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24 October 2003

Madrid Conference Reaps "Better than Anticipated" Contributions for Iraq

USAID chief says Iraq has "absorptive capacity" for large investment

By Wendy Lubetkin
Washington File Correspondent

Madrid -- USAID Administrator Andrew Natsios says the October 23-24 International Donors' Conference for the Reconstruction of Iraq has changed the dynamic in the international donor community in favor of greater contributions.

"This has been, so far, a remarkable conference. I think it has changed the dynamic in the donor community," he told journalists midway through the final day of the conference October 24.

"There are countries that that are stepping up to the plate now. The United Arab Emirates, for example, a relatively small country, made a $250 million contribution," Natsios said.

The conference outcome is "much better than we anticipated," he said. "A couple of the countries that are not in the coalition are actually lobbying other countries to put money in."

Natsios said the most important part of the Madrid Conference "is not the speeches, it is the informal meetings that have been taking place," where aid agencies present projects which need support, and different donors work out which aspects of assistance they can provide. He compared the process to a collective effort to build a brick wall.

"It is sort of like a brick wall. And each brick represents a separate sector of projects or set of reforms. And donors will write their name on the brick and say, I'm going to fund this one, will you fund this one?"

Sources at the conference said nations are pledging in different ways, such as loans, technical assistance or humanitarian relief. They said that some pledges are for one year, while others span several years, so calculating the monetary value of the total likely will require extended analysis.

Natsios said Iraq has the "absorptive capacity" for large-scale new investment because of the high level technical and management skills of the people, which are not those of a developing country.

"This is more like Eastern Europe in 1990," Natsios said. "The number of highly skilled technical people who are also competent managers who can actually make things happen is very high."

"We were astonished at how the Iraqi engineers can take a power plant that basically should not be functioning -- you look at it and say there is no way this plant is going to produce electrical power -- and the Iraqis fashion what we call a 'field expedient solution' that keeps it going another month," Natsios said.

Lewis Lucke, USAID's Mission Director in Iraq, said USAID is implementing a $2 billion program in Iraq. "$1 billion is for repairing central infrastructure, and we are spending money very, very quickly, and very well, with accountability and transparency," he said.

Natsios said the $2 billion "has gone through the competitive bidding process required by the federal acquisition regulations ... the same procedures were used in Bosnia reconstruction and in Afghan reconstruction and never caused any controversy."

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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