DEMARCHE ON DEBT RELIEF FOR IRAQ

C O N F I D E N T I A L AMMAN 008363

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/09/2026
TAGS: ECON EFIN IZ JO
SUBJECT: DEMARCHE ON DEBT RELIEF FOR IRAQ

REF: A) STATE 184738 B) STATE 181094

Classified By: Ambassador David Hale, Reasons 1.4 (b) and (d).


1. (C) Ambassador delivered the points requested to the
Foreign Minister and Minister of Industry and Trade on
November 2 but received no substantive reply. Ambassador
will also deliver the points to the Deputy Prime Minister and
Finance Minister, who handles this issue but has been
unavailable due to travel, early next week. Post will also
continue to follow up at the working level.


2. (SBU) By way of background, Jordan has not forgiven Iraqi
debt to date. Both Jordan and Iraq have yet to resolve the
status of the $1.3 billion Jordanian claim on Iraq as part of
the "trade protocol ledger" established under agreement
between the GOJ and the former Iraqi regime, and in the
framework of the state-controlled bilateral trade between the
countries at that time. However, following up the exchange
of prime ministerial visits, there are serious renewed
bilateral efforts to resolve the issue. Jordan maintains
that this is not debt, but merely an account that needs to be
cleared. The principal of the claim is $900 million, while
the rest is interest. Post understands that Treasury and EB
view the claim as debt. The GOJ and PM Maliki's government
reportedly view the recent oil deal between Jordan and Iraq
as a way for Iraq to eventually start drawing down the trade
ledger claim (Amman 7668). However, Jordan continues to
suffer from high debt levels and face substantial economic
and financial challenges. Pressing the GOJ to forgive this
claim would put substantial pressure on a major U.S.
assistance recipient and its $11 billion economy.
HALE