Donors Promise Iraq $33 Billion, Smashing Expectations

Reuters ^ | 10/24/03 | David Chanceand Mona Megalli

[kattracks]

By David Chance and Mona Megalli

MADRID (Reuters) - International donors pledged at least $33 billion in aid and loans over the next four years to help rebuild war-ravaged Iraq on Friday as the response to a U.S.-led drive for funds far outstripped expectations.

Spanish Economy Minister Rodrigo Rato said the combined offer -- made at a gathering of more than 70 nations in Madrid -- was equivalent to twice Iraq's annual national income and was a global vote of confidence in the country's future.

"If you take the American contribution which is hopefully totally a grant, then we have at least $33 billion, of which $25 billion is grants," said Marek Belka, a former Polish finance minister who is spearheading the fund raising efforts of the U.S.-led Coalition Provisional Authority.

"All in all we are overwhelmed, we are very happy, it surpasses all expectations," Belka told Reuters.

He said the figure took the lowest likely contribution from the International Monetary Fund and World Bank and excluded trade finance and grants in kind.

	RELATED ARTICLES FACTBOX-Contributions to Reconstruction in Iraq

The highest estimate for pledges from non-U.S. donors came from the Iraqis themselves. Planning Minister Mahdi Hafez told reporters they had matched Washington's promise of $20 billion.

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.

"A little over six months ago Iraq was the black sheep of the international community," Iraq Governing Council President Iyad Allawi told a news conference. "Today I am again proud to be Iraqi."

VIOLENCE CLOUDS OPTIMISM

But elation was clouded by the treacherous security situation in Iraq, from where aid agencies and international organizations have pulled out or cut staffing to a minimum.

Two U.S. soldiers were killed in a mortar attack on Friday, bringing to 108 the number of U.S. soldiers killed in Iraq since Washington declared major combat operations over.

"Security is not going to be a permanent hindrance to reconstruction," Secretary of State Colin Powell said. "It is making it a little harder now but...it will improve."

EU External Affairs Commissioner Chris Patten cautioned that past experience had shown there was often a huge lag between promises and delivery of aid. "We need to get the money out of the bank and into Iraq as quickly as possible," he said.

The aid conference had struggled against skepticism from critics of the war. Indeed, international fault lines that were opened by the conflict were still apparent in Madrid, with France, Germany and Russia bringing no new aid.

The $33 billion falls short of the $56 billion the World Bank and United Nations have said is needed over four years to rebuild an economy torn apart by war and sanctions, but future oil revenues, foreign direct investment and a refund on the oil-for-food program could narrow the gap.

JAPAN PLEDGES MORE

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

The World Bank said it would make between $3-5 billion available up to 2008, while the IMF 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 and promised to look at reducing Iraq's debt burden, estimated at $120 billion, within a wider framework of debt forgiveness.

A State Department official said Washington had wanted as much of the assistance to be in the form of grants, rather than loans, but declined to criticize any of the countries -- like Saudi Arabia -- that chose to offer loans.

"Obviously we would prefer the maximum amount in grants, but every country has to make (the) decision of what it can afford," he said.

The EU said its combined aid for Iraq in 2004 had risen to some 700 million euros ($826 million), overtaking its contribution to Afghanistan last year.

Total pledges from the EU 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.

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

Pledges piled up from poorer nations too, with Vietnam offering $500,000 worth of rice and Sri Lanka 100 tons of tea. (Additional reporting by Jonathan Wright, Daniel Trotta and Emma Ross-Thomas) ($1=.8479 Euros)

[kattracks]

ping

[Born Conservative]

REUTERS posted this? What's the catch?

[johniegrad]

Wow. Thanks for the answer to the other thread.

France, Germany and Russia bringing no new aid

Shameful.

[Caipirabob]

REUTERS posted this? What's the catch?

Most likely the UN promised twice as much in aid to the terrorists. They'll take it out of dues the US paid.

[PGalt]

Good news bump. Thanks for the post.

[RobFromGa]

Very misleading title,

$20 million of this $33 million is the US money-- $13 billion from everyone else combined. The US feels $56 million is needed so they're way short.

The Weasels predictably gave little.

[DB]

Ya, but they will pay...

They'll pay by not being paid back billions the loaned Saddam. By everyone else giving the money instead of making it a loan it makes it virtually impossible for them to demand repayment.

[ChadGore]

Trust the Spaniards!

[Ramcat]

"Iraqi Donor Conference falls short "

This is the headline in today's Pittsburgh Post Gazette!

[meenie]

This is a story of how to take defeat and turn it into victory. The original target was the 56 billion needed to complete the reconstruction. We furnish 20 billion, Iraq Governing Council springs for matching the US, or another 20 billion which they don't have. This leaves 16 billion that will be(?) furnished as soon as security is established. In the background, we keep hearing of this 200 billion debt that Iraq owes.

How in the name of common sense can the residents of an outlaw regime be liable for a debt that the outlaw regime authorized? Has the US, as the guardian of Iraq, agreed that this is a valid debt? If so, we are in over our head in Iraq. Is the US the informal debt collection agency of the world? It is beginning to appear that way.

[Clara Lou]

REUTERS posted this? What's the catch?
Word for word, I had exactly the same thought. As soon as it gets light outside, I'm checking for flying pigs.

[Peach]

Yes, I was surprised at the title as well because I'd thought we were going for approx. $60B, with the US giving $20B of that.

Surely Reuters wouldn't make this mistake - I'll be looking for a headline correction on Monday.

[StriperSniper]

Very misleading title,

Sarcasm?

[Brian S]

Check out this version of the story:

Donors pledge $13bn to Iraq - although most of the money was in the form of loans
The Scotsman ^ | 10-24-03

Posted on 10/24/2003 10:26 PM EDT by Brian S

MARGARET NEIGHBOUR

AN INTERNATIONAL donors’ conference for Iraq’s reconstruction ended yesterday with $13 billion (£7.7 million) in new pledges, although most of the money was in the form of loans to an economy already crippled by heavy debt.

[The Old Hoosier]

Indeed, international fault lines that were opened by the conflict were still apparent in Madrid, with France, Germany and Russia bringing no new aid.

They will pay the price.

[Dave S]

Most of $33 billion is from the US. Most of the rest of the money from others is loans. On Fox News yesterday they were talking about how this was a bust and that they got the low end of what they expected. Somebody at Reuters got "spun."

[Chad Fairbanks]

Pledges piled up from poorer nations too, with Vietnam offering $500,000 worth of rice and Sri Lanka 100 tons of tea.

Even something as small as this shows some decency. Can't kncok them for that...

I think once all this is over, it'll be nice to have the Iraqis back as part of the world... they've been isolated too long.

[Mo1]

$20 million of this $33 million is the US money-- $13 billion from everyone else combined. The US feels $56 million is needed so they're way short

Short?? .. Yes .. But it is a start and a big difference from where things stood a couple months ago