News Intelligence Analysis
Bush Names Baker Envoy on Iraqi Debt
By Mike Allen and William Branigin
Washington Post Staff Writers
Friday, December 5, 2003; 1:10 PM
President Bush today appointed former secretary of state James A. Baker III to a key new post in the U.S. effort to rebuild Iraq, announcing that the veteran political operative and renowned troubleshooter would become his "personal envoy on the issue of Iraqi debt."
"Secretary Baker will report directly to me and will lead an effort to work with the world's governments at the highest levels, with the international organizations and with the Iraqis in seeking the restructuring and reduction of Iraq's official debt," Bush said in a statement.
Iraq is saddled with an estimated $125 billion in foreign debt, and most international donors have pledged loans instead of grants. U.S. officials fear the debt load will badly hamper the country's economy as the United States takes steps to foster a sovereign, democratic government.
The appointment appeared to reflect a realization among Bush's advisers that Iraq's future economic well-being would be tied to the president's own legacy, even as the administration prepares to hand over control to a provisional Iraqi government by the end of June.
"The future of the Iraqi people should not be mortgaged to the enormous burden of debt incurred to enrich Saddam Hussein's regime," the statement said. "This debt endangers Iraq's long-term prospects for political health and economic prosperity. The issue of Iraq's debt must be resolved in a manner that is fair and does not unjustly burden a struggling nation at its moment of hope and promise."
Bush said the appointment came in response to a request by the Iraqi Governing Council for help in lowering the country's debt. Iraq's debt service charges amount to $7 billion to $8 billion a year.
The president of the World Bank, James Wolfensohn, has said that at least two-thirds of Iraq's foreign debt needs to be written off if reconstruction efforts are to succeed.
Of its total foreign debt, Iraq owes about $40 billion to the United States, France, Japan, Germany, Russia and other members of the Paris Club, a 19-nation organization of creditors that seeks solutions to the problems of debtor countries. The remainder is owed to other Arab states and nations outside the Paris Club.
Baker, a 73-year-old Texan, has long undertaken challenging assignments for the Bush family. He was secretary of state under President George H.W. Bush, helping to assemble the international coalition for the 1991 Persian Gulf War. He then served as White House chief of staff and manager of the first President Bush's reelection campaign of 1992.
Baker later headed the Republican team during the Florida recount litigation after the disputed election of 2000.
In the 1980s, he served as treasury secretary and White House chief of staff under President Ronald Reagan.
White House press secretary Scott McClellan, who made the announcement by reading Bush's statement to reporters this morning, said the job is a volunteer post. He said Baker will have access to an office at the White House if he wants it, but that he is likely to be traveling a lot.
"The regime of Saddam Hussein saddled the Iraqi people with the debt because they were more interested in building palaces and torture chambers and mass graves than helping the Iraqi people," McClellan said.
Baker's name surfaced in July in connection with the Iraq reconstruction effort when administration officials said he was being considered for a key post to work alongside L. Paul Bremer, the U.S. administrator in Iraq. Officials said at the time that Baker could be asked to take charge of specific tasks such as seeking funds from other countries or restructuring Iraq's debt.
The Bush administration issued a denial two days later, however, saying Baker would not join the reconstruction team. Neither Baker nor Secretary of State Colin L. Powell "had ever heard about it," State Department spokesman Richard A. Boucher said. "It's a dead parrot."
Baker currently works as a senior partner in the international law firm of Baker Botts L.L.P., which has offices in Washington, New York, Houston, Moscow, London, Riyadh and other cities. The firm last year landed the Houston-based oil services company Halliburton as a client. Baker also serves as a senior counselor to The Carlyle Group, a merchant banking firm in Washington, and is honorary chairman of the James A. Baker III Institute for Public Policy at Houston's Rice University.
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