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| December 12, 2003 |
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| International Fund For Iraq Becomes Operational |
WASHINGTON - December 12, 2003. The International Reconstruction Fund Facility for Iraq, a combination of
two trust funds through which governments can contribute to the rebuilding of Iraq, was inaugurated Thursday by the United Nations Development Group and the World Bank, reports Xinhua.
"The fund, which will go by the official name of the International
Reconstruction Fund Facility for Iraq, is being inaugurated by the UN
Development Group and the World Bank," UN spokesman Fred Eckhard told a
press briefing at the UN headquarters in New York. "Now that it is up and
running, interested Governments can contribute to the rebuilding of Iraq's
economy and infrastructure through projects managed by UN agencies and the
World Bank," he said. According to the spokesman, the fund is made up of
two individual trust funds. "One of these is managed by the World Bank
which will focus on technical assistance, infrastructure support and
feasibility studies. The other will be handled by the UN Development Group
and it will focus on quick impact projects and transition activities," he
said. On Iraq's side, two entities will supervise the spending of contributions. The Iraqi Strategic Review Board will guide donors and make
the final decision on recommendations from the Ministries of Planning and
Finance. The Iraqi Ministry of Planning will serve as the Interim Iraqi
Administration's primary link to the facility and will ensure that funds
are equitably distributed.
Meanwhile, Reuters reports that Iraq has told the IMF and the World Bank
it has other ways to raise revenue rather than imposing taxes now, the
finance minister said on Thursday. Iraqi officials worry that imposing
taxes would worsen frustration with US occupying troops that many Iraqis
say have not delivered on promises of economic prosperity. "We have our
point of view on the right time to make such decisions. We explained to
them we will have other sources of revenue," Kamel al-Gilani said,
referring to measures such as tariffs on trade. The minister said the
world organizations were suggesting Iraq resorts to taxes to cover a
slight budget shortfall projected for next year.
Dow Jones notes that Iraq is likely to end up having to pay back up to one
third of the whopping $113 billion to $120 billion of debt plus interest
the country racked up before Saddam Hussein was overthrown, the leading
expert on Iraq's foreign debt said earlier this week. But Iraq should be
able to service the remaining $37 billion to $40 billion in debt without
damaging its long-term economic prospects as long as prices for crude oil, the country's main source of income, stay around $25 a barrel, said
Richard Segal, director of research at London-based Exotix Ltd.
In other news, The New York Times notes that the American administrator of
Iraq said Thursday that occupation forces would pour $250 million into
local reconstruction projects over the next six months in an attempt to
offset public anger over hard-hitting US military strikes on suspected
insurgent bases. Paul Bremer predicted that attacks on Americans and Iraqi
government officials here could sharply increase in the months leading up
to Iraqi independence on July 1.
BBC Online reports that an oil services firm formerly run by US Vice
President Dick Cheney may have overcharged US forces in Iraq by some $61 million, a Pentagon audit has found. The firm, Kellogg, Brown and Root-a subsidiary of Halliburton-has denied charging too much for fuel for
troops. Pentagon officials say the firm is not alleged to have profited
from the overcharging, but it may have paid a local sub-contractor too
much for fuel.
The Guardian (UK) notes that nearly half the newly recruited Iraqi army
has quit in a row over poor pay, officials in Baghdad admitted yesterday.
The resignations are a blow to US attempts to build up the Iraqi security
forces, who will have a far greater role in running the country once
America and Britain hand over power on July 1 to an Iraqi government.
Meanwhile, Die Welt (Germany) and International Herald Tribune report that
US President George Bush firmly defended Thursday a decision to limit
major Iraqi reconstruction contracts to countries supporting the Iraq war,
but is dispatching one of the country's most eminent diplomats to confront
the anger of European leaders excluded from the projects. His newly
appointed special envoy on Iraq debt, the former Secretary of State James
Baker, leaves Monday for high-level visits in Russia, Britain, France,
Italy and Germany to discuss the matter.
AP adds that the European Union said Friday it would investigate the
validity of the US decision to bar opponents of the Iraq war from
reconstruction contracts, but EU leaders papered over any Iraq rift during their summit meeting. The EU's executive Commission said it would
investigate whether the restrictive allocation of US$18.6 billion in
reconstruction contracts violated world trade rules.
The New York Times writes in an editorial that finding a way to persuade
creditor nations like France, Russia and the Persian Gulf Arab states to
forgive part of Iraq's debt and restructure the rest is critical to the
[US] administration's foreign policy. It is no wonder the president turned
to an experienced hand like James Baker. Yet before any of this can
happen, Baker must show that he will be free of any private business
entanglements that could raise legitimate questions about his
recommendations. If the administration needs a political reason for doing
the right thing, it need only look at the deep suspicion raised about the
Iraqi construction contracts doled out to Halliburton, a company that was
run by Dick Cheney before he became vice president.
The Wall Street Journal writes in another editorial that US reconstruction
plans can be seen as generous. The prohibition applies only to the 26
prime contracts. The majority of the money will be spent at the
sub-contractor level and all countries-except for a few outlaw states-are
welcome to bid on those. And it is expected that the currently outraged
countries will indeed be successful bidders.
Commenting in another leader, The Washington Post writes that Bush and his
Pentagon hawks may believe they are meting out just punishment to
countries that have opposed the mission in Iraq. But there will be little
cost to Germany, France, Canada or Russia. Instead, the real price will be
paid by Iraqis and the American soldiers and civilians trying to help
them. They will have to continue an uphill struggle to stabilize and
rebuild Iraq without substantial support from many of the world's richest
and most powerful nations.
Source: The World Bank |
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