Russia Ready to Negotiate Iraqi Debt Write-Off

By Sergei Blagov | July 7, 2008 | 8:15 PM EDT

Moscow ( - Russia has reiterated its willingness to write off some of the $8 billion debt it is owed by Iraq.

"Russia is prepared to substantially reduce the debt and also to reach agreements on the repayment of the remaining part of the debt," Deputy Foreign Minister Yury Fedotov announced.

He said Moscow was ready to begin negotiations, either with the interim government currently in place, or with the one that takes power following elections scheduled for next January.

Fedotov expressed Moscow's hope that the January election would go ahead as planned.

At one point, Russia said it would not write off Iraqi debt, after learning that it could not participate in U.S.-funded postwar reconstruction projects.

In exchange for its willingness to cancel some of the debt, Moscow expects rewards such as oil deals with the new government.

Russia's top oil company, LUKoil, hopes to salvage a $4-billion oil production agreement which was signed with Baghdad in 1997 but canceled by Saddam Hussein shortly before last year's war.

Moscow's responses to developments in Iraq have been mixed.

Russia opposed the war that toppled Saddam, but agreed to help Iraq's recovery. Last June, it welcomed the transfer of power to the interim government and pledged to help it -- but ruled out contributing troops to the U.S.-led coalition.

Fedotov complained at the weekend that "a lack of security" was holding up plans by Russian companies to begin rehabilitation and development projects in Iraq.

On Tuesday, Russia expressed concern about the offensive now underway in Fallujah, a Sunni city that has become a stronghold of anti-coalition forces and terrorists.

The operation in Fallujah "should not entail casualties among the Iraqi civilians, and it should be proportional to the threat," Foreign Ministry spokesman Alexander Yakovenko told reporters.

Send a Letter to the Editor about this article.