Global Policy Forum

By Anna Willard

A meeting of donors to raise money for rebuilding Iraq will take place in September, following preliminary discussions at a meeting in New York at the end of June, U.S. officials said on Wednesday. The officials said Iraq will need substantial debt relief and that other donors privately agree with this assessment. "The June 24 conference is not a pledging conference as such. It is the beginning of the process for a pledging conference we hope to have in September," Alan Larson, Undersecretary of State for Economic and Agricultural Affairs told the Senate Foreign Relations Committee. A similar meeting for Afghanistan held in Tokyo last year raised pledges of $4.5 billion.

U.S. Treasury Undersecretary for International Affairs John Taylor said by September there will be an estimate of rebuilding costs. The World Bank, International Monetary Fund and United Nations are doing a needs assessment, but it will not be ready in time for the June meeting. "That is pretty early for a good estimate because the IMF and World Bank people are just getting on the ground as we speak," Taylor said. "We estimate it would take a good 6 weeks from when they're on the ground to actually get a preliminary estimate." An official each from the IMF and World Bank and the newly appointed U.N. special representative for Iraq, Sergio Vieira de Mello, traveled to the country this week. But the officials said during the donor meetings there will be no attempt to give each country a goal for how much money it would stump up.

"If we came out with a percentage goal now I think it would be counterproductive," said Larson. The United States intends to use the revenues from Iraqi oil sales to fund rebuilding. If Iraq is able to bring exports up from 1 million barrels per day in mid-June to 2 million barrels per day at the end of the year, gross earnings would be in the range of $5 billion for the second half of this year based on an Iraqi crude price of $20 per barrel, Larson said. And if production is stable throughout 2004, it could earn gross revenues of $14 billion to $15 billion.

While the U.S. officials did not say how much rebuilding cash will be needed, they agreed the country will need relief on debts estimated to be between $60 billion and $130 billion. The United States is putting pressure on the Paris Club of creditors to work out a number for the debt owed to Paris Club members. And the IMF is doing a survey to put a figure on money owed by Iraq to countries outside the Paris Club. Key donors have agreed Iraq will not be expected to service its debt before the end of 2004. Larson said some donors also privately agree "that when the time comes it will be necessary to give substantial debt relief to Iraq."

Earlier calls for debt forgiveness have been met with resistance by countries like Russia, who are owed far more by Iraq than the United States. Debts to Russia are estimated to be around $9 billion compared with an estimate of just $2.1 billion to the United States. Taylor also said another $358 million in U.S. cash is headed toward Iraq to try to keep key civil service workers on the job. About $199 million in cash had already been sent.

(Additional reporting by Jonathan Nicholson)

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