Iraq's Debt Relief: Procedure and Potential Implications for International Debt Relief [Updated January 24, 2007] [open pdf - 130KB]
From the Summary: "Following the ouster of the Saddam Hussein regime in spring 2003, Iraq's external debt was estimated to be $125 billion. Reducing this debt to a sustainable level has been a priority of the U.S. government. Since 2003, debt relief negotiations have taken place in a variety of fora and led to the cancellation of a significant amount of Iraq's external debt. Iraq's external debt comprised four components: Paris Club bilateral debt ($37.15 billion), non-Paris Club bilateral debt ($67.4 billion), commercial debt ($20 billion) and multilateral debt ($0.5 billion). […] A provision of the Paris Club agreement is that Iraq cannot accept a debt cancellation agreement with other creditors on less favorable terms than those reached with the Paris Club. Thus, Iraq is expected to receive no more than an 80% cancellation from all of its creditors. […] The negotiations and process of providing debt relief to Iraq may shed some light on the approaches bilateral and corporate creditors take toward providing international debt relief to middle-income countries who would not be eligible for the debt relief already provided to the poorest countries. In light of Iraq's experience, three new precedents appear to have taken shape: 1. a willingness by the international community to grant a stay on the enforcement of creditor rights to collect unpaid sovereign debt; 2. an increased flexibility in Paris Club debt relief decisions; and 3. an unwillingness by successor regimes to claim that their debt is odious and repudiate it."
CRS Report for Congress, RL33376