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Iraq Aid

October 24, 2003 at 12:00 AM EST
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RAY SUAREZ: The two-day conference involved 77 potential donor countries and wrapped up today with pledges of at least $33 billion in reconstruction aid to Iraq over the next four years. The World Bank has estimated Iraq needs $56 billion over that same period.

Of the $33 billion promised, $20 billion is from the United States, $5 billion from Japan, $500 million from Kuwait and $1 billion from Saudi Arabia. Joining me now from Madrid is Keith Richburg, a foreign correspondent and Paris bureau chief for The Washington Post. Keith, welcome. Did the U.S. get what it was looking for from the conference?

KEITH RICHBURG: Well, I think they probably got what they were looking for in the sense that they really had lowered expectations quite a bit coming into this conference. They didn’t get nearly enough in terms of grants, which they would have liked. They got more in terms of loans and people giving money more to the out years.

People expressed a lot of concern about security in Iraq and a lot of concerns about whether this money could really be spent, so expectations coming in were really low. Up to two weeks ago, it was really unclear whether they could even have this conference at all, so in that sense, I mean, against that backdrop of low expectations, they came out of it with basically you could say all that could be expected.

RAY SUAREZ: Were there any surprises, either on the upside or disappointments on the downside, countries that the United States might have expected to help more or help at all that really didn’t?

KEITH RICHBURG: Yeah, you know, I think the big surprise really was looking around the Gulf Arab neighbors of Iraq. The Saudis came up with a billion dollars but they came up with a billion dollars in loans and export credits, no real grants. Look around at Kuwait. Really, the figure they came out with in new money was only a half a billion dollars, $500 million — and then look around at some of the others, Qatar, Oman, Bahrain, they really came out with very, very, very small amounts. And I think the U.S. was looking for larger contributions on that side. And, of course, not a big surprise with France and Germany not coming out with any money at all really, basically saying that they’re not giving anything new.

So I think really they were a bit disappointed. If you look at that total figure that came out of this conference, the bulk of it, something like 75 or 80 percent of it by my sketchbook map, is coming really from the same four sources: The United States, Japan, the World Bank and the IMF. And if you count the fact that the IMF and the World Bank get most of their money from the United States, that really means the American taxpayers are going to be footing the bill for the reconstruction for Iraq.

RAY SUAREZ: What about other European Union members besides France and Germany?

KEITH RICHBURG: Well, Britain’s put in a big chunk of money. Depending on how you do the math, it comes out to something like $700 million, $800 million, a big chunk. But much of that had been promised beforehand. The Italians have come up with some. The Spanish here, the hosts of this conference, have come up with a small amount, I think something like $200 million. So the money is there. The European Union, the European Commission itself, which does control its aid budget through Chris Patton, the commissioner for external affairs, they’re putting in 200 million Euros, which will come out to about $230 million at today’s exchange rate.

So … but also, with the European contribution, that money is only for the end of 2004, and after that they say they want another conference; they’re saying, “let’s look at it again. We don’t know what kind of government’s going to be in place, so let’s give a little bit money now … a little bit of money now; let’s come back and look at it later.” So really a bit of caution on the part of the Europeans and also a lot of concern about how the money will be spent. They were really interested in having a separate monitoring authority, which they got. They did not want their money commingled with the $20 million in U.S. funds.

RAY SUAREZ: Well, let’s talk a little bit about the mechanisms in place for both collecting the money and providing oversight on how it’s spent. Was that an issue in Madrid?

KEITH RICHBURG: It was not an issue in the sense that the Americans diffused that issue by agreeing before this meeting to have this separate monitoring authority. It’s the monitoring body that’s going to be comprised of the World Bank, the IMF, the United Nations. And that’s what the Europeans want their money going into. Now, you’re … then you’re going to have basically two separate pots of money, the $20 billion that the U.S. Congress is still hashing out the details on. That will be spent through the coalition authority’s own budget body there.

The Europeans said they don’t like the monitoring of that. They don’t like the fact that that money was being used for contracts that were going to U.S. companies. That’s why this new monitoring body became important, and just a few hours ago here, Chris Patton, who does administer that EU aid budget, said he is now confident that the European money will be more effectively monitored through this new body that was just created. So I think the Americans managed to diffuse that issue, but you still do have the two separate monitoring authorities out there.

RAY SUAREZ: Have donor countries or potential donor countries expressed skepticism over whether Iraq in the state it’s in is even able to process such large amounts of donor aid?

KEITH RICHBURG: Absolutely. There were two concerns expressed here. Number one was can this Governing Council that’s in place now absorb that large amount of money? The World Bank had come out earlier with a figure that said really only about $5 billion, $5.5 billion could they absorb. So you didn’t really need large amounts pledged at this … or at least, large amounts pledged for the next year. Second big concern was security, and I heard this a lot from the Europeans.

They said basically, look, you know, you’ve got … you’ve got the Red Cross, you’ve got OXFAM, you’ve got all these NGOs pulling their stuff out since that deadly attack since that deadly attack on the U.N. headquarters. So they’re saying it really didn’t make sense to put a lot of money into Iraq at the moment when there are not NGOs there on the ground who can move around the country freely really to distribute it. So that was a real concern, as to how this money is going to get spent in this current atmosphere.

And Colin Powell here today, representing the United States’ high-level delegation, he went to great lengths to try to assure people here that the security situation is improving. I’m not sure he really convinced a lot of people because there were continuing attacks today in Baghdad that really kind of undercut his position.

RAY SUAREZ: You mentioned that some of the pledges took the form of loans and credits. Is Iraq already a heavily debt- burdened nation to begin with?

KEITH RICHBURG: Absolutely, and that’s a big problem here. You know, they owe about $4 billion to the United States. I think Russia is owed several billions of dollars, France and Germany, two nations that are not giving more, and Russia, France and Germany have all said coming into this conference that they expect to be repaid. They don’t really want any kind of debt forgiveness. In addition to that, Iraq is paying huge amounts of money in reparations to Kuwait after their invasion of Kuwait, that prompted the first Gulf War.

So Iraq is already coming into this burden with $120 billion worth of debt. And that’s why the Bush administration really chastised the U.S. Senate when the Senate tried to make some of the $20 billion in Iraq aid into loans, and the Bush administration, the White House saying nope, that can’t happen because they’re already really adding more burden on to an already overly burdened country.

So it’s going to take a little bit of explaining as to why the Congress was told it has to be in the form of grants, but here in Madrid the Bush administration had to settle for getting more loans piled on. I should add that the U.S. Treasury secretary did say that the next step we’re going to see is a huge push by the U.S. administration on other countries through the Paris club of donors, and try to get that debt reduced, rescheduled or even forgiven.

RAY SUAREZ: Smaller countries, poorer countries, many places that have historically played very little role on the world stage were there and made pledges. Was there a mood that was positive in some aspects as countries sort of stepped up to the bar and joined the world community in a way they hadn’t before?

KEITH RICHBURG: Absolutely. You know, it’s an interesting thing. You’re seeing the Philippines, you know, itself a very heavily indebted country, a very poor country, pledging $1 million — not very much, but symbolic. I think it should also be added that the Philippines has troops there on the ground. We see Sri Lanka, another poorer country. They couldn’t send money but they’re pledging to send consignment of tea. You’re seeing Vietnam pledging to send rice to Iraq. So there is a real feeling out there that people want to help, people want to be seen as being part of this group to help Iraq, even small countries, poor countries that traditionally don’t really give. They’re traditionally countries that get money from the international community, all trying to show some kind of solidarity for the Iraqi people.

So there was a feeling of good will out there. Everyone, speaker after speaker, talked about the need to put the past behind, bury the differences that did exist, and we all know they were there in the United Nations, in the world community over the invasion of Iraq, and let’s get to beyond that to the point of reconstructing Iraq and helping the Iraqi people. So there was a real feeling out here that people wanted to help, people wanted to stand up and be counted.

RAY SUAREZ: Keith Richburg of The Washington Post in Madrid. Thanks a lot, Keith.

KEITH RICHBURG: Thank you.