Rice asks neighbors to offer Iraq debt relief, ties

20 April 2008

By Sue Pleming

SHANNON (Reuters) - Secretary of State Condoleezza Rice called on Arab nations on Sunday to offer diplomatic ties and debt relief to Iraq's government to reward its efforts on improving security and political reconciliation.

Rice said she hoped a conference of Iraq's neighbors on Tuesday in Kuwait would lead to progress on debt relief by Arab nations, and that states such as Saudi Arabia and Bahrain would meet their promises to open embassies in Baghdad.

Since the first two neighbors' meetings in Istanbul and Egypt last year, Rice said Iraq had passed some important laws and Iraq's army had tried to curb the militias.

"This meeting is going to have to take note of that," Rice told reporters before a refueling stop in Shannon, Ireland, on her way to Bahrain and Kuwait.

"I think it is fair to say that the neighbors could do more to live up to their obligations because I do believe the Iraqis are beginning to live up to theirs."

In Iraq, Shi'ite cleric Moqtada al-Sadr threatened on Saturday an "open war" against the government unless it halted a crackdown by Iraqi and U.S. security forces on his followers.

The specter of a full-scale uprising by Sadr raises the stakes in his confrontation with Prime Minister Nuri al-Maliki.

Rice is due to meet ministers in Bahrain from the Gulf Cooperation Council and Egypt and Jordan before going to Kuwait for the neighbors' meeting. The GCC comprises Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman and Bahrain.

"A number of people at this meeting will have done debt relief. Well, Iraq's neighbors ought to do that debt relief. The debt relief has come from the Paris Club, not from Iraq's neighbors," she said.

About $66.5 billion of Iraq's debt has been forgiven, with the bulk by the Paris Club members, according to State Department estimates this month. Of $56 billion to $80 billion of the estimated remaining debt, more than half is owed to Gulf countries, the department said.

Iraq's Sunni Arab neighbors, notably Saudi Arabia, have resisted U.S. pressure to open embassies in Baghdad, which Washington argues would bolster Maliki's Shi'ite-led government and help counter the influence of neighboring Shi'ite Iran.

"As to when missions will open, it is a good step that Saudi Arabia and Bahrain have said they are going to do it. I hope they will do it relatively soon," said Rice.

Egypt said on Friday it would wait until security conditions improved before it returned an ambassador to Baghdad. Militants kidnapped and killed Egypt's ambassador to Iraq in 2005.

Rice said she understood Egypt's concerns and while recent Iraqi government action in the southern city of Basra against militias had sparked new violence, the security situation was "very different" and had improved.

She said there were other ways to have representation in Baghdad and she encouraged more bilateral visits by Arabs.

Iran, which Washington accuses of stoking tension in Iraq, is expected to attend the Kuwait meeting, but Rice has said she has no plans to meet its foreign minister. Iran blames the United States for violence in Iraq.

"We continue to hope, particularly with Iran, for behavior that would be in line with what Iran says it wants which is to support the Maliki government and have a stable Iraq," she said.

"I have to say that the arming of militias and activities that end up killing both innocent Iraqis and threatening coalition forces don't seem to be in line with that goal."

In previous meetings, Rice has pressed Syria to stop the flow of foreign fighters across its borders into Iraq. She said there had been some improvements, "although not enough".