IRAQ: Little Expected at Donors Meet

By IPS Correspondents Reprint | | Print |

Peyman Pejman

BAGHDAD, Oct 22 2003 (IPS) - Iraqi officials leave for the donors conference in Madrid this week hoping for the best but prepared to return empty-handed.
   More than 1,000 delegates are expected at the conference called by the Spanish government Thursday and Friday to discuss and fund the reconstruction of Iraq.

Iraqi officials leave for the donors conference in Madrid this week hoping for the best but prepared to return empty-handed.

More than 1,000 delegates are expected at the conference called by the Spanish government Thursday and Friday to discuss and fund the reconstruction of Iraq.

The delegates will include representatives from the United Nations (UN), the World Bank, the International Monetary Fund (IMF), the United States, the European Union (EU) and Japan.

Iraq is sending a 100-member delegation, including a third of the governing council and half the cabinet ministers. The Coalition Provisional Authority (CPA) is also sending a large delegation.

According to World Bank and IMF studies, Iraq will need about 55 billion dollars over the next five years to rebuild many of its economic and social sectors.

The good news is that Iraq has already received pledges for about half of that amount. The United States is due to give Iraq 20 billion dollars next year, and Japan 1.5 billion dollars. Tokyo is expected to announce its pledge during the conference.

The bad news comes from multiple fronts.

Aside from the United States and Japan, only the EU is expected to offer any firm pledges of support in Madrid.

Also, half the 20 billion dollars from the United States will take the form of a loan, adding to the massive foreign debt Iraq accumulated during 35 years of Saddam Hussein’s reign.

There is no exact figure for how much the Saddam-era Iraq owed the world, but official estimates place it around 130 billion dollars. Iraq hopes to renegotiate much of those debts. But some countries, including Arab countries, have said they will not reopen the issue.

Attending the Madrid conference presents risks for the Iraqi delegation because its case for additional funding rests on the assumption that the security situation will improve dramatically over the next 12 to18 months.

"We realise that a lot of this depends on the security situation in the country, but we hope that as that improves and we start exporting some of our own oil, it would become much easier for us to go back to donor countries to seek additional money," planning minister Mehdi Hafez told a press conference this week.

That may be too optimistic in a country which witnesses at least a dozen attacks on coalition forces every day, though U.S. military officials point out that the number of attacks has declined over the past few months.

The 140,000 U.S. troops are the bulk of the coalition forces. Washington has been trying hard to replace as many of those troops as possible with soldiers from other countries.

The United States managed to convince Turkey to send up to 10,000 troops to Iraq, but many Iraqi officials and citizens say they want foreign troops out, not replaced by others.

"The Americans think if they bring Turkish troops, put them in a troublesome place like Fallujah, it will stop the attacks," Mahmoud Osman, member of the governing council told IPS. "It won’t. The solution to the security situation in Iraq is for the Iraqis to be in charge of the security."

Another risk for the Iraqi delegation is that its members would be asking not just for grants but also for loans based on the assumption that Iraq would soon be able to sell large quantities of oil.

Before the war, Iraq sold about 3 million barrels a day. Since the invasion, Iraq’s two main oil and gas arteries, one in the south and one from the north to Turkey, have witnessed constant acts of sabotage. As a result, Iraq has barely sold any oil in the past seven months.

According to budget estimates provided by the coalition forces, Iraq is expected to generate as much as 12 billion dollars in oil revenue next year.. Many consider this estimate too high.

"We realise the stakes are high," Adel Abdel Mehdi, a senior aide to Abdel Aziz Hakim, a governing council member told reporters earlier this week. "But for us this is not just a conference to go and get money. This is also politically important for us to increase the legitimacy of the council and tell people that we need their assistance, so we can provide security and offer basic needs to the people of Iraq."