The United Arab Emirates has announced that it is cancelling the entire debt owed to it by Iraq, a sum of almost $7bn (Ј3.5) including interest.
The Gulf state also appointed a new ambassador to Iraq, in a move which eases Baghdad's diplomatic isolation.
The news was announced during a visit by Iraqi Prime Minister Nouri Maliki.
Correspondents say Iraq's Sunni Arab neighbours have been wary of fostering ties with Iraq's mainly Shia government because of its links with Iran. Tendulkar suffers injury setback ...
US rebuke over Palestinian funds ...
Iran 'installing new centrifuges' ...
(BBC)
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