The Bush administration hopes to start marshaling international support behind its reconstruction plans for the Iraqi economy, including forgiveness of much of the country's debts, at meetings this weekend of top economic policymakers from around the world.
But even before the meetings get underway, the U.S. effort is running afoul of the divisions that plagued Washington's drive to unseat the regime of Saddam Hussein.
Treasury Secretary John W. Snow said yesterday that he wants the meetings, which bring together member countries of the International Monetary Fund and World Bank, to direct the two institutions to begin work promptly on assessing Iraq's need for aid and how they might provide it. But World Bank President James D. Wolfensohn said that in the absence of a United Nations resolution affording legitimacy to a new authority in Baghdad, the bank can't even send a mission to Iraq unless its major shareholder countries give the go-ahead -- a stance that drew a rebuke from Snow, who pronounced himself "baffled."
Snow also said he hopes Iraq's major creditors -- which include France, Russia and Germany, all opponents of the U.S.-led military campaign -- will forgive substantial portions of the tens of billions of dollars that Baghdad owes them.
Deputy Secretary of Defense Paul Wolfowitz was even more pointed on that issue, telling a Senate hearing: "I hope they [Paris, Moscow and Berlin] will think about how they can contribute to helping the Iraq people get on their feet. . . . I hope, for example, they'll think about the very large debts that come from money that was lent to the dictator to buy weapons and to build palaces. . . . I think they ought to consider whether it might not be appropriate to forgive some or all of that debt."
The rhetorical jousting underscored the challenges facing the administration as it embarks on the task of fulfilling its vision to turn Iraq into a flourishing democracy after more than two decades of despotism, war and international sanctions. Washington wants to dominate at least the initial stages of Iraq's postwar reformation, with U.S. advisers exerting heavy influence at the nation's ministries. But that assertive approach runs the risk of further alienating Paris, Berlin and Moscow, whose support may be essential on issues such as debt forgiveness and World Bank aid.
The IMF and World Bank meetings, which also include a gathering of top economic policymakers from the Group of Eight major nations, can't possibly resolve the main issues, Snow said at a news conference. But he said he wants "a substantial conversation about how our nations and international institutions can work together to help the Iraqi people recover."
The Treasury chief acknowledged the difficulties that would face the international community even if it were united. "It isn't just 25 days of conflict" that the reconstruction effort is aimed at, he said. "It's 25 years of economic misrule and mismanagement."
For the World Bank -- traditionally a major source of funding and expertise in "post-conflict" situations such as Kosovo and East Timor -- part of the problem is that it knows little about the Iraqi economy because of Baghdad's long-standing proclivity for secrecy. The bank last made a loan to Iraq in 1973. Its top staffers are now relying on figures supplied by the Economist Intelligence Unit Ltd., an analytical arm of the company that publishes the Economist magazine, for estimates of Iraq's gross domestic product, which they peg at about $26 billion.
The country has enormous assets that in some ways could make it much easier to develop than most poor nations. In what was once one of the Arab world's most prosperous lands, much of the populace is well educated, and the infrastructure is relatively modern. Iraq's enormous oil reserves -- the second biggest on earth -- provide around $15 billion a year in revenue.
But the economy has shrunk drastically, especially since the 1991 Gulf War. According to figures the World Bank has gleaned from sources including the United Nations, the number of underweight children has soared from about 10 percent of the population in 1990 to about 20 percent in 2000, while primary-school enrollment fell from nearly 95 percent to about 75 percent during the same period. Other indicators, such as child and maternal mortality, have also worsened significantly.
As for the oil wealth, nearly three quarters of it goes to feed the hungry under the U.N. "Oil for Food" program, and most of the rest is earmarked for paying war reparations to Iranians and Kuwaitis. Increasing production, which could give the country an important new source of income, will take some years, according to the World Bank and other experts.
The nation's debt, which is variously estimated at $60 billion to more than $100 billion, is another major barrier to economic advancement, as are the claims for reparations, which are as high as $200 billion by some accounts.
Whatever the debt's precise amount, it is far greater than the size of Iraq's economy, Snow noted. "Certainly the people of Iraq shouldn't be saddled with the debts incurred through the regime of a dictator who is now gone," he said on Fox News, adding that while not all of the debt need be forgiven, "I would be an advocate for a process that works those debts down."
France and Russia are reportedly owed about $8 billion each. A French embassy spokeswoman said her government has not formulated a position on the issue, a statement echoed by a spokesman for the German embassy. The Russian embassy's press office did not return a call seeking comment.
The contretemps between Snow and Wolfensohn began with a news conference held by the World Bank president yesterday morning.
"We stand ready in any situation of reconstruction to be helpful," Wolfensohn said. But he added that the bank can only lend to a recognized government, "and that is a decision for the United Nations to take in principle." Even just to launch an assessment of needs, he said, bank staffers' activities would be severely limited by a long-standing U.N. resolution prohibiting any bank support for Iraq.
"We are prepared to go in if we have an authorizing environment from our board to do feasibility or other studies, but it needs to get our board approval," he said.
Snow took strong issue with Wolfensohn's position. "I hope he rethinks that, because I think the World Bank today should be involved in making those assessments," he said.
The spokesmen for the French and German embassies said it is too early to say whether their representatives on the World Bank board would be willing to vote in favor of a bank mission to Iraq before an agreement is reached at the United Nations. The bank's board almost always takes decisions by consensus, with contested votes rare.