Cartoon by Gary Barker

The Post-Islamic State Marshall Plan That Never Was

Foreign Policy: For the final session of the international Iraq reconstruction conference held here this week, two sets of speeches were drawn up for Iraqi Prime Minister Haider al-Abadi and the United Nations secretary-general to deliver — one in the event that funding targets were met, and another in case they weren’t.

Iraq needs billions of dollars to rebuild after the military defeat of the Islamic State, but the nations expected to step up and shoulder the financial burden of reconstruction have sent a mixed message of support, leaving the final outcome in doubt.

In the weeks leading up to the conference, the threshold for making a public announcement at the conclusion of the event was also rolled back. The original goal of $20 billion dropped to $10 billion, and finally to $5 billion. Even then, it was unclear which speech would be given, according to a source familiar with the preparations.

The World Bank estimates that Iraq needs nearly $88 billion to reconstitute damaged infrastructure, housing, and vital services — much of which is supposed to come from Iraqi government oil revenue. In the end, additional support pledged at the conference in Kuwait raised roughly $30 billion in a complex combination of loans, investment guarantees, and direct investment — short of the goal, but better than expected.

That result was reflected in Secretary General António Guterres’ speech. “The response to this conference and to this appeal is an extraordinary proof of confidence in the government and in the people of Iraq,” he told the audience.

An Iraqi official confirmed the $30 billion estimate but noted that the government had still not received official documentation of the pledges.

Though this final number is considerably higher than originally anticipated, questions remain over whether cash-strapped Gulf states will make good on their promises, and whether private sector companies will begin to ramp up investments necessary to jump-start the country’s economy after years of war.

Iraqi national elections are also scheduled for May, and the government must still shoulder much of the reconstruction burden itself, a proposition heavily reliant on high and stable oil prices.

Already, the International Finance Corporation has estimated that Iraq alone would need to bear at least $50 billion of the expected price tag. That number, said Christian Josz, IMF deputy division chief for the Middle East, would be realistic only if oil prices stayed relatively steady. “The financing gap increases significantly if oil prices drop even a little,” he said during talks on Tuesday.

Still, the conference’s outcome beat many originally dim predictions. “This is an important signal to Iraq and to Abadi going into elections,” said Elizabeth Dickinson, a Gulf researcher at the International Crisis Group. “This gives him something tangible to take back to Baghdad and show voters that he can deliver on reconstruction.”

Several foreign officials at the conference, however, noted that contributions were originally expected to be considerably lower. As early as December, said some, it was apparent that the Iraqi government’s original benchmark of raising $20 billion from international donors might be difficult to reach >>>