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Japan, China offer Iraq debt cuts

Baker and Koizumi discussed the Iraq debt situation in Tokyo Monday.
Baker and Koizumi discussed the Iraq debt situation in Tokyo Monday.

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(CNN) -- Japan says it is willing to forgive the "vast majority" of its Iraqi debt, but only if other Paris Club members do the same, Japan's Foreign Ministry says.

China also says it will consider reducing Iraq's debt out of "humanitarian concern", state-run media report.

Tokyo's announcement Monday came after U.S. presidential envoy James Baker described talks between Japan and the United States over debt forgiveness as making "very good progress."

Iraq owes Japan more than $4 billion in outstanding public and private sector loans. The figure rises to above $7 billion if late payment charges are added -- making Japan the largest creditor to Iraq among the 19-member Paris Club that is owed a total of about $21 billion before other charges.

Baker, a former U.S. secretary of state, arrived in Tokyo Sunday to ask for Japan's cooperation in reducing Iraq's debt burden, as part of the reconstruction effort for the war-ravaged nation.

He met Japanese Prime Minister Junichiro Koizumi Monday to discuss the debt issue, describing the talks as "exceedingly good."

According to government sources quoted by Kyodo news agency, Koizumi would tell Baker that Tokyo will proactively deal with the issue. One key point is whether it is feasible for Japan to give up about two-thirds of its claims against Iraq, the sources said.

From Tokyo, Baker flew to Beijing, where he met Chinese President Hu Jintao and Premier Wen Jiabao for discussions on Iraq.

According to the state-run Xinhua news agency, Wen told Baker China "will consider reducing the debts owed to by Iraq out of humanitarian concern."

China says Iraq owes it at least $1.1 billion -- much of it for work by two state-owned construction companies before the 1990 Gulf War -- though the total isn't clear. The state newspaper China Daily has put the figure at "several billion" dollars.

In a separate meeting, Hu told Baker that China would continue working with the international community to help restore peace and rebuild Iraq.

China, along with France, Germany and Russia, was part of the group of nations that opposed U.S. military action before the attack on Iraq.

Iraq's total public debt to overseas lenders is estimated as high as $120 billion, according to the International Monetary Fund.

Baker has already won commitments from Britain, France, Germany, Italy and Russia to forgive some of the money owed them.

Tokyo has also pledged $5 billion in financial aid to Iraq over the next four years at a donors' conference in Madrid in October. (Full story)

It was the biggest single donor after the United States commitment of $18.7 billion. More than $55 billion is needed over the next four years, according to estimates, to help in the reconstruction of Iraq.

All told, the conference pledged at least $32 billion to help rebuild Iraq, according to a table published earlier this month by the World Bank. Kuwait and Saudi Arabia both pledged $500 million and Britain offered $452 million.

The final amount of grants and loans could go as high as $36 billion, depending on the value of loans by the World Bank and the International Monetary Fund.

The U.S. had hoped other countries would contribute $36 billion at the Madrid conference.

"The Paris Club will agree a deal with Iraq as soon as there are Iraqi authorities in place, when they are internationally recognized," the club's president, Jean-Pierre Jouyet, said earlier this month after Baker's talks with European leaders.

World Bank President James Wolfensohn has urged the Paris Club creditors to each forgive more than two-thirds of their claims.

Along with the financial commitment, Japan has sent its first non-combat troops to the Iraq region. They left last Friday, beginning Japan's biggest overseas military deployment since World War II. (Full story)

The 23 personnel from the Air Self Defense Force (ASDF) departed from Tokyo's Narita airport and will work as an advance team in cities in Iraq, Kuwait and Qatar, Kyodo news agency reported.

They are part of a 40-member group that will prepare for the arrival next month of the main ASDF detachment, numbering about 150 personnel.

In all, Japan will send about 1,000 non-combat troops to Iraq. The bulk of them are expected to go in February and March.

The ASDF team, based in Kuwait, will operate four C-130 transport planes and will ferry food and medical supplies to locations such as Baghdad, Basra, Balad and Mosul, Kyodo reported.

Earlier this month, Japan's neighbor South Korea approved plans to send a new 3,000-strong troop contingent to Iraq.

South Korea's Defense Ministry said Friday the 3,000 would include 1,460 combat troops, Yonhap news agency reported. They will be deployed in northern Iraq in April.

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