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US refused several Iraqi offers to pay back $2.5b
WASHINGTON. May 19: The Bush administration turned down several Iraqi offers on the eve of the Gulf War to "pay back 2.5 dollar billion In US loans, confidential cables show, reports AP.
The Iraqi overtures, which were not made public, were dismissed as ploys to divide the international coalition being assembled by the United States against Iraq after Its August 1990 Invasion of Kuwait
Tt Is hardly conceivable to us that the Iraqis Intend to use their limited foreign exchange to make payments on debt to the United States," Deputy Secretary of State Lawrence Eagleburger cabled the US Embassy In Rome.
The October 2 cable urged that the 12-nation European Economic Community, some of whose members received similar offers, withhold any response to Iraq until consulting with the United States.
In the cable, which was obtained by The Associated
Press. Eaglcburger noted that in all. Iraq owed the United States about 2.5 billion dollar of which almost dlrs 2 billion were loans guaranteed by the Bush administration for the export of American farm products to Iraq.
The administration has had to pay back those loans itself.
Eaglcburgcr suggested that Iraq was using the offer as "a ploy to promote some other objective"— possibly to draw the United States into discussion that would ease the Internationa] isolation imposed by punitive UN economic sanctions.
He said that although the United States didn't want to be seen as waiving Its claim to the money, tt also didn't want to accept the offer and be seen as softening Its demand for a total Iraqi withdrawal from Kuwait.
In the end, the United States and EEC all rejected the offers, said a State Department official who discussed the matter Monday on condition of anonymity.
The first offer came on September 17. 1990, as US troops were massing in Saudi Arabia in response to Iraq's August 2 invasion of Kuwait.
A note to the US Embassy in Baghdad from the foreign ministry said the Iraqi government "expresses Its full readiness to pay off its debts .... immediately and regularly." It asked the United States to seryl an envoy "to discuss the method of payment of these debts."
The official said the Iraqis made several such offers to the United States and to EEC member nations in the months leading up to the January 16, 1991, start of the allied air war against Iraq.
In a related development, the chairman of the House Banking Committee asked the administration Monday for information regarding the role of Eaglcburgcr's boss — Secretary of State James A Baker III — in making policy toward Iraq.