Japanese Prime Minister Junichiro Koizumi told US presidential envoy James Baker on Monday that Japan will provide "substantial" debt reduction for Iraq at the Paris Club meeting of creditors in 2004.  

"Japan would be prepared to eliminate the vast majority of its debt of US$4.1 billion owed it by Iraq if other Paris Club creditors are prepared to do so in the context of a Paris Club agreement," Koizumi was quoted by Kyodo News as telling Baker during a meeting in Tokyo.  

Welcoming Koizumi's commitments, Baker, a former Secretary of State, told reporters after the talks, "Japan has taken a leadership role in the reconstruction of Iraq, something that is extraordinarily important and for which the United States is very grateful."

The Japanese government said Tokyo and Washington will discuss whether it is feasible for Japan to relinquish about two-thirds of its claims against Iraq.

The amount of Japan's outstanding loans to Iraq comes to US$7.0 billion if late payment charges are added, according to the government statistics.

Koizumi told Baker that Japan will work closely with other creditors countries, including the United States, to reduce the debt of Iraq.

"This is essential for ensuring the Iraqi people to have the opportunity to build a free and prosperous Iraq, and is of special importance to the international security and stability," Koizumi was quoted as saying.

Japan is the largest creditor country to Iraq among the 19 members of the Paris Club. Iraq owes a total of US$21 billion to the 19 nations.

Baker arrived in Japan on Sunday after visiting other major creditor countries, such as France, Germany and Russia, which basically agreed to offer debt relief to the war-torn country.

World Bank President James Wolfensohn has urged the Paris Club creditors to each forgive more than two-thirds of their credit claims.

Japan was reluctant to forgive the debt, partly because it has already pledged US$5 billion in financial contributions to Iraqi reconstruction efforts. But the country softened its stance after seeing that Russia and the European countries had agreed to the US request.

(Xinhua News Agency December 30, 2003)