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U.S. cancels Iraq's $4.1 billion debt

Four killed in attack on car in Mosul

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WASHINGTON (CNN) -- The Bush administration formally canceled Iraq's $4.1 billion debt to the United States on Friday and urged others to do the same to help the country rebuild.

Secretary of State Colin Powell, Treasury Secretary John Snow and Iraqi Finance Minister Adil Abd al-Mahdi signed the agreement, cementing the U.S. commitment made at a meeting last month of the so-called "Paris Club" of creditors. (Full story)

At that meeting, the 19 member creditors agreed to write off 80 percent of the nearly $40 billion owed to them by the regime of Saddam Hussein, which left behind a total of $127 billion in debt when it was deposed in 2003, according to al-Mahdi.

The United States agreed to write off all of its $4.1 billion debt.

Powell and Snow urged countries that are not members of the Paris Club to do the same.

"Lifting the crushing burden of the old regime's debt is one of the most important contributions we can make to Iraq's new beginning," Powell said at the signing ceremony.

"It's clear more is needed," Snow said. He said the United States would help other countries reach similar agreements to cancel part or all of Iraq's debt.

The Paris Club, an informal group of creditor nations, is composed of 19 permanent members -- including the United States, Germany, Great Britain, France and Russia. It works to find sustainable solutions to payment dilemmas experienced by debtor nations.

Al-Mahdi called the debt cancellation a "second liberation" for Iraq, saying the move would "keep all the momentum in this process" of reconstruction. Iraqis "need every dollar" to rebuild, he said.

Insurgents kill four in Mosul

Insurgents attacked a car Friday in the northern Iraqi city of Mosul, killing four people inside before setting the vehicle on fire, an Iraqi national guard official said.

The attack took place at the Yarmuk traffic circle in Mosul, the Iraqi national guard official in Mosul said.

Witnesses said one of those killed was an Iraqi and the other three appeared to be foreigners.

Reuters reported that the insurgents took one of the foreigners hostage, but then decapitated him when he tried to escape.

Photographs from the scene showed the bodies outside of the burning car. One of the bodies was partially in flames.

The national guard official said that Iraqi police told him the bodies of the foreigners remained on the ground outside the car as it was burning, and that no one had touched their bodies.

It was not known what happened to the body of the Iraqi.

Witnesses told Reuters that two of the men appeared to be in their 20s or 30s and were wearing jeans and windproof jackets.

They also were reportedly carrying small automatic weapons, which the insurgents took before setting the car on fire.

Mosul has been a scene of frequent attacks in recent weeks.

On Tuesday, a U.S. military spokesman said that the bodies of eight men were found on the western edge of Mosul. They had all been shot.

The letters "ING" -- referring to the Iraqi national guard -- were written on the ground next to one of the bodies, the spokesman said.

Iraqi national guard troops have been a frequent target of insurgents, who consider them to be American collaborators.

U.S. Marine killed

A U.S. Marine assigned to the 1st Marine Expeditionary Force was killed in action Thursday during security and stabilization operations in Anbar province, a U.S. military news release said.

No other details were released because of concerns that the information could help insurgents assess the effectiveness of their tactics and put troops at greater risk.

The expansive Anbar province, west of Baghdad, has been a stronghold of insurgent activity.

CNN's Elise Labott contributed to this report.

Reuters contributed to this report.

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