[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Friday, 24 October, 2003, 18:02 GMT 19:02 UK
Donors' summit fails to convince
Katya Adler
By Katya Adler
BBC correspondent in Madrid

The conference had been billed as a disaster and opened to extremely low expectations.

Right up until the last minute, few countries had confirmed their delegations and many had expressed very strong reservations about pledging money to Iraq in its current state.

US Secretary of State Colin Powell (l) chats with Spanish Prime Minister Jose Maria Aznar at the Moncloa palace in Madrid
Colin Powell is rounding up supporters and opponents alike

The pace of political change is slow, there is ongoing violent unrest and a lack of transparency about which country or multi-lateral organisation would handle and distribute donated funds remains.

In the end though, despite the gloomy expectations, governments and international agencies have pledged billions of dollars in aid and loans to help get Iraq back on its feet.

But the final total has still come in considerably below the amount originally hoped-for.

The United Nations and the World Bank say Iraq needs $56bn to rebuild over the next four years.

The United States has already pledged around $20bn of that.

And Washington had hoped to make up the remaining $36bn here in Madrid.

But they did not get even close to achieving their goal.


The pledges that have trickled in have also come in a confusing mixture, including humanitarian and reconstruction aid, export credits and project finance, and covering different time periods.

Saudi Arabia - one of the richest and most powerful of Iraq's neighbours - announced a $1bn financing package, split equally between project finance and export credits.

Japan will provide a total of $5bn in aid for Iraq's reconstruction for a four-year period from 2004 to 2007.

The Moncloa palace in Madrid
There was a notable absence of demonstrators
This includes $1.5bn in grants for the coming year. The remaining $3.5bn will take the form of yen loans.

Half of the $20bn pledged by the US comes in the form of aid and the remainder in grants and bilateral aid linked to contracts for US firms, many of which are linked to developing Iraq's huge oil reserves.

For their part the Iraqi delegation at the conference made it plain they were after hard cash, not pretty promises.

Wary commitment

It is, of course, one thing to pledge money and quite another to foot the bill.

Experience in countries such as Afghanistan shows that converting paper pledges to banknotes can be a long and slow process.

And then there is the issue of what happens to the money - how fast and how wisely will it be spent?

Iraqi Governing Council President Iyad Allawi said Iraq would never forget those it felt had turned its back
Wary potential donors here at the conference expressed concern about the lack of transparency surrounding funds for Iraq.

The US-led Coalition Authority came under renewed fire on Thursday.

Christian Aid, a leading British relief organisation said it had not properly accounted for $4bn dollars in Iraqi assets.

The Coalition Authority has dismissed these allegations but as a carrot to hesitant donors the US has approved the establishment of an International Advisory and Monitoring Board - which includes the UN, the World Bank and the IMF.

Its powers include approving external auditors for the US-controlled Development Fund for Iraq (DFI) established by the UN Security Council and evaluating their reports.

Doubts remain though as to just how independently the international board can act when on the ground in Iraq.

This sort of wrangling aside the Iraqi Governing Council President Iyad Allawi said Iraqis would not forget those who them in their hour of need.

And in what many have interpreted as a veiled threat, Mr Allawi also added that Iraq would also never forget those it felt had turned its back.


This conference has struggled against scepticism from critics of the Iraq war.

The outspoken opponents of the Iraq invasion, Germany and France said no new money would be forthcoming as long as political change in Iraq was slow in coming and instability in the region remained high.

Also they ask why they should pay for the damage to a country they didn't think should be invaded in the first place?

Iraqi engineer repairs telephone line in Baghdad
Enough has been pledged for re-building to commence
But the decision to donate or not has not purely been a question of moral judgement.

Self-interest too has been quite plainly at play with countries hoping for lucrative business contracts in the reconstruction effort.

This could be seen as a further reason for France and Germany to keep their purses snapped shut, after the opposition they have shown to the US-led invasion and subsequent occupation in Iraq, it is unlikely their businesses would be rewarded with contracts.

So "less bleak than expected - though could have done better," will probably be the verdict of the Madrid meeting overall.

Still the money raised is more than enough to get re-construction started.

The World Bank says that under the unstable circumstances and with infrastructure so very basic in Iraq, it won't be possible to spend more than $5.6bn in first year.

The next stage will be to tackle Iraq's crippling debt - estimated to be between $100-120bn.

The US Treasury Secretary John Snow said after this donor's conference, the US administration has a plan to do just that.


The BBC is not responsible for the content of external internet sites


News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific