$30bn to rebuild Iraq, now the hard work begins

The Iraqi Prime Minister Haider Abadi received resounding endorsements from most participants at last week’s Iraq reconstruction conference in Kuwait, attended by thousands of delegates from over 70 countries, and hundreds of NGOs and private companies.
The international community agreed with the Iraqi government about the urgent need for recovery and reconstruction of areas recently liberated from Daesh. The projects submitted by the government included rebuilding devastated cities (notably Mosul), roads, bridges, railways and private homes. Hospitals, schools and universities are to be rehabilitated. Most urgently, the basic needs must be provided for more than six million internally displaced people, most of whom have returned to devastated towns bereft of basic necessities.
About $30 billion in loans, lines of credit and direct investment were committed by participating delegations. GCC countries and regional funds pledged about $7.5 billion in loans and credits. Kuwait pledged $1 billion of loans through the Kuwait Fund for Arab Development and another $1 billion as direct investment. Saudi Arabia pledged $1 billion in loans and $500 million in export credits. The Arab Fund for Economic & Social Development, based in Kuwait and funded mainly by GCC member states, pledged $1.5 billion in loans. The UAE pledged $1 billion in loans, export finance and direct investment. Qatar pledged another $1 billion. The Islamic Development Bank, based in Saudi Arabia and funded mainly by GCC member states, pledged $500 million in loans.
There was palpable goodwill toward Iraq during the three-day conference, and Prime Minister Abadi was warmly welcomed and widely applauded. He was stressing Iraq’s reconstruction needs, but was aware of obstacles, which he freely acknowledged.
However, most conference delegates also equally stressed the prerequisites for the success of the reconstruction process. In public statements and private meetings, they called for a greater focus on the areas recently liberated from Daesh control. They should take priority to help the devastated communities recover from years of war and neglect. To prevent a resurgence of Daesh or other terrorist groups in those areas, efforts must be intensified to stabilize them and prevent terrorist groups of any affiliation from returning to them.
Security, stability, national reconciliation and good governance were the main themes of many potential investors and donors. To attract investment, Iraq announced some enticements such as tax holidays and fast-track or one-stop-shop options to investors. While those are important, many potential investors called for beefed-up security and accelerated stabilization of the liberated areas. Officials from donor countries stressed the need for national reconciliation and genuine equality of opportunity and participation in political life as well as in security and civil employment for Iraq’s ethnic and religious communities.

Potential donors will require assurances on security, stability, national reconciliation and good governance before the cash begins to flow.

Abdel Aziz Aluwaisheg

Prime Minister Abadi and many others spoke at the conference about good governance, because corruption derailed earlier efforts at recovery and reconstruction. All agree that without reassurances of good governance, many investors and donors may delay fulfillment of their pledges of assistance. 
Another equally important issue was immunizing the recovery and reconstruction process from political interference or disruption by militant factions.
It was encouraging that the Iraqi government made clear that it was aware of all of these misgivings and had started taking meaningful steps to address them. That trend should be encouraged and supported, technically and financially, by donors, especially by international financial and development organizations such as the World Bank, the International Monetary Fund, and the United Nations.
However, donors, creditors and investors need also to be involved in the oversight of the recovery and reconstruction process. Before the conference, the Iraqi foreign minister called for a “Marshall Plan” for Iraq, an idea that may indicate Iraq’s recognition of the need for international oversight of the reconstruction process, because the Marshall Plan did involve extensive outside participation and supervision of post-Second World War development in Europe.
Pledging aid is just the first step, to be followed by several rounds of consultation between donors and recipients. The next steps would be agreement on the priorities and allocations, followed by signing financing agreements, detailed economic studies and technical designs, followed by public tenders and implementation. Each step typically involves detailed measures. Without close consultation between donors and the government, any of those steps could derail the process and delay the fulfillment of the pledges made at the Kuwait conference. Good governance is extremely important during those steps.
Finally, there is an urgent need to coordinate between donors, to avoid overlap and to ensure good governance and compliance with the priorities expressed at the conference by donors and investors and by Prime Minister Abadi.
• Abdel Aziz Aluwaisheg is a columnist for Arab News. Email: [email protected]. Twitter: @abuhamad1