RUSSIA: IRAQI DEBT RELIEF UPDATE

C O N F I D E N T I A L MOSCOW 000523

SIPDIS

SIPDIS

STATE FOR EUR/RUS WARLICK AND EB/IFD/OMA DETWILER
TREASURY FOR LEE AND BAKER
NSC FOR GRAHAM AND MCKIBBEN

E.O. 12958: DECL: 02/06/2017
TAGS: EFIN IZ KTIA RS
SUBJECT: RUSSIA: IRAQI DEBT RELIEF UPDATE

REF: STATE 11880 AND PREVIOUS

Classified By: Ambassador William J. Burns for reasons 1.4 (b/d).


1. (C) Summary. On February 5, reftel concerns about delays
in the signing of Russia's bilateral debt agreement with Iraq
were raised with Kremlin Foreign Policy Advisor Prikhodko and
Deputy Finance Minister Storchak. Prikhodko told the
Ambassador that the GOR was not linking the final signature
on the agreement to new conditions, and suggested that the
issue would be resolved soon. Storchak relayed a similar
message to Economic Minister-Counselor, adding that it was
possible Finance Minister Kudrin would be in a position to
report Russia's willingness to move forward on the debt deal
in his meeting with Treasury Secretary Paulson this weekend.
End Summary.


2. (C) The Ambassador approached Kremlin Foreign Policy
Advisor Prikhodko February 5 to urge a speedy conclusion to
Russia's bilateral debt agreement with Iraq. Prikhodko
stated the debt deal was not linked to Russian commercial
contracts in Iraq, but noted deep concern at senior GOR
levels that Russian firms were not being accorded equal
access to commercial opportunities in Iraq. The Ambassador
emphasized the priority placed by the USG on closing the debt
chapter in Iraq, to which Prikhodko suggested that the matter
might be settled soon.


3. (C) In a separate approach February 5 to Deputy Finance
Minister Storchak, Economic Minister-Counselor emphasized the
danger Russia's behavior posed to the integrity of the Paris
Club process, and Russia's responsibility as a member of the
Paris Club to help lead other creditors outside the Club
toward favorable treatment of Iraq. Economic
Minister-Counselor highlighted the upcoming Paulson-Kudrin
meeting on the margins of the G-7 Finance Minister meeting in
Germany as an ideal opportunity to signal GOR readiness to
close the Iraqi debt deal.


4. (C) Storchak expressed understanding for USG concerns
about the Paris Club process, and reiterated that Kudrin and
the Ministry had been careful not to link the final signature
on the debt deal to any new conditions. He confirmed that
the agreement is ready for signature and that there are no
outstanding technical issues. Final approval for signature
from the Kremlin, however, was still not forthcoming.
Storchak agreed that the upcoming meeting with Paulson would
be a good target date to lay this issue to rest, and said he
would work with Kudrin to see if they could get the necessary
Kremlin go-ahead in the days remaining before he would see
Paulson.
BURNS