Thu, Oct 02, 2003 - Page 6 News List

Leaders want reconstruction cash from US

AFP , WASHINGTON

A US soldier stands guard after Iraqi police fired in the air to disperse an angry crowd of Iraqi job-seekers who fired back, threw rocks and set cars ablaze yesterday.

PHOTO: AFP

Iraqi leaders on Tuesday asked US lawmakers for billions of dollars in grants to rebuild their war-torn country, saying loans would raise the question of whether the US came to Iraq for its oil.

"We hope it will be a grant, not a loan, because Iraq is already burdened with very heavy loans," said Adnan Pachachi, a member of the Iraqi Governing Council.

Pachachi said switching from grants to loans would "reopen the debate" about whether the US invaded Iraq to gain control of Iraqi oil, the second-largest known reserves in the world.

"It will have very adverse effects, both in Iraq and in the region, I think."

Council chairman Ahmad Chalabi said a loan would come with "complications" and add to the burden of reconstruction the Iraqi people face.

"A grant would emphasize completely the sincerity of the United States that they came to liberate the Iraqi people and to have established freedom and democracy in Iraq."

US President George W. Bush has asked Congress for US$87 billion for the reconstruction of Iraq and Afghanistan and to continue his war on terrorism.

US lawmakers increasingly are suggesting however that some US$15 billion to US$20 billion of those funds could be given in the form of loans to be repaid with revenue from Iraq's oil production.

Senate Minority Leader Tom Dashchle said Tuesday there are limits to America's ability to bear the costs of reconstruction.

"We're borrowing money today to give to Iraq, so they don't have to borrow the money. Now, you find an American who thinks that makes sense," he said.

Senator Byron Dorgan proposed legislation Tuesday to require that Iraqi oil be used as collateral for international loans to finance reconstruction in Iraq.

"Those resources can and should be used to help finance reconstruction of Iraq," said Dorgan, whose amendment failed to win approval.

Daschle said various loan schemes are being considered by lawmakers.

"Someone suggested that the federal government provide a loan guarantee ... We then become the source of support should the loan default," the Democrat said.

"If we don't do that, if they collateralize the loan with their own revenues, the United States has no obligation to repay if there is a default. So there is a big difference, but they are both loan proposals that have some merit."

Republican Senator John Warner, said Washington has no choice but to provide the reconstruction funds as a grant.

"A debt on this rather than a grant would completely undermine our future efforts as a government," Warner said.

Another leading Republican, Rick Santorum, agreed.

"I don't know of a better investment right now for our service men and women, as well as the stability of the region and the security of this country, than that 20 billion," for Iraqi reconstruction, the Pennsylvania Republican said.

The Senate Appropriations Committee on Tuesday unanimously approved the White House request, by a vote of 29 to 0.

Meanwhile, Representative Henry Waxman sent a letter Tuesday to White House Budget Director Joshua Bolten expressing concern about alleged overspending and lack of transparency in the Iraq reconstruction operations.

The California Democrat said in the letter that his concerns stemmed from recent conversations with members of the Iraqi Governing Council who "told my staff that the costs to the American taxpayers could be reduced by 90 percent if the projects were awarded to local companies rather than large government contractors like Halliburton or Bechtel."

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