JORDAN'S OFFER TO FORGIVE IRAQI DEBT

C O N F I D E N T I A L BAGHDAD 001538 SIPDIS E.O. 12958: DECL: 05/19/2018 TAGS: ECON EFIN EAID PREL IZ SUBJECT: JORDAN'S OFFER TO FORGIVE IRAQI DEBT REF: AMMAN 1428 Classified By: Economic Counselor Todd P. Schwartz for reasons 1.4 (b) and (d) ¶1. (C) Reftel refers to the Government of Jordan's (GOJ) offer to forgive Iraqi debt, which is believed to amount to approximately USD 1.3 billion. Based upon our conversations with Iraqi Ministry of Finance officials, including Minister Bayan Jabr and Advisor (and principal debt negotiator) Azez Hassan Jafar, the GOI considers this offer a non-starter. The GOJ offer would cancel interest (30 percent of total claims) and reschedule principal payments, which does not meet the standard of the "comparable treatment" clause in Paris Club agreements. Therefore, moving forward on this basis would trigger re-negotiation of all Iraqi agreements with its Paris Club creditors. Iraqi Finance Ministry officials are unsure whether the GOJ proposal is an opening bid or a serious offer. ¶2. (C) As a previous recipient of Paris Club relief, the GOJ is familiar with the "comparable treatment" clause. Iraq's Paris Club deal calls for an 80 percent discount (as measured by the Paris Club) if paid over time, or 10.25 percent discount if paid immediately in cash (as was recently concluded for Bulgaria and a few Balkan states). The GOJ must make a comparable offer for negotiations with the GOI to progress. CROCKER