KUWAIT CITY — At the close of a donor conference on Wednesday, Iraq secured only a fraction of the funds urgently needed to rebuild towns and cities demolished during battles against the Islamic State. But US and regional officials nevertheless praised a last-minute rush of pledged investments, loans, and guarantees, mostly by neighboring countries.
The conference was hosted by the Kuwaiti government and attended by dozens of foreign ministers and the United Nations secretary general, António Guterres. Turkey, one of Iraq’s largest trading partners, stepped up with a promise of $5 billion in investment loans in expectation that some of its large-scale construction, transportation and infrastructure companies would jump back into northern Iraq, where they had long dominated the economy.
Another surprise came from Kuwait, which has had frosty relations with Iraq, its larger neighbor, since 1990, when Saddam Hussein invaded. The Kuwaiti ruler, Sheikh Sabah al-Ahmad al-Sabah, announced $1 billion in investment and $1 billion in loans. Other Arab Gulf countries followed, with the Saudi, Emirati, and Qatari foreign ministers announcing investment and loan deals.
All told, the conference participants pledged a total of $30 billion in loans and investments, Kuwait officials said, a figure Guterres described as an “enormous success.”
Iraq’s foreign minister, Ibrahim al-Jafari, was more measured in his assessment, telling reporters that the amounts offered fell far short of the $100 billion that Iraq had hoped to attract for the rebuilding effort.
The last-minute burst was a welcome development, in that Iraq had been struggling to raise even $5 billion in pledges. But the creative math about the promises masks deeper challenges.
Iraq is facing around $22 billion in urgent reconstruction needs after three years of bloody and destructive battles to oust Islamic State fighters from the northern third of its territory. That includes Mosul, once a thriving commercial center of 2 million residents where now more than 20,000 homes and businesses have been destroyed.
Because the vast majority of the pledges came as investment loans and guarantees, not direct aid, many of the headline-grabbing amounts are contingent on investment deals or contracts coming to fruition.
No business deals were signed at the three-day conference in Kuwait. While hundreds of businessmen and women attended receptions on the sidelines of the event, many expressed misgivings about the political and security risks of doing business in Iraq, considered one of the most corrupt countries.
Given years of estranged relations between Iraq and its Gulf Arab neighbors, few companies have tried to penetrate the Iraqi economy, and it is unclear what sort of risks they would be willing to assume, even with government loan guarantees.
In comparison, the Turks’ surprise pledge of $5 billion in investment loans and guarantees, announced by Foreign Minister Mevlut Cavusoglu, promises a more certain outcome.
Unlike the Sunni Arab nations, which have largely shunned the Shi’ite-led governments that have run Iraq since the fall of Saddam, Turkey saw an opening.
Turkish businesses jumped into Iraq in multiple sectors after the US-led invasion in 2003, from infrastructure to construction, transportation and consumer goods, becoming the largest direct investor in the Iraqi Kurdistan region and one of Baghdad’s largest trading partners.
In turn, Iraq, a leading oil exporter, transports a significant amount of crude to world markets through a pipeline over northern Iraq to the Turkish port of Ceyhan.
“As a neighbor, friend and reliable partner, we will always stand by our Iraqi brothers,” Cavusoglu said on his Twitter account after his pledge in Kuwait.