June 10 (Bloomberg) -- U.S. President George W. Bush's personal appeals failed to win agreement from Group of Eight nations to reduce Iraq's $120 billion of debt and to send more G- 8 troops to stabilize the country.

French President Jacques Chirac disagreed about how much debt to cut and sought to limit relief to 50 percent because of Iraq's revenue from oil reserves, the world's second-largest. The stalemate leaves the Paris Club of creditor nations, whose members include both the U.S. and France, to find a compromise.

Divisions between the U.S. and France, which opposed the U.S.-led invasion of Iraq, also surfaced when Chirac rejected Bush's suggestion that NATO expand its role in Iraq. France and Germany have refused to send troops to Iraq to support the 150,000 that Britain, the U.S. and Italy have there.

``You can't write one big check in the enthusiasm of the moment without considering all the interconnected issues -- oil prices, your country's credit rating, what troops on the ground actually do,'' said John Kirton, a University of Toronto professor who has attended G-8 meetings since 1987. ``These are issues that can get worked out over the next few weeks.''

Bush wanted an agreement to write off the ``vast majority'' of Iraq's debt, a U.S. official said yesterday. France sought a G- 8 endorsement for ``substantial'' relief, defined by the Paris Club as 50 percent, a French official said today. Both spoke on condition of anonymity. Iraq owes France about $5 billion.

Differences Over Troops

The dispute at the G-8 summit Bush is hosting in the coastal resort of Sea Island, Georgia, belied assertions by Bush and U.K. Prime Minister Tony Blair that the world set aside its differences yesterday when the United Nations Security Council unanimously approved a resolution backing U.S. plans for Iraq.

Bush, 57, wants military assistance in Iraq to relieve commitments on the U.S., which has 140,000 troops there. Britain has 8,900 troops and Italy about 3,000 in Iraq.

Chirac, 71, rebuffed Bush's call for NATO to help more with security in Iraq, saying it's not the alliance's job to ``intervene.'' North Atlantic Treaty Organization leaders meet in Istanbul on June 28, two days before Iraq's interim government takes power.

Canadian Prime Minister Paul Martin, 65, said he wouldn't send troops to Iraq because he has none to spare after deployments in Afghanistan and Haiti. Canada, which is already helping to train Iraqi police officers, may do more to help establish democratic institutions such as courts, Martin said.

``We are certainly prepared to participate,'' Martin said at a press conference. ``I do not believe we will be participating with further troop movements, but we are certainly going to participate with expertise.''

Waiting for Paris Club

Canada is willing to forgive the C$750 million ($552 million) it is owed by Iraq once the 19-member Paris Club forges an agreement. Canada also has promised C$300 million over five years to help Iraq rebuild.

The official G-8 statement included no indication on the amount of debt to be cut and said the Paris Club would work out details. The U.S. expects the amount to be more than half, a Bush administration official said, speaking on condition of anonymity. German Deputy Economics Minister Alfred Tacke said G-8 leaders want to grant ``substantial'' debt relief.

``Debt reduction is critical if the Iraqi people are to have the opportunity to build a free and prosperous nation,'' the G-8 statement said.

The G-8 summit includes the leaders of the world's eight most industrialized nations: Canada, France, Germany Italy, Japan, Russia, the U.K. and the U.S., which together account for more than $24 trillion, or about two-thirds of the world's gross domestic product.

Iraq's Resources

France doesn't want to write down more than half of Iraq's debt because the nation's oil reserves make it better able to pay than some other nations seeking debt relief, Catherine Colonna, a spokeswoman for Chirac, said yesterday.

``Iraq is a country which has resources,'' Colonna said. ``There are very strong points leading us to believe that treating 50 percent of Iraq's debt would be appropriate.''

Finance ministers from the Group of Seven nations -- the G-8 excluding Russia -- are pushing oil-exporting nations to raise production to bring down prices that touched record highs earlier this month. In New York, crude oil futures rose as much as 25 percent this year to $42.38 a barrel.

Debt to Japan

More discussion is needed on how much debt to forgive, said a Japanese official who spoke on condition he not be named. Iraq owes Japan $4.11 billion, of which almost nine-tenths is trade- related insurance payments. Late payment charges bring the total to about $7 billion, according to Japan's foreign ministry.

The Paris Club holds $42 billion in Iraqi debt, the IMF reported in May. Debt relief should be approved by the end of this year, a U.S. official said at Sea Island, speaking on the condition of anonymity.

Colonna said the French-backed reference to ``substantial'' Iraq debt relief was replaced in the final G-8 statement on the Middle East by phrasing intended to avoid ``prejudicing future talks which will take place under the Paris Club rules.''

The IMF estimates creditor nations must probably wipe out as much as 80 percent of Iraq's debt to make it ``sustainable'' as the country begins to reconstruct, Colonna said.

``We will take this advice into account,'' she said.

To contact the reporter on this story: Roger Runningen at Sea Island at rrunningen@bloomberg.net

Last Updated: June 10, 2004 00:02 EDT