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Wednesday, July 22, 2009

Iraq's credit rating holding up military deliveries

WASHINGTON — Iraq's Iraqi Prime Minister Nouri Al Maliki came to town today seeking to relax U.S. regulations that are hampering defense procurement.   

On July 22, Al Maliki met President Barack Obama to discuss defense and other relations with the United States. Al Maliki brought his defense minister and interior minister to focus on U.S. arms deliveries to Iraqi's military and security forces, Middle East Newsline reported.

Officials said Al Maliki has been pressing Washington to liberalize credit rules that would increase the flow of military platforms to Baghdad. They said billions of dollars of U.S. equipment ordered by Iraq remains stuck because of the fear of an Iraqi government default.


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Iraq has ordered more than $5 billion in U.S. platforms, including aircraft, helicopters and main battle tanks. But officials acknowledged that deliveries were being delayed by the poor credit rating of the Baghdad government.

"This issue must be resolved if the United States wants to keep Iraq as a defense client," an official said.

Officials said Iraq has been hampered by the U.S. Foreign Military Sales program. FMS sets strict requirements for credit by a U.S. defense client, which has forced Baghdad to pay cash in advance.

"When the price of oil was high, Iraq could come up with the cash," the official said. "Now, it can't."

Iraq has already relayed more than $1 billion to the U.S. Federal Reserve Bank as a downpayment for a $2.1 billion project to procure the M1A1 MBT and related vehicles. Officials said the Abrams MBTs were expected to arrive over the next few months.

U.S. defense companies have lobbied the Obama administration and Congress to relax credit rules for Iraq. Executives have warned that Iraq has been signing agreements with France and negotiating defense deals with Russia and South Korea.



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