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US extends $3bn credit line at Kuwait conference for Iraq reconstruction

Secretary of State Rex Tillerson says that money is to 'generate interest' for business investment in post-war Iraq
Tillerson attended Kuwait conference for Iraqi reconstruction as part of his Middle East tour (Reuters)

The United States on Tuesday urged members of the coalition fighting the Islamic State (IS) group to help rebuild Iraq or risk a reversal of the gains made against the militants, and said it would extend to Baghdad a $3bn credit line through the Export-Import Bank.

Although the US government was not expected to pledge direct financial aid at the conference being held in Kuwait, Secretary of State Rex Tillerson said the official US export credit agency, the Export-Import Bank of the United States (Ex-Im), would sign with Iraq's finance ministry on Tuesday a $3bn memorandum of understanding "that will set a stage for future cooperation".

In an interview with al-Hurra TV, a US-funded Arabic network, Tillerson said the event in Kuwait was not meant to be a donor conference.

"This was really organising to ensure that business, the private sector, as well as other lending institutions have a good understanding of the situation in Iraq now after the defeat of ISIS/Daesh, of the opportunities that are available, and it is to generate interest and excitement about Iraq as a good business and investment opportunity," he said, using a different acronym for IS.

“A lot of the reconstruction we’re confident will be undertaken through both public and private sector approaches, and the lending institutions – OPIC, Ex-Im, World Bank, IMF – all of these are important elements of ensuring Iraq has a successful future,” he added.

The United States leads the coalition and hopes that after a three-year fight to defeat the militants it can count largely on Gulf allies to shoulder the burden of rebuilding Iraq. It is also counting on a Saudi-Iraqi rapprochement to weaken Iran's influence there.

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Iraq declared victory over IS in December, having taken back all the territory captured by the militants in 2014 and 2015. IS has also been largely defeated in neighbouring Syria.

"If communities in Iraq and Syria cannot return to normal life, we risk the return of conditions that allowed ISIS to take and control vast territory," Tillerson said.

"We must continue to clear unexploded remnants of war left behind by ISIS, enable hospitals to reopen, restore water and electricity services, and get boys and girls back in school."

Iraq's government is pursuing a difficult diplomatic balancing act by trying to maintain good relations with both the US and its Gulf Arab allies and with their main regional foe, Iran.

Arriving in Kuwait for the conference, Iranian Foreign Minister Javad Zarif said his country would "stand by the Iraqi people forever".

"At a time when only a few countries were participating in the reconstruction of Iraq, Iranian companies were active in building roads in the country and providing Iraqis with engineering services," he was quoted by state news agency IRNA.

Iraqi Prime Minister Haider al-Abadi, whose government puts the costs of reconstruction at more than $88bn, said Iraq could not rebuild without outside help.

Iraq has published a list of some 157 projects for which it is seeking investment. Baghdad has said it is determined to tackle the red tape and corruption that hamper investment.

"Doing business in Iraq can be complicated, but the Iraqi market has vast potential," said Tillerson.

NATO Secretary-General Jens Stoltenberg said the alliance was ready to answer a US call for it to expand its small training mission in Iraq to support reconstruction.

Tillerson also cautioned that the end of major combat operations in Iraq did not mean the United States and its allies had achieved final victory over the militants.

"In Iraq and Syria, ISIS is attempting to morph into an insurgency. In places like Afghanistan, the Philippines, Libya, West Africa, and others, it is trying to carve out and secure safe havens," he said.