Paul Richter | Washington | July 12
LA Times – Of the $13 billion in non-American aid pledged to Iraq, only about $1 billion has been turned over to the U.N. and World Bank funds set up to take in most of the donations, U.S. and international aid officials said. Almost half the money contributed, $490 million, is from a single donor, Japan.
The shortfall is a source of growing frustration for Iraq’s new interim government, which had hoped that the U.S. hand-over of sovereignty two weeks ago would have resulted in a flow of cash from European nations that opposed the U.S.-led occupation and from wealthy Arab neighbors — two groups that have long been generous donors.
Officials with the new government have begun to complain about the tardiness of the financial aid, as well as the reluctance of Iraq’s creditors to follow through on promises to forgive some of the country’s $120 billion debt. Iraqi officials fear that their frail economy will not be able to recover unless the debt burden is eased.
Rend Rahim, Iraq’s ambassador to the United States, said the aid “is much, much lower than what Iraq was promised…. We shouldn’t be set adrift, on our own.”
Rahim also told an audience at the American Enterprise Institute in Washington on June 29 that “so far, we do not have any serious pledges for the reduction of Iraqi debt.” She criticized countries that have been unwilling to forgive more than a small portion of the debt, saying that they “really want their pound of flesh.”
Some foreign policy analysts said they believe the slow pace of donations and debt forgiveness partly reflects the hesitancy of European and other allies to be seen as agreeing with the U.S.-led invasion and occupation of Iraq, particularly if it might give a pre-election boost to President Bush.
“The reluctance to turn over the cash dovetails with the way the whole war has played out,” said Steven A. Cook, a fellow at the Council on Foreign Relations in New York. “Even though this is for a humanitarian cause, they feel like they would be, in a way, legitimizing the Bush administration’s invasion.”
U.S. officials have been seeking to emphasize international support as a way of blunting Democrats’ charges that the administration has damaged relations with traditional U.S. allies, some analysts maintain.
Administration officials have been saying in recent weeks that allies who differed with them on the war have now closed ranks in the effort to rebuild Iraq.
“The bitter differences of the war are over,” Bush said during a summit among NATO leaders last month. “There is a common interest and a common goal to work together to help the Iraqi people.”
One State Department official defended the pace of donations, saying that it was “pretty good in the first year of a four-year program…. This is a process that hopefully will build momentum.”
He said some donors have delayed giving aid because they think Iraq’s shaky security situation could make it impossible to put the money to work.
Nevertheless, the administration has been concerned enough that in May, on the eve of a second Iraq donors’ conference, in Qatar, U.S. and Iraqi officials issued a new appeal for funds.
“I urge you to disburse your pledges quickly, and I hope that your governments will consider additional assistance,” Secretary of State Colin L. Powell told coalition partners May 20. Japanese and American officials disclosed plans last month for a third donors’ conference, to be held in October in Tokyo.
Another U.S. official, who spoke on condition of anonymity, said the reluctance of some European countries to contribute continued a pattern that had begun before the war, when some nations that opposed the invasion resisted an appeal by U.N. Secretary-General Kofi Annan for money to avert a feared refugee crisis.
The donors’ conference in Madrid last October was hailed at the time by U.S. officials as a major accomplishment.
“Any way you look at it, the conference was an enormous success,” Treasury Secretary John W. Snow said as the meeting concluded.
Late last year, the United Nations and World Bank each set up funds to receive the donations. To date, the U.N. fund has received about $600 million and the World Bank fund about $400 million, officials said.
As part of the $13 billion, the World Bank and International Monetary Fund pledged $5.5 billion in loans at the Madrid conference. Officials of the two organizations say that with the return of sovereignty to Iraqis, they are preparing to begin making some of that money available.
Countries also were invited in Madrid to donate directly to Iraq. But only the U.S. and Japan have contributed any money directly, Rahim said.
Neither France, Germany nor Russia pledged at Madrid. But France and Germany paid a substantial share of the $235 million the European Union recently contributed to the World Bank fund, officials of those countries noted. They have also spent millions on humanitarian relief in Iraq since the war.
Several officials from European countries say they may be more receptive to requests for aid now that the Iraqi interim government has replaced the U.S.-led Coalition Provisional Authority in Baghdad.
French officials said that they had been reluctant to pledge because of the absence of a sovereign government, and that security risks made it unlikely that work could be carried out. But Paris now will be open to considering requests from the new government in Baghdad, they say.
Saudi Arabia pledged $1 billion in loans and credits during the conference. But Saudi officials said it had been impossible so far to disburse the aid.
“What good is foreign aid if you can’t spend it?” said Nail Jubeir, a spokesman for the Saudi Embassy in Washington, noting that U.S. officials had succeeded in spending only a small fraction of the $18.6 billion appropriated by Congress last fall for reconstruction.
U.N. and World Bank fund managers provided only total amounts given, without a breakdown by country, making it difficult to determine how much each nation had paid. But among the other pledges were $500 million by Kuwait, $215 million by the United Arab Emirates, $200 million by South Korea, $34 million by India and $24 million by China, according to officials of those countries.
A group of top lending nations called the Paris Club is expected to reach a decision this year on how much of Iraq’s debt to relieve.
The issue is urgent because lenders will be reluctant to offer new loans to Iraq if they fear the country is barely able to meet its existing obligations.
The White House considered the debt relief issue so important that it recruited former Secretary of State James A. Baker III to visit European capitals last December seeking pledges.
U.S. officials have pressed for creditors to forgive 95% of Iraq’s debt.
But French and German officials, whose countries are owed $3 billion and $2.5 billion, respectively, have said they want to limit the relief to no more than 50% of what they are owed.
French officials said they would have difficulty justifying any greater relief for Iraq, which has the second-largest oil reserves in the world, when poorer developing countries receive fewer benefits. If France forgave half of Iraq’s debts, it would write off more in one stroke than it had written off for poorer countries over more than 10 years, French officials said.
Also unclear is how much will be forgiven by Saudi Arabia, Kuwait and other Arab countries, which are owed about $50 billion.
On top of that, Iraq owes an estimated $125 billion in reparations from the 1991 Persian Gulf War.
Saudi officials say they want a general agreement among creditor nations on how much relief Iraq will be given, so that they are not forced to forgive more than other countries. And they insist that they have no control over reparation claims that have been brought forward by private Saudi companies and individuals, which are part of the $125-billion total.
The Bush administration also has encountered resistance in other aspects of its effort to gain more backing for its Iraq policy.
Richard N. Haass, a former senior administration official who is president of the Council on Foreign Relations, has said it was disappointing that U.S. officials couldn’t persuade NATO allies at last month’s summit to supply troops, or even to send police and military instructors into Iraq. They did agree to provide training in other countries.
“If this was an accomplishment,” Haass said on his organization’s website, “it was a very modest one.”