April 30, 2007
HP-380

Prepared Remarks of Ahmed Saeed
Deputy Assistant Secretary for Africa and the Middle East
On the Signing of the International Compact with Iraq

Nine months ago – on July 27, 2006 – the Government of Iraq and the United Nations announced the launch of the International Compact with Iraq.   Under this initiative, the Government of Iraq reached out to key partners in the international community to establish a collaborative process for developing policy commitments to put its economy on a path to self-sufficiency and sustainable growth, while also creating safeguards to protect the most vulnerable groups in its society.

The Government of Iraq and the UN established a preparatory group to help develop the Compact, based on best practices and lessons derived from the experiences of other transition economies.  Between July and December, Iraq consulted regularly with members of this group, including the World Bank, the IMF, and the Arab Fund for Economic and Social Development, as well as knowledgeable government officials from the Gulf, Europe, and Asia.  The U.S. Government also played a strong supporting role. 

The UAE and Kuwait each hosted preparatory group meetings, and the UN briefed its members on progress under the Compact on September 18, November 13, and March 16. The World Bank and IMF also hosted a Compact briefing during their annual meetings in Singapore in September 2006.

The final Compact document was presented at a meeting attended by over seventy countries and institutions and hosted by Secretary General Ban Ki Moon in New York on March 16. It is significant in many respects:

The Compact is comprehensive in scope, ranging from commitments to strengthen public expenditure management, to policies designed to improve health, education, and the environment.  It is also underpinned by clear, measurable benchmarks. 

The Compact commits to a number of significant unifying principles, including the adoption of policies to ensure that all Iraqis benefit from the country's vast hydrocarbons resource base, important anti-corruption practices, and the accelerated development of Iraq's private sector.
The Compact document was unanimously endorsed by the Cabinet of Ministers last December, establishing a clear consensus on the direction and strategy for realizing Iraq's economic potential.

The Compact has been a critical vehicle for Iraq's engagement with its neighbors – preparatory group meetings were hosted in the UAE and Kuwait, and the final signing is in Egypt.

The Compact has provided the Iraqi government an opportunity to draw attention to its own very significant economic accomplishments: a sound macroeconomic framework and management of inflation, adherence to the strict criteria of an IMF Stand-By Arrangement and reduction of fuel subsidies, bank restructuring, pension reform, passage of an investment law, and forward movement on hyrdrocarbons legislation and a revenue management law.

The next step is for Iraq and the international community to formally endorse this Compact at a Ministerial-level meeting in Sharm el Sheikh on May 3.  At this event, participants have been invited to offer their support for the Compact.  To be clear, this is not a gap-filling exercise: the international community has not been asked to meet a specific fundraising target.  However, they have been asked to provide other forms of support. 

Chief among them is debt relief.  With Iraq's focus on financial sustainability, ridding the balance sheet of Saddam era debts is one of the most important,  and prudent steps it can take.  It is expected that Saudi Arabia will announce at Sharm el Sheikh a commitment to provide debt relief and that others, including, the UAE, will follow suit.

Other countries are expected to offer support in the form of loans, grants, and technical assistance.  The United States will also offer a generous bilateral pledge.

Secretary Rice will attend the signing, supported by Treasury Deputy Secretary Kimmitt, who is also the President's Special Envoy on the Compact.  The UN and Iraq expect the meeting to be attended by over 35 countries and organizations.  Ministers will be attending from the UK, Germany, Italy, Denmark, Bulgaria, Poland, China, Korea, Saudi Arabia, the UAE, Bahrain, Kuwait, Egypt, Turkey, and Greece, among others.  Other countries, including Russia and Japan, are expected to be represented at senior levels. UNSYG Ban Ki Moon will co-chair the event with Prime Minister Maliki.