Iraq Gains $30 Bil In Loans Investments Credits From Kuwait Conference

The three-day Kuwait investment conference concluded with Iraq earning pledges of roughly $30 billion. About half of that was loans, with the rest investments and credits. The meeting was originally meant to gain money for reconstruction, but it turned out to be for a mix of rebuilding and general development plans. 157 projects were listed by Baghdad that included housing, health, education, historical sites, farming, industry, etc.

Most of the money promised came from ten main sources. Turkey offered $5 billion in loans and investment. The U.S. said it would contribute $3 billion in financing from its Export-Import Bank. Kuwait pledged $1 billion in loans and another $1 billion in investment. Saudi Arabia said it would contribute $1 billion in investments and $500 million to support Iraqi exports. England stated it would provide $1 billion in export credits for ten years, Qatar added $1 billion in loans and investments, $500 million in investments by the United Arab Emirates, $495 million from the European Union, $330 million from non-governmental organizations, and $100 million from Australia. The World Bank also signed a memorandum with Iraq for $510 million in projects.

Iraq’s Planning Ministry recently issued a report for the conference estimating that Iraq needed $88 billion for rebuilding from the war versus the Islamic State and general development. $45.7 billion of that was directly related to the fighting. Iraq received $392 million in contributions for that purpose before the Kuwait meeting.

While Iraq was able to gain a sizeable amount of money from Kuwait there are a number of issues ahead. First, pledges are not always followed through with so Iraq may end up with a lower figure than $30 billion. Second, Baghdad is trying to come up with procedures to ensure that a sizeable amount of the aid, loans, etc. is not siphoned off via corruption. Iraq has not proven that it has the means nor capacity to follow through with those promises yet. Third, it’s not clear how much of this money will go to reconstruction, which is one of the most pressing issues for the country, and how much will go towards general development of the economy. From the media, it doesn’t appear it has close to the $45.7 billion it needs. Iraq is hoping that more money will come from companies investing in Iraq. While private enterprise might be interested in Iraq, going into war damaged areas is probably not the top priority when it came do business in southern Iraq and Kurdistan which are much more stable and therefore have greater potential for profits. Last, relying upon the Iraqi budget to take care of rebuilding is also fraught with problems as Iraq has historically been unable to spend a lot of that money. Overall, that means the dilemma of rebuilding is far from solved.

SOURCES

Baghdad Post, “Abadi launches recaptured districts’ reconstruction, development plan,” 1/3/18

Chmaytelli, Maher, Hagagy, Ahmed, “Iraq says reconstruction after war on Islamic State to cost $88 billion,” Reuters, 2/12/18

Cocker, Margaret and Harris, Gardiner, “Iraq Wants $88 Billion for Rebuilding. Allies Offer a Fraction of That,” New York Times, 2/13/18

Daily Sabah, “Turkey pledges $5 billion as nations commit funds for Iraq reconstruction,” 2/14/18

George, Susannah and Hinnant, Lori, “Few ready to pay to rebuild Iraq after Islamic State defeat,” Associated Press, 12/28/17

Gordon, Michael and Coles, Isabel, “Defeat of ISIS in Iraq Caused $45.7 billion in Damage to Infrastructure Study Finds,” Wall Street Journal 2/12/18

Kullab, Samya, Otten, Cathy, “Reconstruction hopes hinge on Kuwait conference,” Iraq Oil Report, 2/12/18

Reuters, “Iraq gets $330 million in pledges of humanitarian aid: KUNA,” 2/12/18

Rudaw, “$30 billion pledged for Iraq reconstruction at Kuwait conference,” 2/14/18

Sotaliraq, “Parliament takes a decision to cut salaries, compensates the staff of the region and increases taxes,” 2/11/18

UN Development Programme, “The European Union contributes $58.96 million for Iraq stabilization,” 2/12/18

World Bank, “World Bank’s Commitment to Iraq Reaches US$4.7 Billion,” 2/14/18