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US Officials Seek International Aid for Iraq Reconstruction - 2003-10-22

On the eve of an international donors conference on Iraq, U.S. aid officials are looking at the mechanisms now in place to funnel contributions to the Iraqi reconstruction project.

The World Bank has estimated Iraq's reconstruction needs at about $36 billion. Add to that another $19 billion for restoring oil pumping and security operations. Dozens of countries and international organizations are meeting in Madrid to see how much of that total can be raised by national and institutional contributions.

While the United States is expected to funnel more than $20 billion in assistance directly into its own reconstruction projects, separate trust funds have been set up to channel donations from other sources. The head of the U.S. Agency for International Development, Andrew Natsios, says that will make it easier for smaller countries to contribute.

"You know, small countries of four or five million that want to make a contribution, they don't have people on the ground to carry out operations," said Mr. Natsios. "They don't do things in the developing world operationally and they don't have mechanisms. So these trust funds and two run by the World Bank and the U.N. Development Program were announced a few days ago for these countries that don't expect to be sending people into Iraq to carry out programs."

The Under Secretary of the Treasury for International Affairs, John Taylor says the trust funds should not discourage countries other than the United States from working out bilateral deals in Iraq.

"Many countries will be contributing in a way through their bilateral agencies helping Iraq as they have other countries in the past in the same way." Mr. Taylor said. "The channels here are useful for different countries. And we want to make it as attractive as possible for each country, whether they want to use their own aid agencies and contracting rules or the trust fund. "

Japan, Britain and Spain have pledged several billion dollars. But the European Union so far has offered only about $230 million, which it describes as a realistic amount in view of the current security situation in Iraq.

U.S. Under Secretary of State for Economic, Business and Agricultural affairs Al Larsen expects more EU aid should be offered in the future.

"We consistently have heard that they all believe that the reconstruction of Iraq must succeed, that is it a matter of very vital national interest to European governments, that this effort succeed. We would certainly hope that the contributions coming from Europe over time would reflect that assessment of their own interests in seeing reconstruction succeed," Mr. Larsen said.

Mr. Larsen expects more Arab assistance too.

"We believe that neighboring Arab countries have a very, very large stake in the success of reconstruction. These are countries that were threatened the most by Saddam Hussein. They are the ones who will benefit the most by the emergence of a prosperous and democratic Iraq," said the Treasury Dept. official.

"They would suffer if Iraq were to slide into a situation of instability or once again become a threat to its neighbors. So we would look them to make substantial contributions to reflect their stake in having the reconstruction process succeed," he said.

Many countries have expressed reluctance to help pay for Iraq's recovery until power is transferred from the U.S. occupation force to the Iraqis.