Posted on 10/24/2003 8:40:37 AM PDT by TexKat
MADRID (AFP) - The World Bank and the International Monetary Fund (IMF) unveiled a loan package for Iraq worth up to a total of 9.25 billion dollars over five years to aid reconstruction of the country's war-shattered economy.
As more than 70 donor nations outlined their own pledges here, World Bank president James Wolfensohn said Friday that the international community had to rebuild a "depressed" society that was "really on its back" and said the organisation would pledge loans of up to five billion dollars over the next five years.
The IMF weighed in with a package worth up to a maximum 4.25 billion dollars over a three-year period.
Wolfensohn called on countries to forget past differences over Iraq, which the World Bank assesses as needing 36 billion dollars of assistance in the next four years, to which the US-installed Iraqi provisional government adds a further 20 billion.
"It is a country of great potential that needs rebuilding," Wolfensohn said, adding security problems could not be allowed to stand in the way of a reconstruction programme.
Iraq was not seeking handouts or charity but opportunities, Wolfensohn said.
He added the World Bank would additionally lend 125 million dollars to Iraqi small and medium enterprises.
Horst Koehler, managing director of the International Monetary Fund (IMF), told delegates attending the second day of a two-day reconstruction aid conference the world knew the challenge of rebuilding Iraq had to be met.
"The reconstruction of Iraq is an immense challenge for us all. We are here today in Madrid because the world recognises the scale of that challenge and is determined to meet it," said Koehler, adding the IMF saw Iraq's prosperity as a key factor in underpinning overall stability in the Middle East.
"A virtuous circle of a growing Iraq and a vibrant Middle East region needs to be generated," said Koehler.
He added the IMF was ready to lend 850 million dollars as emergency post-conflict assistance followed by between 850 million and 1.7 billion annually for total assistance of up to 4.25 billion over three years.
But Koehler added the IMF's assessment of Iraq's needs would depend on the ability of the Iraqi authorities to "effectively implement" assistance programmes.
Iraq is saddled with external debts of some 120 billion dollars, excluding reparation payments from three wars under Saddam Hussein and Koehler said the world had to help the country put its debt servicing obligations on a "sustainable footing."
Without debt relief, "the country has no prospect of restoring its creditworthiness (or) of regaining access to private capital to finance future growth," Koehler said.
The announcement of the packages from the IMF and the World Bank came after Japan said it would extend a total of five billion dollars in aid for 2004-2007 to help with the reconstruction of Iraq,
By DANIEL WOOLLS, Associated Press Writer
MADRID, Spain - International donors promised more than $33 billion for Iraqi reconstruction in the next four years, officials said at a conference Friday. The figure fell short of the estimated $56 billion needed to rebuild the country.
While big spenders such as Japan and Saudi Arabia pledged more than some expected, much of it was in the form of loans or credits for a nation already burdened with an estimated $120 billion in debt run up during Saddam Hussein 's rule.
After the two-day gathering of delegates from 77 nations closed, a senior conference official said on condition of anonymity that "more than $33 billion" was raised. The amount was to be officially announced by the World Bank later.
The total included the $20 billion already promised by the United States. A senior U.S. official said earlier that the United States had counted "in excess of $13 billion" in new pledges, which he called in line with expectations.
The World Bank and U.S. officials estimated ahead of the conference that Iraq needs $56 billion in reconstruction aid over the next four years. The World Bank has said much of that amount will likely be covered by Iraq's oil revenues, private investment and other resources, rather than donations.
"All of us are here today to make a strategic investment in hope," Secretary of State Colin Powell told delegates at the start. "Now is the time for all of us to be generous with money, with training, with opportunity."
In an interview with European newspapers published Friday, Powell expressed regret that France and Germany weren't pledging new funds.
But he said it would "not mean it's a disaster" if the two-day conference doesn't raise the entire $36 billion — on top of the U.S. pledge — that the World Bank says Iraq needs over four years.
France and Germany, the two leading opponents of the U.S.-led war in Iraq, are holding back to register their disapproval of the U.S. blueprint for restoring Iraqi sovereignty.
Japanese Foreign Minister Yoriko Kawaguchi offered the second biggest pledge: $1.5 billion in grants for 2004 and $3.5 billion in loans for 2005-07.
Kuwait, which was invaded by Iraq in what led to the 1991 Gulf War, offered $500 million in new money, on top of $1 billion already spent.
"Now that the darkness that has prevailed over Iraq for decades has gone, we hope that peace and security with the help of the international community will prevail again," said Kuwait's foreign minister, Sheik Mohammed Sabah Al Salem Al Sabah.
Saudi Arabia pledged $1 billion, but the richest country in the Arab world said half would be in loans through 2007 and the rest would be in export credits. However, it gave the first hint that progress might be made on a U.S. push to relieve some of Iraq's debt.
Prince Saud Al-Faisal said Saudi Arabia is ready to reduce some of the $24 billion it was owed by Iraq, but he did not give specifics.
Mouwaffek al-Rubaie, a member of Iraq's U.S.-appointed Governing Council, called that "a step in the right direction."
The president of the council, Ayad Allawi, opened the pledging session with promises that his country would not forget those who helped it in its hour of dire need.
"Your success here will be a success for humanity and a help for peace and security in the world," he said.
Italy added $232 million over three years — in addition to the 3,000 troops it has stationed in Iraq.
In all, the European Union is giving $812 million next year, said Italian Foreign Minister Franco Frattini, whose country holds the EU presidency.
That's less than the $931 million the 15-nation bloc offered to Afghanistan last year, reflecting the absence of France and Germany.
However, Germany's deputy minister for economic cooperation, Erich Stather, said Berlin might offer export credits and would play a "constructive role ... in finding a solution of Iraq's debts."
French Trade Minister Francois Loos said his country is "willing to envisage and adapt its treatment of Iraq's debt compatible with the country's finance capacity."
The IMF estimated Iraq owes about $120 billion, mainly to European and Gulf countries, plus reparations from the 1991 Gulf War.
"This is not the end of the process," U.S. Treasury Secretary John Snow told the conference. "We have much work to carry forward from here."
China pledged $24.2 million. Poorer countries chipped in too, like Slovakia with $290,000. Bulgaria and Egypt offered technical assistance but no money.
Iran, which fought Iraq from 1980-88 in a war that claimed 1 million lives, said it would let Iraq export oil through Iranian ports and supply its neighbor with electricity and gas.
International Monetary Fund director Horst Koehler said the fund could lend Iraq from $2.5 billion to $4.25 billion over three years. It would be the IMF's first loan ever to the oil-rich nation. The World Bank has said it will lend Iraq $3 billion to $5 billion over the coming five years.
But Koehler stressed Iraq needs economic stability and reforms, as well as debt relief, to lure private investment and lower a staggering 60 percent unemployment rate.
"These results will not come overnight," he cautioned. "And we know that these reforms will only succeed if there is ownership by the Iraqi people" — a reference to Washington's continued control of the country.
The American administrator in Iraq, L. Paul Bremer, acknowledged lingering differences over the war and its aftermath.
"But by our presence today we signify that we agree on one major point and that is the Iraqi people need help to realize their future of hope," he said.
In other pledges announced, South Korea has agreed to $200 million and Canada $230 million, most already spent.
American officials stressed that the United States would administer all U.S. contributions — not the new fund set up here to be managed by the World Bank, the United Nations and Iraqis.
I thought all contributions were to be "grants"?
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