| Section 2207 Report on Iraq Relief and Reconstruction -Back to July 2006 report. Released by the Bureau of Near Eastern Affairs July 2006 Appendix II Contributions from Other Donors International Resources for the Reconstruction of Iraq: During this past quarter, the United States has been working very closely with Iraq and international donors to maximize international assistance. A major development in this assistance will be an International Compact for Iraq. Prime Minister Maliki has asked the UN, in close cooperation with the World Bank, to play a lead role with his government in developing a Compact between the international community and the Iraqi government and people. The Prime Minister envisions a Compact in which Iraq will undertake a series of reforms in exchange for more robust political and financial support from the international community. The UN has agreed to lead this effort with Iraq and is consulting with the Iraqi Government and other donors on the scope of the Compact and next steps. On June 14, after returning from his trip to Iraq, the President announced that the United States will actively support this endeavor and appointed Deputy Secretary of the Treasury Robert Kimmitt and State Department Counselor Philip Zelikow to lead USG efforts on the Compact. At the October 2003 Madrid International Donors’ Conference, donors other than the United States pledged over $13.5 billion in assistance for the reconstruction of Iraq. This includes $8 billion in assistance from foreign governments and $5.5 billion in lending from the World Bank and International Monetary Fund (IMF) -- all to be disbursed between 2004 and 2007. As of June 2006, over $3.5 billion of the pledges of non-U.S. assistance had been disbursed; about $3 billion of this was from other donor governments, either in bilateral projects or through the World Bank and UN-administered International Reconstruction Fund Facility for Iraq (IRFFI). The IMF approved $436 million in balance-of-payments support in September 2004 and an additional $685 million of such support in December 2005. An additional $3.5 billion of Japanese concessional loans are currently awaiting approval by the Government of Iraq. Since Madrid, donors have pledged an additional $850 million. A number of countries and institutions have disbursed assistance above and beyond what they pledged at the 2003 Madrid Conference, including Australia, the European Commission, Finland, Greece, Hungary, Iceland, the Netherlands, New Zealand and Norway. Donor government disbursements are defined here as funds that have left government treasuries. Because, however, much of the assistance is being channeled for implementation through trust funds, contractors, NGOs, international organizations and Iraqi institutions, there is normally some time between disbursement by the donor and impact on the ground in Iraq. Donors committed an additional $235 million in new contributions to the IRFFI at the July 2005 meeting of the IRFFI Donors' Committee at the Dead Sea in Jordan. Most of this was new pledges since Madrid, and most has already been deposited in the IRFFI. The Islamic Development Bank agreed that it would make $300 million in new concessional financing available, and the World Bank and Iraq agreed in principle on a $500 million program for concessional IDA lending. The World Bank Board has approved two IDA loans under this program: a $100 million education project and a $135 million transportation project, approved in June 2006, that will help rehabilitate roads and bridges. In December 2005, the IMF agreed to a Stand-By Arrangement (SBA) with Iraq that makes $685 million available for balance-of-payment support. The Madrid Conference authorized the establishment of the IRFFI, which gives donors a multilateral channel for their Iraq assistance -- in addition to their bilateral efforts. The IRFFI contains two primary trust funds, one managed by the World Bank, the other by the UN. Funds channeled through the IRFFI come from donors’ pledges made at the Madrid Conference and those made subsequently. There are currently 102 IRFFI projects (92 UN, 10 World Bank) in various stages of completion. Details on the IRFFI can be found at www.irffi.org. • Current donor commitments to the IRFFI total about $1.4 billion. Of this amount, $491 million is from Japan; $430 million from the European Commission; $127 million from the UK; $69 million from Canada; $40 million from Spain; $31 million from Australia, $29.8 million from Italy; $13.7 million from Norway; $12.9 million from the Netherlands; $16.4 million from Sweden; $15 million from the Republic of Korea; $10 million each from the United States, Denmark, Germany, India, Iran, Kuwait and Qatar. Belgium, Finland, Greece, Iceland, Ireland, Luxembourg, New Zealand and Turkey have committed amounts less than $10 million each. • Of the $1.4 billion in commitments, donors (including the U.S.) have deposited $1.37 billion in the IRFFI trust funds as of May 31, 2006. • The UN and World Bank submit their project proposals for approval to the Iraqi Strategic Review Board (ISRB). The ISRB is an Iraqi coordinating body chaired by the Minister of Planning and Development Cooperation that reviews requests for and offers of external donor assistance. • The IRFFI Donors' Committee held its fourth meeting at the Dead Sea in Jordan, on July 18-19, 2005. The Donors’ Committee consists of 18 countries that have committed at least $10 million to the fund facility and two rotating representatives (currently Finland and Turkey) from countries that have committed less than $10 million. So far in 2006, the IRFFI has received approximately $6 million in new commitments ($1.5 from Australia, $1.1 from Luxembourg, $1 million from New Zealand and $2.4 million from Spain). Canada continued its chairmanship of the IRFFI Donors’ Committee, which it assumed from Japan in February, 2005. • At the Dead Sea meeting, the Iraqi Transitional Government (ITG) assumed its central role in soliciting and coordinating international support for Iraqi reconstruction. It presented an updated National Development Strategy and a series of new donor coordination mechanisms on the ground in Iraq. Together these efforts represented an important shift toward an Iraq-led reconstruction process, strongly supported by the international community. Chaired by the ITG, but supported by the UN and World Bank, these new coordinating bodies, which include a "Baghdad Coordination Group" of all donors on the ground and "Sectoral Working Groups," have been holding meetings since August 2005. So far, Sectoral Working Groups have been established for Health, Education, Rule of Law and Electricity. • The next IRFFI Donors’ Committee meeting will be scheduled after close consultation with the new Iraqi government. Updates on Selected Major Donors The January 2004 report to Congress included a table of pledges made at the Madrid International Donors Conference. Since that report, donors have begun disbursing and implementing their assistance. Below are major donor highlights: Japan Japan has pledged and disbursed more assistance to Iraq than any other country except the United States. By May 2005, Japan had entirely obligated the $1.5 billion of grant aid that it had pledged in Madrid. Japan is currently in discussions with Iraq on the first projects to be implemented from its $3.5 billion concessional loan program. In late March, Japan announced and notified the Iraqi side of its intention to provide yen loans up to the total amount of 76,489 million yen (approximately $655 million) towards three projects in Iraq. On June 18, Japan confirmed with the new Iraqi government the decision to extend yen-loan up to 3,348 million yen (approximately $28 million) for implementing another project in Samawah. Exchange of Notes will be signed with the new Iraqi government regarding the provision of these loans. The four projects are: In December 2005, Japan decided to extend a grant of $14.4 million to UNDP for the Iraqi Reconstruction and Employment Program and Electricity Network enforcement Program in Al-Muthanna. In earlier disbursements of its grants assistance, Japan deposited a total of $491 million to the IRFFI ($361 million to the UN fund and $130 million to the World Bank fund). Japan has also deposited $10 million to the International Finance Corporation's (IFC) Small Business Financing Facility. In addition, Japan has disbursed $116 million directly to international organizations to implement projects such as restoration of water and sewage systems, garbage collection and sanitation. The balance of Japan’s disbursements, $938 million, have been in direct bilateral projects or channeled through Iraqi institutions and NGOs for implementation. Major Japanese contributions (in grants): The United Kingdom The UK has disbursed approximately £181 million ($333 million) for projects in support of reconstruction in southern Iraq, governance and economic capacity building, the justice sector, independent media and civil society. The UK’s Department for International Development (DFID) is responsible for these projects. The UK also deposited $127 million in the IRFFI - $71 million to the World Bank Trust Fund and $56 million to the UN Trust Fund. The DFID program in 2006-2007 is entirely bilateral and focuses on economic reform; infrastructure (improving power and water services in the south); governance and institutional building in Baghdad and in the south; and support for civil society and political participation. In southern Iraq, the UK has provided support to rehabilitate emergency infrastructure, working closely with the UK military; an infrastructure project to deliver improved power and water services; support to build the institutional capacity of the four southern governorates and private sector development; a team of technical specialists to advise local councils, UK military and other donors on infrastructure rehabilitation and construction; and support to strengthen independent broadcasting. In central Iraq, the UK has supported the Iraqi government on economic reform issues; supported the Center of Government Program to improve functions of government; supported the justice sector; provided funds for a Civil Society Fund (CSF) to develop legitimate and representative Iraqi NGOs; and provided funds for a Political Participation Fund (PPF) to encourage poor and marginalized sections of Iraqi society to engage in the constitutional process. Major UK contributions: Further information on the DFID program in Iraq, including quarterly updates, is available at http://www.dfid.gov.uk/countries/asia/iraq.asp Canada has pledged C$300 million (about $230 million) for Iraq's humanitarian relief and reconstruction, including C$245 million ($187 million) pledged at Madrid and C$55 million ($42 million) in urgent humanitarian relief disbursed through multilateral relief agencies in response to the UN Humanitarian Appeal. Canada became Chair of the IRFFI Donors’ Committee in 2005. Canada has committed C$100 million (about $76 million) to the IRFFI, of which it initially deposited C$60 million ($44.7 million) equally divided between the UN and the World Bank trust funds. In September 2004, Canada deposited another C$20 million ($15.3 million) in the UN Trust Fund to be used to support Iraqi elections. In December 2005, an additional C$10 million (about $8.5 million) was deposited to support United Nations support to elections and human rights. In addition to funding to IRFFI, Canada has allocated over C$100 million in other, non-IRFFI assistance. This includes C$40 million (about $34 million) to UNICEF for social sector funding and bilateral assistance through CARE Canada for reconstruction work to improve basic services in water and sanitation, basic health and education and child protection. CIDA also allocated C$3 million (about $2.6 million) to assist in the restoration and management of the ecological health of the "Mesopotamian Marshes." In the area of governance, human rights and civil society capacity building, Canada is supporting a number of projects including: C$15 million (about $12.8 million) for the Rapid Civilian Deployment Mechanism for capacity-building, including governance; C$10 million (about $8.5 million) for a civil society capacity building fund, including media and human rights training; C$5 million (about $4.2 million) to the Middle East Good Governance Fund; $C2 million (about $1.7 million) for human rights and diversity management training; C$2 million (about $1.7 million) for support to the constitutional process and federal systems; C$700,00 million (about $600,000) to UNDP for research on governance questions; and a small fund for building a culture of human rights in Iraq and the Middle East. Canada also supported elections with an additional C$7 million (about $5.8 million) allocated to the International Mission for Iraq Elections. In the security sector, Canada allocated C$10 million (about $7.9 million) over two years for deployment of Canadian police instructors to assist in the training of Iraqi police at the Jordan International Police Training Center (JIPTIC) as well as funding to deploy senior police advisors to the Ministry of Interior. Since January, Canada has provided an additional C$7.5 million (about $6.4 million) to these activities. Total Canadian assistance to the security sector is now C$17.5 million (about $15 million). Canada plans to focus the remainder of its assistance on good governance and the promotion of human rights including women's rights. More details on Canadian assistance to Iraq are available at www.acdi-cida.gc.ca/iraq. The European Commission (EC) • To further an inclusive democracy; Additional information on the EU Framework for Engagement can be found at: The EC's €200m allocated for 2006 will be used to support the Communication’s objectives. The EC is currently in the process of defining the activities under its 2006 Assistance Program. The EC expects to have proposals approved for over half of the €200m by mid-July. The EC is strengthening its presence in Baghdad and expects to have a Head of Delegation/Ambassador confirmed this summer. In addition, with the new Iraqi government in place, the EC soon expects to launch negotiations for a Trade and Cooperation Agreement. United Nations (UN) A. Agriculture, Food Security, Environment and Natural Resource Management As of May 2006, the UN had developed 92 projects, valued at $794 million, all of which have been approved for implementation by the Iraqi government. Among these projects, the UN has provided school supplies, rehabilitated schools, provided vaccines, supported internally displaced persons (IDPs) and refugees, conducted capacity-building training programs for Iraqi officials and assisted in the elections. By end May 2006, the U.N. trust fund had obligated $613 million in binding contracts for implementation and had disbursed $490 million. A full list of the U.N.’s IRFFI projects is available at the www.irffi.org website. World Bank As of May 2006, donors had pledged approximately $457 million to the World Bank trust fund of the IRFFI, of which approximately $454 million had been deposited. With these deposits, the World Bank is implementing the following projects: Operation Projected Costs Emergency Textbooks $40 million Emergency School Rehabilitation $60 million Emergency Baghdad Water Supply and Sanitation $65 million Emergency Water Supply, Sanitation and Urban Reconstruction $90 million Emergency Health Rehabilitation $25 million Emergency Private Sector Development I $55 million Capacity Building I $3.6 million Capacity Building II $7 million Emergency Community Infrastructure $20 million Emergency Disabilities $19.5 million As of May, 2006, the ITG and World Bank had signed grant agreements for all of the projects above totaling $385 million. Capacity Building I project is complete, and the remaining projects are now in the implementation phase. The Emergency Textbook project is nearly complete and has financed the printing and distribution of more than 79 million textbooks, benefiting millions of students throughout Iraq. The World Bank is currently operating from Amman, Jordan with staff dedicated full-time to Iraq operations. The office has established a videoconference link between its Amman office and the Iraqi government to facilitate project development and coordination. The Bank has contracted one international staff member in Baghdad. In June 2006, the World Bank began seeking a Country Director for an office in Baghdad. Once that individual is hired, several more international staff will be brought in to the Baghdad office. The Bank expects to complete this process by the fall. Funded by $3.6 million from the EC, the World Bank conducted training for Iraqi officials addressing the environmental and social impact of development projects, infrastructure regulation, restructuring of state-owned enterprises, investment climate issues and financial sector reform. The World Bank also provided a range of policy advice, including a substantial set of policy briefing papers on a range of issues for the new Iraqi government. These papers were provided in June and well received by the Iraqi government. Through its role in helping the Government of Iraq develop the International Compact, the World Bank will continue to play a critical role in capacity building for economic policy development for the Government of Iraq. At Madrid, the World Bank pledged to offer at least $3 billion in lending to Iraq. In December 2004, Iraq cleared its arrears to the World Bank, making it eligible for lending again. The World Bank staff on September 15, 2005 presented to its Board an Interim Strategy Note that includes the commencement of the $500 million IDA (International Development Association) concessional lending program. The strategy discussed by the Board also envisions up to an additional $500 million in IBRD (non-concessional) lending, assuming Iraq makes critical progress regarding IBRD creditworthiness. In November 2005, the World Bank Executive Board approved the first $100 million IDA loan within the $500 million program. The $100 million Third Emergency Education Project (TEEP) will help the Government of Iraq alleviate school overcrowding and lay the groundwork for educational reform. In June 2006, the Bank approved a $135 million IDA transportation project that will help rehabilitate Iraqi roads and bridges. IMF At the Madrid Donors’ Conference, the IMF pledged to provide over $2.55 billion in lending to Iraq. On September 29, 2004, the IMF Board approved an Emergency Post-Conflict Assistance (EPCA) package that provided Iraq SDR 297.1 million (about $430 million) in balance-of-payments support. The main goals under the EPCA were to maintain macroeconomic stability and lay the groundwork for a long-term development and reform program. On December 23, 2005, the IMF approved a Stand-by Arrangement (SBA) for Iraq that provides SDR 475 million (about $685 million) in balance-of-payments support. The 15-month SBA provides a comprehensive framework of policies for economic reform and growth in coming years. The first tranche of the SBA, worth $114 million, became available to the Iraqi government at the time of SBA approval. To date, Iraq has not drawn against the funds in either the EPCA or SBA programs. The IMF was to do quarterly reviews of Iraq’s progress under the SBA. The first such review, scheduled for March 2006, was postponed because of the lengthy Iraqi government formation process. IMF Executive Board consideration of the combined first and second quarterly reviews is now scheduled for August 2. Reaching the SBA also triggered the second 30% tranche of debt reduction under Iraq’s agreement with the Paris Club. To obtain the final 20% tranche of Paris Club debt relief, Iraq must complete three years of successful performance under the SBA. The IMF also provides technical assistance to Iraq, including training in such policy areas as public expenditure management, fiscal federalism, tax policy, tax and customs administration, monetary operations, banking supervision, payments system reform and statistics. Some of this training has been done jointly with the World Bank. The IMF has assisted in coordinating macroeconomic training with the other major providers: the World Bank, the US and the UK. Debt Forgiveness Other Major Efforts With the help of U.S. advisors, the Ministry of Planning and Development Coordination has completed plans to eliminate the major hurdles faced by donors on the ground in Baghdad. Plans are being implemented to provide security, housing and office space to potential donors inside the International Zone. The accommodations, called "Donor Village", are inside the secure Army Corps of Engineers/PCO compound. Donors can occupy space, and they will reimburse the USG for billeting arrangements, office space and meals. The cost-prohibitive nature of setting-up individual offices and providing security for accommodations had previously been a major impediment to obtaining further donor assistance, and this integrated plan has been well-received and coordinated. Useful References for International Donor Assistance to Iraq: |
