DUBAI , United Arab Emirates ( CNN ) -- Dubai has forgiven the nearly $ 7 billion Baghdad owes it , Iraqi Prime Minister Nuri al-Maliki announced Sunday . UAE President Sheikh Khalifa bin Zayed Al Nahyan has promised to appoint an ambassador to Iraq . UAE President Sheikh Khalifa bin Zayed Al Nahyan promised to `` put out these debts , '' appoint an ambassador to Baghdad , and `` help Iraq building the holy shrines that were targeted by the terrorists , '' al-Maliki said in a written statement . Al-Maliki and the sheikh met Sunday , the first day of a two-day official visit . Al-Maliki was accompanied by the Iraqi ministers of Interior , Commerce and Industry . `` Our biggest challenge is now the reconstruction and rehabilitation of the economic situation and to provide services to our citizens , '' al-Maliki said . Debt relief is a major issue for Iraq , and the United States has urged other nations to forgive Iraqi debt , most of which is held by Arab states , U.S. Deputy Treasury Secretary Robert Kimmitt said in late May . Also , the UAE Cabinet on Sunday nominated Abdullah Ibrahim al-Shehhi to be the country 's ambassador to Iraq . Al-Shehhi , who previously served as the Emirates ' ambassador to India , is to travel to Iraq after his nomination is confirmed . An official government source said the UAE intends to reopen its embassy in Baghdad by the end of the year . The United States and other nations have urged Arab countries to post ambassadors to Iraq , reopen embassies and forge closer relationships with Iraq 's government . The UAE mission in Iraq has n't been active since a UAE diplomat was kidnapped and released two years ago . The year before that , two Iraqis working for that mission were killed . No ambassador from an Arab country has been stationed permanently in Iraq since July 2005 , when Egypt 's ambassador , Dr. Ihab al-Sherif , was abducted from a Baghdad street and slain . Al Qaeda claimed responsibility for the assassination , saying it had killed al-Sherif because of Egypt 's foreign policies and its alliances with the United States and Israel . The UAE 's announcement Sunday came a month after its foreign minister , Sheikh Abdullah bin Zayed al-Nahyan , visited Baghdad . During that visit , al-Nahyan extended the official invitation that brought al-Maliki to Dubai . Iraq 's government said that al-Nahyan 's one-day visit was the first to Iraq by a Gulf Cooperation Council foreign minister since the 2003 U.S-led invasion that toppled the regime of President Saddam Hussein . The Gulf Cooperation Council also includes Bahrain , Kuwait , Oman , Qatar and Saudi Arabia . Prior to al-Nahyan 's visit , only Syria and Jordan had sent foreign ministers to Iraq in the post-Saddam Hussein era . The Arab League 's secretary-general has also visited . War and the Sunni-Shiite rivalry in Iraq and the Muslim world have slowed the Arab world 's re-establishment of diplomatic relations with Iraq . Iraq 's mixed population is mostly Arab with some Kurds and Turkmens , and mostly Shiite Muslim , with a Sunni Muslim minority . Most Arab countries -- including the UAE -- are Sunni-ruled . Iraq 's government is Shiite-dominated and it is forging a close relationship with its neighbor , the non-Arab Shiite nation of Iran -- a development that concerns Arab nations wary of Iran 's Islamic Republic government . Al-Maliki 's government is seeking to develop close ties to all countries of the region . CNN 's Caroline Faraj in Dubai and Mohammed Tawfeeq in Baghdad contributed to this report .
President of Iraq agrees to cancel all United Arab Emirates 's debts to the nation . West has urged nations to forgive billions in Iraqi debt . DUBAI nominates Al-Shehhi to be ambassador to Iraq .