Economy & Trade, Headlines, Middle East & North Africa, North America

IRAQ: U.S. Seeks International Help Again – in Dollars

Emad Mekay

WASHINGTON, Sep 5 2003 (IPS) - As the Bush administration turns to Congress for billions of dollars more to help stabilise Iraq, U.S. officials say they will also seek foreign donors and investors to commit cash to the troubled country at a conference next month.

“The major focus of the conference is going to be on raising new resources to support reconstruction in Iraq,” Undersecretary of State Alan Larson told reporters Friday.

The administration reportedly said this week it would seek a whopping 60 to 70 billion dollars from Congress to help pay for the U.S.-led military presence in the country and to finance Iraq’s recovery.

The U.S. civil administrator for Iraq, Paul Bremer, said this week that he expects the reconstruction in 2004 and 2005 to run into ”tens of billions of dollars”.

But President George W. Bush has repeatedly declined to give a specific estimate of the total cost, saying he would wait for final estimates from the World Bank and the International Monetary Fund (IMF).

Daily deaths of U.S. soldiers in Iraq along with a record federal deficit of around 500 billion dollars – further drained by the war and occupation of that country – have fed an increasingly vocal call in Washington for the United States to elicit foreign help to heft the burden. The donors’ conference will play part of that role.

Friday’s press conference came as Washington is circulating a draft resolution at the United Nations Security Council for a multinational peacekeeping force that would take some of the pressure off U.S. soldiers and cut Washington’s military costs.

The donors’ meeting, to be held in Madrid, Spain, Oct. 23-24, is being set up by the so-called ”core group” of countries and organisations, including the United Nations, World Bank, IMF, European Union (EU), Japan, the oil-rich United Arab Emirates, the U.S.-appointed Iraqi Governing Council and Washington.

It will include assessments of Iraq’s needs in 14 sectors, such as health, employment, education, transportation, governance and the media.

The conference is also likely to have added importance for the United States as an earlier call by Washington for western governments to forgive Iraq’s foreign debt, roughly estimated at around 300 billion dollars, has apparently lost momentum.

The creditors, snubbed by Washington before and during its invasion of the Arab country, have said they will only delay collecting debt, until the end of 2004, rather than completely forgive it.

Larson was careful to note that the conference will not seek to immediately plunge Iraq into further debt but would seek grants and promote foreign investments.

”In the short run, the major type of resources that are going to be sought will be new government grant resources, which do not increase debt,” he said.

While this might be true in the short term, U.S. fears of footing the bill alone could prompt Washington and its Iraqi governing council into further borrowing well before the country’s outstanding debt could be solved, a fact not contested by U.S. officials.

”Over time, it will be very important for Iraq also to be able to borrow, because it’s a country that has a capacity to borrow responsibly. It has many assets including, notably, oil assets,” Larson said.

Another route to financial help in Iraq, U.S. officials say, is to invite new foreign investments.

”We will be planning to have some type of event associated with the Madrid conference that would focus on foreign investment, because we do believe that when one looks at issues like telecommunications or transportation, that Iraq is a country that has the capacity to attract foreign investment, Larson said.

Accompanying U.S. hopes for the donors’ conference is its willingness now to share control over some financial matters with others.

Washington has agreed to pool funds raised into a ”trust fund” to be run by the World Bank outside of U.S. control, an idea that originated in Europe. They money would then be re-channelled to projects in Iraq.

The trust fund is a top priority on the conference agenda.

“And so, our view has been a very practical one. If that (a trust fund) elicits more contributions for reconstruction, then we’re for it,” Larson said.

But despite a meeting of donors on Wednesday, funders have not yet agreed on how the trust fund would be managed. Some donors also have concerns over whether they will be able to target their pledges to certain projects and companies.

Larson downplayed such issues. ”I think those are both very manageable concerns and ones that the World Bank will be able to deal with as they refine the concept of a trust fund.”

The U.S. State Department said that Deputy Secretary of State Richard Armitage will travel to the Middle East next week for talks with Arab leaders on Iraqi reconstruction efforts.