October 25, 2003	Saturday	Sha’aban 28, 1424

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MADRID, Oct 24: International donors pledged around $40 billion in aid and loans over the next five years to help rebuild Iraq on Friday as the response to a US-led drive for funds smashed expectations.

Donors other than the United States promised some $20 billion at the two-day conference in Madrid, Iraqi Planning Minister Mahdi Hafez told reporters.

“This is an excellent start...Most of the pledges are grants but the exact percentage will be announced later,” he said.

That is on top of $20 billion promised by Washington and is far in excess of what had been expected a few weeks ago, when political divisions threatened the existence of the meeting.

US officials, who had lobbied hard to persuade reluctant donors to chip in more cash, praised for the conference which they said marked a turning point in international support for Iraq.

“The Iraqi people will long remember the assistance we’ll provide them at this critical moment of challenge and hope,” US Secretary of State Colin Powell told the conference.

But optimism over the rash of pledges was clouded by the worsening security situation in Iraq, from where international agencies, including the United Nations, have pulled out or reduced their staffing to a minimum.

The aid conference had struggled against scepticism from critics of the war and the fault lines opened by the conflict were still apparent, with war opponents France, Germany and Russia making no new promises of aid.

The $38 billion falls short of the $56 billion that the World Bank and United Nations say is needed over four years to rebuild Iraq after years of war and sanctions.

The World Bank has said that not all of the money required may have to come from outside aid.

Some officials said future oil revenues, foreign direct investment and a refund on the oil-for-food programme could close the gap and help Iraq cover the $56 billion needed. “The battle is not won, but we are almost there,” said a development official, who spoke on condition of anonymity.

TURNING POINT: Andrew Natsios, administrator of the US Agency for International Development, said the “remarkable conference” had changed the dynamics in the donor community.

“A lot of countries are making commitments now well beyond what we had anticipated...There is a sense that this is a turning of the corner,” he said.

Pledges from governments and international agencies came in a confusing mixture, including humanitarian and reconstruction aid, export credits and project finance, and covered different time periods stretching up to five years.

Mark Malloch-Brown, head of the UN Development Programme, said however that commitments were “on the high end of expectations”

“I completely expect the money to be spent in 2004 to be more than $5 billion,” he told a news conference.

As part of the process of engaging Iraqis more in running their country, the Coalition Provisional Authority will give Iraq Governing Council members some oversight over aid money to be spent in Iraq.

The Council President Iyad Allawi said the reconstruction effort would establish a beacon for democracy in the region and spell an end to the violence that has plagued the country since US-led forces toppled Saddam Hussein in April.

The World Bank said it would make between $3 to 5 billion available up to 2008, while the International Monetary Fund promised support of up to $4.25 billion over three years.

Japan made the largest offer after the United States, pledging a further $3.5 billion in medium-term loans to bring its total promised aid to $5 billion.

Saudi Arabia announced a $1 billion financing package, split equally between project finance and export credits. It added it would look at reducing Iraq’s massive debt burden, estimated by the IMF at $120 billion, within a framework of international debt forgiveness.

The European Union said its combined aid for rebuilding Iraq in 2004 had risen to some $826 million, overtaking its contribution to Afghanistan last year.

Total pledges from the EU community budget and member states from now until 2007 stand at 1.3 billion euros.

Iraq received a wide-ranging offer of help from former enemy Iran, against which Saddam fought a war between 1980 and 1988.

Iranian Foreign Minister Kamal Kharrazi promised a credit facility of up to $300 million, offered cross-border electricity and gas supplies and said it would allow Iraq to export oil through Iranian terminals.

MAIN DONORS: Following are details of some of the main contributions made or pledged by various countries and organisations:

AUSTRALIA — $14 million in aid plus $38 million committed to humanitarian needs and $31 million for reconstruction.

BELGIUM — $5.88 million for reconstruction. Total $20 million.

BRITAIN — $495.7 million to March 2006. Total commitment of $911 million.

CANADA — Already pledged $76.57 million for reconstruction and offered a further $76.57 million at Madrid. It has also pledged 76.57 million for humanitarian aid.

CHINA — $24 million.

DENMARK — $55.4 million in aid, of which $26.9 million for reconstruction and $28.5 million for humanitarian assistance. Also providing export guarantee scheme of $158.2 million.

EU — EU and member states pledged a total of $826 million for rebuilding in 2004. Of that, European Commission making 200 million euros available from EU budget. Total pledges from EU community budget and member states until 2007 stand at $1.53 billion. EU also giving $858.9 million humanitarian aid to end 2004.

FINLAND — $5.90 million in 2004 grants.

GERMANY - An estimated $118 million, about 50 million euros of that through the EU.

INDIA — Further $10 million on top of $20 million given so far, including a hospital and 50,000 tons of wheat.

IRAN — Offered to allow oil exports through Iranian terminals or to enter into an oil swap arrangement with Iraq of up to 350,000 bpd. Also promised up to $300 million in buyers and suppliers credits and offered to supply electricity and gas.

ITALY — $235.9 million in addition to share of EU reconstruction contribution. Military contribution $270.6 million in 2004 every six months.

JAPAN — Pledged a further $3.5 billion in medium-term loans on top of $1.5 billion of grants already pledged, bringing its total of promised aid to $5 billion.

KUWAIT — $1 billion already given in technical and humanitarian aid since April. Offers further $500 million aid.

NEW ZEALAND — US$3 million.

NORWAY — $74.13 million during 2003-6.

SAUDI ARABIA — $1 billion package, half in project finance for education, health, infrastructure and housing till 2007.

SOUTH KOREA — $200 million from 2003-2007 on top of $60 million earmarked earlier this year.

SPAIN — $300 million in aid to 2007.

SWEDEN — $43 million for 2003-2005 in humanitarian assistance only, until there was either a sovereign Iraqi government or UN authority overseeing reconstruction.

TURKEY — $50 million from 2004 to 2007.

UNITED ARAB EMIRATES — $215 million for humanitarian aid and reconstruction work.

UNITED STATES - $20 billion over 18 months.

WORLD BANK — $3-5 billion available over next five years.

IMF — $2.5-4.25 billion over three years.—Reuters