Bush Picks Friend Baker as Iraq Debt Envoy
By Steve Holland, Reuters

WASHINGTON (Reuters) - President Bush on Friday [December 5] turned to a family friend who helped bail him out of the 2000 Florida recount battle, former Secretary of State James Baker, to seek an international consensus on restructuring Iraq's estimated $120 billion in 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 international organizations and with the Iraqis in seeking the restructuring and reduction of Iraq's official debt," Bush said in a statement.

The appointment of Baker, 73, reflected Bush's need for a seasoned and trusted diplomat to try to resolve the complicated issue of Iraq debt. The administration believes debt relief will accelerate Iraq's transition to a functioning, viable economy.

The issue has become politicized and provided a means for countries like Germany and France, which opposed the U.S.-led war to oust Saddam Hussein, to try to influence the reconstruction and political future of Iraq.

Baker was Bush's point man in the 2000 Florida recount battle between Bush and Democrat Al Gore, a dramatic struggle that ended with a split U.S. Supreme Court ruling that Bush won the state's closely fought election, essentially giving him the presidency.

Baker served under President Ronald Reagan as treasury secretary and also did a stint as White House chief of staff. He was secretary of state for the current president's father, George Bush. He was highly regarded in all three positions.

Bush said the appointment was made in response to a request by the Iraqi Governing Council for help with debt relief, and that Baker was chosen due to his government connections and experience as secretary of state during the first Gulf War.

World Bank President James Wolfensohn has said that at least two-thirds of Iraq's estimated $120 billion foreign debt will need to be written off to rebuild the country properly.

"The future of the Iraqi people should not be mortgaged to the enormous burden of debt incurred to enrich Saddam Hussein's regime," Bush said.

Baker is presently a senior partner in the law firm of Baker Botts and senior counselor to The Carlyle Group, an influential merchant banking firm in Washington.

He is honorary chairman of the James A. Baker, III Institute for Public Policy at Rice University in his native Houston.

FINANCIAL LEADERS POSITIVE, FRENCH LESS SO

In St. Louis, Treasury Secretary John Snow said he had met Baker on Thursday in Washington and then had spent a good deal of time on Thursday night and Friday morning talking with international financial leaders on the phone and informing them of the move.

They had a "very positive response," Snow said. "They said it was a positive step, a good step and they all looked forward to working with Mr. Baker."

His Houston office said Baker was traveling and could not be reached for comment.

A senior French official said on Thursday that he did not see an easy way to quickly reduce some of Iraq's debt because the U.S.-occupied land was not a sovereign country.

The official, Foreign Ministry spokesman Herve Ladsous, said members of the U.S.-appointed Iraqi Governing Council may visit Paris in mid-December and that the issue of debt forgiveness would be discussed.