U.S. Assistance to the Iraqi Economy

3:30 P.M. (EDT)

Real Audio of Briefing

MODERATOR: Ladies and gentlemen, good afternoon. Welcome to this latest in our series of special briefings for correspondents from the Arab and Muslim worlds. Today we are honored to have three very senior officials with us to discuss our program of economic and humanitarian assistance to Iraq, and specifically to the Iraqi people. Their biographies are available to you, so I will introduce them in very brief terms. They will each speak for two or three minutes and we will then open the floor to questions and answers, which I will moderate, paying due attention to the front row. (Laughter.)

With us today is the Under Secretary of State for Economic, Business and Agricultural Affairs Alan Larson, the Under Secretary of Defense and Chief Financial Officer for the Department of Defense Dov Zakheim and the Under Secretary of the Treasury for International Affairs John Taylor. Without further ado, I give the floor to Alan Larson.

UNDER SECRETARY LARSON: Thank you very much and good afternoon. It's a great pleasure to be here with two colleagues and friends to talk about the work we're doing together to help the Iraqi people reclaim their future and renew their country.

I speak of renewal rather than reconstruction because what we really are talking about here is an effort to help the Iraqi people recover from over 20 years of misrule. We believe that this work requires close cooperation with the United Nations and we have been very strong supporters of the UN Humanitarian Appeal. One of the good news stories, one of many good news stories, is that we have not seen the degree of refugee movement that might reasonably have been anticipated. We believe that the humanitarian situation is very much under control, in part, because of the very good response to the UN Appeal.

In the field, we have USAID DART teams that are assisting the Office of Reconstruction and Humanitarian Assistance, and have been working very hard on issues like restoring water supply, helping restore electricity supply, getting schools and hospitals running again, and those activities will gather even more steam in the days and weeks ahead.

Another thing that each of us is doing, working together, is to reach out to other countries and other organizations in the international community to get their support for the efforts of the Iraqi people, and I know I can say that we're all very encouraged by the type of response that we are seeing.

Dov.

UNDER SECRETARY ZAKHEIM: Well, thank you, Al. Let me just continue with that. The Office of Reconstruction and Humanitarian Assistance, which is sometimes called ORHA, because we never spell anything out in this country, is run, as you know, by retired General Jay Garner. What you may not know is not only does it have members as part of the staff from our sister agencies, not just the Defense and State and Treasury Departments, but many other agencies.

We also have an international staff. This is not just an American organization. And I think that's terribly important because what Al and John and I work on, and we speak almost daily, we meet at least once a week, is to have an international effort that demonstrates that the world is working together to renew Iraq. And we're already seeing success in a number of ways. Just this week, for example, we have been able, thanks to the work of ORHA, to have five power plants, generating plants in southern Iraq working at the same time. The last time that happened was 1991.

That is an example of the level of international cooperation and effort that is going to yield considerably and increasingly greater results for the Iraqi people. And make no mistake about it. The only objective -- one objective only is to renew, revitalize the spirit of Iraqi life, the life of the Iraqi people.

UNDER SECRETARY TAYLOR: The Iraqi economy has been declining for 25 years. 25 years ago, the GDP was $128 billion. Now it's about $30 billion. While the rest of the world has grown, Iraq has declined and contracted. Income per capita 25 years ago was $3,000. Now it's half that, at best. So what we would like to do is to help the people of Iraq restore economic growth in their country so that they can begin to prosper like many of the countries in the world have, who have not been under such repression.

We're giving technical advice in the economic and the financial area; trying to make sure there's a stable currency, stable prices -- not the constant inflation and the depreciation that has existed in the recent past. And one way we're doing that is by sending advisors to work with the people in Iraq. They have already begun to do that in the financial area and the central bank. They are communicating with the people who have had experience in the country for 35 and 40 years. We've already begun to pay railroad workers, dock workers, using funds that are going to go to the people of Iraq, and we're very interested in working with the people there so that they can prosper and they can benefit from the talent that they have, from the education that they have and from the great amount of resources in the country. That's our objective.

MODERATOR: We'll move to questions and answers. Please, as you ask your question, identify yourself and your organization. Keep your questions short and if you are asking a question of a particular member of the panel, please so state.

Here.

QUESTION: My name is Said Arikat, I am from Al Quds Newspaper. Any of the panel, there's -- you know the Iraqi oil industry has been nationalized. Now there is talk today that it is going to be denationalized. Could you tell us how this process will take place and who will assume responsibility for that?

UNDER SECRETARY LARSON: I'd be happy to take a first crack at that. I think our starting point is that Iraqi oil is a trust for the Iraqi people and must be used for the benefit of the Iraqi people. At this stage, one of the important things that has happened is that the basic infrastructure production process in transportation has been safeguarded. There is very active work underway to do the necessary maintenance and rehabilitation.

This is important because production of oil can make a very big contribution to the development of Iraq, and to the efforts of the Iraqi people to rebuild their country. We are going to be working to make sure that the Iraqis who have expertise in this industry -- and there are many of them at all levels -- play a prominent role in this process.

I think the big decisions about the future of the Iraqi oil industry -- whether it should be public sector or private sector, whether it should be larger than it is now, what companies, if companies are invited in, should be invited in -- those are all decisions that should be left to the future elected Iraqi Government to make.

QUESTION: Could I have a follow-up?

MODERATOR: Go ahead.

QUESTION: Okay, but not to belabor a point or anything. Now when you say a trust, is it like giving everyone a portion of the oil --

UNDER SECRETARY LARSON: I was using it in the more, broader sense that it is something that Iraqis ought to benefit from. It is something that belongs to the country and the people and should be used for their benefit.

MODERATOR: Third row here, our friend.

QUESTION: Thank you. Umit Enginsoy with Turkey's NTV Television. This is an Iraq-related question for Secretary Taylor and Secretary Larson. Secretary Snow said yesterday that the planned grants, $1 billion worth grants, that could be converted to loans or loans guaranties, the mechanism could be that, could be started shortly, soon, once a few uncertain points are removed regarding their legislation.

Now how would the whole mechanism start? Would the Turkish Government, at some point, ask the U.S. Government, "Okay, let's try to begin this." And we also know that there is a political condition imposed by the Congress, and Turkey should cooperate on Iraq matters and Secretary Colin Powell will be the person to decide on that.

How will the mechanism start, and how soon is this? Is it a matter of weeks or months? And would you expect the Turkish Governments to begin with a formal request so that Secretary Powell makes an evaluation and leaves it to you, or how will this work? Thank you.

UNDER SECRETARY TAYLOR: Just briefly, the $1 billion in grant or grant equivalent loans or guarantees was a part of the bill the Congress passed and the President signed. And the next step is to work together to negotiate an agreement that puts down the details of how much will be grants, how much will be loans, and that remains to be done. It will take some time. There will be discussions in Ankara and in the United States. There's no timetable for that at this point, but in terms of the relationship between the Turkish economic policy and the grant, we have always stressed that the policy has to be consistent with the budget rules that the IMF has laid out so that there's a good policy in place. And the Turkish Government has been very good, I believe, in laying out a good economic policy and a good budget policy. And that's important for economic stability in Turkey.

MODERATOR: Yes, sir. Right here.

QUESTION: Mohamad Elsetouhi, Nile News, Egyptian Television. Back to the Iraqi oil. How will you be able to finance all the efforts of reconstruction in Iraq while you are still limited with the Oil-for-Food program and sanctions are still there?

UNDER SECRETARY LARSON: Our position is that the purpose for sanctions no longer exists and that the sanctions should be lifted. More specifically, sanctions were in place because the international community, as represented by the Security Council of the United Nations, did not want Saddam Hussein to use Iraq's oil revenues for the purpose of buying or acquiring weapons of mass destruction.

Since that no longer is the issue, we believe that it's appropriate for the Security Council to move forward with the resolutions that would recognize that we're in the new era now, and that it's time for the oil production of the Iraqi people to be used to generate revenues that can contribute to their economic development.

QUESTION: Follow-up, please.

MONITOR: Go ahead.

QUESTION: This what you want, but the fact is sanctions are still there. And Russia and France and others maybe are still -- they are not ready yet to lift sanctions. Up until this moment, what will you do?

UNDER SECRETARY LARSON: Well, again, it is my firm view that no thoughtful person or thoughtful country is going to want to stand in the way of the development of the Iraqi people. And so I believe firmly that the partners in the Security Council will find a way forward to address this issue.

MONITOR: Next, you in the fifth row, there.

QUESTION: Gabe Caggiano, Middle East News Broadcast Center. Last week, Newt Gingrich was very critical of the State Department, specifically pointing out the failures, at least in his mind, in Afghanistan, specifically saying that not one mile of road has been paved in Afghanistan, that it's been a disaster. What can the State Department do to make sure that things are more successful in Iraq? And do you disagree with the assertion that Afghanistan has been a bureaucratic, red tape nightmare?

UNDER SECRETARY LARSON: I'll make a quick comment, but I think Dr. Zakheim may have something to say, as well. Look, both White House Spokesman Ari Fleischer as well as Secretary Powell and others have pointed out that many of the things that the former Speaker was criticizing are policies of the President of the United States. And so the State Department's job is to implement the policies of the President of the United States. And we believe that we are doing that in an energetic and effective way.

On Afghanistan, each of us has been working, each of us before you has worked very hard on those issues, as well, and I think that it has been an effective process of mobilizing the international community. It is hard to lay asphalt in winter in Afghanistan, but watch and see what happens in the weeks ahead now that spring is here. You're going to see tremendous progress in the construction of that road.

UNDER SECRETARY ZAKHEIM: It's true that the roads have not been paved yet. What has been laid down is gravel. They've been prepared. And I'm just speaking to, literally, facts on the ground. Go out and look. They've been prepared. There is already far faster travel on roads now -- and I'm talking about literally sometimes ten times faster -- than was previously the case, and that's just on the roadside. I think if you were to speak to someone like Ashraf Ghani, the Finance Minister, with whom we all interact, a very talented man, he will tell you that we, together, working with him and with others in the international community, and I have to stress that, he's been able to put out a budget. He has been able to provide funds that will allow for delivery of services -- something that they didn't have before.

Do you know that we and the French are jointly training the Afghan National Army? It continues. The Germans are in charge of training the Afghan police. The British are in charge of the counternarcotics program. And when I say "in charge," they're not in charge in the sense of somehow being on top of things and the Afghan Government is out of it; on the contrary, they are the ones who have taken it upon themselves to be the lead support for a central Afghan government.

So I think if you were to go out there, as I have, and just see what is going on, you'll see that -- well, let me put it this way -- (a) the red tape there is nothing like what you might imagine it to be if you're just sitting here; (b) there's tremendous progress; and (c) most of all, that is a function, again, of the work of all of us jointly together with others in the international community.

MODERATOR: Thomas.

QUESTION: Thomas Gorgussian, Al-Wafd, Egypt. Secretary Taylor, I have two questions for each gentleman. (Laughter.) A short one, I mean. Excuse the three questions. It's all finance and everything.

Secretary Taylor, how and when you are going to solve the issue of Swiss dinar and Saddam dinar and American dollars?

Secretary Larson, the issue of international participation -- I mean, is there any part of it for the regional countries, mainly the neighboring countries, whether they Arab or not, I mean, including Turkey, Iran, others?

And Secretary Zakheim, my question is related to the law and order in the streets. After this moment, American troops and Marines are the ones, and unfortunately some clashes taking place. Recently, maybe a week ago, we heard about that Albanian troops are going to -- or some people from Muslim countries are going to guard Islamic centers or mosques in different places. Is there -- what is the vision of law and order, policemen, not Marines or military with uniforms?

Thank you.

UNDER SECRETARY TAYLOR: Sir, on the currency question, as you know, there are three major currencies that circulate and are used within the territory of Iraq: the old Iraqi dinar used before 1990, sometimes called the Swiss dinar; the second is the current dinar; and the third is the U.S. dollar. And we have emphasized that all three, and any other currencies that are in circulation, are acceptable for means of payment. There is a flexible exchange rate where the exchange rates between those are determined. As I mentioned before, the dinar has depreciated in value a lot in the last 12 years. Right now, we've seen some stability in the currencies, and I think that's very good.

The payments that the United States is making to workers is now in U.S. dollars. It's a very stable, acceptable currency and it's welcomed by the people. In a number of cases, we've also made payments in dinars, if that's more convenient to people.

With respect to what will ultimately be decided about the currency, that is a decision for the people of Iraq to make. And we're going to be very happy to work with the international community. The International Monetary Fund has already begun to work on this, but to give them the assistance that they need to make it a smooth operation -- and just one comparison with Afghanistan, if I may -- we also gave advice to the Government of Afghanistan, and when they came in, and they had the interim authority, they decided that they were going to do a new currency. We assisted them, and it was a very successful operation. That may be how it works in Iraq, but it's really their decision.

UNDER SECRETARY LARSON: On the issue of the potential for a role of regional countries, there is not only the potential; it's actually underway already. And in the spirit of interagency cooperation, Dr. Zakheim just handed me his notes, which give a few of the examples: Kuwait delivering food and medical supplies; Morocco sending a medical team; the UAE and Egypt having offered medical personnel, equipment and pharmaceuticals. There has also been help in the financial sector from neighboring countries.

As this process continues, I am confident that there will be a role for cooperation from Turkey, particularly, for example, in the construction area where -- in the same way, really, that Turkey has been very active in construction -- in the reconstruction of Afghanistan.

UNDER SECRETARY ZAKHEIM: On the security side, there really are four components, if you will, different sources for different kinds of security issues. You mentioned, of course, the troops that are there. The second is the Iraqi police, who are coming back and beginning to do work in a variety of towns. And, remember, of course, people read about the difficulties, But in the south, for instance, things are quite stable. And in the north, they've been stable for 10 years.

So the vast majority of this country is already quite stable. So you have now the military, the Iraqi police. You then have what might be called constabulary forces, the equivalent of a Spanish Guardia Civile, or the Carabinieri of Italy. And, in fact, those two countries, among others, have already made offers to provide forces.

Well, one of the things that has to be worked out is, how do you organize these forces properly? Where do you assign them? How do they blend in, on the one hand, with the local police, and, on the other hand, with the forces that are moving on to other jobs?

I mentioned non-Muslim countries, but then there are offers from Muslim countries as well, pure police; and, indeed, there are offers of pure police from other non-Muslim countries. And then there are offers to train police. So you have a complex of both sources of support, as well as a demand that has to be worked out in a rational, effective, and smooth-flowing way.

And I think with the passage of time, with each passing day, quite frankly, you will see more and more of these sorts of functions handed off from the 19, and 20, and 24-year-old troops to seasoned, veteran professionals who really are in the business of policing, as opposed to being in the business of fighting.

MODERATOR: Second row here.

QUESTION: Yasemin Congar with Milliyet of Turkey. On the humanitarian aid, I was wondering if any of you can put a figure on the aid either in terms of dollar figures and/or quantity of humanitarian aid, and received by how many people?

And then I have a very brief follow up to a former question, I guess, to Secretary Larson on the loan package to Turkey. My information was that there was a text for an agreement being worked out between the State Department and the Treasury. Is the text ready? What does it -- that it's holding up, or when is it going to be sent to Turkey?

UNDER SECRETARY ZAKHEIM: Well, let me try that first one. The numbers change daily because, literally, every single day there are additional offers of support. For instance, I just heard -- and I don't have all the details -- that the Canadians announced further humanitarian support. It was just announced -- I think this morning or yesterday. Up to now, we have been able to track something in excess of $1.7 billion in humanitarian assistance of various kinds.

About $4-500 million, I guess, is going through the United Nations Appeal. The remainder going directly to organizations like the Red Crescent, or the International Committee for the Red Cross, and so on. The beneficiaries -- I haven't taken a headcount. We do know that we have, literally, tons of grain, rice from Japan, wheat from Australia and so on, being distributed, medical supplies being distributed.

And so what you are noticing -- and I think Al Larson alluded to it earlier in a different way -- there are no real refugee crises. There isn't really a hunger crisis either. And that's terribly important to bear in mind. The kinds of dislocations that people kept predicting and predicting, whether it's economic dislocations or human dislocations, just haven't happened.

UNDER SECRETARY LARSON: If I could just add one number from a slightly different angle, the same statistics that Dov's using. The USAID has obligated over $500 million itself. So out of those numbers that Dov was talking about, we account, just through AID, for over $500 million.

QUESTION: (Inaudible.)

UNDER SECRETARY TAYLOR: Yeah, well, you -- I am going to let John really handle this. John and I worked at an earlier stage on a very general arrangement. At this stage, it's really -- the issues are really largely in John's area.

QUESTION: But basically, my question is, is the text ready? Is it ready to be sent? And if not, why not?

UNDER SECRETARY TAYLOR: The loan agreement itself is not negotiated yet. We have to sit down with our colleagues from Turkey and work on the language, look on what -- what terms they would like. They have not indicated yet how they want to transfer the money to grants if they do, even. And so, as they lay out and see their plans for the future, they're going to come and say, "This is the kind of way we would like to take some grants and make them into loans or vice-versa." And we are ready to work with them. But it will take some time. These documents are complicated with all of the legal terms in them. But it's underway. There's nothing that's preventing it from happening at this point at all.

QUESTION: I'm sorry. I don't want to, you know, continue along, but there will be an initial text, no? Like a proposal that's going to go to the Turkish officials so that they can think about it and come back to you with some response, or am I misinformed?

UNDER SECRETARY TAYLOR: Well, in many respects, that has already been done.

QUESTION: That's done.

UNDER SECRETARY TAYLOR: That kind of thing has been done. That's just a -- you would call that the terms of references for an agreement. But the outline, if you like, has been done. Now it's the details.

MODERATOR: Here.

QUESTION: Amal Chmouny, Al Shaqraq, Lebanon. Back to the oil industry. The oil industry include the pipeline also. And we heard about -- that you the find pipeline to Haifa Airport, passing by Jordan. And is that true? And when the pipeline will start if it is true? And what about the other pipeline, especially when the borders are closed, with Syria, for example, and the countries neighboring Iraq?

UNDER SECRETARY LARSON: I think the best way to look at this is in steps. The first thing that has to be done is to make sure that there is the appropriate maintenance and rehabilitation. And that's been going on very, very actively. And
there is production underway. And I think we announced in the last day that the refinery in the south is now up and running.

There are multiple export pathways. There's the platform in the south. There's Baku-Ceyhan. There are other pipelines through Saudi Arabia and Syria. But the issue right now is making sure that this maintenance of the production and the processing, and then the refining sector, for the oil that's used domestically in Iraq is maintained; and then, subsequent to that, subsequent to that, making sure that you have the regime in place. And it gets back to one of the questions that was raised earlier. It's very important to move quickly and lift sanctions for the benefit of the Iraqi people.

MODERATOR: You had a follow-up?

QUESTION: You didn't answer the question I was -- the Haifa.

UNDER SECRETARY LARSON: Yeah, I don't have -- I'm not even sure I understood the nature of the question. There are multiple pipelines and the location of the pipelines, I think, is well known. So I don't understand what you're getting at.

QUESTION: I mean, we heard that there is the fact that the pipeline to Haifa Airport, to Haifa, I mean, Port and Harbor will begin working -- will be the first one to work after the whole process. And, you know, there is --

UNDER SECRETARY LARSON: I'm not the person who would be in a position to give you an answer. I think you're going to -- that's a question that the management team that gets set up in Iraq is going to have to make a decision on, not anybody that's sitting in front of you today.

MODERATOR: This one over here.

QUESTION: Yeah. This is Kasim Cindemir, Turkey Daily Hurriyet. What are your expectations from the NGOs? What should be NGOs' role for humanitarian aid?

Secondly, are you satisfied with the Iraqi people cooperation with the coalition and NGOs?

UNDER SECRETARY LARSON: Well, 50 NGOs are on the ground now, so that question is already answered in practice. NGOs are on the ground and beginning to do their work already.

QUESTION: But the question is about NGOs, that's why -- what are your expectations, frankly, from the NGOs?

UNDER SECRETARY LARSON: Well, they'll do the sort of work that they customarily do in these types of situations. Some of these groups are, you know, very experienced in delivering certain types of humanitarian assistance. Again, I think the good news is that they're already on the ground doing the things that they know how to do best.

UNDER SECRETARY ZAKHEIM: Let me add to that. The Office of Reconstruction and Humanitarian Assistance works with them, but you shouldn't just generalize and say NGOs. There are different kinds of NGOs for different kinds of activities. For instance, I heard a report -- and I think it's true -- that Medecins Sans Frontieres have already left. They were there. They recognized that the kinds of things they do as emergency medical assistance turned out not to be necessary. Things are much better than they anticipated. Other NGOs, presumably, will come in to do other things.

So the relationship with NGOs is, in part, the nature of what is being done at a particular time. But there's clearly a role for them, as Al Larson just said.

QUESTION: (Inaudible.) [Hasan Hazar, Turkiye Daily]

UNDER SECRETARY LARSON: Sorry?

QUESTION: -- the Iraqi people cooperation?

UNDER SECRETARY LARSON: Well, that's the central issue. I mean it's the Iraqi people we're trying to serve here.

UNDER SECRETARY TAYLOR: I wonder if I could just add one comment, which I think gets at the direction you're going. Our sense is that a lot of Iraqi people in different sectors are wanting to come back to work, wanting to come back and help, you know, start this process of rebuilding their country. And so the reports that we've been hearing is that people are showing up and asking what they can do and how they can help, you know, get the bank operating or get the refinery operating, things of that sort.

UNDER SECRETARY LARSON: Just by way of example, the people that are part of the financial operation in Baghdad who we're in close contact with, have been meeting with -- officials, Iraqi officials, from the central bank and from the finance ministry comparing notes on how payments are made, getting records of people so payments can be made to them, getting the details of how the cash will be distributed. And so there's a great deal of cooperation on the matters that we are interested in right now.

QUESTION: Hoda Tawfik, Al Ahram, again on oil. Denationalization -- what does it mean and how it will be implemented? It is a transitional period in Iraq now? There is no government? There is no administration, Iraqi administration? Would this liberate the possibility of having contracts with other countries to export oil? And who will take these decisions?

UNDER SECRETARY LARSON: You started with a phrase that is not my phrase when you said "denationalization." I think the best way for me to describe it is that our view is that it will be very important for Iraqis, and there are many very, very experienced Iraqis in the oil industry, to play a very prominent role in the immediate task of making sure that these oil facilities are repaired, rehabilitated, and can be put into production quickly and safely.

As time goes on, we hope to work with these Iraqis so that the revenues from the oil that is sold can be used to pay the salaries of the workers, can be used to help develop the country. And that's what we have in mind. We believe that the sort of big decisions that you seemed to imply by the beginning part of your question about what should this industry look like? What should its future be? Should it be public or private? Those are questions that an elected Iraqi government should decide and will decide. In the meantime we have what I would describe as a stewardship role. We need to work with these experts in Iraq on the oil industry to help safeguard this asset for the benefit of the Iraqi people.

MODERATOR: Follow up.

QUESTION: Okay, who decides these experts? They are not elected? Who decides that these experts will take over? And also, are you free to make contracts with other countries outside Iraq during the transitional period?

UNDER SECRETARY LARSON: Well, as you defined it, it is a transitional period and there is no elected official at this stage. The whole purpose of the transition process and of helping the Iraqi people organize a process by which they can select their own leaders is to get to that situation where you have an elected government that's been elected by a process that has been a representative and fair process. And that's the sort of activity that even now has begun through some of the consultative meetings that already are being held.

Between now and then, it will be the responsibility of the authorities on the ground, and that means the coalition, working with the Iraqi people and with the appropriate actions, I believe, of the United Nations Security Council, to put in place together a process for moving this forward and for making the decisions that you're talking about. You're asking me, a little bit, to look into a crystal ball and describe in detail a process that hasn't yet been totally worked out. And what I am trying to do is just give you the basic principles that will guide the way that those decisions will be made.

MODERATOR: Second row here.

QUESTION: (Inaudible.)

UNDER SECRETARY LARSON: Well, I think we addressed that question before.

MODERATOR: Second row here.

QUESTION: Hi, gentlemen. My name is Mathab Fahrid. I am from Radio Farda. My question is for Dr. Zakheim.

Could you brief us on what's the update with Mujahideen Assan?

And in the past few weeks, there has been tremendous amount of concern from the Defense Department regarding the possible Iranian interference, as far as the possible Shiite influence, and also the possible Islamic Republic. Could you elaborate on that please, sir?

MR. ZAKHEIM: Well, on the first one, it's not -- none of these are really my turf, per se, so I hesitate to speak too much about any of it. Generally, the concern about Iran, I think Secretary Rumsfeld made it very clear when he was asked about this. It's that he does not anticipate an Islamic Republic, Iranian style. I think that's pretty evident. It's not clear that that's what the people of Iraq want either, for that matter. But to get into the details, I think you'd have to ask some of my colleagues who are on the policy side of Defense.

MODERATOR: Over here.

QUESTION: Thank you. On the reconstruction --

MODERATOR: Identify yourself, sorry.

QUESTION: Oh, yeah. My name is Abdullah Safi, Abu Dhabi TV. On the reconstruction, I understand and I hope you, you probably agree with me on that manpower is available in Iraq, but what is needed is technology. Are you prepared to provide U.S. technology? And how this will be compatible with the existing technology in Iraq? And, on this point, will it be easier or cheaper to depend on Israeli technology? Thank you.

UNDER SECRETARY LARSON: Well, I think you have asked a very broad question that will only be answered in very specific circumstances. We certainly see that there is tremendous expertise in Iraq. I've given the example already about the oil sector, where we know that there is tremendous expertise at all levels. And we know that the Iraqi oil sector has been maintained by some very ingenuous engineers who have done some things that may not have been done other places, but managed to find a way to make it work.

Now, if you answer this question in a very broad sweeping way, I think you again have to say it will be up to the Iraqis to decide the extent to which they want to bring in technology in a very, very large way from outside of the country and to decide from where they bring it in.

I think, based on my experience in other parts of the world, that there are tremendous benefits to a country that is open, for example, to foreign investment, where foreign investors can bring in state-of-the-world technology and managerial techniques, and things of that sort, but that's my view. And the decisions on an issue like this would be decisions that Iraqis will have to make.

UNDER SECRETARY TAYLOR: If I could actually just add: it's decisions of the people of Iraq, in the sense of their private decisions about starting firms. You can't produce just with labor. You need tools for the workers to have. You need technology. You need capital. You need equipment. And all the resources to do that are available, and they'll be coming -- be very welcome from the rest of the world, capital coming in. I bet capital is right there as well

I expect, as I was saying before, that growth could be very strong in Iraq with the right circumstances where the environment is conducive to capital investment and the business of starting up. We have even begun to see it already, some businesses starting up, and entrepreneurs that work. And I very much expect we are going to see much more of that and a real thriving economy down the road; we very much hope so.

QUESTION: Could I just have a brief follow-up on that? I mean one what you mean exactly down the road. We have now existing Chinese technology, Russian technology, French technology in Iraq. Do you find this a problem in very technical terms? I know it might not be your specialty to implement or to introduce U.S. technology to various areas other than the oil?

UNDER SECRETARY TAYLOR: There have been telecommunications, food distribution, all sorts of technologies around the world, and they should have access to the best technology they can find. We very much hope they do.

UNDER SECRETARY LARSON: Just one sentence further on this. Wherever possible, we have always favored interoperability, that is to say, technical standards that are open to use by different types of product. That's a particularly important principle in the area of telecommunications and cell phones, for example.

QUESTION: My name is Andrei Sitov; I'm with the Russian News Agency ITAR-TASS. I guess I represent here the Muslim countries of the former Soviet Union.

(Laughter.)

QUESTION: Thank you, thank you for -- thank you for giving me the question. Secretary Taylor, I want to -- I want to ask you about the monies, Iraqi monies invested in this country. Yesterday, Secretary Snow mentioned it's $1.7 billion. And how do you use that?

Do you use any of that money for paying for commercial contract in Iraq for reconstruction? And, if so, why aren't these contracts distributed through international tenders?

And I also wanted to ask Secretary Larson about his recent comments about the Iraqi debt. You said that Paris Club is probably not enough because it does not cover, for instance, the reparations due from the Iraqis, which are a big part of their obligations. What other mechanisms do you see to resolve that issue, sir?

UNDER SECRETARY LARSON: Regarding the $1.7 billion, these are funds that were frozen back in 1990. And what the United States has done now is reserved those funds for the use in Iraq for the Iraqi people. So, for example, payments to the railroad workers that have been made this week are really coming from those funds. It's going right back, those funds are going right back to Iraq, payments to the Iraqi people, and that's what we continue to do.

UNDER SECRETARY TAYLOR: Let me add to that, the payments are made by the Office of Reconstruction and Humanitarian Assistance. We have a very, very rigorous, careful system for accountability and visibility of all those funds. We've worked on that with the Treasury Department, with the State Department, with others, to make sure that exactly the kind of question you asked is answered clearly and openly. These monies are for the Iraqi people.

QUESTION: And none of these funds are for contracts with foreign companies?

UNDER SECRETARY TAYLOR: It's for payments to the Iraqi people.

UNDER SECRETARY LARSON: On the debt point -- and John may have something to say on this. I didn't make the comment that you attributed to me.

QUESTION: (Inaudible.)

UNDER SECRETARY LARSON: Well, what I have said, and it's just a very general comment, is that what one does in these debt situations of post-conflict countries is, first of all, make sure you've got the data right, and then there is a big discussion, typically. And certainly in the case of Iraq the discussion already is underway, and that has included a discussion of a general nature in the Paris Club.

But the basic concept is to, at the appropriate time, look at the country's income and look at its total obligations, its debt obligations to governments, its debt obligations to private banks and other obligations that it may have, and you mentioned these very specific obligations that Iraq has in the nature of reparations. And then you have to figure out what is an appropriate way forward. And so it's in that context that we probably did point out that Iraq is a country that has lots of obligations, some of them debts to governments, some of them debts to banks and some of them the debts have been imposed upon Iraq as a result of the suffering that they inflicted on Kuwait in their invasion in the first Gulf War.

MODERATOR: Two more questions. Radio Sawa here.

QUESTION: Samir Nader, Radio Sawa. The Washington Post last week reported that the NSC at the White House had decided to present this week a draft resolution to the Security Council to remove the sanctions. What is the date on this resolution?

UNDER SECRETARY LARSON: Well, I can give you a very general update. As Dr. Zakheim said in response to a different question, this isn't my turf. It's not the issue that I work on day to day. But, basically, what's going on is that there are very intensive consultations among the members of the Security Council to discuss informally the very important issues that would have to be addressed in any Security Council resolution so that you can identify, before you start putting papers down formally, what needs to be done, what suggestion and advice and views that there are. And then, after you've done that consultation, that's the right moment to actually table a resolution. My sense is that these consultations have been very active, have been useful and constructive, but I don't know of any specific timetable for the introduction of a resolution.

MODERATOR: Last question here.

QUESTION: Kasim Cindemir, Turkish Daily Hurriyet. This is for Mr. Taylor. Going back to an earlier question, sir, you said if I'm not wrong, the Turkish Government laid out a good program and a budget. Does that mean you are confident that Turkish Government will implement IMF program as it is expected by the IMF?

UNDER SECRETARY TAYLOR: Well, I very much hope they do. They've indicated that they're intending to keep the budget commitments that they've put forth and to do the other things. They've indicated how important it is for Turkey and for the success of the Turkish economy.

The economy grew very rapidly last year, as you know: over seven percent. And they were undertaking some good reforms under this IMF program. So continuing that growth and a good success on inflation is going to require that they take these good policies and continue with them. And so far, what we've seen is very promising and I have every expectation that they would continue with those good policies.

MODERATOR: Is there one last question on Iraq? All right?

QUESTION: Thank you. This is Said Arikat again from Al Quds to Dr. Zakheim. Secretary Powell, yesterday, before the Senate Foreign Relations Committee, I guess, said that you will see more and more people from State versus Defense running Iraq. How do you react to that?

(Laughter.)

UNDER SECRETARY ZAKHEIM: I think it was more and more Iraqis, Al tells me, which sounds quite a bit more accurate.

QUESTION: Not from State Department?

UNDER SECRETARY ZAKHEIM: Look. We have every intention to hand over, as quickly as is feasible, the management of the ministries -- there are 23 ministries -- to the Iraqi people. It's not a simple matter because the junior officials, of course, were junior and are being brought back quite quickly.

The senior officials, the only way they got to be senior, is that they happened to get along with a certain individual who is no longer in Iraq. And so they are not the kind of people, Saddam's people, that you want. So the idea is to move as quickly as possible to get Iraqis in jobs that Iraqis should conduct.

As to State and Defense, we work together.

UNDER SECRETARY LARSON: Yeah. (Laughter.)

UNDER SECRETARY TAYLOR: Treasury, too. (Laughter.)

QUESTION: Thomas Gorgussian, Al Wafd, Egypt. But the question is, Dr. Zakheim, when you say the NGOs are allowed to go there and help, I mean, the question which is raised in the last few weeks, How they can -- who is in, who is out of it? I mean, is there a kind of permission, permit? Who is deciding who can be in or out?

UNDER SECRETARY ZAKHEIM: I'm not familiar with the process. I don't know, Al, whether you have a better idea. I'm not sure it works entirely in such black and white terms as you mention. But I don't have any clear sense of that.

UNDER SECRETARY LARSON: I was looking for a list of who -- but you're asking a slightly different question.

UNDER SECRETARY ZAKHEIM: We'll try and fix that.

MODERATOR: Anyway, Under Secretary Larson, Zakheim, and Taylor, thank you very much and thank you all for joining us.