October 22, 2003 | WebMemo on Iraq
Finance ministers from across the world will gather in Madrid, Spain on October 23 and 24 to discuss the reconstruction of Iraq. The Bush Administration will be seeking international financial support for the rebuilding of the country, which may cost as much as $55 billion. The White House has called for the US to contribute $20 billion towards the total cost of reconstruction.
The Madrid Conference will be an excellent opportunity for the US to show leadership on the international stage, and convince skeptical nations that a successful and secure post-Saddam Iraq is in the world's interest. The Administration should also:
As it goes into the meeting, the Bush Administration will be boosted by the announcement by Japan that it plans to provide $1.5 billion in aid to Iraq in 2004, rising to a total of $5 billion over the next four years.
Several other nations have also pledged financial support. The UK has pledged $900 million, Spain $300 million, and Canada and South Korea $200 million each. Disappointingly, the European Union has promised just $230 million, a fraction of the $3 billion it controversially invested in the Palestinian Authority over the past decade.
As President Bush faces mounting pressure domestically to reduce the financial burden on US taxpayers posed by the reconstruction of Iraq, the Administration should resist the temptation of seeking short-term solutions in an effort to secure more international support.
The prospect of a UN-controlled reconstruction fund may well result in limited additional offers of aid from international donors, but could also create major problems for the US/British administration of Iraq. It will undermine the authority of the Coalition government, and is likely to result in a conflicting command structure in the reconstruction process, with two competing funds in operation. A UN/World Bank fund will also add a huge new layer of bureaucracy, which could result in paralysis of Iraqi reconstruction.
Advocate Debt Forgiveness
Leadership and Vision in Iraq
The Bush Administration should seek to raise several billion dollars in additional pledges at the Madrid Conference. However, while doing so, Washington should avoid making major concessions by handing over further political or economic control to the United Nations and World Bank. What Iraq needs is clear direction and leadership, which is best provided not by faceless international bureaucrats but by the Coalition Provisional Authority working together with the Iraqi Governing Council. Ultimately, the key to the advancement of economic freedom in Iraq lies in the creation of a vibrant market economy, based upon the rule of law and the protection of individual liberty.
Nile Gardiner Ph.D. is Jay Kingham Fellow in International Regulatory Affairs in the Center for International Trade and Economics at the Heritage Foundation.
 See 'US To Cede Part of Control Over Aid to Iraq', The New York Times, October 20, 2003.
 The failure of World Bank intervention is explored in more detail in Ana I. Eiras, IMF and World Bank Intervention: A Problem, Not a Solution, Heritage Foundation Backgrounder No. 1689, September 17, 2003.
 For further background, see Nile Gardiner Ph.D. and Marc Miles Ph.D., Forgive the Iraqi Debt, Heritage Foundation Executive Memorandum No. 871, April 30, 2003.
 These figures are drawn from A Wiser Peace: An Action Strategy for a Post-Conflict Iraq, Center for Strategic and International Studies (CSIS), January 23, 2003.
 For in-depth analysis of the problems facing the Iraqi oil industry, see Ariel Cohen Ph.D., Restarting the Flow: Restoring Iraqi Oil Production, Heritage Foundation Backgrounder No. 1693, October 1, 2003.