PARIS — Major economic powers agreed Sunday to write off more than $31 billion of Iraq's debt, a critical step in rebuilding the nation's devastated economy.
Under the agreement, the Paris Club of 19 nations will write off 80% of the $38.9 billion that Iraq owes them, group chairman Jean-Pierre Jouyet said. The Paris Club includes the United States, Japan, Russia and European nations.
Iraq owes $80 billion more to various Arab governments. A clause in the agreement gives the Paris Club the option to suspend part of the debt reduction if it is not matched by Iraq's other major creditors -- led by Saudi Arabia and Kuwait.
The United States had been pressing for up to 95% of the Paris Club debt to be lifted. Iraq has said its foreign debt was hindering postwar reconstruction, already struggling amid the country's persistent insurgency.
The deal represented a considerable concession from France, whose ties with the United States were damaged by disagreements over the U.S.-led Iraq war. France opposed the invasion that toppled Saddam Hussein.
Jouyet said the debt reduction plan would work in three phases, with 30% of the debt being written off immediately.