The United States must help Iraq realize wealth quickly -- in addition to giving Iraqis more responsibility -- in order to make the Arab state more secure, politically stable and economically viable, the chairman of the Export-Import Bank of the United States (Ex-Im Bank) says.
In March 24 remarks to a business organization in Washington, Phillip Merrill said that the funds appropriated so far by the Congress, even when counted together with the money generated by current production of Iraqi oil, will not cover the costs of reconstruction and revitalization of the country's economy, estimated at close to $100 billion over several years.
He said that unless Iraq finds a way of using its "tremendous" oil reserves to obtain the necessary capital, or access to it, more quickly, the U.S. taxpayer will likely have to pick up the tab.
"It is cheaper, as well as smarter, to make Iraq relatively
rich than it is for the United States to continue on a path that, in time, if not already, is sure to make us be seen as an occupying power," Merrill said.
He said that an Iraqi authority could securitize the proceeds from future oil production to raise more money upfront. News reports says the Ex-Im Bank is supporting a plan under which such an authority would issue bonds or other securities and pledge a portion of Iraq's future oil and gas revenue as collateral to obtain capital.
Merrill said that, in any case, Iraq will need
approximately $20-30 billion in long-term investment to increase its oil production significantly. He emphasized that a request for such investment must come from the Iraqis themselves.
"In the end, it is their oil, and they can use it as they wish," Merrill said. As the precondition for international investment, Iraq will have to deal "promptly" with its foreign debt estimated at $130 billion -- an amount that excludes reparation obligations from its previous wars, Merrill said.
He said that international investors will require "some form of sovereignty, physical security, and precedence over existing debt, to provide sufficient comfort that contracts will be honored over time" if they are to come to the country. — (menareport.com)
© 2004 Mena Report (www.menareport.com)
