- The Washington Times - Wednesday, March 19, 2003

As pressure grows on the Bush administration to increase postwar planning for Iraq, experts are trying to predict the cost of reconstruction and of maintaining stability in the region.
A task force for the Council on Foreign Relations expects $20 billion per year will be needed for several years, but this doesn't include funding for Iraqi civil servants or the cost of food. It also expects that about 75,000 troops will be enough to maintain stability in the country.
"It is important that the Iraqis believe that the United States will not walk away after the military tasks are completed, and Americans need to know that the costs are likely to be considerable," James Schlesinger, co-chairman of the task force and secretary of defense in the Nixon and Ford administrations, said last week.
The Bush administration has declined to make public its cost estimates of a possible war or what it would take to rebuild Iraq afterward.
But in his speech to the American people on Monday evening, President Bush pledged a relief effort as it helps to rebuild Iraq.
"If we must begin a military campaign, it will be directed against the lawless men who rule your country and not against you," the president said.
"As our coalition takes away their power, we will deliver the food and medicine you need. We will tear down the apparatus of terror, and we will help you to build a new Iraq that is prosperous and free."
Members of the blue-ribbon task force organized by the Council on Foreign Relations foresee that Iraqis will be in considerable need of public-security measures and humanitarian aid, as well as a quick cleanup in case chemical and/or biological weapons are used in the conflict.
So far, the U.S. Agency for International Development (USAID) has provided more than $9 million to a variety of agencies for contingency planning, including $2 million to UNICEF and $5 million to the World Food Program. According to the USAID Web site, the agency is in discussions with international organizations to provide an additional $56 million soon.
The Refugee Bureau at the State Department has provided more than $15 million to international agencies for pre-positioning and contingency planning.
USAID has also recruited the largest Disaster Assistance Response Team (DART) in U.S. history, which will be headquartered in Kuwait City and have three mobile field offices. The DART, which is made up of more than 60 humanitarian-response experts, is supposed to function as a turnkey response mechanism for assessment and funding in the field.
The experts at the Council on Foreign Relations suggest that the United States work out a multibillion-dollar long-term reconstruction program and seek formal congressional endorsement. They also stress that international engagement in rebuilding Iraq will be vital.
"We felt that the administration should work to reconcile this tension between our leadership, which we feel strongly should be in place, and the participation of others, by providing a postconflict Security Council resolution or series of resolutions that will, in the first place, endorse U.N. leadership on security and civil administration in postconflict Iraq," said Thomas Pickering, former undersecretary of state and a co-chairman of the task force.
As far as international nongovernmental organizations (NGOs) are concerned, the current state of emergency preparedness in Iraq causes alarm, said Sandra Mitchell, vice president for government relations of the International Rescue Committee, in testimony before the U.S. Senate last week.
The IRC estimates there are fewer than 20 international humanitarian organizations in Iraq, and many of them, including the United Nations, are expected to withdraw staff in the event of hostilities.
According to Miss Mitchell, U.N. agencies are prepositioning stocks of essential relief items and fielding emergency-response personnel to the region. In particular, food sufficient for 250,000 beneficiaries has been prepositioned for 10 weeks.
However, she said that U.N. preparations continue to be hampered by the lack of funding, and U.N. appeals for more than $200 million remain unfulfilled, despite pledges by the United States and a handful of other donors.
The resolution proposed by the task force should also establish an oil-oversight board for Iraq to authorize the continuation of the U.N. oil-for-food program and other management of oil resources.
"We expect that in the early years, the revenues for the oil industry will be insufficient to cover the costs of our actions," said Mr. Schlesinger. The task force report says that up to $5 billion will be needed to repair the damages to oil-production facilities.
However, experts predicted that later on, the income from the oil industries would be enough to advance the Iraqi economy.
The resolution suggested by the task force should also establish a consortium of donors in conjunction with the World Bank and the International Monetary Fund to consider reconstruction needs and debt relief.
So far, the World Bank does not have any operations or presence in Iraq, nor does it have any contingency plans for postwar assistance, according to the bank's Middle East and North Africa department.
While the most responsibility for assistance to postconflict Iraq is laid on the U.S. government, as well as the NGO sector, private capital is also expected to contribute. According to some news media reports, more than $1.5 billion in Iraq work has been already offered to private U.S. companies.
The U.S. Army Corps of Engineers, which previously supervised oil-well firefighting as well as civil-reconstruction work in Kuwait, has recently invited 12 U.S. companies to bid for construction, renovation and design work at the area of its operation, which covers 25 countries from Africa to Central Asia.
However, Joan Kibler, spokeswoman for the Transatlantic Program Center of the Army Corps, confirmed that its most recent activities were concentrated in the Persian Gulf area.
In particular, the Army Corps is now involved in providing facilities for the graduating battalions of Afghanistan's new national army. Miss Kibler said that every contractor will be awarded a minimum of one contract, which could be valued up to $100 million. The maximum per contractor is five contracts.
Miss Kibler said that companies are still unaware of the specific tasks they will be expected to perform. However, sample tasks for the companies involve road building, bridge replacement and construction of housing with temporary sewers.
Some investors say that private capital's impact on the reconstruction of Iraq could be no less significant than the international assistance, and Iraq has plenty of potential to attract investors beyond the oil sphere.
"After the war, the World Bank, the IMF, other international financial institutions and the United Nations will take over trying to build the economy. In this case, it's very important to rebuild the private sector and get it engaged at a very early stage," said Edilberto Segura, a former country director for the World Bank who is now the senior analyst for Sigma Bleyzer investment company.
To focus economic assistance for Iraq only on budget-deficit financing, infrastructure development, environmental protection and human rights would be a mistake, said Michael Bleyzer, president of Sigma Bleyzer, whose experience includes investment in the transition economies of former Soviet states.
"By creating the right regulatory environment, and by establishing the right, transparent, simple rule of law that is predictable, we'll create a capital-friendly environment, which will allow for industry to diversify," Mr. Bleyzer said.
He suggested that an international agency using only private capital be formed to focus on economic development, and "this group of companies creates this investment vehicle."
"Private-industry experts can look at that country from the perspective of creating an attractive investment," Mr. Bleyzer said. A one-sided economy could become a potential problem for Iraq, as is often the case with other Middle Eastern countries, he noted.
However, other experts insist that investment opportunities in Iraq will largely depend on the outcome of the war.
"If there is a relatively benign scenario with a relatively swift war and a coherent, stable Iraqi regime that follows then there is obviously a potential in the oil sector, and maybe beyond that," said Caroline Atkinson, an economics specialist at the Council on Foreign Relations.
According to Miss Atkinson, oil opportunities would be the most obvious ones to attract international investors, while the bulk of reconstruction costs will be laid on international financial institutions.
"Because of the need for institutional rebuilding and uncertainties, I think there will be more institutional financial aid. But over time, if things are successful, then the region will depend more on private capital flow."

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