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Iraq: Donors Conference Not Expected To Amount to Much

Representatives of several dozen countries and international organizations are meeting in Madrid tomorrow for a two-day Iraq donors conference. The estimated cost of Iraq's reconstruction is put at $55 billion. About one-third of that amount will be covered by the United States. Washington and its allies are trying to persuade others to pick up the rest of the tab. But political disagreements over the military operation in Iraq -- as well as transparency over the use of the funds -- are influencing many potential donors, and contributions are expected to cover only a small part of the total needed.

Prague, 22 October 2003 (RFE/RL) -- U.S. Secretary of State Colin Powell and Treasury Secretary John Snow will be among those attending the Iraq donors conference, which begins tomorrow in Madrid.

Few others nations are sending such high-level delegations, however -- an ominous indicator as Washington attempts to persuade foreign capitals to help pay for the huge costs of Iraq's reconstruction.

Washington would like to put prewar divisions over the use of force to topple Saddam Hussein behind it and focus on getting Iraq back on its feet. But opponents of the war -- in particular, France, Germany, and Russia -- have made it clear they are not ready to forgive and forget and contribute so readily to Iraqi reconstruction.

Delegations from those three nations, as well as many other countries, will be headed by lower-level officials. Only Spain, Italy, and Japan -- all supporters of the U.S. policy on Iraq -- will be represented by their foreign ministers.

UN Secretary-General Kofi Annan and World Bank President James Wolfensohn will also be in Madrid to show support for a new international fund-raising initiative for Iraq -- one that is likely to draw more donations.

U.S. Assistant Secretary of State Kim Holmes, speaking at the Council on Foreign Relations in New York yesterday, praised the unanimous passage of Resolution 1511 by the UN Security Council last week. The resolution confers UN authority to the occupation of Iraq while keeping the U.S. in charge of military operations in the country.

Holmes said the resolution should spur states to contribute at events like the donors conference in Madrid. "We hope and we expect that every nation that voted for this resolution will support its implementation in the coming months, both in word and in deed. No one can afford to back away from the Security Council's concrete commitments to the Iraqi people," Holmes said.

The ultimate goal is to raise the $55 billion that has been estimated for the reconstruction of Iraq. The U.S. recently committed $20 billion to the cause and plans to channel the money through a reconstruction fund managed by the U.S.-led Coalition Provisional Authority. U.S. allies will likely follow suit.

But many other donations are expected to go through another fund run by the United Nations and the World Bank. The details of that trust fund -- approved by the UN Security Council -- are due to be unveiled in Madrid. Its main objective is to encourage more nations to contribute to Iraqi reconstruction by overcoming the skepticism of donors by making the handling of the funds more transparent and giving the donors greater control over how the money is spent.

Diego Ojeda is a spokesman for the European Commission's external relations commissioner, Chris Patten. He explained the position of those donors who want their contributions to be handled by an international fund: "We will participate in the conference [in Madrid] wholeheartedly because we believe that we have an important stake in making sure that the reconstruction effort in Iraq is successful. The situation on the ground is very fluid, and the needs are now beginning to be assessed. So we think it is most efficient if all donors will contribute through this fund and that the managers of which -- basically the UNDP [United Nations Development Program] and World Bank -- will then administer as needs arise."

So far, only about $3 billion has been pledged for Iraq, in addition to the U.S. donation. The other major contributors are Japan, Britain, and Spain. The European Union says it will pledge around $235 million specifically for reconstruction in 2004. Germany and France have said they do not plan on pledging any additional funds. The EU has already given about $850 million in humanitarian assistance for Iraq.

And in a surprise announcement on 21 October, the World Bank said it plans to make available up to $5 billion to Iraq. In a statement, World Bank President James Wolfensohn said, "It is critical to mobilize the donor community behind innovative solutions to help clear the way for the rapid reconstruction for Iraq."

But Dr. Nile Gardiner, an international regulatory affairs fellow at the Heritage Foundation, thinks the existence of two funds might ignite an additional political struggle over Iraq. "I believe that to have two rival reconstruction funds for Iraq would greatly complicate the situation on the ground and therefore this should be strongly opposed by the United States," he said. "There is going to be tremendous pressure by various European countries for their own companies to be awarded contracts. I think that this will open up the way for tremendous political fighting, frankly, between various European governments. And I think that this is not going to be something which would be a positive development for Iraq at all."

Russian Deputy Foreign Minister Yurii Fedotov said yesterday that Moscow is not planning to finance the rebuilding of the Iraqi economy, at least not through direct donations. "Iraq," he said, "is not a poor country and has oil, agricultural, and industrial resources. In addition, the assistance shouldn't be necessarily reduced to donations. There are many other options."

One of the alternatives being discussed, Gardiner said, is writing off Iraqi debt. He believes the U.S. will be pushing hard for billions of dollars in debt to be forgiven by European and Arab governments. "I think we will see a decent amount of money being put forward," he said. "And also hopefully Iraqi oil revenues will start to be able to pay for a lot of the other reconstruction. I don't think it's all a doom-and-gloom situation at all, actually. It is manageable, but the U.S. certainly does need some more international money pouring into the country."

(RFE/RL's Robert McMahon contributed to this story.)