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Bush names baker as envoy on iraqi debt { December 6 2003 } Original Source Link: (May no longer be active)
http://www.guardian.co.uk/uslatest/story/0,1282,-3471387,00.htmlhttp://www.guardian.co.uk/uslatest/story/0,1282,-3471387,00.html
Bush Names Baker As Envoy on Iraqi Debt
Saturday December 6, 2003 2:16 PM
By TOM RAUM
Associated Press Writer
WASHINGTON (AP) - President Bush has turned to a longtime family friend and troubleshooter, former Secretary of State James A. Baker III, to be his personal envoy in seeking an international deal to lower and refinance Iraq's staggering foreign debt.
Friday's appointment gives high-profile attention to a complex issue that clouds Iraq's economic prospects. The war-ravaged country owes an estimated $125 billion to other countries, excluding war reparations.
Baker, 73, who was Bush's main advocate in the 2000 Florida recount battle with Democrat Al Gore, brings a wealth of negotiating experience to the job as well as personal ties with many of the world's leaders.
``Secretary Baker will report directly to me and will lead an effort to work with the world's governments at the highest levels, with international organizations and with the Iraqis in seeking the restructuring and reduction of Iraq's official debt,'' Bush said in a statement.
``The future of the Iraqi people should not be mortgaged to the enormous burden of debt incurred to enrich Saddam Hussein's regime.''
Administration officials argue that major debt relief is needed for Iraq's economy to get back on its feet. The issue has become politicized, however, with countries that opposed the war, such as Germany and France, expressing doubt about high levels of debt forgiveness.
Negotiations are expected to be extensive and involve trade-offs as countries offer to forgive debt in return for bidding on new construction contracts.
Iraq's debt carries annual servicing charges of $7 billion to $8 billion.
Baker, a Houston attorney, served under President Reagan as White House chief of staff and then as treasury secretary. He also managed Bush's father's 1980, 1988 and 1992 presidential campaigns.
Baker's Houston office said he was traveling and could not be reached for comment.
As the elder Bush's secretary of state, Baker engaged in a futile round of shuttle diplomacy in late 1990 in an effort to head off the first Gulf War. After the war, he made more forays around the world and collected billions of dollars to help pay the war debts.
He has retained close ties with countries in the region.
Baker's Texas law firm, Baker Botts LLP, has an office in Saudi Arabia.
Edwin M. Truman, a former Federal Reserve Board and Treasury Department official now with the Institute for International Economics, said Baker's credentials make him an ideal person to seek consensus among Arabs and others in the region.
Baker's selection ``signifies that the administration is serious about working on this,'' Truman said.
While in the Middle East, Baker may also weigh in on a related dispute: Syria's refusal to relinquish an estimated $250 million that deposed Iraqi President Saddam's government deposited in a Syrian state bank. Under a U.N. Security Council resolution, such seized assets should be turned over to the U.S.-controlled occupying coalition.
Treasury Secretary John Snow has been leading the administration's efforts at Iraqi debt relief.
At the State Department, spokesman Adam Ereli said Baker's appointment had been under discussion by senior administration officials, including Secretary of State Colin Powell, for several months.
Of Iraq's foreign debt, some $40 billion is owed to the United States, France, Germany, Japan, Russia and other countries among 19 nations that belong to the Paris Club, an umbrella organization that conducts debt negotiations. At least $80 billion more is owed to other Arab countries and nations outside the Paris Club.
The World Bank has proposed forgiving two-thirds of Iraq's debt, as was done with Yugoslavia after President Slobodan Milosevic was driven from power. Unlike Yugoslavia, a relatively poor country, Iraq has the second-largest oil reserves in the world.
Efforts to restructure Iraq's foreign debt are unrelated to the October donor conference in Madrid, which won global pledges of $33 billion for reconstruction.
Baker is widely respected. Earlier this week, Democratic presidential hopeful Sen. John Kerry of Massachusetts listed him as the kind of statesman he'd name as special envoy to the Middle East peace process. His list also included former President Clinton and Bush's father.
The Democratic campaign of retired Gen. Wesley Clark got off a double-barreled attack on both Bush and Kerry on Friday.
``President Bush took John Kerry's bad idea and made it worse,'' said Clark's communication director, Matt Bennett. ``Baker will undoubtedly be bringing his special Florida `recount-style democracy' to the Middle East.''
Baker will serve as a volunteer, working out of an office at the White House and traveling to other countries.
Bush said he made the appointment in response to a request by the U.S.-backed Iraqi Governing Council.
Kamal Gilani, the council's finance minister, said in a statement that Baker's appointment would give significant momentum to resolving Iraq's debt worries. L. Paul Bremer, the top U.S. administrator in Iraq, also welcomed the announcement.
On a related matter, export credit agencies from 16 countries, including the United States, Japan and some nations of Europe, signed a $2.4 billion deal Friday to help finance Iraq's reconstruction.
The agreement, signed in Rome during a ceremony at the Italian Economy Ministry, was aimed at short-term exports of goods and services to Iraq.
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