India may attend meet on Iraq reconstruction

Foreign minister Yashwant Sinha's statement on board the Prime Minister's aircraft upon his return from his East Asia tour, that "if all goes well" India will be invited to attend the conference of international donors to Iraq, to be held at Madrid on 23 and 24 October, could represent a huge business and political opportunity for India and Indian business.

Iraq will need about $50 billion in foreign aid for reconstruction in the four years to the end of 2007, planning minister in Iraq's US-appointed governing council Mahdi Hafedh has told the United Nations.

In a joint report, the World Bank, UN and the International Monetary Fund estimate that $35.6 billion will be needed to restart Iraq's economy over the next four years. The US has already pledged $20 billion over the next 18 months.

The US is hoping that much of this money will flow out of a trust fund outside Washington's direct control to administer the cash they raise, so that donors can support specific sectors and institutions.

It is to discuss the creation of this fund and other issues on the reconstruction of Iraq that donors are meeting.

Currently, Iraq's reconstruction is financed by the UN Development Fund that is under the direct control of the US. As a result current contracts for the reconstruction of Iraq are being given out only to US firms.

A Halliburton subsidiary, Kellogg, Brown & Root, received a $1.2 billion no-bid contract for extinguishing oil field fires and $1 billion for logistical support to US troops.

USAID awarded Bechtel a $680-million contract to restore infrastructure facilities like airports and buildings.

US Vice-President Dick Cheney is the former chairman of Halliburton and according to a report presented to the Congress, continues to have interests in the company.

Former Secretary of State George Shultz and former Defence Secretary Caspar Weinberger have been directors of Bechtel.

Now, with other countries wanting to support the reconstruction of Iraq without necessarily endorsing the US presence there, a trust fund has become imperative.

The EU has promised $234 million initially and Japan is expected to contribute $4-5 billion overall.

Even Iran has been asked to contribute and has agreed to put up money despite its troubled relations with the US, a move that is sure to provide legitimacy to the fund.

This politics will also be played out in Madrid. France, Germany and other European critics of the US role in Iraq have said they would like to involve themselves in the fund provided their companies can bid for the contracts.

This means a second resolution on Iraq in the UN, involving it in reconstruction must go through before the Madrid conference, although the conference of donors, foreign office sources say, will still be held.

Currently, India is only involved in running a hospital at Najaf. Indian firms present in the region gradually phased out their presence because of the complicated funding procedures in the Oil-for-Food system overseen by the UN that has governed sanctions-hit Iraq for the last 14 years.

However, Indian infra and manufacturing industries will have access to huge markets and international competition if Iraq is opened up to the world. Already the market for subcontracting by Bechtel and Halliburton runs into millions of dollars.