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. Last Updated: 07/27/2016

Baker Put in Charge of Iraqi Debt Restructuring

WASHINGTON -- U.S. President George W. Bush turned Friday for assistance on Iraq to the man who helped him win the contested election in 2000, naming former Secretary of State James A. Baker III as his personal envoy to restructure more than $100 billion in Iraq's foreign debt.

The appointment of Baker, a longtime Bush family confidant and troubleshooter, was, in effect, a public admission by the White House that the occupation and reconstruction of Iraq is a more urgent problem than officials acknowledge. Over Baker's decades of friendship with the Bush family, both father and son have turned to him when things have gone wrong, and Baker has for the most part delivered.

"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.

But administration officials said that the portfolio of Baker, 73, would be much broader than seeking an international agreement to restructure the debt, and that he would serve as an unofficial ambassador to explain the administration's plans for Iraq to skeptical nations in Europe and the Middle East. Officials noted that Baker, who was a very powerful White House chief of staff and treasury secretary in the Reagan administration, and an equally powerful secretary of state for the first President Bush during the 1991 Persian Gulf War, was not a man accustomed to remaining in the background.

Baker was said to have accepted the job only after being convinced that he would have direct access to Bush as his envoy, just as he had with Bush's father. The White House said the appointment had been made at the request of the Iraqi Governing Council.

Although Bush has never been as close to Baker as he was the first President Bush -- and was said to distrust him after his father's losing 1992 campaign, which Baker ran -- any such feelings have long been set aside in the pursuit of results, in this case the solvency of Iraq.

"James Baker's vast economic, political and diplomatic experience as a former secretary of state and secretary of the treasury will help forge an international consensus for an equitable and effective resolution of this issue," Bush said in his statement.

Baker's appointment raises questions about the role of the Treasury secretary, John Snow, who has been leading the administration's efforts on Iraqi debt. At the same time, the appointment gives Baker diplomatic responsibility and visibility that would ordinarily be accorded to Secretary of State Colin Powell. Administration officials said Baker would regularly travel to foreign capitals to meet with heads of state about U.S. plans for Iraq.

At the State Department, Baker's appointment, with its emphasis on debt, was cast as more of a supplanting of the Treasury Department's role. "If this was going to take away from anyone's role, it would be John Snow's," said a State Department official who asked not to be identified.

"The job that Baker's doing is not a job that Powell would be doing," the official said. "To do the job the way it needs to be done, you need a special envoy. It requires the investment of time and energy that a secretary of state doesn't have."

The official added that Powell had been involved in the decision to appoint Baker.

Treasury officials said Friday that Iraq's debt was somewhere between $100 billion and $120 billion. Of that, some $40 billion is owed to the United States, France, Germany, Japan, Russia and other nations that belong to the Paris Club, a group of industrialized nations that conducts debt negotiations. About $80 billion is owed to Arab nations and others outside the Paris Club.

The debt does not include as much as $100 billion more demanded in war reparations from countries like Kuwait and individuals who claim damages from Iraq.

The Paris Club has begun discussing Iraq's debt, but a French official said this week that the talks were only in the earliest phases, and that they had not reached a substantive level. The World Bank has proposed forgiving two-thirds of Iraq's debt, but it is unclear what the White House, or Baker, thinks of the idea.