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US Seeks Donors for Iraq Reconstruction at Madrid Conference - 2003-10-22

During the next two days in Madrid, the United States and its closest allies will try to convince other countries to pledge large sums of money for Iraq's reconstruction. But their chances of success appear to be limited, in part because of political differences stemming from the U.S.-led war in Iraq.

Washington wants to put the divisions caused by the war behind it and focus on getting Iraq back on its feet. But countries that opposed the war, like France, Germany and Russia, have made it clear they will not help bankroll Iraq's recovery until power is transferred from the occupying forces to the Iraqi people.

Dozens of countries and international organizations will attend an international donors' conference on Iraqi reconstruction Thursday and Friday in Madrid. The aim is to raise as much as possible of the more than $50 billion that U.S. and World Bank officials estimate that Iraq needs if it is to recover from years of war, sanctions and neglect.

U.S. and Spanish officials have not set a target for how much they hope to see pledged. Diplomats say Washington and Madrid want to avoid the meeting being declared a failure if it falls far short of the $36 billion total required from non-U.S. sources.

Between $2-3 billion has been pledged for Iraq in addition to the $20 billion the United States plans to contribute over 18 months. That is well short of the total officials say is required.

Efforts to secure pledges have run into concerns about lack of Iraqi sovereignty or the widespread feeling that the country's oil resources give it the potential to pay for its own reconstruction.

Apart from Washington's contribution, the biggest pledges so far have come from Japan, which says it will give $1.5 billion in grants in the near term, Britain, which has promised about $440 million during the next two years, and host Spain, which says it will provide $300 million in economic aid up to 2007. France and Germany say they will pledge no funds beyond the $230 million promised by the European Union through the end of 2004.

EU External Affairs Commissioner Chris Patten described the relatively small EU donation as realistic. "It is money which takes account of the security situation, which takes account of the budgetary obligations on me to spend money elsewhere, and the limits on the amount I have got. It takes account of what we think is realistic in terms of the absorption capacity in Iraq over the next year," he said.

Aides to Mr. Patten say the European Union, which donated $250 million this year to reconstruction in Afghanistan, wants to be seen as even-handed in giving about the same amount to Iraq. But they acknowledge that slow economic growth and high unemployment in the bloc, as well as lingering resentment over the U.S.-led war, are factors contributing to the relatively small EU contribution.

U.S. officials say they hope Italy and oil producing states in the Gulf will come forward with significant pledges at the meeting.