PRESS REPORTS WRONG: POLAND AND IRAQ HAVE NOT

C O N F I D E N T I A L WARSAW 003010

SIPDIS

STATE FOR EUR/NCE TARA ERATH AND MICHAEL SESSUMS
STATE FOR NEA/I-ECON LAIRD TREIBER
PARIS FOR OTTO VAN MAERSSEN
TREASURY FOR OASIA MATTHEW GAERTNER AND ERIC MEYER
FRANKFURT FOR TREASURY JIM WALLAR
USDOC FOR 4232/ITA/MAC/EUR/JBURGESS

E.O. 12958: DECL: 08/03/2015
TAGS: EFIN PREL IZ PL
SUBJECT: PRESS REPORTS WRONG: POLAND AND IRAQ HAVE NOT
REACHED DEAL ON IRAQI DEBT

REF: WARSAW 0135

Classified By: A/DCM Lisa Piascik, reasons 1.4 (b) and (d)


1. (SBU) On the heels of Prime Minister Marek Belka's July
visit to Baghdad, several Polish press outlets reported that
Belka promised the Iraqi government forgiveness of 80 percent
of Iraqi debt, in line with the Paris Club's agreement.
However, Poland's Iraq Task Team at the Ministry of Foreign
Affairs and contacts at the Ministry of Finance told econoff
that the press reports were inaccurate and did not reflect
the reality of Belka's meetings with the Iraqi Transitional
Government or the position of the Polish government in
regards to Iraqi debt.


2. (C) Pawel Herczynski from Poland's Iraq Task Team at the
MFA said that while Belka and the ITG discussed Iraqi debt in
Baghdad, no commitments were made. Instead, Belka told the
ITG that Poland is in favor of Iraqi debt relief, but needs
to consider the matter further. Belka asked the ITG to
formulate possible "solutions" to help alleviate any public
backlash the Polish government might incur by forgiving Iraqi
debt, such as offering commercial deals to Polish companies
in the oil and gas sectors and donating ground for a new
Polish embassy in Iraq. Herczynski said the meeting resulted
in no finalized quid pro quos, as the Polish press articles
suggested. (The press articles intoned that an Iraqi pledge
to not issue claims against Poland for damages to the Babylon
archeological site was tied to an agreement on debt relief.)


3. (SBU) Ministry of Finance contacts explained that the
current Polish government is in favor of relieving Iraqi debt
and views the Paris Club agreement as a model that it might
follow. However, the Council of Ministers has decided not to
enter into any agreements in the final days of the current
government that would not be finalized before the expected
change of power following Polish elections this fall.
Rather, the current government will recommend to the incoming
one to conclude some type of debt relief for Iraq, but will
not take any binding actions in that regard, according to
officials at the Ministry of Finance. In the interim, MoFin
specialists are continuing to hold working-level discussions
and exchanges of letters with Iraq to determine the actual
amount of Iraqi debt held by Poland.


4. (C) Comment. The Ministry of Finance offered one
explanation why the current Polish government has decided to
abstain from finalizing an agreement on Iraqi debt despite an
internal consensus that it is in Poland's interest to do so.
Herczynski candidly offered another explanation when he said
that forgiving nearly a billion dollars in debt would be
"political suicide" during the current election season. As
such, it appears that making the final (and potentially
sensitive) decision on this issue will fall on the future
government. End comment.

ASHE