UAE wipes Iraq slate clean to tune of $7bn

CLEAN SLATE: The UAE announced the cancellation of almost $7 billion of debt owed by Iraq during a visit to the Emirates by Al-Maliki. (AFP)

The United Arab Emirates said on Sunday it was waiving Iraq's debt of nearly $7 billion and also named an envoy to Baghdad during a visit by Iraq's premier to the oil-rich Gulf state.

President Sheikh Khalifa bin Zayed Al-Nahayan told Nuri Al-Maliki the UAE has "decided to write off all debts owed by Iraq totalling $4 billion... plus accrued interest", the official WAM news agency said.

An Emirati official, confirming the decision, told newswire AFP the debt and interest amounted to just under $7 billion.

The UAE, a close US ally, also named its current envoy to India as ambassador in Baghdad, an Emirati official said.

Washington has been pushing its Arab allies to send ambassadors to Baghdad and ease Iraqi debt to help anchor volatile post-Saddam Hussein Iraq in the Arab world.

"The UAE cabinet, at its meeting today, approved the appointment of its current ambassador to India, Abdullah Ibrahim Al-Shehhi, as its ambassador to Iraq," the official told AFP, requesting anonymity.

"The Iraqi government has already approved the nomination."

The appointment came a month after UAE Foreign Minister Sheikh Abdullah bin Zayed Al-Nahayan became the first high-ranking official from an Arab state in the Gulf to visit Iraq since the 2003 US-led invasion and said Abu Dhabi would soon name an ambassador to Baghdad.

The announcement came shortly after Al-Maliki arrived on a two-day visit.

The UAE withdrew its most senior diplomat - a charge d'affaires - from Baghdad in May 2006 after another diplomat was kidnapped by Islamist militants and held for two weeks.

An Iraqi government spokesman said on Thursday that Jordan's King Abdullah II will visit Iraq next week in what would be the first trip by an Arab head of state since the invasion.

Jordan, another close US ally, announced it had appointed an ambassador to Iraq where its embassy has been run by a charge d'affaires since it came under deadly attack in 2003.

The Sunni-ruled Arab monarchies of the region had been reluctant to upgrade ties with Iraq, not just for security reasons but also because of its Shi'ite-led government's perceived tilt toward non-Arab Shi'ite Iran.

A US official said recently that Arab states had been encouraged by the crackdown on Shi'ite militias by Al-Maliki, himself a Shi'ite, and motivated by a need to check Iranian-backed power plays in Lebanon.

The UAE hopes that its decision to cancel Iraq's debt "will help alleviate the economic burdens endured by the brotherly Iraqi people", and is meant to "help the Iraqi government implement reconstruction plans and rehabilitate institutions and facilities", WAM quoted the UAE president as telling Al-Maliki.

Abu Dhabi will not hesitate to "provide all kinds of financial and moral aid" to Iraq, he said.

Sheikh Khalifa added that Abu Dhabi's decision to reopen its embassy in Baghdad underlined its belief in "the importance of Iraq's interaction with its Arab environment".

Saudi Arabia, one of Washington's key regional allies, said in April it would reopen its embassy in Iraq only when security is restored.

Before the UAE announced the debt writeoff, the US State Department had said Iraq's debt has been reduced by $66.5 billion over the past three years, including a total of $42.3 billion cancelled by Paris Club members.

US Deputy Treasury Secretary Robert Kimmitt said in May that $50 billion to $80 billion remain, with a "significant majority" owed to Arab countries.

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