Egypt Forgives Iraqi Debt in Exchange for Oil

By Ayah Aman for Al Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the opinions of Iraq Business News.

Iraqi Prime Minister Haider al-Abadi’s visit to Cairo on Jan. 11 included several political, military and economic agreements, and marked a new chapter in Egypt-Iraq relations.

These agreements also contributed in expanding the cooperation areas to confront the Islamic State (IS), which, according to the Egyptian government, are a threat to its national security.

“There was an agreement to solve all outstanding issues between the two countries, especially the issue of the Iraqi debt owed to Egypt,” an Egyptian government official told Al-Monitor on condition of anonymity.

The source, who attended Abadi’s talks with two Egyptian officials, said: “We suggested dropping the Iraqi debt in exchange for Iraqi oil shares. The concluded economic agreements also included resending Egyptian workers and contracting companies to Iraq.”

The issue of Iraq’s debt has been plaguing the Iraqi-Egyptian relationship since the Central Bank of Iraq refused to pay $1.7 billion to Egypt.

“Dropping the debt in exchange for oil was the only solution to get the Egyptian dues in the form of a commodity that Egypt strongly needs in light of the energy crisis,” the source said. “There was no time to waste in new differences with Iraq, as the unstable situation in the region required finding a solution to this issue and new ways of cooperation.”

Negotiations between Abadi and Egyptian officials did not end at this point. The talks mainly focused on military cooperation at a time when Cairo was fully aware of the serious threat posed by IS to its national security, especially as large segments of young Egyptians were joining IS.

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