HL Deb 23 February 2004 vol 658 cc1-3WS
Baroness Amos

My right honourable friend the Secretary of State for International Development has made the following Written Ministerial Statement.

I have placed in the Libraries of both Houses a copy of DfID's Interim Country Assistance Plan for Iraq. It sets out how DfID aims to contribute to the reconstruction of Iraq in the period up to March 2006. I have also decided to make an initial contribution of £65 million (120 million US dollars) to the International Reconstruction Fund Facility for Iraq, managed by the World Bank and United Nations, out of the resources pledged by the United Kingdom for the reconstruction of Iraq at the Madrid donors conference in October 2003 (see my Written Statement of 14 October 2003: Cols. 9–10WS).

Saddam Hussein's tyranny led to a significant increase in poverty and Iraq was isolated from the rest of the world, including its own region, for much of his rule. In many respects Iraq's social and economic indicators now resemble those of a low-income country rather than a major oil producer. But Iraq's abundant human and natural resources offer the potential for a rapid return to relative prosperity, if the right conditions are created in the short and medium term.

Against this background, DfID's objectives for the next two years are to support: rapid, sustainable and equitable economic growth; effective and accountable governance; and social and political cohesion and stability.

To work towards these goals DfID will focus on three levels:

Internationally: by supporting the United Nations and World Bank International Reconstruction Fund Facility for Iraq (IRFFI), assisting the Ministry of Planning and Development Co-operation, and continuing dialogue with other donors on the coordination and effectiveness of assistance to Iraq.

Nationally: by funding projects which benefit the poor, promote an inclusive political process and economic reform, and strengthen public administration. Examples include: helping the growth of small and medium-sized businesses; setting up a fund to support the participation of citizens, parties and interest groups in the political process; and technical assistance to Iraq's public administration system.

In southern Iraq: by funding projects to reduce poverty and helping to restore the area's administrative and political links with Baghdad so that it can benefit from Iraq's national development efforts.

At the Madrid donors conference, the United Kingdom pledged a total of £544 million for the period from April 2003 to March 2006, a significant proportion of which would be channelled through the International Reconstruction Fund Facility for Iraq (IRFFI). The allocation of our initial contribution between the UN and the World Bank Trust Funds will be decided shortly. Any further DfID contributions to the funds will be considered in the light of the effectiveness of their operations and their need for additional funding.

A total of over 32 billion dollars was pledged to Iraq at the Madrid conference. These pledges, together with a substantial reduction in Iraq's debt which should be negotiated this year, will provide a sound basis for the country's initial reconstruction. If the right steps are taken now, and the political situation in the country is stabilised, much of Iraq's longer-term investment needs should be met by commercial loans, foreign direct investment and its own resources. Iraq's human capital, and its oil reserves of about 2,500 billion dollars at current prices, should enable it to meet its future needs without significant external grant assistance.

The country assistance plan is also available on the DfID website: www.dfid.gov.uk.

Forward to