France and the United States dug into polarized positions on how much of Iraq's debt to cancel at a meeting today aimed at promoting international harmony.
A day after US President George W. Bush took a jab at Paris over its opposition to the Iraq war, France said it had amassed support among top industrialized countries for its proposal that creditors initially forgive just half of Iraq's $120 billion debt load, revisiting this after three years.
This may leave the United States, which wants a 90-95 per cent write-off for the country, isolated.
"It's up to (the United States) not to block a possible deal," one French official said ahead of today's annual autumn meeting of the International Monetary Fund here.
Russia, Germany and Italy all supported France's proposal, French Finance Minister Mr Nicolas Sarkozy said.
The United States says Iraq needs much more substantial relief to get back on its feet and become economically viable. US Treasury Secretary Mr John Snow said today that creditor countries were moving towards an agreement.
The debt dispute revived lingering tensions between Washington and Paris over the US-led Iraq war, which France opposed along with Russia and Germany.
Washington has been pushing for a rapid debt deal, and an accord among top industrialized nations before the November presidential election would be good news for Mr Bush as he campaigns for a second White House term.
The chances of sealing a deal by then looked slim at best.
Finance chiefs from the Group of Seven rich nations - the United States, Japan, Germany, Britain, France, Italy and Canada - committed yesterday to reach a deal by year's end.
G7 officials will hold further Iraq debt talks at meetings planned for mid-October and late-November at the Paris Club of creditor nations, an informal body that seeks sustainable solutions to the payment difficulties of debtor countries.