Hoping for $100 Billion to Rebuild, Iraq Got Less Than a Third

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.

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Iraq’s foreign inister, Ibrahim al-Jaafari, was less than thrilled with the outcome of a donor conference in Kuwait this week, as pledges fell far short of the $100 billion Baghdad was seeking.

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Noufal Ibrahim/European Pressphoto Agency

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.

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In comparison, the Turks’ surprise pledge of $5 billion in investment loans and guarantees, announced by Foreign Minister Mevlut Mevlut Cavusoglu, promises a more certain outcome.

Unlike the Sunni Arab nations, which have largely shunned the Shiite-led governments that have run Iraq since the fall of Saddam Hussein, Turkey saw an opening.

Turkish businesses jumped into Iraq in multiple sectors after the American-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.

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“As a neighbor, friend and reliable partner, we will always stand by our Iraqi brothers,” Mr. Cavusoglu said on his Twitter account after his pledge in Kuwait.

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