Senate votes for repayment of $10 billion

WASHINGTON -- The Senate last night voted to force Iraq to pay back half of the $20 billion President Bush requested to rebuild the postwar nation, a stinging rejection for the president for the first time on a major request he has made for the US mission in Iraq.

By a 51-to-47 vote, senators approved a bipartisan amendment to give Iraq $10.3 billion for security and other reconstruction, and to offer the country $10 billion more in loans for additional rebuilding efforts.

The House last night rejected a similar plan, and administration officials are hoping to kill off the proposal when the two chambers meet to negotiate differences between the two bills. But the vote was significant because a majority of senators, including eight Republicans, defied personal entreaties by Bush, Vice President Dick Cheney and Secretary of State Colin L. Powell to fund what is becoming an increasingly unpopular effort in Iraq.

"I do not believe it is unfair in any way to ask the Iraqis to invest in their own future by paying the American taxpayer" for rebuilding the country, said Senator Susan Collins, Republican of Maine and a cosponsor of the amendment.

The White House said in a statement that it "strongly opposes" the loan plan, but it did not threaten a veto. "Doing so would slow efforts to stabilize the region and to relieve pressure on our troops, raise questions about our commitment to building a democratic and self-governing Iraq, and impair our ability to encourage other nations to provide badly needed assistance without saddling Iraq with additional unsustainable debt," the statement said.

Both chambers are expected today to approve about $87 billion in supplemental spending for US missions in Iraq and Afghanistan. Many Democrats -- including both of the Democratic senators in Massachusetts, John F. Kerry and Edward M. Kennedy -- have announced their opposition to the overall package, saying it would swell the deficit and encourage what Democrats call a failed postwar policy in Iraq. Kennedy initially voted "no" on last night's loan vote but switched his vote.

"The best way to support our troops and take the target off their backs is with a real strategy to win the peace in Iraq, not by throwing $87 billion at George Bush's failed policies," said a statement by Kerry, who voted for the resolution last October authorizing war against Iraq. Kennedy, who opposed the war, said he would vote "no" to "send the administration back to the drawing board."

The House trimmed Bush's request slightly, to just under $87 billion, and yesterday rejected Democratic efforts to pay for the package by rolling back tax cuts for wealthier Americans. The House also slimmed down the Iraqi aid package to $18.6 billion, eliminating, for instance, funds to create a ZIP code system for the country.

Tom Korogolos, senior counselor for L. Paul Bremer III, head of the Coalition Provisional Authority, said he was disappointed in the vote but said the administration was pleased to see that the $87 billion was headed toward passage.

"Congress does two things best: nothing, and overreacting. Tonight, they overreacted," Korogolos said. Bush, he said, would weather the setback: "He's been counted down and out before. It's just another bump in the road."

Administration officials say the rebuilding money is needed to restore security to the volatile nation, where local frustration over the lack of security and basic services has contributed to anger at US forces there.

But a bipartisan team of deficit-wary senators insisted on loans. The idea is popular with Americans who have supported the war but now resent spending money on education and security in Iraq instead of shoring up schools and police forces back home, legislators said.

Many of those who voted last night for the loan proposal also voted to authorize force in Iraq. Some of those legislators noted that the Bush administration promised that the Iraqi reconstruction would be funded largely through oil revenues generated by Iraq, which holds the second-largest oil reserves in the world, after Saudi Arabia.

"The logic escapes me. Part of what this money will go for is to rebuild the oil industry of Iraq. Iraq stands to be one of the richest nations in the world," said Senator Hillary Rodham Clinton, Democrat of New York. Iraq should receive US help, she said, but "not at the expense of the American taxpayers, and not at the expense of . . . an increasing debt burden on our children."

Under the amendment approved last night, the loans would be converted into grants if Iraq is able to erase 90 percent of its prewar debt. The provision is intended to encourage other nations to forgive their debts to Iraq. Specialists estimate Iraq owes as much as $200 billion in loans and reparations.

The damage inflicted during the war was minimal, Collins said, making the postwar task "construction, not reconstruction."

The White House fought hard to retain its grant proposal, saying that Iraq already is heavily indebted, and that a loan program would further inflame Iraqis who suspect the United States fought the war to capture the nation's oil fields. Bush summoned wavering senators to the White House this week, and Powell and Cheney visited senators on Capitol Hill, winning a few supporters.

"We ought to give the president the leeway here," said Senator Arlen Specter, a Pennsylvania Republican who initially was sympathetic to the loan proposal. Senator Kay Bailey Hutchison, a Texas Republican and an original sponsor of a loan proposal, also backed off her position after being lobbied by the White House.

Opponents of the loan idea say it would worsen relations with both the Iraqi people and US allies, some of whom are owed money by Iraq's previous regime and might feel they will be the last to be paid if the United States puts the country into further debt.

"As an American taxpayer, I, too, wonder why we're doing so much, but given the fact that we very unwisely got into this war and the occupation, I think it's a really bad idea to get the Iraqis to pay for a mess we have made in their country," said Michael Hudson, a Middle East analyst at Georgetown University. "I think it's a bit much to tell the Iraqis that we'll do their reconstruction for them the way we want it, and they'll have to pay for it."