Baghdad sets $15b for rebuilding
Minister says funds fall short
BAGHDAD - Iraq has earmarked about $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 yesterday.
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 US-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 United States, Europe, and the neighboring countries to start joint ventures with our banks and to enter the Iraqi market," he said.
He said the country's "primitive" insurance market presents a similar opportunity for foreign companies.
Iraq's economy has recovered slowly since the 2003 US-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 about $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 overdependence on the government for everything from investment to building.
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.
In a separate development, Iraq sent police reinforcements to the Syrian border after last weekend's US raid against an alleged Al Qaeda hideout in Syria raised tension between the two countries, officials said.
Police Colonel 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 Qaeda 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 Qaeda stronghold until Anbar's Sunni tribes turned against Al Qaeda.
The police moves follow last Sunday's bold US raid on the Syrian border town of Abu Kamal, during which US officials say they killed a top Qaeda militant who operated a network that smuggled fighters into Iraq.
The US has not officially acknowledged the attack. Syria says eight civilians were killed and has branded the raid as aggression.
Damascus has demanded that Washington apologize for the strike and has threatened to cut off cooperation on Iraqi border security in response to the attack. Last week, Syria also sent additional troops to the border because of the raid, but it 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.