Iraqis pleased with aid pledges

Almost all Iraqis are living hand to mouth

Iraqi officials say they are pleased with the outcome of a donors' conference in Madrid, which produced pledges of at least $13bn for the reconstruction of their country.

The head of Iraq's governing council, Ayad Allawi, said the balance between grants, loans and potential oil revenue was almost right.

US President George W Bush thanked donors and said a free Iraq would serve as an example throughout the Middle East.

But even adding the $20bn already pledged by the United States, the $33bn total falls short of the estimated $56bn needed for reconstruction.

Mr Allawi said that Iraq would be able to support itself, as it was a rich nation, made temporarily poor.

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"We are a proud people, we want nothing more than to be proud again," he said, adding that Iraqis would remember who had come forward to help.

"The Iraqi people are moving steadily toward a free and democratic society," said President Bush.

"We are rebuilding schools, and clinics, and power plants."

Holding back

Apart from the US, Japan is the single biggest donor, with a pledge of $5bn.

The European Union, Saudi Arabia and Kuwait, are each contributing about $1bn to Iraqi projects.

Iraq is still wracked by instability Tea, rice and tourists pledged Starting from scratch

However, France and Russia, which opposed the US-led intervention in Iraq, have not become involved at this stage.

France says it will wait until Iraq has a democratically-elected government.

But UN Secretary General Kofi Annan said the demands of rebuilding were too pressing to tolerate delay.

"We all look forward to the earliest possible establishment of a sovereign Iraqi Government but the start of the reconstruction cannot be delayed until that day," he told the conference.

Most of the funds being raised in Madrid are to go into a trust managed by the World Bank, the UN and a committee of Iraqis.

The new fund is designed to lure donors wary of US control, although some aid groups have reportedly questioned whether it will be able to make decisions on the ground.

Continuing violence and disputes over the running of Iraq have also made some potential donors reluctant to commit themselves financially at this stage.

No lag

The World Bank has said $56bn is needed for rebuilding Iraq, while the US-controlled Coalition Provisional Authority says nearly $20bn more will have to be spent on security and the oil sector.

However, this does not take into account Iraq's large foreign debt, estimated at $130bn by international financial institutions.

A guide to living conditions and the reconstruction effort in Iraq

In detail

The European Union's Commissioner for foreign affairs Chris Patten said it was important that the money made its way to Iraq quickly.

"We know from previous experience that there's been sometimes a lag, or more than a lag, between promises of help and the arrival of the help itself," he said.

"We need to get the money out of the bank and into Iraq as quickly as possible.

For the UK's Secretary for International Development, Hilary Benn, the most significant outcome of the conference was the way the international community has come together "whatever differences of the past".

"We leave Madrid in a much stronger position to continue to support the reconstruction of Iraq in the interests of its people," he said.