Aid to Iraq Should Not Be Confined to Donations Alone

IraqAn international conference on the reconstruction of Iraq, or a donor conference as it is often called, will be held in Madrid on October 23 and 24. In our view, it would be more correct to speak about reconstruction in the wider sense of the term. Iraq, with its oil and a big industrial and agricultural potential and manpower resources, including workforce and well-trained managerial personnel, will be capable of ensuring a worthy life for its people. But, at the present difficult stage, the country needs international aid. Therefore, the question today is in what proportions, in what form and by what mechanisms this aid is to be provided.

The crux of the matter should be addressed here. Economic restoration and solutions to the urgent humanitarian problems in Iraq are a significant, though not the most important, component of a political settlement. This is the substance of the Security Council resolutions on Iraq adopted after the war.

A question often asked is whether or not Resolution 1511, unanimously adopted by the Security Council on October 16, will help to collect more donations in Madrid. One may well believe that this is what the initiators of this resolution expected.

Resolution 1511 is the product of a difficult compromise reached at the highest political level. Russia played a key role in reaching this compromise, while all the parties made reasonable concessions. The first draft resolution submitted by the US in September was rewritten five times. Its final wording is fundamentally different- in its structure and content - from the initial one.

Like any documents adopted through compromise, this resolution is far from perfect. It goes farther than Resolution 1483, which was adopted in May, but we would prefer more clear-cut provisions on ways to achieve a political settlement in Iraq and on the UN role in this process. This concerns the economic and humanitarian sections of this document.

A minimum set of objective preconditions will have to be established to ensure that the international efforts in the economic restoration of Iraq are effective. It is hardly possible to say that this goal has been attained.

Firstly, no reliable security conditions have been created, without which the reconstruction process can hardly proceed normally.

Secondly, economic and financial activities in Iraq are not completely transparent. There are no clear and understandable regulations for foreign companies' work on the Iraqi market. And no one can say that the principles of equality and fair competition will be guaranteed.

Thirdly, it is important that continuity be ensured to the greatest extent possible, because we are not beginning our work in Iraq from scratch. The UN Oil for Food humanitarian programme, for all its limitations, helped the Iraqis to survive under the sanctions and to meet the minimal level of the country's humanitarian and economic needs. At present, this programme is nearing completion, but, in the next few months, planned deliveries to Iraq worth $7 billion under this programme will play a leading role in the restoration process.

Russian companies, as is known, worked actively under the Oil for Food Programme. They may incur certain expenses when it ends. The Russian Foreign Ministry is working hard to minimise these expenses. At present, 75% of the contracts signed by Russian companies, for which funds have been allotted under the UN programme, have been included in the priority category, which means that they will be implemented.

In late November, the UN humanitarian programme will be brought to an end completely, and by that time we must ensure that many more Russian companies are "priority" ones.

As for the contracts that were not financed, in our view it would be unjustifiable extravagance to give them up. Many of the contracts can contribute considerably to Iraq's economic rehabilitation. We shall do everything at the Madrid conference and during contacts with our partners to see that these contracts are implemented. They should be financed by the Iraq Development Fund.

With regard to this Fund, it may seem strange that an International Consultative and Controlling Council, which should ensure unbiased supervision over the Fund's activities, including its audit, has not been established yet. The Controlling Council should have been set up in keeping with UN Security Council Resolution 1483. Indeed, this task was re-iterated in Resolution 1511, but there has been no result so far. Maybe this is a minor point, but such details undermine international trust and objectively hamper efforts to attract donations.

The UN Development Group and the World Bank have prepared a major report for the Madrid conference, which on the whole gives an idea about the priority goals of Iraq's economic restoration. However, it raises questions, too.

Accordingly, the view that by 2004 under $2 billion dollars is to be spent on the country's reconstruction out of the $12 billion Iraq will get from oil exports is highly disputable. In our view, additional substantiation and figures for different sectors are needed. The areas of top-priority investment should be clarified. These should take in spheres which will help the situation in the country to be normalised as soon as possible, including the provision of more jobs. This, in particular, concerns also the oil industry, which the report does not cover. We are waiting for detailed assessments on this matter.

In other words, neither Security Council Resolution 1511, nor the documents prepared for the upcoming Madrid Conference make the problems of post-war reconstruction absolutely clear. In these conditions, at the Madrid conference Russia is not going to announce donations to the new fund for the restoration of Iraq. But support for Iraqi people should not necessarily be confined to donations alone.

Russian companies have a wealth of experience in co-operating with their Iraqi partners to implement major economic and humanitarian investment projects. This experience could be used in the interests of earliest possible restoration of Iraq.

The matter in hand concerns the oil industry, the energy sphere, irrigation and water supplies, transport, the construction of various industrial plants and other infrastructure facilities. Many of them were built with the help of our country and use Russian equipment. It is far easier and cheaper to restore and modernise facilities than to replace them with new ones.

A few examples of this kind of investment project can be cited here. If work is resumed in western Qurna, about $3 billion in investment could be attracted to develop this Iraqi oilfield over the first seven years. Another $350-400 million may be invested in developing other oil deposits. But potential Russian investment is definitely not limited to these sums.

In short, there is the willingness to promote co-operation, make investment and provide assistance free of change. But we expect the Iraqi side, which seeks full participation in the life of the international community as a reliable partner, to confirm its commitments under the contracts signed earlier.

The Russian Foreign Ministry and the Russian Embassy in Baghdad, for their part, continue to give Russian companies the necessary support for their work in Iraq. We understand that the situation in the country has changed fundamentally and are prepared to work constructively in the new, post-war conditions.

The Madrid conference will, no doubt, mark yet another stage in Iraq's restoration. It is a good sign that it is being continued. However, no one should expect the fate of the Iraqi economy to be decided in two days.

Yuri Fedotov, Deputy Foreign Minister of Russia

Author`s name Petr Ernilin