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Bush Administration Officials say Iraqi Oil Can Help Pay for Reconstruction - 2003-09-16

Bush administration officials say Iraq's oil proceeds can help pay for the costs of the country's reconstruction. They made their comments before a Senate panel Tuesday.

Undersecretary of State Alan Larson told a Senate Banking subcommittee that Iraqi oil exports could generate $12 billion next year, and as much as $19 billion in 2005 and 2006. "Iraqi resources could begin making a significant contribution to economic reconstruction," he said.

U.S. Export-Import Bank President Philip Merrill testified that Iraqi oil proceeds would not be enough to cover the costs of the reconstruction. Besides U.S. taxpayer money and international donor contributions, he said foreign investment would also be necessary.

Congress is expected to vote on President Bush's $87 billion supplemental funding request for Iraq and Afghanistan in the coming weeks. Most of the money is to be used for military operations. Twenty billion dollars is to go toward Iraq reconstruction.

Treasury Undersecretary John Taylor told the panel that much more, between $50 and $75 billion, would be needed to rebuild Iraq's infrastructure, including electricity, transportation, and communications facilities.

Mr. Taylor said Congressional approval of the President's request would spur financial contributions from other countries. He said Washington is pressing other nations to offer generous pledges at a donor conference scheduled next month in Madrid.

On another issue, Mr. Taylor said a new Iraqi currency would be introduced next month. "A public education campaign is underway in Iraq to make sure the Iraqi people are well informed about the new currency and the exchange itself. The new currency will be issued in more denominations than currently available: six, rather than two. It will have built-in security features to enhance public confidence and reduce the risk of counterfeit," he said.

Mr. Taylor said efforts are underway to rebuild Iraq's financial system, and that Iraqis are playing an important role in creating a new economy.