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Last Updated: Monday, 29 December, 2003, 14:30 GMT
China mulls reducing Iraq debts
Iraqi oil worker
Iraq needs billions of dollars of reconstruction aid
China will consider cutting the debts owed by Iraq as a humanitarian gesture, Prime Minister Wen Jiabao has said.

The announcement came US envoy James Baker met top Chinese leaders - and follows Japanese and European pledges to write off Iraqi debts.

The Chinese Government, which opposed the US-led war on Iraq, did not say by how much it might reduce the debts.

And it is not clear whether Beijing has received US concessions in exchange, the BBC's Francis Markus says.

Sums unclear

China fully understood the difficulty of Iraq's reconstruction efforts and the plight of the Iraqi people, Mr Wen said, according to Xinhua news agency.

It is hard to get precise numbers on the sums which Beijing is owed by Iraq, our correspondent says.

The figures mentioned in the media range from just over one billion to several billion dollars, most of it for construction and oil industry work done before the first Gulf war.

Wen Jiabao
China's policies are securing diplomatic leverage over the US
The US is probably calculating that Beijing will take its lead from other governments, our correspondent says.

China may do so even though the US has said it will not allow countries which opposed the war to bid for valuable reconstruction contracts, he adds.

It is not yet clear what the Chinese might expect of Washington in return for agreeing to forgive Iraq's debt - perhaps greater access for Chinese companies to Iraqi reconstruction work, he says.

But China's pivotal role in trying to resolve the North Korean nuclear crisis is already giving it significant diplomatic leverage over the United States, our correspondent says.

President Hu Jintao later told Mr Baker Beijing wanted to "foster the development of a constructive partnership" with Washington, Xinhua said.

Japanese worries

Japan has already pledged $5bn in aid to Iraq and will send about 1,000 troops to help reconstruction efforts in its largest foreign deployment since 1945.

Iraq owes Japan $4.1bn, but this rises to $7.75bn with late penalty fees.

"Japan would be prepared to eliminate the vast majority of its Iraqi debt if other Paris Club creditors are prepared to do so," a statement by the Foreign Ministry said after talks between Mr Baker and Japanese Prime Minister Junichiro Koizumi.

Japanese demonstrators in Japan's Ginza shopping district
Some Japanese fear troops will be drawn into the Iraq conflict

Most of the debt results from hospitals and power stations built by Japanese firms in the 1970s and early 1980s.

The government later took on the debts incurred by private companies.

Japan's pacifist constitution, adopted after World War II, forbids the country from using force to settle disputes.

A special law allowing the deployment of troops was passed by Japan's parliament in July, but only under the condition that the troops be sent to a place away from combat.

The first detachment of air force personnel have already gone to Kuwait and Qatar to prepare for the arrival of a larger unit in January.

Most of the troops will be based in south-eastern Iraq, where they will help restore water services, offer medical aid and rebuild schools.

Recent opinion polls have suggested that up to two-thirds of the Japanese public are opposed to sending military personnel to Iraq.




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