The Paris Club cartel of Iraq's creditors has been meeting, and news has just filtered out (11am GMT, 20 November) that a deal has been achieved.
Germany's finance minister Hans Eichel told reporters: "I had talks with my American colleague, John Snow, which created the basis on which the forgiveness of Iraqi debt can be settled mutually in the Paris Club. We agreed that there should be a write-off of debts in several stages amounting to 80% in total."
30% would be written off immediately, another 30% in a second stage ''tied to a program of the International Monetary Fund'' and a further 20% ''linked to the success of this program. Within this framework, the necessary decisions can now be taken in the Paris Club.'' He added: "by doing this we see a special situation for Iraq. This does not create a precedent for any other case.'' A G20 source said that debt relief would be phased over an 8 year period.
Assuming all non-Paris Club creditors agree to the 80% reduction, which is far from certain, Iraq would still be shackled with over $25bn of debt, not to mention new loans being peddled by the IMF and World Bank, and the $31bn reparations awarded so far. The IMF conditions – such as privatisation and ending food rations – could further exacerbate the poverty and instability in Iraq.
Jubilee Iraq staged a protest at the Paris Club on Wednesday and met with the Paris Club President and French officials to communicate Iraqi views that almost all of the debt is odious, and should be written off entirely, immediately and unconditionally - not partially, over 8 years and based on dangerous IMF conditions.
While the offer the Paris Club has made is better than nothing, it is unjust in the face of the odious origins of the debt and economically inadequate in the face of the devastated state of Iraq today.
There will be significant developments in the next few days, so please watch www.jubileeiraq.org for updates.