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Iraq: Reconstruction

Volume 689: debated on Thursday 1 March 2007

My right honourable friend the Secretary of State for International Development has made the following statement.

Four years after the invasion, progress on reconstruction and development in Iraq remains mixed. Prime Minister Maliki’s Government, less than a year old, face immense security, political and economic challenges. The escalating sectarian violence, which is for many Iraqis a daily reality, has displaced large numbers of people both within Iraq and the wider region. We are therefore responding to help to meet urgent humanitarian needs across the country. But the critical priority now is for the Iraqi Government to end the violence, so that Iraq’s rich resources can be invested in creating better services and opportunities for all Iraqi people. Only a political solution will break the destructive cycle of violence, and Prime Minister Maliki has made tackling the violence his highest priority. It is therefore vital that we give this new and democratically elected Government every assistance.

But there are gains worth noting and, more importantly, protecting. The most important achievement of recent years has been the establishment of a democratically elected Government, the first in Iraq for decades, replacing Saddam's brutal regime. Prime Minister Maliki's coalition Government were established following elections in which 76 per cent of the population voted. The constitution was agreed in a referendum and will be reviewed later this year. The Council of Representatives has agreed a budget law and will soon consider a hydrocarbons law to determine how Iraq's oil revenues will be managed. International support was crucial in helping to run and monitor the elections, as well as funding outreach programmes to encourage participation.

Once a relatively wealthy country with high levels of education and healthcare, Iraq had by 2003 suffered more than 20 years of conflict, mismanagement and chronic underinvestment. The 2003 conflict and the continued violence, including sabotage of key infrastructure, as well as low (but growing) levels of management capacity in Iraq's national and local government, have slowed progress. However, reconstruction has continued and much has been achieved by the Government of Iraq, with support from the UK, US and a range of other donors.

With international community support, Iraq has made some improvements to basic services. Over 5 million children have received life-saving vaccinations and Iraq is now spending 30 times more on healthcare compared to pre-war levels. Over 5,168 schools have been rehabilitated and a further 450 are in progress. More than 100,000 primary and 40,000 secondary teachers have been trained. Unfortunately, the violence is seriously affecting Iraq's health and education systems, as talented professionals are targeted or choose to leave the country.

There has also been progress on the economic front. The Iraqi economy rebounded quickly in 2004 and dollar income has continued to grow, almost doubling by 2006. Income growth has mainly been driven by rising oil prices, so the challenge now is to convert more of the windfall earnings from oil to productive investments in public services and infrastructure.

The UK is one of the first major donors to Iraq to fully disburse our Madrid pledge—£544 million since 2003. The further pledge of £100 million announced by the Chancellor is on top of this, bringing the total UK commitment to £644 million. From our own resources, we have funded major electricity and water projects in southern Iraq. For example, DfID has repaired the Al Hartha power station chimney and ensured the equivalent of 24 hours of electricity to 85,000 households (enough to supply a city the size of Cardiff with 24-hour power). By the time these projects are complete, we will have added or secured 470 megawatts to the national electricity grid and improved access to water for about a million people. These projects will have employed around 450 people, generated almost 100,000 work days and secured around 17,000 work days per year for operation and maintenance.

But there is still a long way to go. The major focus of our effort now is in helping the Iraqi Government to take the lead in investing in critical services and infrastructure. The Iraqi Government need to do more to provide basic services for their people and to protect those at risk. And they need to make a start on some of the economic reforms that will unlock more money to invest in better public services and infrastructure in the longer term. We and other donors are providing support to help them to do so.

Much of the work done to get development in Iraq back on track goes unnoticed—the backroom, unglamorous slog of getting the right policy advice on tough issues such as drafting and redrafting budgets, setting up systems to manage central government business and dealing with milestones such as regular IMF reviews. But it is paying off. With help from donors, including DfID, the Iraqi Government have stayed on track with its stand-by arrangement, therefore meeting the conditions of the Paris Club debt reduction deal.

This work is hugely important because it puts Iraqis in the lead. With oil revenues of $30 billion (93 per cent of the national budget) in 2007, there is no shortage of resources in Iraq. Iraq has the resources to finance its own development. The challenge is spending it effectively. What has been lacking is the capacity of Iraqi institutions to deliver. Thanks in large part to our work in Basra and Baghdad, this is beginning to change.

Iraq's Deputy Prime Minister recently held a meeting with the Basra governor and Provincial Council and a range of relevant national Ministers to set out Iraqi plans for the development of the province. For the first time, Basrawis heard from their own Government how much money was to be invested in their area, when and on what. This sort of transparency is vital to building a culture of trust and accountability between government and people.

Large numbers of civil society initiatives are springing up throughout Iraq. Over 250 newspapers and magazines have been launched since the fall of the regime and there are more than 2,500 registered Iraqi NGOs, which range from groups focused on reconciliation to groups promoting women's rights and organisations trying to enhance political participation. DfID's support for Iraqi NGOs has encouraged poor and marginalised sections of Iraqi society to engage in the political process by fostering partnerships between international NGOs to provide advice and support to other Iraqi grass-roots organisations.

While these achievements are important, and a credit to the Iraqis and their partners who work so hard in the face of enormous risks and challenges, there is much still to do. Our objective remains to develop the capacity of the democratically elected Government of Iraq and to increase their ability to provide security and basic services to the Iraqi people.