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Russia to negotiate N. Korean, Iraqi debt settlement in 2007

MOSCOW, August 6 (RIA Novosti) - Russia expects to negotiate North Korea's debt settlement next fall, and could settle Iraq's $10 billion debt to the former Soviet Union later this year, a senior official at the Finance Ministry said Monday.

The official said a North Korean delegation had already visited Russia for negotiations twice this year, and that a Russian delegation would now travel to Pyongyang. Experts have estimated North Korea's Soviet-era debt at some $8 billion.

"Russia expects to negotiate North Korea's debt settlement to the former Soviet Union in the second half of this year," said Sergei Storchak, Russia's deputy finance minister.

Earlier in the day Russia signed a deal with Afghanistan writing off most of the Asian nation's Soviet-era debt totaling around $11 billion.

Russia earlier said it would write off 80-90% of Afghan debt under agreements reached through the Paris Club of Creditor Nations in July 2006. Afghanistan's debt to the former Soviet Union accumulated largely from arms supplies.

Storchak said unlike Afghanistan, North Korea was not going to sign agreements to implement projects as part of the International Monetary Fund (IMF), nor would its debt fall under the jurisdiction of the Paris Club.

"This is their internal affair, but the aspect is very important to us as a Paris Club creditor," the deputy finance minister said adding that it would be more difficult to settle debts outside the financial group.

Speaking about the Iraqi debt, which had mostly accumulated from military hardware deliveries, Storchak said: "There is cautious optimism that we could sign [a relevant agreement] before the end of this year."

The official also said that "much will depend on a visit by the Iraqi oil minister" due Thursday.

The official said the Finance Ministry did not link any debt settlement to possible participation by Russian companies in projects to develop Iraqi oil fields.

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