About 20 countries, including Russia, have agreed to forgive 80 percent of Iraq's foreign debt. Russia signed on to the international agreement Sunday, even though it is owed billions of dollars in debt wracked up by former dictator Saddam Hussein. Even so, political and economic experts in Iraq are debating the significance of the agreement.
Making the decision to forgive about $31 billion worth of debt will enable Iraq to use its oil revenues to rebuild the country, rather than being forced to pay off former leader Saddam Hussein's creditors.
Even so, political and economic experts in Iraq are at odds as to whether the move will help bring greater stability to the country, where insurgents wage daily attacks throughout Iraq.
At Baghdad University, political science professor Jabbar Abdel Abdullah says Iraq needs a political solution to rein in the insurgency, not an economic one.
"We need a conference, a political conference, not an economic conference. I think that Germany removing the debt from Iraq by 80 percent, it does not benefit Iraq. It is a benefit to the United States to show their [Germany] readiness to cooperate with the United States, to show the readiness of France to cooperate with the United States," he said. "But, it is not a benefit to me as an Iraqi citizen. I need their support to us in a political aspect, not an economic aspect."
But, economic expert at Baghdad's Economic Administration Institute, Omar Arafat, disagrees. Without economic freedom, he says, there will never be stability in Iraq.
"The chaos, and I think the security issue, is not the first issue," he commented. "I think the economic issue is the first, and then the security. Poverty makes you think, lets say, not in a good way. Always, if you have someone without a job, without money, it is hard to pay for the schools, for his children, he'll go the other way, the way of violence. I think the economic issue is the first issue. They have to resolve it."
According to professor Arafat, relieving Iraq's debt was, as he put it, an enormous first step in laying a solid foundation for Iraq's future.
Relieving Iraq's debt, among other things, will also enable Iraq to seek loans from other countries. And, according to professor Oman Thobic at the Economics Administration Institute, the loans will be key in securing the country's future.
Professor Thobic says the loans are needed because oil revenues won't be enough to rebuild what he called a completely destroyed infrastructure in Iraq. He says such loans are badly needed, in order to put the country back on sound economic footing.
More progress toward chiseling down Iraq's debt is expected Tuesday at an international summit being held in Sharm el Sheik, Egypt. Countries taking part in the two-day conference will discuss Iraq's future, and are expected to approve a statement supporting Iraq's interim government, as well as the scheduled January 30 national elections in Iraq.