Washington, Dec. 7: Saying No to America on the request for troops in Iraq was easy. For South and North Blocks, the next phase of US pressure on India in sorting out the post-war mess is going to be much more difficult.
James Baker III, the Bush familys trusted trouble-shooter and secretary of state to the first President Bush, will arrive in Delhi some time soon with a brief from the White House, which India will be hard put to refuse.
Baker, who late last week was given a US government plane by the White House for his extensive travels around the world, will ask Prime Minister Atal Bihari Vajpayee to write off all the money Saddam Hussein owed Indian companies for the work they did in Baathist Iraq.
Baghdads debt to India is estimated at $2 billion. According to sources in South Block, if Vajpayee agrees to forgive this debt, Indian taxpayers will be the losers, not Indian firms which put up projects in Iraq.
This is because a considerable portion of Saddams dues to these firms has already been taken over by the government. Many Indian companies waited two decades to receive the money and there is little hope these funds will ever find their way into Indian coffers.
Earlier this year, for instance, the Indian government issued seven-year bonds at 6 per cent interest to three firms which had an Iraqi debt burden of Rs 298 crore. Two similar tranches of bonds had been issued earlier to relieve Indian firms of their dues from projects, in the implementation of which South Block had a persuasive role during the years when a secular Saddam was projected as a good friend of Delhi and rewarded with liberal grants and credits.
To be fair, between 1983 and Saddams ill-fated occupation of Kuwait in 1990, the Baathist regime did pay $701 million it owed Indians. Even after the war which liberated Kuwait, Delhi and Baghdad negotiated an arrangement under which Iraqs Central Bank certified dues to Indian companies and settled some of it through an account operated by Indias Exim Bank.
Some project exports were also discussed within the limitations of UN sanctions.
If Vajpayee agrees to write off the substantial debt merely because the US chose to change the regime in Baghdad, India will have only empty hands to show for all the initiatives of its businessmen and project exporters.
But after having refused to send troops to Iraq, the Prime Minister will find it hard to turn down a plea for writing off the Iraqi debt: that too from a presidential envoy who is a retainer of sorts of Americas first family.
Administration sources here said it was too early to suggest a date for Bakers travel to India. In all probability, he will first visit Russia, France, Germany, the UK and the Gulf Arab states, which are all owed the bulk of Iraqs debt of about $125 billion.
Baker, 73, insisted when he was appointed presidential envoy that he will report solely to the President. He was secretary of state during the 1991 Gulf war and is expected to deal with more than just Iraqs debt, though publicly that is his brief for the moment. If Baker meddles in other aspects of the Iraqi occupation as he is widely expected to do he will substantially undercut Colin Powell and Donald Rumsfeld, the secretaries of state and defence.
By agreeing to negotiate the debt, he has already entered the turf of treasury secretary John Snow.