ARAB-US RELATIONS - Oct. 22 - Powell Plays Down Hopes For Donor Conference.

US Secretary of State, Powell says Pledges from donor countries attending the conference on Iraq that begins in Madrid on Oct. 23 are likely to fall short of what is required to rebuild the country. Although some estimates put the amount of money required at $55bn, "That doesn't mean we have to raise $55 billion," says Mr Powell. "It just sets a goal which we have to work towards and it may take time to meet that goal. There will always be a gulf there that we will be trying to close as best we can, but it's not something that has to be closed right away. Nor would I think that anyone expects it to be closed right away," he says. Powell said he looked forward to a "productive conference" but did not have a target for how much money it might raise. Organisers of the two-day conference hope Gulf states will match a high attendance level with financial support for their beleaguered neighbour. Kuwait on this day promises to unveil a "generous" aid package and the UAE, which was involved in organising the conference, is expected to make commitments. But at least part of the funds to be pledged are expected to be as humanitarian aid rather than grants. Saudi Arabia has sought to play down expectations, saying it would first look at Iraq's needs before deciding how to help. A prominent British aid agency,Christian Aid, stirred controversy on the opening day of the conference by accusing Iraq's US and British administrators of failing to account for at least four fifths of the oil revenues and other money it has received towards rebuilding the country. But the problem of lack of accountability could be changed by a new, independent, fund, run by the World Bank and the UN that will determine how international contributions to reconstruction in Iraq will be spent. The decision to set up the fund conference followed a unanimous UN resolution last week that called on countries to help rebuild Iraq but largely left Iraq's transition under US control. The Madrid conference is expected to raise several billions of dollars in grants. Over the next five years, according to needs assessments by the UN, the World Bank and Iraq's CPA, Iraqi reconstruction will cost $55bn. With the US Congress finalising the allocation of $20bn over the next year to 18 months, World Bank officials on Oct. 22 says the conference was likely to produce sufficient support to get the process firmly started. Saudi Arabia, Kuwait and the UAE are sending their foreign ministers to the conference. Kuwait, which has a massive compensation claim on Iraq dating from Saddam Hussein's ill-fated invasion of his neighbour, could offer debt relief or come in with fresh money. Iraqi officials have repeatedly called on Kuwait to reduce or eliminate its claims, saying the new Iraq should not have to pay for the mistakes of ousted regime. Saudi Arabia meanwhile wants to be seen as helping Iraqis but is keen to distance itself as much as possible from the US occupation. It is likely to offer debt reduction to Iraq and loans from the Saudi Development Bank. A Saudi official says Riyadh wanted to be a "contributing factor" in the rebuilding of Iraq but that it was taking to Madrid a "basket of thoughts" rather than specific pledges. The $1. 5bn in grants Japan is pledging could make it the most generous donor after the US, at the conference. In Europe the commitments are in line with pre-war political divisions. The EU is giving at least $200 but Britain, the US's closest ally in Iraq, plans to contribute another $500m, raising its aid to more than $900m since April. Spain will donate $300m. Germany and France, the most vocal opponents of the US invasion, have made their position known, in part by sending only junior ministers to the conference. "To us, the starting point is truly the full and complete recognition of Iraqi sovereignty. We consider that we have to move towards this recognition of Iraqi sovereignty, which is the central condition if you really want to launch the reconstruction process in Iraq" says French FM,Dominique de Villepin.