World Bank pledges $5bn in Iraq aid

Much of Iraq's economic infrastructure is in ruins

The World Bank has said it will contribute between $3bn and $5bn over the next five years towards the rebuilding of Iraq.

The pledge will come as a boost to the United States, as it attempts to rally support ahead of an international donors conference in Madrid on Thursday and Friday.

It adds to the $231m pledged by the European Union, $1.5bn by Japan, $300m from Spain and about $835m from Britain.

But US requests for aid from France, Germany and Russia - opponents of the recent Iraq conflict - have so far been met with an icy response.

Bush setback

The World Bank said its executive board broadly supported trust funds for Iraq to be managed by the World Bank and United Nations that will be presented at the Madrid conference.

A guide to living conditions and the reconstruction effort in Iraq

In detail

It has been estimated that $56bn will be needed in total to rebuild Iraq after years of war, sanctions and neglect.

US fundraising efforts suffered a blow last week when the Senate defied President George W Bush by voting to convert half of a $20bn aid package into a loan.

The Republican-run chamber voted 51-47 for a proposal to make $10bn a loan - to be converted to a grant if other countries agree to waive debts owed to them by the former regime.

France, Germany and Russia have said concerns about the text of a UN resolution on Iraq meant they would not contribute troops or funds to aid efforts.

Analysts say the US Senate's decision to defy the President Bush over his Iraq funding proposals shows lawmakers' concerns at the vast spending plans on foreign aid at a time of record deficits at home - with elections just more than a year away.

The Bush administration had argued against the decision, saying loans would worsen Iraq's foreign debt and exacerbate Arab suspicions about US intentions in the country.

The $10bn loan could be converted by President Bush to a grant if France, Russia, Saudi Arabia and other creditors forgive at least 90% of Iraq's debt, roughly set at $130bn.

Bremer hopeful

America's administrator in Iraq, Paul Bremer, was upbeat about the prospect of success at the Madrid conference.

"I think we'll find that a number of countries will make important contributions," Mr Bremer told French newspaper daily Le Figaro.

"We're finding a lot of receptivity."

He also said he had not given up on securing the $20bn Iraqi civilian reconstruction package as a full grant.

"I think we're going to make a big effort to make it grants," he told the newspaper.

But once the US package received final approval, it would still take until next March before the money started to make a difference in Iraq, he added.