Investment in Post-invasion Iraq - Funding For Iraq Reconstruction

Funding For Iraq Reconstruction

Funding of reconstruction efforts began with the creation of the Iraq Relief and Reconstruction Fund (IRRF) in April 2003. The IRRF is administered and funded by the United States. An initial allocation of $2.5 billion was made for immediate food, medicine and water relief.

The “Madrid Conference on Reconstruction” held in Spain October 23–24, 2003 was organized by the United States to solicit donor pledges from the international community. About $33 billion in grants and loans were pledged. Of this, $18.4 billion was from the U.S. with another $5 billion from Japan, $812 million from the EU, $500 million from Kuwait and offers of loans from World Bank and the IMF amounting from $5.5 to $9.25 billion. Some countries pledged to reduce the debt that Iraq owed to them and to provide direct donations in forms such as food and fuel. The pledge by the United States was fulfilled in November 2003 by adding $18.4 billion to the IRRF.

Much of the non-U.S. pledged money is managed through two additional funds that have been created under the facilitation of the International Reconstruction Fund Facility for Iraq. The funds are managed by the United Nations Development Group (UNDG) and by the World Bank. Twenty-six donor nations participate in this effort with total pledges, as of June 30, 2006, of $1.4 billion. The United States donates a small amount to these funds but does not control their disbursement.

As of December 30, 2005 the UNDG and World Bank Funds had expended about $0.51 billion and $0.39 billion, respectively. The United States managed IRRF had expended about $11.4 billion as of March 2006.

As of 2009, current spending in Iraq seems to have increased a bit with some consideration of new projects. Since March 2003,the figure has come to a tune of $50 billion (US Dollars) - as the amount appropriated by the US congress in relief and reconstruction. A new inspectorate under the office of Special Inspector General for Iraq Reconstruction (SIGIR)is in place to oversee key essential areas of development. Among these include the establishment of new Iraq forces, creating a free market economy, and put the country on path to achieving an effective democracy. Among the most recent developments (January 2009), also include the initiative in effect to re-define the bilateral relationship between Iraq and the United states, as a way of facilitating "future reconstruction efforts"