David Chance and Mona Megalli
National Post
October 25, 2003

Madrid: An international donors’ conference for Iraqi reconstruction ended yesterday with pledges totalling more than US$33-billion, far exceeding the hopes of many officials.

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

“All in all, we are overwhelmed, we are very happy, it surpasses all expectations,” Mr. Belka said.

Rodrigo Rato, Finance Minister for Spain, which hosted the meeting, said the total did not include export credits, technical assistance or other non-cash aid promised, ranging from tea from Sri Lanka to rice from Vietnam.

“This clearly indicates that there is a major commitment for the future of peaceful, democratic and prosperous future for Iraq,” he said.

Although it was short of the US$56-billion Iraq is estimated to need over the next four years, UN officials said the most critical period – 2004 – was covered.

Iraqi officials also thanked the 77 countries that took part.

“A little over six months ago, Iraq was the black sheep of the international community,” Iyad Allawi, President of Iraq’s governing council, told a news conference. “Today, I am again proud to be Iraqi.”

The biggest contribution was a US$20-billion package already promised by Washington. A senior U.S. official said the United States had counted “in excess of US$13-billion” in new pledges.

The figure is well ahead of what had been expected just a few weeks ago, when political divisions had threatened the very existence of the meeting.

U. S. officials, who had lobbied hard to persuade donors to chip in more cash, were full of praise for the conference, which they said marked a turning point in international support for Iraq.

“The Iraqi people will long remember the assistance we’ll provide them at this critical moment of challenge and hope,” said Colin Powell, the U.S. Secretary of State.

Canada is contributing US$76.5-million and is also sending police trainers to Jordan to help train Iraqi police officers, Canadian officials announced.

The US$76.5-million, originally announced in March, is part of a total of US$229.5-million Canada is contributing for humanitarian and reconstruction efforts in Iraq. The other US$153-million was announced in May.

“Pledges made here in Madrid are essential signals to the Iraqi people that the international community stands behind them, and there are prospects for the future stability, recovery and self-government,” said Susan Whelan, Minister for International Co-operation, who led the Canadian delegation. “Iraq cannot be allowed to fail.”

UNI spokesman Bill Orme said 2004 was the “critical year,” when Iraq would need about US$9-billion in grants.

“It’s the only year when they will be totally dependent on external grant support,” he said. “And that we have.”

While big spenders such as Japan and Saudi Arabia pledged more than some expected, some of it was in the form of later loans and credits. Iraq, already weighed down with US$120-billion in debt amassed by the Saddam Hussein regime, had said it was not eager for further loans.

Kuwait, which Iraq invaded in what led to the 1991 Persian Gulf War, offered US$500-million in new money, on top of US$1-billion already spent.

Saudi Arabia pledged US$1-billion, but the richest country in the Arab world said half would be in loans through 2007 and the rest in export credits. Prince Saud Al-Faisal said Saudi Arabia also is ready to reduce some of the US$24-billion already owed it by Iraq, but did not give specifics.

In all, the European Union is giving US$812-million next year, less than the US$931-million the 15-nation bloc offered to Afghanistan last year, reflecting the absence of France and Germany. Paris and Berlin are holding back to register their disapproval of the U.S. blueprint for restoring Iraqi sovereignty.

François Loos, the French Trade Minister, said France is “willing to envisage and adapt its treatment of Iraq’s debt compatible with the country’s finance capacity.”

Poorer countries chipped in too, such as Slovakia with US$290,000. Bulgaria and Egypt offered technical assistance but no money. China pledged US$24.2-million.

Iran, which fought Iraq from 1980 to ‘88 in a war that claimed one million lives, said it would let Iraq export oil through Iranian ports and supply its neighbour with electricity and gas.

Kamal Kharazzi, the Iranian Foreign Minister, also promised a credit facility of up to US$300-million. “We stand ready to supply our electricity and gas to Iraq and to facilitate its oil exports through our oil terminals or enter into a swap arrangement that can amount to 350,000 barrels per day,” Mr. Kharazzi said.

“We have envisaged a comprehensive package of economic cooperation comprising development aid, investment, trade, tourism, project financing and so on.”

The Associated Press with files from Reuters.