After a meeting of G7 finance ministers in Washington, Germany rejected the idea pressed by Washington for massive postwar debt relief for a new Baghdad administration, and France gave a lukewarm response.

The G7 did endorse the idea of a new UN Security Council resolution as part of a multilateral postwar effort to rebuild the nation, but offered no guidance on the thorny issue of an interim postwar administration.

"We recognize the need for a multilateral effort to help Iraq," according to a G7 communique.

"We support a further UN Security Council resolution. The IMF and World Bank should play their normal role in rebuilding and developing Iraq, recognizing that the Iraqi people have the ultimate responsibility to implement the right policies and build their own future."

The G7 statement offered no specifics on the UN resolution or any details on the postwar administration of Iraq, a source of friction between the United States and its allies.

The statement also acknowledged the importance of a cooperative effort dealing with Iraq's massive debt, saying the Paris Club of creditor nations should review this.

The G7 statement gave scant guidance on handling Iraqi debts and liabilities.

Iraq owes an estimated 127 billion dollars in pure debt, of which 47 billion dollars is accrued interest.

Experts say it owes another 199 billion dollars in Gulf War compensation claims and 57 billion dollars for contracts such as energy and telecommunications deals.

US Treasury Secretary John Snow said the G7 officials "began substantive discussions about how our nations and the international institutions can work together to help the Iraqi people recover -- not just from 25 days of conflict, but from 25 years of economic misrule."

Snow said the ministers "had useful discussions about how to proceed with the Iraqi debt -- recognizing that the Iraqi people cannot bear the burden of current debt levels -- and we recognize the need of the Paris Club to begin to address this issue."

But German Finance Mnister Minister Hans Eichel said his country was not prepared to start writing off its Iraqi debt.

"We do not only expect to get our money, we will get our money back," Eichel told reporters.

Germany estimates it is owed about 4.0 billion euros (4.3 billion dollars) by Iraq.

Eichel said he expects Iraq to be granted a moratorium on debt repayment until a legitimate government has been established and for its debt to be restructured.

"But if a country has the possibility of repaying its debt, it must do so," he said.

French Finance Minister Francis Mer declined to offer a commitment on relief for Iraq, but said debts cannot be erased simply by a change in government.

"One does not clear the slate (but) this (debt) can be progressively renegotiated," he said.

Mer said France is owed about 1.7 billion to 1.8 billion dollars in principal by the Iraqi government.

The French finance minister did not directly challenge Washington's view that Iraq should get some debt relief, but said this should be considered by the Paris Club.

Mer also dismissed the notion of erasing all Iraq's debts.

"This does not mean ... that the past must be forgotten and that the debts of a country should be dropped after a change in government," Mer said.

This is not the first time France has had to deal with such a situation, he said, noting that the French are still pressing for repayment of Russian bonds prior to the 1917 Bolshevik revolution, widely held in France.

The G7 includes war allies Britain and the United States as well as war opponents France and Germany, along with Italy, Canada and Japan.

SPACE.WIRE