The money claimed by the Gulf Arab states is a substantial part of the estimated $120 billion Iraq owes other states and eliminating it would significantly ease the country's burden.

In an interview with London's Financial Times newspaper, World Bank President James Wolfensohn warned that global policymakers have been distracted from some of the world's most pressing development issues because of terrorism and security concerns.

He spoke with the newspaper in Washington, where the World Bank and the International Monetary Fund are preparing the agenda for their annual meeting next month.

One of the key topics will be debt relief for Iraq, which owes about $120 billion on Saddam Hussein-era loans. The United States favors a 90 percent reduction, but France and other creditors argue that would be too generous.

What is the status of debts owed by Saddam\ufffds regime?
This issue has divided the United States and its European allies. The debt run up by the Saddam regime is estimated to be between $120 billion and $135 billion, according to Joseph Siegle, Douglas Dillon Fellow at the Council on Foreign Relations. Iraq also owes some $200 billion in reparations to Kuwait and other countries from the Gulf War. The United States is pushing to classify Iraq\ufffds obligations as \ufffdodious debt.\ufffd Alexander Sack, a pre-eminent international legal scholar, defined the term in 1927 as debt incurred by a despotic power not for the needs or interests of the state, but to strengthen the regime and repress the population under its rule. Some debt experts argue that, because the people had no choice and received no benefit from the despot\ufffds actions, they should not be held accountable for the debt. Others add that institutions or companies that lend to despots and their regimes should consider the risk they are taking. However, there is no formalized international legal framework to define odious debts or to determine which debts of which countries could be thus classified. France, Germany, and Russia insist they won\ufffdt forgive debts Iraq owes to them. Hans Eichel, the German finance minister, told reporters on October 18, \ufffdWe do not only expect to get our money back; we will get our money back.\ufffd

Which countries are owed the most money by Iraq?
Iraq\ufffds Gulf state neighbors are owed the most, at $30 billion. Japan is next at $9 billion, Russia at $8 billion, France at $8 billion, and Germany at $4 billion.