Via the NYT: Major Creditors in Accord to Waive 80% of Iraq Debt

The world’s leading industrial nations agreed Sunday to cancel 80 percent of the nearly $39 billion debt owed them by Iraq, a critical step in rebuilding the country’s devastated economy and an important precedent for its other creditors to follow.

The agreement, after a year of intense lobbying by the United States, puts pressure on Saudi Arabia, Kuwait and Iraq’s other Middle Eastern neighbors to forgive obligations owed them, including more than $100 billion in reparations Iraq owes from the 1991 Persian Gulf war.

[…]

Clearing the liabilities from Iraq’s books is considered almost as important to its future as defeating the insurgency because the country cannot hope to attract investors while carrying the current amount of debt.

[…]

While the 80 percent writeoff falls short of the American goal, it is the best deal the Paris Club has ever given a developing country: the previous record was a 66 percent debt reduction for the former Yugoslavia after the ouster of President Slobodan Milosevic.

This strikes me as a major diplomatic success of the Bush administration, albeit for less debt forgiveness than they were after.