Negotiators: Loans to Iraq Unlikely in Final Funding Package

WASHINGTON – Republican senators who sought to include loans as part of an $87 billion package for Iraq (search) and Afghanistan acknowledged they had little hope of prevailing Tuesday as House and Senate negotiators tried to work out final details.

The White House had threatened a veto if the final version of the bill included the loans stipulated in the package approved by the Senate.

"I don't have the vote totals on it, but my sense is they probably have located the votes to get the package" without loans, said Sen. Sam Brownback, R-Kan. Brownback supported the loans and a participant in the House-Senate conference meeting Tuesday.

Another Republican senator who supported the loans, Sen. Susan Collins of Maine, said she wasn't optimistic. She said failing to include the loans "would be very unfortunate."

"I think that public support for the package would be boosted by having some provisions for the loans," she said.

The Senate version of the bill included $18.4 billion for reconstruction of public works and for security but would require Iraq to repay about half of that unless other countries forgave 90 percent of the debt Iraq ran up under Saddam Hussein, deposed as president by U.S. troops. The House version includes $18.6 billion, none of which would have to be repaid.

The bulk of both bills, about $66 billion, would pay for U.S. military operations (search) in Iraq and Afghanistan.

The White House and Republican congressional leaders strongly oppose loans, saying Iraq already is too deeply indebted and has no government with authority to borrow more money. It also has argued that loans secured by Iraq's vast oil reserves could support claims of war opponents that the United States went to war to tap into Iraq's oil wealth.

At a news conference Tuesday, Bush said the administration was working hard with lawmakers "to make the case that it's very important for us not to saddle Iraq with a bunch of debt early in the emergence of a market-oriented economy, an economy that had been wrecked by Mr. Saddam Hussein."

The Senate had voted 51-47 to convert part of the rebuilding funds into loans. Although the House did not include loans in its package, it supported the concept in a 277-139 nonbinding vote.

Supporters of loans said their case was strengthened last week when much of the $13 billion in new aid pledged at an international donor's conference was made as loans.

Among other issues that will have to be resolved by congressional negotiators are whether to expand the military health insurance system known as Tricare (search) to members of the National Guard and reserves and how much flexibility the Pentagon will have to reallocate money without consulting Congress.