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 You are in: Secretary of State Condoleezza Rice > Former Secretaries of State > Former Secretary of State Colin L. Powell > Speeches and Remarks > 2003 > October

Press Conference with Spanish Foreign Minister Ana Palacio, Japanese Foreign Minister Yoriko Kawaguchi, President of the Iraqi Governing Council Ayad Allawi, European Economic Commissioner Christopher Patten, Secretary of the Treasury John Snow Following the International Donors' Conference for the Reconstruction of Iraq

Secretary Colin L. Powell
Madrid, Spain
October 24, 2003


FOREIGN MINISTER PALACIO (translated): The International Donors’ Conference for the Reconstruction of Iraq has taken place and I think that we can say that it has been a success.

What I would stress is what (inaudible) said in his conclusions, there are three main messages, and as (inaudible) said, at this international referendum on the future of Iraq, the international community is committing itself to the future of Iraq, and secondly there is a clear message that reconstruction is not just a question of governments but that civil society also has a great deal to say. It has had a very active participation at this donor’s conference and thirdly there is no doubt that this conference has had very high attendance.

The delegations have been handled by top people and a lot of money has been pledged. I will be giving the floor to Dr. Allawi and the other members of the core group who are up here with me, beginning with Dr. Allawi, you have the floor, and then we will take a few questions from the auditorium.

DR. ALLAWI: Thank you very much for those kind remarks and for your wonderful hospitality over the past two days. This has been a historic occasion for my country, which a little over six months ago was the black sheep of the international community. When Iraqi delegates made speeches or asked for support, the conference halls emptied and the silence was deafening.

Today I am again proud to be an Iraqi. My colleagues and I came to Madrid to ask for support in the huge task ahead of us in reviving our country, and the support has been outstanding. Iraq has made many new friends. In the last few days I have met with representatives of dozens of countries who have offered to help us build a secure and stable future for our country. In years to come the Iraqis will remember who came forward to help them and to help us in our time of need.

The pledges made today will help us get back on our feet. Iraq should not need help. As others have said, we are a rich country made temporarily poor. We are a proud people who want nothing more than to stand proud again and to reach our huge potential. We will return to Iraq confident that the reconstruction needs of Iraq will be met. The pledges made today represent a huge investment by the international community in Iraq.

A very significant portion of the overall reconstruction needs are identified by the UN and by the World Bank in their research report. As this investment starts to pay dividends in Iraq, we expect to be able to start funding more and more of these needs through our auditors and once we have fully repaired the criminal damages done by the former corrupt regime, we look forward to joining future conferences on the other side of the table as a donor, not a recipient.

I look forward to welcoming many of the participants from both the donors and private sector conferences in Iraq, as we work together to build a new free, stable and secure Iraq. Thank you.

SECRETARY POWELL: Thank you for participating in this conference, and let me begin by thanking you and President Aznar and the government of Spain and the people of Madrid for all the wonderful hospitality and all the work that you have put into making this a very successful conference.

Madam Chair, I have to reflect on the fact that two and a half weeks ago you and I were getting phone calls from people saying are you going to have a conference, aren’t you going to cancel? You haven’t come together on a resolution, there are debates between Security Council members and the Secretary General. You won’t get good attendance and there won’t be much pledging taking place. But here we are.

We’ve had a very successful conference. We’ve had a unanimous resolution. The Secretary General gave us a powerful message yesterday. The international financial institutions gave us powerful messages today, as did all of the delegations that are here present. And the at least $33 billion number that has been pledged here today demonstrates that the international community is coming together to help the Iraqi people build a new nation, one that will be proud to rejoin the international community.

I should also note that a number of nations that were unable or for one reason or other did not make a pledge today might well be able to do so in the future and might be considering their position as we move forward with this achievement under our belt. As the President said, there are other funds that will be reaching the ultimate goal of $56 billion for reconstruction over an extended period of time, through 2007.

The budget for Iraq, beginning in the year 2005, will generate a surplus over operating costs of the government of roughly $5 billion a year which can be applied to reconstruction efforts. So in the period we are talking about 2004-2007, in 2005, -06 and –07, $5 billion in each of those years will add to the total and assist with the reconstruction effort.

So I think this has been a very successful conference, and I thank all of my colleagues in the core group and all of the delegations who have come here to Madrid.

And I would now like to turn the floor over to my colleague, Secretary of the Treasury, John Snow.

SECRETARY SNOW: Thank you very much. As Secretary Powell has said, any way you look at this the conference has been an enormous success. We need to understand the real message of this conference though.

The real message of this conference is an enormous vote of confidence in the Iraqi people and the process of restoring freedom and stability and peace to that country which has suffered too long. The funding is impressive. It will make available the resources to carry on the rebuilding process. But equally important is this outpouring of support from the world for Iraq and for the Iraqi people. Now that the funding has been made available, the critical thing is to deliver on the promise that that money makes possible.

I thank you very much.

FOREIGN MINISTER KAWAGUCHI: Thank you, Madame Chair. It was my great pleasure and privilege to be able to attend this conference today. As one of the co-chairs I would like to thank all of the donor countries, international organizations and NGOs who worked to make this conference a success. We did make a big stride forward today. We were able to get the commitment of $33 billion dollars, but what was more important is that we have been able, we as an international community, have been able to send a strong message as an international community to the Iraqi people that the international community is united to support the Iraqi people for their efforts to rebuild a democratic and stable Iraq and the international community will not let the Iraqi people down. Thank you, and thank you to the government of Spain for hosting this conference.

FOREIGN MINISTER PALACIO: Lastly, Chris Patten, the European Commissioner speaking on behalf of the European Commission.

COMMISSIONER PATTEN: I just want to make two points. First of all I’m delighted that we reached agreement today on establishing the multilateral trust funds. I think that they will provide an effective channel for international donors to provide assistance. I think they will provide a solid base for the operations of the international financial institutions, and the UN in Iraq, and I also believe that they will help insure transparency and openness in the reconstruction process in Iraq.

Secondly, I’d like to stress, which was a point to which the Secretary of the Treasury alluded, I’d like to stress the importance of rapid disbursement. We know from previous experience that there is sometimes a lag or more than a lag between promises of help and the arrival of the help itself. We need to get the money out of the bank and into Iraq as quickly as possible. I think there is going to be an important continuing task for the core group in monitoring the delivery of assistance, and I ‘d just like to say that with the help of the UN, I hope that our first tranche of assistance from the European Budget will be out of Brussels and into Iraq in the next few weeks.

FOREIGN MINISTER PALACIO (translated): Thank you very much. Well, let me see. We have time for some questions, first from Spanish journalists and then foreign journalists. Javier Arenas, from Spanish National Radio.

QUESTION (translated): Thank you. Good evening. This is not really a question, but two comments linked to reconstruction: money and security. Now, figures. Can you give us an explanation of this official figure for the $3 billion overall? Exactly how many multilateral funds, bilateral funds, how much is donation, how much is loans? And I would like to ask Mr. Snow how many U.S. dollars under multilateral control and what about security. That has been a great concern. Will this mean that, post-Madrid, we will have to start rethinking security there? That’s for Mr. Powell I suppose.


SECRETARY SNOW: All right. With respect to the U.S. funds, the $20 billion, we will see those funds available soon, as soon as the Congress passes the legislation and the President signs it into law, and we will make those funds directly available.

SECRETARY POWELL: Security is a problem; we don’t deny it. Ambassador Bremer spoke about it earlier, as have I, and members of the Governing Council. But we are confident that security will improve in a manner that will permit reconstruction to accelerate. It’s already going on now.

Reconstruction is taking place now. The power grid is up, clean water is flowing, the petroleum system infrastructure is being repaired, there is a great deal of money going in now, and, as the security situation improves, it will be easier to put more money in and have more contracts and more activity take place. And so security is not to be a permanent hindrance to reconstruction. It is making it a little harder now, but I am quite confident that it will improve. Reconstruction is taking place right now.

With respect to the exact composition of the $33 billion, I will yield back to the chair, but I think what we want to do is to make sure, after this first sort of inputs that we have gotten today, to make sure we have a clear understanding of the different components of what each country meant by their pledge. But we are relatively confident of that $33 billion number. It is the low end of the range that came in the course of the afternoon. I don’t know if the Chair wishes to say anything more about that.

FOREIGN MINISTER PALACIO(translated): No, I think that’s the answer. The figure is a global figure. And there will be a breakdown. Precisely through the follow up group, the core group, this is a breakdown that will be – the international, financial institutions will be responsible for that. And Chris Patten wants to say anything.

MR. PATTEN: I would just like to add one point because I’ve been – I think the same is true of one or two others of us – I’ve been to several donors’ conferences like this – for the Balkans, for Afghanistan, and so on. And what you try to do, what the World Bank and the UN try to do is – people make the statements – is to reach a rough calculus of what’s actually being pledged. But it’s not always clear exactly what is grants and exactly what is loans. And so this is the best estimate that the experts from the Bank and the UN can make at the moment.

Obviously we have to go back and get the exact breakdown, as the minister said, but this is exactly the process that we’ve used at previous donors’ conferences. And as Secretary Powell said, the estimate is probably at the low end of what was actually pledged today.


QUESTION: Mr. Secretary, so far as the U.S. is concerned, because I guess we’ve just asked you about the U.S., there is $4 billion owed by Iraq. Will the U.S. forgive that? I know the Administration has a view about loans not being the best way of assisting Iraq, and do you intend to marshal some sort of a campaign to make sure most of the assistance at least is in the form of grants – Iraq having a $125 billion debt or $120 billion debt right now that costs $7 or 8 billion a year to service?

SECRETARY SNOW: Well, on the question of debt, the United States will join with other nations of the world in an effort to bring that debt level down, to rework that debt level. That was signaled at the G-7 meeting in Dubai, where in the communique from Dubai, the reference to the unsustainable level of the debt was noted by the G-7, and along with rebuild funds for rebuilding, which have been accomplished here at this conference, we noted the essentiality of addressing the debt overload burden. Yes, we will address it, it’s a matter of urgency, it was noted by Jim Wolfensohn, it was noted by Horst Kohler, and it was noted by Secretary Powell and me as a matter of great urgency. Secretary Powell and I will be taking an initiative to the Paris Club and beyond the Paris Club to the other non-Paris Club members to pursue a significant reworking of the debt levels, yes.

QUESTION: (Inaudible)

SECRETARY SNOW: Well, the U.S. will act in accordance with the Paris Club and the multilateral effort.

SECRETARY POWELL: As you know, the U.S. contribution, the President feels very strongly that it should be in form of grants and we will encourage those nations that are able to do so to provide support in form of grants.

But what is more important really at this conference is that a reservoir – a pool of money – has been put together that totals the minimum in my judgment – and we will get the details in due course – $33 billion – that will be available to the Iraqi people. As the Secretary of the Treasury just said, we will be very sensitive to the debt burden that has been placed on the Iraqi people. We have to restructure the old debt and be careful about the new debt. And those are the details we will be working out, and the core group will stay together.

Let me also mention that this is the first meeting. We expect that there will be future meetings and that we will stay engaged on this on a regular basis as we work with each of the nations and institutions that pledged today to make sure that what they have pledged is made available as soon as possible and in the easiest manner for the Iraqi Governing Council to accept the money without picking up new burdens that are excessive or unreasonable. But I also expect that many of these loans that will be made will be stretched out over a long period of time and hopefully in a manner that Iraq is able to service the debt in due course.

FOREIGN MINISTER PALACIO(translated): Thank you. Asaki newspaper. Mr. Mira.

QUESTION: I have a question for Minister Kawaguchi. With the pledge of $5 billion, Japan has become the biggest donor after the United States. How will this affect Japan’s overall development aid policy? Does this mean some money earmarked for other countries will be diverted to Iraq? What will be its political and diplomatic implications?

FOREIGN MINISTER KAWAGUCHI: We will have to make best efforts to make our assistance to overseas countries as efficient as possible. We have, as you know, a declining budget for the ODA. And we have been making efforts so that that can be spent in an efficient, and also productive and transparent way. We’ll just have to continue that, and we, at the same time, we will try, as the Ministry of Foreign Affairs, we would like to try to make do our best to obtain as much budget as possible for overseas assistance, because there are other countries which need assistance from us and we are mindful of these countries. Thank you.

FOREIGN MINISTER PALACIO: Thank you very much. Washington Post.

QUESTION: Thank you.

From the Washington Post and for the U.S, delegation, can I ask again about the breakdown of loans versus grants? When the Congress changed it in the U.S. to make 50% of the $20 billion into loans, the White House put out a statement saying this would hinder Iraqi democracy and add to the unsustainable debt burden.

When I do the breakdown here, it looks like quite a bit of the money that’s coming in is being in the form of loans, from the Saudis, the World Bank, the $3.5 billion from the Japanese. I wonder if these do feel that’s going to be a big problem; and secondly, if it is going to be accepted, then how can you go back to the Congress and say the U.S. contribution has to be all in the form of grants and not loans.

SECRETARY SNOW: That matter was addressed in the course of this conference, never more eloquently than by the UN representative, who directly said that it would be a terrible mistake in his view for the U.S. Congress to proceed with loans as opposed to grants because the loans only complicate the long-term problem of the rebuilding of a country that today has unsustainable debt levels. Some of the donors, some of the pledges that were made were made as loans because the World Bank and the IMF are financial institutions that are only by their by-laws permitted to make loans. They’re not in the grant-making business. They are in the loan business, and of course, a very substantial part of what we’re calling the loans, come from those two entities – $5 billion potentially pledged by the World Bank and $4 billion pledged by the IMF. That’s $9 billion of that total. So sure, we prefer grants but what we really prefer, what we really are counting on here is financial support, is the line of credits, is the money in the banks that can be drawn on to fund, to finance the rebuilding. Thank you.

FOREIGN MINISTER PALACIO (translated): Thank you. Carlos Segovia from El Mundo.

QUESTION (translated): Thank you, Minister. This is a question for you and for Mr. Powell. Do you think that after last week’s UN resolution on the donor’s conference, do you think the end to national divide has been overcome, or they’re still concerns about countries like France or Germany who have really not made a commitment, or not made a very big commitment. Second question: What about the criteria you’ve used for countries at this conference. Why was Israel not here?


SECRETARY POWELL: I’ll take the first one and you can deal with the invitation. (Laughter.)

I do believe that unanimous passage of Security Council resolution 1511 did bring the international community back together again, not in every detail and every aspect. There are still differences of opinion and there are still disagreements, but all 15 nations voted for a Security Council resolution that endorses the approach that we are now taking with respect to the creation of a new Iraqi government and the process by which we will return sovereignty, and the role of the special representatives of the Secretary General, the role of the Coalition provisional authority, and it’s a fine resolution. It doesn’t mean that there will not continue to be debates about how to implement that resolution.

So I think this resolution coming out on top of 1483 and 1500 to a large extent has put the disagreements and the debates we went through earlier in the spring where they belong, in the past. And we are all now joined together to move forward. I think that the world will see as we move forward that rapidly the Iraqi authorities, governing council, the ministries, other organizations will be stood up and with each passing day take on increasing responsibilities and increasing authority for their own decisions and for their own future and slowly but surely the CPA will start to recede into the background until that the day comes, we all look forward to, and know now will come. The constitution has been ratified and elections have been held, and a legitimate government has been put in place based on a democratic model.

FOREIGN MINISTER PALACIO (translated): I agree with what the Secretary of State has said, and if you would allow me to add something from a purely European perspective.

What we’re seeing is an example of the application of the method of construction, the European method, which is, I mean, it’s a textbook example. The European method means construction or building from a situation of differences. There’s no greater division than a war and you have stood in the aftermath of a war, and that is the community method, looking towards the future, committing to the future with specific projects, creating de facto solidarities as Shuman described.

That doesn’t mean that there may still be, there may not be any differences, but these two forces are sort of frozen and you come back to method. And this has already been built. What the development of the sequence of resolutions 1483, 1511 shows the commitment to the future with specific projects and solidarity for the future of Iraq.

John Zepelin, the Financial Times.

QUESTION: Actually, what about….

FOREIGN MINISTER PALACIO: What can I say about the invitation criteria was in the hands of the core group. You are aware of the composition of the core group, so it was a consensus selection. Next question.

Mr. Zeppelin from the Financial Times.

QUESTION: This goes to Mr. Allawi. Before this conference there were some, from the Iraqi government council, mentioned some numbers for pledges for Arab countries. Those numbers were higher than the numbers we heard today here at this conference so, how disappointed are you about the contributions of Arab countries, and how do you see the future with your neighboring countries?

DR. ALLAWI: We welcome donations from Arab countries and, of course, this is again part of the full – which will be available for Iraq to use until Iraq stands on his feet. We think such donations will cement the relationship and the region that will build an integrated circuit of mutual trust that will promote peace and stability. We look forward to donations from the Arab countries. Thank you.

FOREIGN MINISTER PALACIO (translated): Thank you very much. Last question.

QUESTION: Today many countries expressed their concern and mistrust concerning how the money will be channeled, and if it’s going to the right objectives. Do you think they have reason for their concern or mistrust, and what do you do to assure them?

SECRETARY POWELL: No, I don’t think they should have any concern. There will be a number of channels to which the money will flow. You have heard about the creation of the UN - World Bank fund. There is a development fund that is in place now, that receives oil revenue, and the United States has ways of distributing the money that will be appropriated by our Congress. We are absolutely committed to transparency, to open the books to whomever wishes to see these books, and we’re absolutely committed to setting priorities in coordination with and at the, frankly with the lead of the Iraqi Governing Council and with the Cabinet ministries.

It will be a collaborative effort to select the projects that should be funded and are most essential and open discussion between Iraqi leaders and the coalition provisional authority, and all of the other agencies represented here to decide which projects, and then open competition for those who have the capability to do these projects throughout the world, and the world will see that it is a transparent, open, honest process that has only one purpose to serve the Iraqi people and not to take any advantage of the Iraqi people or the oil wealth of the Iraqi people.

COMMISSIONER PATTEN: Can I just add a couple of thoughts to that? First of all, this is an issue which in a very welcome way was addressed directly in 1511, in the Security Council resolution, this question of openness and transparency. Secondly, it was precisely in order to be able to answer questions like yours, with my customary honesty, and that I and others have argued from the outset, that we establish a couple of multilateral trust funds under the UN and World Bank with various windows for different sorts of objectives in Iraq. They’ll be set up in the coming weeks and will be subject to all the cleanest auditing processes imaginable.

In the meantime, until they are set-up, we’re making our first tranche of assistance through an existing UN trust fund which deals with post-conflict situations, and is opening a specific Iraq window in order to allow us to use it for contributions to Iraq. So I have absolutely no doubt that the money for which I’m responsible, and I’m sure the same will be said by every other donor, is going to be used for the people of Iraq to create for them a much better future.

FOREIGN MINISTER KAWAGUCHI: I also would like to add that all the governments who have committed money for the people of Iraq is responsible to explain to our domestic constituency, to our people that the money is spent in a transparent way, in an accountable way. And all the governments are going to be interested in the subject and because everyone is interested in this, there is just no way, the money will be spent in a very transparent way. It is in everyone’s interest that it is that way. Thank you.

FOREIGN MINISTER PALACIO (translated): I think that the auditing and control systems have been one of the main issues that have been discussed during the preparations at this conference.

Again, thank you very much. This brings us to the end of this press conference. Thank you so much for your attendance and this really the final act of the donor’s conference.

Thank you very much.

Released on October 25, 2003

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