updated 12/17/2003 10:41:57 AM ET 2003-12-17T15:41:57

President Bush’s envoy to Iraq met Wednesday with Italian Premier Silvio Berlusconi — a staunch U.S. ally on Iraqi policy — seeking Italian assurances to help relieve Baghdad’s huge debt burden.

Former Secretary of State James A. Baker III was upbeat after winning agreement from Germany and France, the first concrete cooperation in rebuilding Iraq from two nations that fiercely opposed the war to oust Saddam Hussein.

Baker met for nearly an hour with Berlusconi, who supported the U.S.-led war and sent troops and aid workers to help in the reconstruction of Iraq. The American envoy made no comments to reporters after the talks.

According to figures from the Paris Club, Iraq owes Italy $1.73 billion, excluding interest, making it No. 6 on the 19-member group’s list creditor nations.

Baker overcame serious German misgivings during a meeting on Tuesday with Chancellor Gerhard Schroeder about the U.S. exclusion of German firms from Iraqi reconstruction. Baker earlier had what he called “very fruitful” talks with French President Jacques Chirac in Paris.

Paris Club debt relief
France, Germany and the United States agreed that Iraq should get substantial debt reduction from the Paris Club, the leaders of the three nations said in a joint statement issued by the White House Tuesday afternoon.

Video: Debt-free Iraq

“Debt reduction is critical if the Iraqi people are to have any chance to build a free and prosperous Iraq,” according to the statement by Bush, Chirac and Schroeder. The three said they will “work closely with each other and with other countries to achieve this objective.”

“The exact percentage of debt reduction that would constitute ‘substantial’ debt reduction is subject to future agreement between the parties.”

The three nations have agreed that having a new government in place — expected next summer — is not a precondition for moving forward on debt forgiveness, a senior Bush administration official said.

Iraq owes $40 billion to the United States, France, Germany, Japan, Russia and others in the Paris Club. Other countries and private creditors are owed at least $80 billion in addition.

It appeared to be an effort to project a united front. Germany and France — which led the effort to prevent the war and have refused to contribute troops to the postwar stabilization mission — have been eager to reconcile with the United States.

Germany repeated its concerns about the contract issue and U.S. officials left open the possibility they would discuss it further.

“We all share the same goal of helping the Iraqi people build a better future, a future that is free and prosperous,” White House spokesman Scott McClellan said in Washington.

War opponents banned from contracts
Baker’s five-nation lobbying mission was complicated by the Pentagon’s exclusion of war opponents from $18.6 billion in U.S.-financed reconstruction projects in Iraq. His next stops are Moscow and London.

Russia, which is owed $8 billion by Iraq, said it had no intention of writing off debt after learning it could not participate in the U.S.-funded reconstruction projects.

Asked if the United States might revise its contract policy, Defense Secretary Donald Rumsfeld said Tuesday it was a matter for negotiations between U.S. agencies.

Baker made no comment in Berlin, but spoke in Paris after meeting with Chirac.

“We are agreed it is important to reduce that debt within the Paris Club — if possible in the year 2004,” Baker said.

Despite responding to Washington’s call for debt relief, Schroeder expressed concerns about the Pentagon’s exclusion of German companies from Iraqi reconstruction contracts.

“Germany’s position on the awarding of reconstruction contracts in Iraq was clearly expressed in the talks,” Schroeder’s spokesman Bela Anda said in a statement.

The White House, however, gave no indication that debt forgiveness could result in a slice of the reconstruction deals.

“We’ve made it very clear that when it comes to the U.S. taxpayer dollars, that we believe those tax dollars should be going to the countries that have been involved in helping to liberate the Iraqi people and help them build a free and peaceful and prosperous future, and also to Iraq as well,” McClellan said.

“If additional countries want to join the efforts of some 60 countries and the Iraqi people in the overall reconstruction, then circumstances can change."

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