Iraq Money to Go as Grants

After a closed-door vote Wednesday, conference negotiators handed the White House a victory, agreeing to strip language out of a $87 billion supplemental bill that would condition part of the reconstruction aid to Iraq as a loan rather than a grant.

By a 16-13 vote, lawmakers stepped back from provisions in the Senate bill that make half of the $18.4 billion in aid to Iraq to be given as a loan that could be turned into a grant if other nations forgive 90 percent of Iraq's estimated $200 billion debt.

Supporters of the measure claimed that it is unjustifiable that Washington would give Iraq so much cash when the United States is carrying a huge deficit and millions of Americans are out of work.

Opponents, including the White House, said that requiring Iraq to pay back the money would not only make it more difficult to get the nation on track, but would confirm suspicions by many Iraqis that the United States went to war only to get control of the country's vast oil reserves.

Grant supporters said the quicker Iraq can get its footing, the sooner U.S. troops can come home.

"America will be recompensed 50 times over if this thing gets ended and they have a strong country," said Sen. Pete Domenici, R-N.M. "This money we're arguing about will be a pittance when they become our friends in the international markets of oil."

Though the House had voted last week in a non-binding measure to instruct conferees to support the Senate loan package, Senate conferees agreed not to insist on the loan amendment. All Republicans in the conference voted no, including several, like Sen. Sam Brownback, R-Kan., who supported loans but were absent and voted by proxy to remove the stipulation.

One Democrat, Sen. Daniel Inouye of Hawaii, also opposed the loans.

Lawmakers also agreed to give $500 million to the Federal Emergency Management Agency (search) to help it deal with recent disasters, including the California wildfires and Hurricane Isabel.

They also approved the launch of a pilot program to expand the military health insurance system known as Tricare (search) so that members of the National Guard and Reserves who are unemployed or lack health insurance coverage can join. The program will last until the end of the current fiscal year, Sept. 30, 2004.

The Pentagon had opposed the change.

"We think that's probably not the best way to compensate the reserves," its chief financial officer, Dov Zakheim said at a Pentagon news conference.

All members of the National Guard and Reserves are given military health care while on active duty, and the "overwhelming proportion" have health insurance when they're not on active duty, Zakheim said.

Republicans also defeated a Democratic proposal that would have required the president's civilian administrator in Iraq, now L. Paul Bremer (search), to get Senate confirmation to continue the job.

Supporters said confirmation would make the administration more accountable, a notion Domenici rejected.

"I'm not at all sure that the American people equate accountability with confirmation by the United States Senate," he said.

A final deal on the bill to provide military operations and rebuilding costs for Iraq and Afghanistan is now close at hand, and Congress could wrap up the bill within a week. Senators and House members will have to vote on the conference agreement before President Bush can sign the bill.

Despite the move toward final approval, lawmakers on both sides of the aisle said they were not pleased with the White House's dismissive and demanding treatment of Congress on the issue.

"You bump up to a degree of arrogance over and over," said Rep. Frank Wolf, R-Va.

The Associated Press contributed to this report.