U.S., Iraq Ask for Money in Madrid

MADRID, Spain – U.S. and Iraqi officials pleaded for billions to rebuild Iraq at a donors conference that opened Thursday with warnings that they might not get all they need right away.

Despite the approval last week of a U.N. resolution setting out Iraq's future course, U.N. Secretary-General Kofi Annan (search) acknowledged that lingering divisions over Washington's role in running the country might deter some donors.

But in his opening remarks Thursday, Annan urged that such concerns be set aside, saying "the long-term challenge of reconstruction has to be faced by all of us."

Security remains a primary constraint "both now and into the foreseeable future," he said.

"But a start to reconstruction cannot be deferred until that day," he said. "It demands our urgent attention now. I appeal to donors to give and give generously."

France and Germany, leading opponents of the war, have both cited concerns about the slow pace of restoring Iraq's sovereignty for their refusal to pledge any new money now.

Chris Patten, the European Union's external affairs commissioner, said nations that were against military intervention in Iraq cannot be expected to feel "hugely enthusiastic about spending a large amount of money in Iraq."

Ahead of the meeting, Annan and Secretary of State Colin Powell sought to lower expectations that Washington would come away with the entire amount it wants — $35.8 billion through 2007.

Powell acknowledged "it may take time to meet the goal" of more than $55 billion set by the World Bank (search), which includes the Bush administration's nearly $20 billion pledge.

L. Paul Bremer III (search), the U.S. administrator in Iraq, said on arriving in Madrid that it was "too early to know what the donations will be."

In London, a British aid group charged Thursday that the U.S.-run body governing Iraq has failed to account for billions of dollars allocated for rebuilding the country.

Christian Aid (search) said in a report that the Coalition Provisional Authority (search) had only explained publicly how it had spent $1 billion of the $5 billion it has been given for Iraqi development. The funds include $1 billion from the former U.N. Oil for Food (search) program, $2.5 billion in assets seized from Saddam Hussein's former regime an $1.5 billion in oil revenues, the group said.

In Baghdad, the provisional authority said it was "adhering fully" to the U.N. resolution that established it and was working with international agencies to set up a monitoring board. Once it is established, the board will audit all the Development Fund of Iraq's transactions, the authority said.

That money is separate from the funds being raised in Madrid, most of which are to go into a trust managed by the World Bank, the United Nations and a committee of Iraqis.

Meanwhile, Bremer joined Iraqis in calling for countries like France and Russia as well as Gulf states to cancel Iraq's crushing debt and reparations load, the result mainly of Saddam's wars with Iran and with the world over Kuwait.

Even with its oil wealth, Iraq can barely cover its expenses, much less the $13 billion needed next year to service a debt of about $125 billion, Bremer said. That includes about $4 billion owed to the United States.

"The United States intends to take the lead in pushing for substantial debt reduction," Bremer said.

Talking to reporters as he flew to Madrid from Egypt, Powell also set his sights on Iraqi assets held in Syrian banks, saying he may take the matter up with Syrian delegates at the meeting.

An estimated $3 billion is reported to be in Syrian banks, but Powell said he had not "heard a number quite that high."

But, he said, there were "certainly numbers of significant magnitude" and that it was "Iraqi money and we would like to get it back to the Iraqi people."

So far, Japan has pledged $1.5 billion for 2004; South Korea has agreed to $200 million, and Canada, $150 million. The World Bank has said it will lend Iraq $3 billion to $5 billion over the coming five years.

Spain pledged $300 million through 2007 and Britain $439 million for 2004-2005. An Italian foreign ministry official said Rome would give around $174 million over the next three years. All three governments were firm supporters of the U.S.-led invasion.

Smaller pledges came Thursday from Sweden, Belgium and the Philippines.

The European Union's head office has limited its contribution to one year, promising $233 million.

Pressed why the Bush administration was not counting on Iraqi oil revenues to pay for reconstruction, Powell said the infrastructure "was more damaged than we expected, and not as a result of the war, but as a result of 30 years of abuse by this dictatorial regime."