Global Policy Forum

By Mona Megalli and Heba Kandil

International donors said on Sunday they would inject about $1 billion of the $33 billion of aid earmarked for Iraq's reconstruction into two trust funds run by the United Nations and World Bank.

Several countries that opposed the U.S.-led war to oust President Saddam Hussein, including France and Germany, refused to contribute any aid to Baghdad if the United States and Britain -- who currently occupy Iraq -- control the funds.

These countries said they preferred to give aid directly to Iraq or contribute to trust funds run and audited independently. "This will be a strong starting point... We feel grateful to donors and thank them," Iraqi Planning Minister Mehdi al-Hafedh told reporters at the conclusion of a two-day meeting to activate Iraq aid pledges made at a September donors' summit in Madrid.

Hafedh on Saturday outlined $4 billion worth of projects he said donors could fund to rebuild the country that has suffered from wars and U.N. sanctions. "The Iraqis must be in the driving seat and they have demonstrated they have the capacity to do that," said Andrew Goledzinowski, director of the donor coordinating committee of the U.S.-led administration.

World Bank officials said donors had begun to deposit money into the funds over the past two days.

Japan, the single largest contributor to the funds with about $500 million in aid, leads the donor committee formed to review the operations of the trust funds, officials said.

Earl Anthony Wayne, leading the U.S. delegation to the donor meeting, told reporters that the United States would still channel the bulk of its aid on a bilateral basis to Iraq, although it would put some money in the trust funds.

The United States has allocated $18.6 billion to Iraq's reconstruction and U.S. officials said about $10 billion of that amount would be committed to projects by July when an Iraqi government is due to take power.

Lorenzo Perez, a senior International Monetary Fund advisor, told Reuters that although U.S. funds and other aid is being used in Iraq the activation of the trust funds would help improve the country's economic activity especially in the second half of the year.

One delegate said the United States, Qatar, Sweden, India, Korea, Spain and Norway became automatic members of the donor committee by contributing $10 million each. Officials later said Kuwait also joined the panel but did not give a figure for its contribution.

Along with Japan, whose trust fund contribution is drawn from a total $1.5 billion of aid to Iraq this year, the European Commission is listed as a member with a contribution of about $200 million, Canada with about $72 million, Britain with $120 million and Australia with $20 million, the meeting delegate said.

"There are countries which would like to increase this amount and there are other countries who want to give," said Masamitsu Oki, Japan's ambassador in charge of Iraq.

Two rotating seats on the committee will be granted to countries that have given the trust fund less than $10 million, the delegate said. France and Germany, who did not send delegations to the Abu Dhabi meeting, are to participate in the trust fund as contributors to the European Commission's donation.

Donors can increase their contribution to the trust funds or donate directly to Iraq, the delegate said. A Qatari delegate said the number of members on the trust funds panel would increase as more countries signed up with $10 million donations. The donors are set to meet in Qatar in the second half of May, delegates said.