based on Reuters
June 5, 2003

Washington — U.S. officials announced this week that there will be a meeting of donors in New York at the end of June, to discuss fundraising for Iraq’s reconstruction.

Alan Larson, Undersecretary of State for Economic and Agricultural Affairs, told the U.S. Senate Foreign Relations Committee: “The June 24 conference is not a pledging conference as such. It is the beginning of the process for a pledging conference we hope to have in September.”

U.S. Treasury Undersecretary for International Affairs, John Taylor, expects to have a cost estimate for rebuilding Iraq by September. The United Nations, World Bank and International Monetary Fund, currently conducting an Iraq needs assessment, are not expected to have their estimates ready for the meeting in June.

The U.S. plans to use Iraqi oil revenues to fund rebuilding. If Iraq can double its oil exports from 1 million barrels per day to 2 million barrels per day by the end of the year, gross earnings for the second half of this year would be approximately $5 billion – assuming Iraq’s crude sells for $20 a barrel, Larson said. With stable production throughout 2004, Iraq could earn gross revenues between $14 billion and $15 billion.

While U.S. officials did not say how much cash will be needed for Iraq’s reconstruction, they agreed Iraq will need debt relief. The country’s debts are estimated to be between $60 billion and $130 billion.

The U.S. is pressuring Paris Club creditors – an informal club of state creditors – to calculate the debt owed by Iraq. Meanwhile, the IMF is preparing an estimate of debts owed by Iraq to countries not in the Paris Club.

The most significant of Iraq’s state creditors have agreed Iraq will not be expected to service its debt before the end of 2004. Larson said some donors agree, “that when the time comes it will be necessary to give substantial debt relief to Iraq.”

Earlier U.S. calls for debt forgiveness were opposed by some countries, including Russia. Iraq owes around $9 billion to Russia, compared with an estimated $2.1 billion to the United States.