ABU DHABI — The United Arab Emirates has cancelled the entire debt owned to it by Iraq, which totals just under $7-billion including interest and arrears payments, a UAE diplomatic source told Reuters on Sunday.

Iraq and the United States have been calling on Arab neighbours to join Western nations and forgive their share of Baghdad's outstanding foreign debts that total up to $80-billion.

The UAE's official news agency said the principle debt equals around $4-billion loaned to Iraq at different times.