Latest Iraq threat: cash crunch

Now, the UN, nongovernmental organizations, and other major groups like the Red Cross are scaling back their operations in Iraq after the bombing of the UN headquarters, representing a withdrawal of foreign cash and demand for services that would have been pumped into Iraq.

With several tens of billions of dollars more needed, according to Bremer, the US will need its allies to help foot the bill. A donor conference, to that end, will be held near the end of October. But it is already proving difficult to get countries to foot the reconstruction bill for a war that many of them opposed outright.

The US is now forced to turn to countries it dismissed six months ago as part of "Old Europe" to help pay for the new Iraq. Moreover, the experience of drumming up pledges for reconstruction aid for Afghanistan at a January 2002 conference in Tokyo teaches the Iraq team that donors are not always the most reliable bunch.

Even after countries make their pledges, most have to go back to their legislatures and parliaments to fund them. Finance experts here say that means that any money pledged in Madrid, Spain, next month will not show up in Iraq's budget until 2005 or 2006."When you think about these things, it just isn't going to happen," says the CPA officer. "I need other funds in 2004."

One of the Bush administration's hopes for rebuilding Iraq was that by revamping the oil ministry and using seized Baathist funds and other assets, a free Iraq would fuel its own renaissance. But oil revenues, have been disappointing, in large part due to looting attacks on oil pipelines and facilities by groups trying to derail US efforts here.

Saboteurs have also targeted power grids, cutting power to homes and businesses that have become accustomed to having it for decades. Seized assets, smaller than expected, have virtually run dry. Seized assets in the US totaled about $1.7 billion, a US official here says, while only $795 million was seized in the country during the war, plus another $1 million found with Mr. Hussein's sons.

The funds the US seized or won from congressional appropriations are being used to try to close the gap for the second half of 2003. But even that, many here say, is hardly covering all the bases. Beyond the most urgent needs, projects that could build confidence in US intentions to help rebuild Iraq are moving much more slowly, due to financial limitations, than many Iraqis expected.

The Ministry of Higher Education, for example, only received about half of what it asked for, or approximately $33 million, to carry it through the rest of the year, says Farouk Darweesh, an adviser to the ministry sent here by a US-funded program to bring exiled experts to Iraq.

When the students come back to school over the coming month, he says, "they will see improvement, but not the extent that many hoped. I would expect that they would, initially at least, be disappointed."

School labs and workshops, particularly in science courses that have the most tangible equipment, "were stripped and are bareboned - there's hardly anything there." Graduate-level courses in need of such equipment will not be held this year. Many Iraqis blame US forces for allowing the looting to carry on as long as it did, and still speak with frustration of Bush administration officials' acceptance of the chaos as an understandable venting of anger.

"The funds allocated to the Ministry of Education, though welcomed indeed, are not sufficient to effect restoration of everything inside for the next academic year," says Mr. Darweesh.

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