October 26, 2003	Sunday	Sha’aban 29, 1424

UNITED NATIONS: The reconstruction of Iraq should not be financed by loans that the war-devastated country is incapable of repaying, a senior UN official warned on Friday.

If the United States and other international donors convert their generosity from outright grants to tied loans “it would surely risk terrible resentment and opposition in Iraq in today’s circumstances”, the administrator of the UN Development Programme (UNDP), Mark Malloch Brown, told a meeting of donors in Madrid.

According to the International Monetary Fund (IMF), Iraq already owes more than 120 billion dollars in repayable loans, mostly to western nations and its Gulf neighbours, plus billions of dollars in reparations arising from the 1991 Gulf War.

Malloch Brown said the occupied country will need about 56 billion dollars in outright grants over the next four years to rebuild its war-ravaged industrial and economic infrastructure, which also deteriorated during 13 years of UN sanctions.

“This is a sum that happens to be rather more than the world gave sub-Saharan Africa over the last four years: a region with a population some 25 times bigger than Iraq’s,” he told the Madrid meeting.

The two-day donor conference, attended by delegates from more than 75 countries and representatives of UN agencies and international institutions such as the IMF and World Bank, ended on Friday with pledges totalling about 13 billion dollars.

With the United States committing about 20 billion dollars for Iraq last month, the total pledged so far is about 33 billion dollars. But that figure falls short of the target by almost 23 billion dollars.

Notwithstanding Malloch Brown’s warning, much of the money promised at the conference will arrive as loans and export credits.

The administration of US President George W. Bush is in dispute with Congress over its proposed contribution of 20 billion dollars. The body is seeking to give only 10 billion dollars in grants, with the remaining 10 billion dollars to be handed over as repayable loans.

Saudi Arabia, which pledged about one billion dollars at the conference, will provide about 500,000 dollars in loans and the remaining 500,000 dollars in export credits.

But as a consolation, the leader of the Saudi delegation, Prince Saud al-Faisal, said his government is willing to write off some of the 24 billion dollars in debts that Iraq owes Saudi Arabia.

The IMF pledged about 4.3 billion dollars in loans over three years and the World Bank about 3.0 to 5.0 billion dollars, also in loans, over a five-year period.

The only grants came from countries such as Japan (1.5 billion dollars next year, rising to 3.5 billion dollars through 2007); the 15-member European Union (812 million); Kuwait (500 million); Britain (495 million); Spain (300 million); Italy (232 million); Canada (230 million) and South Korea (200 million dollars).

US Secretary of State Colin Powell expressed disappointment that two key European nations, Germany and France, did not make new pledges despite having voted for a Security Council resolution last week calling on member states to provide funds to rebuild Iraq.

France and Germany have called for the increased transfer of sovereignty to the Iraqi people, the establishment of an Iraqi government and an end to the US military occupation of the country.

Iraq is currently administered by the US-run Coalition Provisional Authority headed by Ambassador Paul Bremer and a US- appointed Iraqi Governing Council.

“The message of the donors’ conference is the same message the Bush administration has heard consistently since first asking the international community to help foot the bill for Iraq reconstruction,” Chris Toensing, editor of ‘Middle East Report’, told IPS.

“The United States cannot keep all the decision-making power for itself, and expect other countries to pay up,” he added.

“Either the United States should devolve authority to the United Nations or an indigenous government — or Washington will continue to foot the majority of the bill,” Toensing said.

Asked for his comments on the outcome of the conference, UN Secretary-General Kofi Annan told reporters that “one shouldn’t expect governments to indicate all that they are going to do for Iraq today in Madrid”.

“It’s a process,” he said, adding that “over time, governments will do more”.

“I also indicated that security was a constraint and we need to do something about that issue, and I think everybody agrees with that. And so we should not judge the success of Iraqi reconstruction by the contributions that are announced today,” Annan added.

“It is only the beginning of a process.”

Earlier this week an independent panel found that the UN security system was so “dysfunctional” that it provides virtually no protection to staff members working in dangerous situations.

In August, 22 UN employees were killed and 150 injured when a suicide bomber attacked the UN compound in Baghdad.

Asked if the outcome of the donors’ conference contained any political messages, Medea Benjamin of Global Exchange and Iraq Occupation Watch Centre, told IPS, “Yes, it certainly does contain a message from the international community — you got yourself into this mess, now get yourself out.”—Dawn/The InterPress News Service.