President Bush (search) on Friday called on a longtime family troubleshooter, former Secretary of State James A. Baker III (search), to oversee the job of getting Iraq out from under its crushing $125 billion debt.

"Secretary Baker will report directly to me and will lead an effort to work with the world's governments at the highest levels, with international organizations and with the Iraqis in seeking the restructuring and reduction of Iraq's official debt," Bush said in a statement read by White House press secretary Scott Mcker will tackle a major problem in the rebuilding of Iraq. Iraq's debt carries annual servicing charges of $7 billion to $8 billion.

"The regime of Saddam Hussein (search) saddled the Iraqi people with the debt because they were more interested in building palaces and torture chambers and mass graves than helping the Iraqi people," McClellan said.

Bush said he made the appointment in response to a request by the Iraqi Governing Council.

"The future of the Iraqi people should not be mortgaged to the enormous burden of debt incurred to enrich Saddam Hussein's regime," Bush said.

With experience in diplomacy and world finance, Baker "will help to forge an international consensus for an equitable and effective resolution of this issue," Bush said.

Baker will serve as a volunteer, working out of an office at the White House and traveling to other countries.

"This debt endangers Iraq's long-term prospects for political health and economic prosperity," Bush said. "The issue of Iraq's debt must be resolved in a manner that is fair and does not unjustly burden a struggling nation at its moment of hope and promise."

Baker, a Houston attorney, is a longtime Bush family friend who has held several high government posts.

In the closely fought 2000 election, Baker headed up Bush's strategy team during the recount battle in Florida, which eventually ended up in the Supreme Court and delivered the presidency to Bush.

He oversaw the presidential campaigns of Bush's father in 1980, 1988 and 1992.

He served as President Reagan's first chief of staff, and as treasury secretary in Reagan's second term.

He left his post of secretary of state to serve as campaign manager in the first President Bush's unsuccessful 1992 re-election bid.

Dan Senor, a spokesman for the U.S.-led Coalition Provisional Authority, said in Baghdad that estimates of Iraq's foreign debt range as high as $125 billion.

Reducing Iraq's foreign debt is a high priority both of the coalition and of the U.S.-appointed Iraqi Governing Council, Senor said.

Of the total Iraqi foreign debt, some $40 billion is owed to the United States, France, Germany, Japan, Russia and other countries who are among 19 nations belonging to the Paris Club, an umbrella organization that conducts debt negotiations.

At least $80 billion more is owed to other Arab countries and nations outside the Paris Club.