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European countries show tepid support at Iraq conference

MADRID, Spain—The international conference on reconstructing Iraq opened Thursday with continued disputes between the United States and some of its allies over U.S. plans for the country and questions about oversight of billions of dollars in aid.

While teams of American diplomats worked to drum up last-minute contributions, Western Europeans expressed skepticism that prostrate Iraq could efficiently absorb all the money.

Some of the countries and private aid groups also urged the Pentagon to provide more transparency into how American-controlled aid will be spent.

The tensions—and the fact that countries such as France, Russia and Germany sent low-level representatives to Madrid—underscored how some U.S. allies still back different approaches to Iraq despite the unanimous passage last week of a new U.N. Security Council resolution.

"You can't expect European taxpayers who felt pretty hostile to military intervention to feel hugely enthusiastic about spending a large amount of money in Iraq," Chris Patten, the European Union's external affairs commissioner, said at a news conference.

The conference opened with a plea by U.N. Secretary-General Kofi Annan to nations and financial institutions "to give generously."

Annan, who made a last-minute decision to attend, said a sovereign Iraqi government should be established as soon as possible. "But a start on reconstruction cannot be deferred until that day. It demands our urgent attention," he said.

A United Nations-World Bank study concluded this month that Iraq will need more than $35 billion in reconstruction funds over the next four years, in addition to the $20 billion that President Bush requested from Congress.

With anemic donations from Europe, Secretary of State Colin Powell and others in the U.S. delegation lobbied Gulf Arab states such as Kuwait and Saudi Arabia recently to increase their aid.

Nations will announce their contributions Friday. The total, including U.S. funds, was expected to come nowhere near the $55 billion the study says Iraq will need.

Kuwait's foreign minister said Thursday that Kuwait had spent $900 million in Iraq since the end of the war, but it would give more aid and investment. Japan has offered $1.5 billion in grants so far and was expected to announce a total of $5 billion in grants and loans over four years.

The European Union has pledged $233 million, although individual EU countries, such as Britain, are making additional donations.

Powell said Wednesday that $55 billion is not a target. U.S. officials said some of the funds won't be needed until later, by which time Iraq is expected to be bringing in oil revenue to help pay for reconstruction.

U.S. officials predicted the conference would be a success and that the donations would be larger than what was expected just weeks ago. With 70 nations and institutions represented, the conference is the largest of its kind ever held, they said.

"Things are falling into place," said a senior U.S. official, speaking on condition of anonymity. Last week's U.N. resolution, which laid out a path for restoring Iraqi sovereignty, helped spur participation, the official said.

A persistent theme at the conference was fear that car bombings, attacks on U.S. forces and other security threats in Iraq could wreck hopes for reconstruction and leave billions in aid wasted.

Annan said security "will be the primary constraint both now and in the foreseeable future." French officials echoed those remarks.

Several countries, along with private relief groups, said Washington should provide more information about using Iraqi oil revenue and other funds for reconstruction.

A British charity, Christian Aid, said Thursday that $4 billion in oil revenues and other monies have disappeared into "opaque bank accounts" administered by the Coalition Provisional Authority, the U.S.-led occupation government.

U.S. administrator L. Paul Bremer angrily rejected those charges.

The fund that holds Iraq oil revenue and other income will post its accounts on the Internet and be subject to audit, he said. "There's absolutely no question about transparency," Bremer added.

An international monitoring board that will conduct the audits was established last week, five months after the United Nations called for its creation.

Bremer blamed the delay on members of the board, comprised of the World Bank, the International Monetary Fund, the United Nations and the Arab Development Fund.

Pressured by nations that want their donations to be independent of U.S. control, the United States agreed recently to the creation of a second multinational fund. Most of the money donated in Madrid will go into this account.

The U.S. expenditures of $20 billion will be channeled directly through the Coalition Provisional Authority.

The multiple schemes raised questions about overlapping of reconstruction projects.

Whether Iraq can even absorb all the aid is also a question.

The World Bank report predicted that Iraq, shattered by war, could absorb no more than $5.2 billion in aid in the first year.

Patten, the EU commissioner, said it would have difficulty absorbing even that "without improvements in the security situation."

Senior U.S. officials disputed the World Bank estimate, calling it more appropriate for nations such as Afghanistan and East Timor, which never had viable infrastructures.

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(c) 2003, Knight Ridder/Tribune Information Services.

GRAPHIC (from KRT Graphics, 202-383-6064): 20031023 Iraq money

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