Global Policy Forum

Potential Donor Nations Seek More Accountability

By Colum Lynch

Germany, France and other potential donors to Iraq are privately demanding that the United States provide greater accountability over its plans for Iraq's oil revenue and guarantee more opportunities for foreign companies before they will help fund the country's reconstruction, U.N. and European officials said.

U.S. allies in Europe who opposed the war in Iraq have said they are eager to participate in the reconstruction of Iraq. But they told delegates at a two-day meeting of international donors in New York this week that they would require assurances that billions of dollars in contracts financed by Iraq's oil revenues are put out to competitive bidding, European and U.N. officials who participated in the closed-door session said.

The reluctance of key allies and other wealthy nations to commit to funding represents an obstacle for U.S. reconstruction efforts in Iraq. The United States has been reaching out to foreign donors, including countries that opposed the war, to help fill a financial shortfall in its plans. Iraq's oil revenues, which are projected to reach $3.5 billion by the end of this year and $13 billion for 2004, will be inadequate to finance the administration and reconstruction of Iraq through the end of the next year and a half, senior U.S. officials said.

The Security Council authorized the United States to assume control over Iraq's oil revenue, subject to international monitoring, to help pay for the country's recovery. But Security Council members have expressed concern that the United States is not assigning sufficient authority to the International Advisory and Monitoring Board, which was established by the resolution to scrutinize the use of Iraq's oil riches.

They have also complained that efforts by the United States to establish a representative government in Iraq have been too sluggish, and that its preference for U.S. companies has complicated efforts by these countries to justify to their own citizens the cost of aid for reconstruction.

The Bush administration's decision to award more than $1 billion in contracts from the U.S. Agency for International Development to seven U.S. companies, including a $680 million deal for Bechtel to rebuild Iraq's infrastructure, has raised suspicions among foreign governments that the United States would deny their companies' access to the Iraqi market. U.S. officials counter that U.S. law requires that U.S. companies be given preferable treatment in obtaining the contracts, which were awarded as part of $1.7 billion in reconstruction funding approved by Congress. President Bush signed a waiver in January allowing international companies to compete for subcontracts.

"There is a tendency on the part of the coalition authorities to be too heavy-handed," a senior French source said. "So the rest of the international community needs to be reassured. What is important is to find a system in which those invited to contribute feel comfortable. If they give the impression that everything is precooked in a system in which they don't have a real say, obviously there will be no incentive to participate."

U.S. officials have publicly played down the rift. USAID Administrator Andrew S. Natsios, said there is "widespread support" among international donors, even those who opposed the war, to fund Iraq's reconstruction. "There is a genuine sense that we want to make this work," he said.

But privately, U.S. officials have acknowledged concerns. International donors at the New York meeting agreed in principle to meet in the middle of October to consider establishing a new trust fund for donors who are reluctant to put their money in a pot controlled by the United States. But some indicated they would not pledge aid until a representative Iraqi government is in place and the United States has presented them with a 2004 budget outlining how Iraq's oil resources would be spent.

The U.N. humanitarian coordinator in Iraq, Ramiro Lopes da Silva of Portugal, said today that the success of the conference hinges on establishing a representative government in Iraq.

Staff writer Jackie Spinner in Washington contributed to this report.

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