press this point with
Austrian officials.
Pillips

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