Saudi Arabia said today it would not discuss any loan write-offs with Iraq's interim US-appointed government, which is facing a debt burden estimated at more than $100 billion.
Foreign Minister Prince Saud al-Faisal said the oil-rich kingdom, among Gulf Arab states which say Iraq owes them $45-$55 billion, would wait until Iraq had an independent government before looking into possibly reducing the debt.
"This [debt] has to be discussed with a government with total sovereignty, so . . . this issue is now premature," he told a news briefing broadcast live on Saudi state television.
"There is an international dialogue and we are willing to take part and discuss, but I don't think there is scope for a serious dialogue unless there is an Iraqi government."
Financial analysts estimate Iraq's debt at $108 billion to $123 billion - but that could rise to as much as $166 billion if compensation claims for Saddam Hussein's invasion of Kuwait are included and more if Iran seeks compensation for an earlier invasion by Iraq.
The first step on cutting the debt burden is to deal with the money owed to the Gulf states, which Iraq insists was given as grants to help it in the war against Iran in the 1980s, but which the Gulf states say were loans.
Some analysts and academics say Saudi Arabia, for example, did not bother booking the loans, while others have suggested Kuwait refused to write off the loans, but has not insisted on repayment. This could not be confirmed with creditor states.