Iraq sits atop millions in unspent global aid

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iraq under construction
Photo - Reuters

Iraq’s government risks losing funding from international donors as millions of dollars in international aid to build and repair Iraq’s dilapidated schools and other infrastructure has gone unspent for years. The World Bank, chief Iraq donor, is weighing to use some of it elsewhere.

The international aid community is in a dilemma whether to continue financing a government with vast oil resources and a $100bn annual budget or divert the assistance to needier nations.

Frustration is growing in Iraq over bureaucratic hurdles and myriad problems that have kept the money from being used.

The spending delays have left buildings like the al-Min elementary school in the former insurgent stronghold of Baqouba, 60km northeast of Baghdad, in tatters. Thousands of other schools across Iraq desperately need money for repairs.

“The building looks like a prison, not a school,” said headmaster Abdul-Karim Mohammed Sabti. “This is not an appropriate atmosphere for learning.”

Poorer countries in need

World Bank and its donor nations have given Iraq aid worth $1.3bn in grants and loans since 2004 to fund efforts ranging from labour and welfare programmes to providing emergency health services and protecting the environment.

The money was poured to help rebuild the country after the destructive 2003 American invasion and occupation. The aim kept coming in as the country continued to struggle with violence and bad governance.

Around $469m, more than one-third of the overall assistance, remains yet to be spent. Officials at the World Bank ponder whether to extend an end of June deadline for several of the programmes, or face losing grants to rebuild schools.

“When we talk with the government, when we talk to the primary stakeholders in the country, we try to explain to them that it is a pity that this money is just sitting where it is and it is not being utilised,” said Marie-Helene Bricknell, the World Bank’s special representative for Iraq.

She warned that some of the money may have to be given back and distributed to the world’s poorest counties if Iraq continues to sit on it.

“It may difficult for us to argue [to keep] it if Africa needs the money, or if there is another food crisis in the world,” Bricknell said. “Given the austerity around the world, it may be very difficult.”

Aid unspent is aid wasted

The World Bank is the latest foreign donor to be frustrated by Iraq’s lax use of reconstruction aid. Critics of the US invasion and occupation of Iraq say billions of US taxpayer funds have been wasted on projects to rebuild Iraq since 2003. According to several US auditors and prosecutors, much of the money has been siphoned off by corrupt contractors.

The US Congress is considering cutting aid to Iraq by 77% and slashing what was initially touted as a $1bn programme for training the Iraqi police.

Washington’s funding for Iraq is also dropping dramatically following the departure of US combat troops in December.

In 2005, the World Bank started giving Iraq an additional $508m in special loans that have little to no interest to try to speed up the development projects. The Washington-based institution normally gives loans to the world’s poorest countries, nearly half of which are in Africa.

Low income country

The World Bank does not consider Iraq a low-income country and would not consider it eligible for the funds. However, it made an exception to help the Middle Eastern nation recover from upheaval.

According to US data compiled by the Central Intelligence Agency between 2008 and 2010, a quarter of Iraq’s population of 31 million lives in poverty, with an unemployment rate of 15%.

Iraqi schools precisely point out the problem: less than half of the $204m earmarked for education programmes has been spent.

The central government in Baghdad has asked for more time to spend about $16m that’s left from grants issued in October 2004 to rebuild schools. World Bank officials have given signals they may extend the 30 June deadline for the grant by another year.

Iraq’s education ministry has built 37 new schools nationwide and upgraded 133 old ones with the roughly $44m that has been spent so far.

Thirteen more schools are under construction and are expected to be completed by June 2013. Another 30 schools costed $5.2m which were built in Iraq’s southern marshlands between 2006 and 2009 under a different World Bank programme.

Blame game

Senior Education Ministry official Saad Ibrahim Abdul Rahim, who is also the agency’s head liaison to the World Bank, said all the 37 new schools were finished over the last 18 months and blamed the delays on bureaucratic snarls, a slow cash-flow to contractors and a lack of available land in populated areas upon which to build.

More than 6 million students attend Iraq’s 15 000 public schools, Rahim said, adding that at least 5 000 more schools are needed to ease severe overcrowding.

Another $100m was given to Iraq as an emergency education loan to ease crowding and update the curriculum in Iraq’s schools. The project began in November 2005. Since then, the government has spent only $11m and has three times asked for the loan to be extended in order to keep the money. It currently expires in June 2013.


“After the collapse of the Saddam regime, there was a strong feeling that Iraq was going to grow and build a lot of projects,” Rahim said. “But a year later there was a lot of sectarian conflict, and a lot of problems that caused a huge delay to all of the projects, in all of the ministries, for the reconstruction of Iraq.”

Rahim insisted that deadlines would be met as violence ebbs and the country edges toward stability.

The Education Ministry spent $6.9m of the loan funding last year – more than six times of what it spent in 2010. By comparison, the ministry spent $19,800 from the loan fund in 2008.

“We are on track now and the project is going ahead, and there are no huge challenges or any big obstacles to slow or detail it,” Rahim said.

Overall, Iraq had spent nearly $839m of the $1.3bn in World Bank grants and loans as of 31 March, the latest data available suggests. According to the World Bank, the money has helped create cell phone networks, improve drinking water for 600,000 people, rebuild and restock hospital emergency rooms, and train dozens of doctors and nurses across Iraq.

The global financial institution says it has also paid for several studies to strengthen Iraq’s government, reduce poverty and provide forecasts for the oil and gas industry through 2030 – and other small-medium businesses that can create jobs and generate money.

Source – AP

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