Money to rebuild Iraq slow in coming

WASHINGTON -- Nations that pledged last October to help Iraq's reconstruction have been slow to make good on their promises.

Only about $1 billion of $13 billion in grants and loans that were pledged by other nations at a high-profile conference last October in Madrid have been deposited in World Bank and U.N. funds for Iraq. The United States pledged $18.4 billion, of which about $6 billion has been set aside for reconstruction of Iraq.

The slow pace of making good on pledges is not unusual. Iraq's lack of a recognized government may have contributed to the lethargic follow-through.

A number of countries willing to contribute have said they were waiting for the establishment of an Iraqi government, Edward S. Walker, president of the Middle East Institute, a private research center, said Tuesday.

An interim government took control in Baghdad two weeks ago, but Walker said he did not know if donors were waiting until Iraq held national elections in January.

"Some Arab leaders have told me they are waiting for a legitimate Iraqi government, without explaining what it meant," the former U.S. ambassador to Egypt and Israel said in an interview. "These pledges are easier to make than to collect."

The United Nations and the World Bank set up funds late last year to channel the donations. The World Bank has $360 million deposited by nine countries and the European Commission and expects to reach $400 million by the end of the year, according to a World Bank official. There is approximately $600 million in the U.N. Fund.

The World Bank and the International Monetary Fund have also pledged $5.5 billion in loans.

The IMF has begun talks with Iraqi officials on providing about $800 million of the money. But first the IMF wants Iraq to make good on a debt of $80 million for fees and other expenses that have accumulated since the 1991 Persian Gulf war.

The interim government in Baghdad is hoping the flow of grants and loans will pick up, but Iraqi, U.S. and international officials are reluctant to say which countries have come through and which are holding back.

Iraqi officials also are demanding that most, if not all, of Iraq's nearly $122 billion debt would be forgiven.

Iraq's finance minister, Adil Abdel-Mahdi, said last week that the debt could badly hinder attempts at postwar reconstruction.

Iraq owes about $42 billion to members of the Paris Club of creditor countries, with the largest debts owed to Russia, Japan, France and Germany. It owes another $80 billion to several Arab governments.

World Bank President James Wolfensohn said last year that the United States and other wealthy nations should forgive at least two-thirds of Iraq's debt burden to help the country's economy recover.

But Iraqi ambassador Rend Rahim said last month at the American Enterprise Institute that "so far, we do not have any serious pledges for the reduction of Iraqi debt."

Richard Haass, president of the Council on Foreign Relations, said the challenge for the world on Iraq is to make it a success, "and one of the best ways to make it a success is by relieving the economic burden it inherited from Saddam Hussein."

Haass said the risk of waiting for elections before extending a helping hand is that "we may not get to that point if we do not do more."