Iraq asks Arab states to cancel Saddam-era debt

BAGHDAD, July 5 (Reuters) Iraq's President Jalal Talabani urged Arab countries today to forgive Iraq's debts, saying it was incurred under toppled leader Saddam Hussein.

''Regarding our Arab brothers, we hope they will initiate the cancellation of this debt,'' Talabani said in a statement in Baghdad as Prime Minister Nuri al-Maliki ended a Gulf tour.

''States that helped the dictatorship have no right to ask the democratic state that succeeded it to repay those debts.'' Iraq has in the past disputed whether it should pay back much of its debt to Arab countries, most of which was incurred during the Iran-Iraq war, when Sunni Arab countries like Saudi Arabia and Kuwait funded Saddam's fight against the non-Arab, Shi'ite Islamic republic of Iran.

Gulf Arab states are owed about 40 billion dollar by Iraq -- with the bulk of the debt owed to Saudi Arabia and Kuwait.

Iraq's main Western creditors grouped in the Paris Club of wealthy nations agreed in November 2004 to cancel 80 percent of Baghdad's debt to them in three steps over four years.

Reuters DH VP0115