EU Approves $233 Million Aid for Iraq

LUXEMBOURG – The European Union (search) approved $233 million in reconstruction aid for Iraq (search) on Monday, with Britain the only EU nation for now to provide additional funding from its national budget.

Britain said it would donate $439 million from its budget in 2004 and 2005, officials said, while the EU money would be spent in the next 14 months.

The United States has appealed for help with the costs of rebuilding Iraq. But the EU has been reluctant to become a major donor as some members, primarily France and Germany, disagree with Washington's policies in Iraq.

The EU contribution of $233 million is slightly more than 1 percent of the $20 billion the Bush administration has asked Congress to set aside for reconstruction in Iraq.

Even that came with conditions. The EU foreign ministers stressed the need for a "realistic schedule for handing over political responsibility to the Iraqi people." Their statement also said the United Nations must play "a strong and vital role" in Iraq's reconstruction.

Rebuffed in its efforts to secure a larger EU offer, Britain pledged $439 million in reconstruction aid (search) from its national budget, officials said.

"It is now important for the international community to send a clear signal of its willingness to help Iraqis build on the progress already made," said British Foreign Secretary Jack Straw.

For now, Britain is the only EU nation to offer aid from its own coffers ahead of the Iraq donors' conference in Madrid later this month. Spain, which supported the war in Iraq, is expected to come forward with an offer ahead of the Oct. 23-24 meeting. But other countries are clearly hesitant to make individual pledges until the political situation becomes clearer.

"There is no decision by Germany" to provide aid to Iraq over and above the EU contribution, German Foreign Minister Joschka Fischer said, echoing comments by his Dutch colleague, Jaap De Hoop Scheffer.

France and Germany, which opposed the U.S.-led war in Iraq, insist on a faster power transfer to an Iraqi government and more U.N. oversight of the transition to a democracy than the United States and Britain propose. The latter want Iraq to first have a constitution and elections.

The EU funds come on top of the $852 million the bloc and its 15 member states have already pledged in humanitarian aid since the war broke out.

Italian Foreign Minister Franco Frattini predicted more nations would come forward with pledges before the conference in Madrid.

"All members of the European Union have been called on to make generous contributions," Frattini said.

Polish Foreign Minister Wlodzimierz Cimoszewicz, whose country has 2,400 troops in Iraq, said there "was generally more support for more and more assistance" to Iraq.

The EU aid for Iraq roughly matches the union's contribution to Afghanistan. However, individual EU governments contributed another $937 million to Afghanistan, a country far less developed than Iraq and without oil resources to pay for its own reconstruction.

The $233 million contribution will go into a trust fund being assembled by international donors and will be separate from a development fund set up by the U.N. Security Council after the war.

That fund holds revenues from Iraqi oil exports, funds from the U.N's prewar "oil for food" program and assets of the former Iraqi government. The U.S.-inspired Provisional Authority in Baghdad has resisted efforts by international financial organizations to scrutinize spending from the fund.

The World Bank has estimated Iraq needs $55 billion in aid to finance its reconstruction until the country's oil industry gets on its feet.

The EU's initial donation of $233 million must be approved by the European Parliament where demands are growing for the EU to do better.

However, EU officials have said pushing for a larger donation would not be wise, pointing to Iraq's volatile security situation, which has scared off international aid and humanitarian workers.