BERLIN (AFP) - Russia is blocking a Paris Club agreement to wipe out 80 percent of Iraqi debt, a source said on the sidelines of a Group of 20 meeting of finance chiefs.
High-level talks between Russia and the United States aimed at breaking the deadlock are under way, the source said on condition of anonymity.
"An agreement has been reached with most of the creditor nations, with the exception of Russia," the source said.
"Russia wasn`t in a position to give an agreement... talks are under way at the highest level between the Americans and Russians because there must be unanimity."
The information could not be immediately confirmed. It was not clear whether the discussions were taking place in Berlin or elsewhere as Russian Finance Minister Alexei Kudrin was not attending the G20 meeting.
Germany had on Saturday unveiled a breakthrough international plan to wipe out tens of billions of dollars of Iraqi debt so that the war-torn country can begin rebuilding in earnest.
The accord, announced on the sidelines of the G20 meeting, could see the Paris Club of 19 creditor nations cut up to 80 percent of Iraq`s debt and the interest it owes them.
Technical aspects of the deal had been thrashed out by the Paris Club members in the French capital Saturday and representatives in Berlin had thought that an official announcement was imminent.
A third of Iraq`s crippling 120-billion-dollar international debt burden is owed to Paris Club members, with Japan the biggest creditor while Russia is owed an estimated 3.450 billion dollars.
France, Germany and Russia had doggedly refused to go beyond a 50 percent cut in debt, while the United States and Britain had sought 95 percent.
But speaking Saturday in Berlin after meeting US officials, German Finance Minister Hans Eichel said that a three-phase comprimise plan had been agreed.
"In the first stage around 30 percent (will be waived) immediately; in the second stage around 30 percent, tied to an International Monetary Fund programme, and in the third stage 20 percent, dependent on the success of this programme," he told reporters.
A source familiar with the talks termed the debt deal a reasonable compromise between the US and French position, adding that Paris Club members had been committed to reaching agreement before the end of the year.
"It will also show how the world community is coming together in a very cooperative way to address a problem that is before them," the source said.
"I would say it`s an effort to recognize that there`s an opportunity to work together, and that we have a common goal, that is for Iraq to succeed. There is no disagreement about that and this is an important element in that."
11/21/2004 - 11:42 GMT - AFP