10.2 | Reconstruction: July 2004 to July 2009

83. Mr Blair asked Prime Minister Allawi whether he had the “infrastructure” around

him to implement IIG policy. Prime Minister Allawi agreed there was a problem. Mr Blair

said that the UK would send “two or three people” to Baghdad to work on the issue. On

reconstruction, Mr Blair said that each project needed to be properly publicised as an

achievement of the IIG and Prime Minister Allawi.

84. Mr Blair, Prime Minister Allawi and several Iraqi Ministers discussed reconstruction

and the economy over lunch.43 The Iraqi delegation said that there had been good

progress on reconstruction in recent months, but the pace of delivery was still far too

slow. Nor were donors delivering on their commitments to the World Bank and UN Trust

Funds. Mr Blair said that there needed to be absolute clarity on where the blockages on

funding were.

85. Prime Minister Allawi stressed the need for a generous debt reduction package that

would encourage foreign investment, and asked the UK to play a major role in the Iraq

Grand Port project on the Faw peninsula.

86. An Iraqi delegation led by Prime Minister Allawi held a roundtable meeting on

reconstruction with Mr Straw, Mr Benn and Mr Hoon on 20 September.44

87. The FCO reported that Prime Minister Allawi’s main theme had been the importance

of progress on reconstruction and its link to security.

88. Mr Mehdi Hafez, Iraqi Minister of Planning and Development Co-ordination, outlined

progress towards an agreement on debt relief. Mr Benn emphasised the importance of

reducing fuel subsidies if Iraq was to secure an IMF programme. Mr Hafez said that the

IIG was committed to reducing subsidies (which he estimated to account for 50 percent

of government expenditure), but there were political sensitivities.

89. During a discussion of the World Bank and UN Trust Funds, Mr Benn encouraged

Prime Minister Allawi to press the UN to deploy staff to Iraq and to speed up

disbursements from their Trust Fund. The Iraqi delegation said that the reluctance of

the World Bank and IMF to engage raised questions about the value of multilateral (as

opposed to bilateral) assistance. Mr Benn said that “DFID was concentrating on bilateral

projects with 2004/05 money”. Mr Hafez confirmed that the IIG was content with the

DFID programme.

90. DFID sent the note on how to speed up reconstruction funding requested at

the 16 September meeting of the Ad Hoc Ministerial Group on Iraq to No.10 on

23 September, to inform a telephone conversation between Mr Blair and President Bush

the following day.45

43 Letter Quarrey to Owen, 19 September 2004, ‘Iraq: Prime Minister’s Lunch with Allawi, 19 September’.

44 Telegram 73 IPU to Baghdad, 20 September 2004, ‘Iraq: Visit of Allawi: Meeting with Foreign Secretary,

Mr Benn and Mr Hoon’.

45 Letter Drummond to Quarrey, 23 September 2004, ‘VTC with President Bush’ attaching Briefing DFID,

[undated], ‘Prime Minister’s Video-Conference with President Bush’.

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