American: Oil, Reforms Must Rebuild Iraq
By CHARLES J. HANLEY
AP Special Correspondent
BAGHDAD, Iraq (AP) -- As U.S. aid dwindles, Iraq's rebuilding must rely on uncertain oil exports, other foreign aid and a drastic overhaul of its economy to attract investment, the U.S. reconstruction chief for Iraq said Thursday.
The task ahead is "very enormous," Daniel Speckhard said. International experts estimate up to $100 billion will be needed to restore Iraq's ruined infrastructure; the U.S. aid program since the 2003 American invasion has totaled $21 billion.
But "the idea of this program was to kick start the economy," not rebuild it, Speckhard said.
The U.S. Embassy official, director of its Iraq Reconstruction Management Office, met with reporters to discuss Iraq's economic status three years after the toppling of the Baath Party regime, which used oil revenues to subsidize government-owned industries and social welfare programs before U.N. sanctions crippled the economy in the 1990s.
Speckhard cited establishment of 2,000 Internet cafes and the proliferation of cell phones to 5 million users - in a nation of 27 million people - as signs of economic improvement.
But he acknowledged Iraq, in the midst of a bloody insurgency, remains hobbled by critical failures: among them electricity production that still hasn't regained its pre-2003 levels, and oil exports that averaged only 1.4 million barrels a day in 2005, held down by insurgent attacks and other difficulties.
"Roughly to support the government of Iraq's budget you need 1.65 million barrels a day in exports," he said. Only when exports surpass that level will the government be able to invest in capital reconstruction, he said.
"In early 2007 we hope there will be over 2 million barrels a day in exports," Speckhard said.
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Buy AP Photo ReprintsAfter three years in which Washington appropriated more than $20 billion in Iraq aid, Congress is considering little more than $2 billion over the next two years.
Other governments have pledged billions more but have been slow in meeting those commitments. Some were initially reluctant because they opposed the U.S. invasion and occupation, and many now are slow to enter Iraq because of the dangerous security situation.
"The international community should step up and begin to provide some of that support," Speckhard said, mentioning the oil-rich Arab Gulf states in particular.
"Most importantly will be private-sector investment in this country," the American diplomat said. "That takes some significant new policy adjustments by the government, starting with the petroleum law, to ensure outside investors of how their investment will be handled" - that is, ensuring legal rights to ownership shares and return on investment.
Since just after the invasion, U.S. officials have pushed the emerging Iraqi government to open the economy to more foreign investors, particularly oil companies. The Iraqis, sensitive to any sign of foreign "exploitation" of their oil wealth, have reacted cautiously.
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