Sales Pitch For Iraq Funding

American and Iraqi officials urged nearly 80 nations at a donors conference Thursday to pledge billions of dollars to rebuild Iraq, but a senior European official said expectations should be kept low.

"You cannot expect European taxpayers, who felt pretty hostile to military intervention, to feel terribly enthusiastic about spending a large amount of money in Iraq," Chris Patten, the European Union's external affairs commissioner, told reporters as the conference began.

In fact, Patten said, Iraq would have difficulty absorbing even the contributions already promised, which include about $20 billion by the Bush administration and $1.5 billion by Japan.

Nevertheless, American officials think that when the pledges begin Friday, they will significantly exceed most expectations, with Persian Gulf countries offering considerable aid, said a U.S. official who spoke on condition of anonymity.

The senior U.S. official in Baghdad, L. Paul Bremer, who attended the session with scores of Iraqi officials and business leaders, said it was too early to know what donations would be.

Asked about World Bank estimates that Iraq could absorb only about $5.6 billion in aid the first year, Bremer said that spending the money President Bush has asked for would not be a problem.

U.N. Secretary-General Kofi Annan, opening the conference, called for generous contributions. But despite approval last week of a U.N. resolution setting out Iraq's future course, Annan acknowledged that lingering divisions over Washington's role in running the country might deter some donors.

Annan urged that such concerns be set aside and said, "The long-term challenge of reconstruction has to be faced by all of us."

Both Annan and Secretary of State Colin Powell sought to lower expectations that Washington would come away with the entire amount it wants at the conference — $35.8 billion through 2007.

Powell acknowledged "it may take time to meet the goal" of more than $55 billion set by the World Bank, which includes the Bush administration's pledge of about $20 billion.

Security remains a primary constraint "both now and into the foreseeable future," Annan said, but a start on reconstruction cannot be deferred until order is restored.

Bremer, for his part, said attacks on coalition forces posed no strategic threat. But he said terrorism was a significant problem, as well as crimes committed by some of 100,000 convicts that Saddam Hussein freed from prison before he was overthrown in the U.S.-led war.

Treasury Secretary John W. Snow, urging American companies to invest, said Iraq tax rates are low and foreign investors now can own up to 100 percent of investments in the country with the exception of oil, gas, mineral and real estate rights.

Bremer said Iraq was saddled with a debt of about $125 billion and had to spend about $7 billion to $8 billion a year just to service it.

"The United States intends to take the lead in pushing for substantial reduction," he said.

Iraqi Governing Council member Mouwaffek al-Rubaie called for countries like France, Russia and the Persian Gulf states to cancel Iraq's debt and reparations load, the result mainly of Saddam's wars with Iran and Kuwait.

France and Germany, leading opponents of the U.S.-led war, have both cited concerns about the slow pace of restoring Iraq's sovereignty for their refusal to pledge any new money now.

In London, a British aid group contended Thursday that the U.S.-appointed body governing Iraq has failed to account for billions of dollars allocated for rebuilding the country. Christian Aid said the Coalition Provisional Authority had explained how it had spent only $1 billion of the $5 billion it had been given. The funds include $1 billion from the former U.N. Oil for Food program, $2.5 billion in assets seized from Saddam's former government and $1.5 billion in oil revenue.

That money is separate from the money being raised in Madrid, most of which goes into a trust managed by the World Bank, the United Nations and a committee of Iraqis. American officials stressed, however, that the United States would administer all U.S. contributions.