Member States face pressure on Iraq cash

By Dana Spinant

Date: 16/10/03

EU LEADERS are expected to emphasize their commitment to the Union playing an important role in the reconstruction of Iraq, amid mounting pressure on member states to cough up cash at the Madrid donors' conference on 23-24 October.

The delay in adopting a United Nations Security Council resolution mapping out the future of Iraq will weigh heavily on the success or otherwise of the conference.

Only one country, the UK, has so far announced a figure - €375 million of new funding to start next January and run over two years.

Most member states hinted at Monday's (13 October) meeting of foreign ministers in Luxembourg that they might not commit any money at Madrid, although Commission insiders predict the final total from the Union could be around €1 billion.

Joschka Fischer, the German foreign minister, indicated that the EU's biggest economy is unlikely to make a substantial contribution; he pointed out that, as the largest contributor to the EU budget, Germany is already indirectly paying 25% of the €200 million pledged by the European Commission for reconstruction of Iraq.

German officials added that it was difficult for Berlin to be generous at a time when it is under pressure from the Commission and its EU partners to reduce its budget deficit.

However, the country will commit to training Iraqi police and help in setting up a new Iraqi army.

Franco Frattini, the Italian foreign minister, told a briefing that his country's commitment would "not be far off what Spain said they were ready to contribute", but Spanish officials insisted no firm decisions had been made.

Denmark, the Netherlands, Italy and Spain have also stressed that they are already making a significant commitment in Iraq by deploying troops as part of the US-led coalition.

Chris Patten, the external relations commissioner, described the executive's pledge as "absolutely reasonable and in line with what we spent in Afghanistan in the first year".

He said it would be "irresponsible to commit more of the European taxpayers' money before we clarify more about the security situation and Iraq's absorption capacity".

"We will come up next year with a middle- to long-term strategy for Iraq," he added.

Some Commission officials have expressed surprise that Italy and Spain, member states that had "enthusiastically supported the war", were likely to commit "no or extremely little money", in the words of one DG Relex source.

"As host of the conference, it will be very embarrassing if Spain does not set a generous example," he added.

EU officials admit that the delay in adopting a UN Security Council resolution, granting the UN a larger and clearer role in the reconstruction of Iraq and providing for a gradual handover of power, is likely to leave a cloud over the Madrid conference.

• Iraq launched a revalued currency yesterday (15 October), and old dinar banknotes featuring Saddam Hussein's image will be phased out over the next three months. The new notes will also replace the dollar, which has been in wide use since the war.