US to forgive Afghan debt
(AP)
Updated: 2006-02-08 08:52

The Bush administration said Tuesday it will forgive the entire $108 million that Afghanistan owes to the United States, and larger creditors also plan to erase Afghan debt.

"The government and people of Afghanistan are working diligently to build a sustainable market economy despite many challenges," State Department spokesman Sean McCormack said.

The announcement came a week after nearly 70 nations and international bodies pledged $10.5 billion to help Afghanistan fight poverty, improve security and crack down on the drug trade.

The pledges were intended to fund the goals set out in a five-year plan delegates signed Tuesday for redevelopment in Afghanistan, which has been devastated by decades of war.

US Secretary of State Condoleezza Rice last week praised the progress Afghanistan has made since a U.S.-led coalition toppled the hard-line Taliban regime in 2001. The United States plans to give $1.1 billion in aid next year.

"The transformation of Afghanistan is remarkable but incomplete," Rice said at a conference on Afghanistan in London. "And it is essential that we all increase our support for the Afghan people."

Russia said Monday that Afghanistan could erase its entire $10 billion debt to Russia if it fulfills the requirements of a World Bank program aimed at reducing poverty and takes steps to develop economic and trade ties with creditor nations.

"We call on other bilateral creditors to join our decision," the Foreign Ministry said in a statement.

Afghan President Hamid Karzai's government has not recognized the debt to Russia, which dates back to the Soviet era.

The Soviet Union had close ties with Afghanistan and invaded the country in 1979, installing a pro-Moscow Communist government. The decade-long occupation ended with a withdrawal of Soviet forces in 1989 under relentless pressure by U.S.-backed anti-communist mujaheddin rebels.