Iraq Earmarks $15B For Reconstruction

Nadhim Faisal, a construction company owner, monitors work at the construction site of a new hospital in Kut, Iraq, Saturday, Sept. 6, 2008. Improved security is making it possible for companies and investors to do business again in Iraq. To encourage business growth, Iraq's government established an investment commission late last year in an effort to streamline the process in starting a business. (AP Photo/Karim Kadim) AP Photo/Karim Kadim

Iraq has earmarked some $15 billion - nearly 25 percent of its 2009 draft budget - to help rebuild the country's crumbling infrastructure, energy and oil facilities, the finance minister said Saturday.

But Bayan Jabr stressed those funds fall far short of the hundreds of billions of dollars Iraq needs to put its shattered economy back on its feet and appealed to foreign investors to help bridge the gap.

Speaking at a U.S-Iraqi investment conference in Baghdad, Jabr said a government study determined Iraq needs some $400 billion to upgrade its existing infrastructure and build new facilities.

"That is why we have to resort to investment in Iraq ... in many sectors including electricity, oil, oil byproducts, refineries, housing, infrastructure and banks," he said.

Jabr said Iraq's 30 private banks are still grappling with a capital shortage, despite the government's increased credit support.

"That is why we think there is a great chance for banks in the U.S., Europe and the neighboring countries to start joint ventures with our banks and to enter the Iraqi market," he said. "In this way, we can give more chance to credits and to other fields."

He said the country's "primitive" insurance market presents a similar opportunity for foreign companies.

Iraq's economy has recovered slowly since the 2003 U.S.-led war, and the state budget has received a boost from high oil world prices this year.

But Planning Minister Ali Baban warned that Iraq, which is dependent on oil revenues for more than 90 percent of its national capital budget, must wean itself off its oil dependence.

Crude oil prices have fallen from a record $147.27 a barrel on July 11 to below $60 this week, before rebounding slightly Friday to around $67.

"This is an extremely dangerous situation for the Iraqi budget to depend totally on oil prices," Baban said.

"That makes Iraq's economy greatly exposed which is something Iraq has to get rid of as soon as possible. We can succeed in this by having varied sources of national income and by reactivating Iraq's real economic sectors of agriculture and industry."

The recent slide in oil prices has already forced Iraq to cut its planned 2009 budget from about $80 billion to $67 billion.

Baban cited a slew of other problems that he said have hindered faster growth, including an over dependence on the government for everything from investment to building.

"A great part of Iraq's budget is spent on employment at the expense of investment," he said.

Like the finance minister, Baban suggested the key to boosting the economy lies in attracting investment from abroad and encouraging the private sector to increase its role in the economy.

"Iraq has to build a strong and efficient private sector. In general, if we failed to attract the domestic investor, our chance of attracting the foreign investor would be greatly limited."


Iraq Sends More Police To Syrian Border

Iraq sent police reinforcements Saturday to the Syrian border after last weekend's U.S. raid against an alleged al Qaeda hideout in Syria raised tension between the two countries, officials said.

Police Col. Jubair Rashid Naief said a police quick reaction force for Anbar province moved to the border town of Qaim, about 200 miles northwest of Baghdad, to prevent al-Qaida from moving into the area from Syria.

Al-Arabiya television quoted witnesses as saying scores of armored vehicles were seen moving from the Anbar provincial capital of Ramadi to Qaim, which had been a major al-Qaida stronghold until Anbar's Sunni tribes turned against al Qaeda.

The police moves follow last Sunday's bold U.S. raid on the Syrian border town of Abu Kamal, during which U.S. officials say they killed a top al-Qaida militant who operated a network of smuggling fighters into Iraq.

The U.S. has not officially acknowledged the attack. Syria says eight civilians were killed and has branded the raid as aggression.

Syria has demanded that Washington apologize for the strike and has threatened to cut off cooperation on Iraqi border security in response to the attack. Earlier this week, Damascus also sent additional troops to the border following the raid, but has since withdrawn them.

The Iraqi government has rejected the attack, but has urged Syria to crack down on organizations on its territory that are trying to hurt Iraq.


In Other Developments:

  • On Saturday unknown assailants gunned down a policeman on a foot patrol along Palestine Street in Shiite eastern Baghdad, police said.

    Violence is down sharply in Iraq since the Sunni revolt against al Qaeda and the routing of Shiite militias in Baghdad and southern Iraq last spring. Still, attacks continue, although at a lower
    level.

  • About 800 troops with an Enid, Oklahoma-based Army National Guard unit have begun leaving for a nine-month tour of duty in Iraq.

    A Guard official says some soldiers with the 45th Fires Brigade left yesterday for the overseas mission, but the bulk will depart today and tomorrow. The troops are leaving from Fort Hood, where they've spent the past two months working on mission-specific training.

    The unit is usually an artillery unit, but members will be performing base- and convoy-security duties in and around Baghdad.

    The deployment of the 45th Fires Brigade will bring the Oklahoma National Guard's commitment in Iraq to about 1,500 troops.
    • CBSNews

    Comments